Commentary on Sections Part 2: Single Source Contracts Section 15: Pricing of contracts
58.QDCs, and amendments to QDCs, must be priced in accordance with the formula provided at subsection (4).
59.There are many different types of commercial arrangement used in QDCs, and subsection (5) combined with section 43(2)(b) allows for the formula to be adapted for all contract types. The provisions here allow flexibility in the point in time at which the formula is applied, and whether costs are estimated or actual costs. For common commercial arrangements the formula will be applied as follows:
60.There are two elements in the formula – the “contract profit rate” (CPR) which is calculated by a six step process described at section 17, and the “allowable costs”, for which provision is made at section 20.