5.7 To achieve assurance about the bids submitted in non-competitive situations, the government introduced the Single Source Contract Regulations (the Regulations) under the Defence Reform Act 2014. These were designed to enhance the Department's ability to challenge suppliers' non-competitive bids by improving their transparency, except where - notably with international procurements - they are exempt. In 2017, we reported that the Regulations offered considerable opportunities to improve contract management if implemented and applied effectively.33
5.8 In some of the programmes we examined, we saw teams gain assurance on costs provided by suppliers through the Regulations as evidence that single-source bids are VFM. The Department also used the Regulations to test and remove costs, and to challenge suppliers' indirect costs such as labour rates and corporate overheads, which underpin prices on individual contracts across a number of years. The full benefits of the Regulations will take some time to become apparent. The Department is currently reviewing how to further develop the Regulations and is considering how they could be used to incentivise suppliers to innovate, take on more programme risk and support wider government objectives.
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33 Comptroller and Auditor General, Improving value for money in non-competitive procurement of defence equipment, Session 2017-2019, HC 412, National Audit Office, October 2017.