Commentary on Sections Part 1: Defence Procurement Section 1: Arrangements for providing defence procurement services
11.Section 1 sets out the circumstances when Part 1 will apply, namely, when the Secretary of State makes initial and (when required) follow-on arrangements for a contractor (“the contractor”) to provide “defence procurement services” to the Secretary of State under contract. “Contractor” is defined in section 1(8) as meaning a company which provides (or is to provide) defence procurement services to the Secretary of State under contract by virtue of the arrangements, or a company which, by making premises, property and employees available, enables (or is to enable) those defence procurement services to be provided. “Defence procurement” and “defence procurement services” are also defined in section 1(8). These are the services that are currently provided by DE&S. The provisions in Part 1 of the Act will not apply to any services which the contractor provides to anyone other than the Secretary of State.
12.Subsection (1) provides that Part 1 applies where the contractor acquires rights over premises and property (in the form of leases or tenancy agreements) used by DE&S and becomes the employer of civil servants working in or in connection with DE&S.
13.Subsection (2) provides that Part 1 also applies if arrangements are made at a later date (“the new arrangements”) and the new arrangements are the successor to the old arrangements, although the contract with the former contractor in respect of the old arrangements may not have terminated.
14.Subsections (3) and (4) explain when the new arrangements are the successor to the old arrangements. This could arise in a number of situations, for example, where the new contractor is the same as the old contractor (subsection (3)(a)); or where under the contract the property, rights or liabilities of the old contractor are to be or have been transferred to the new contractor (subsection (3)(b)); or where property, rights or liabilities are to be or have been transferred to a new contractor by means of a transfer scheme made under section 10 (subsection (3)(b)); or where property, rights or liabilities of the old contractor have been transferred to the Secretary of State (whether under the terms of the contract or by a transfer scheme) and the new contractor acquires rights in premises from the Secretary of State to be used for the new arrangements and becomes the employer of civil servants carrying out defence procurement (subsection (4)).
15.Arrangements for a contractor to provide defence procurement services may take effect in phases over a period of time (subsection (5)). A contractor may be a publicly owned company, as defined in section 12.
16.Subsection (7) provides that the arrangements may permit a contractor to exercise to any extent any discretion of the Secretary of State in connection with the exercise by the Secretary of State of a function involving defence procurement. The Secretary of State will remain responsible for defence procurement but, given the scale of the activities that the contractor may be required to undertake under the arrangements, it may be necessary for the contractor to exercise a discretion of the Secretary of State in respect of the Secretary of State’s procurement functions.