Consultation outcome

Consultation response

Updated 13 December 2019

Reporting guidance consultation

Response document (version 7)

13 December 2019

1. Introduction

1.1 On 1 July 2019, the SSRO issued a set of reporting guidance consultation documents to its Reporting and IT sub-group for consultation for a period of eight weeks to 23 August 2019. The documents were also made available on the SSRO’s website. The SSRO consulted on reporting guidance proposals in the following areas:

a) On-demand contract reports;

b) Regulation 22 data fields in the Contract Cost Statement;

c) The Contract Completion Report;

d) Compliance activities;

e) Removing comments data fields;

f) Other reporting guidance changes and any associated DefCARS development; and

g) Presentational changes to reporting guidance.

1.2 The SSRO received input on its draft guidance from the Reporting and IT sub-group at its meeting on 10 July. In addition, the SSRO received written responses from seven stakeholders from the stakeholder groups set out in Table 1.

Table 1 – Stakeholder responses to consultation

Organisation	Number of responses
Ministry of Defence	1
ADS Group	1
Defence contractors	4
Independent consultant	1
Total	7

1.3 The independent consultant provided comments which related to a topic which was not the subject of this consultation. Their views were helpful and have been taken into consideration in another area of the SSRO’s work.

1.4 We would like to thank respondents for sharing their views with us. We have considered all responses in drafting this consultation response document and set out the reasons for the changes we have decided to make. The changes are reflected in version 7 of the SSRO’s reporting guidance which has been published on 13 December 2019 and they have also been explained to the Reporting and IT sub-group at its meeting on 5 November 2019.

1.5 In our consultation document the SSRO explained that changes to reporting guidance, subject to stakeholder feedback, would be made to either version 7 or a later version of the guidance once timescales for any associated DefCARS development had been assessed. We make clear in this document whether we intend to introduce changes in version 7 or later.

2. On-demand contract reports

Interim guidance

2.1 Industry and the MOD were generally supportive of the draft guidance on interim arrangements for submitting on-demand reports therefore the guidance which we consulted on has been incorporated in full into version 7.

2.2 A contractor suggested that on-demand report due dates should be manually entered rather than auto-populated by DefCARS. The SSRO has not made this change as DefCARS currently calculates the due dates which are set out in the legislation and it is not clear that relying only on manual entry would be an improvement.

Longer term solution

2.3 The SSRO would like to thank stakeholders for their thoughts and ideas on a better solution for submitting on-demand reports in DefCARS. We are considering the points that have been made, which have been explained below, before deciding how to better facilitate this type of reporting in DefCARS.

2.4 Contractors can either submit on-demand reports when required to by the MOD or can agree to do so voluntarily. One defence contractor asked if those submitting reports in DefCARS could flag whether they were submitting an on-demand report. The MOD asked if, where a contractor submitted a report voluntarily, they could be informed that such a report had been submitted. There is currently no flag on a report which indicates whether it is being submitted by agreement or not and the SSRO is unable to determine when a report is submitted whether it is one identified in the Contract Reporting Plan or a voluntary report. There is also no reporting requirement in the Regulations which would require contractors to provide this information.

2.5 One defence contractor asked if DefCARS could be amended so that on-demand Interim Contract Reports could be included in the Reporting Plan page of the initial reports. The SSRO recognises that this was an omission from the original design of this page and will look to address this as soon as is practical after version 7 is released.

2.6 Stakeholders recognised that because the SSRO had combined the three initial contract reports1 into a single report (called the Contract Initiation Report) in DefCARS to ease the reporting burden on contractors that this had created some complications for on-demand reporting and highlighted the need to develop a longer term solution for these types of report. One respondent suggested that the Contract Initiation Report should be deleted, and the report split out into the original three reports.

2.7 Stakeholders indicated that the SSRO needed to better understand the costs and benefits of a longer-term solution for on-demand reporting before implementing any changes. One defence contractor said it was too early to commit to spending development resource on this aspect of DefCARS. The SSRO intends to keep the impact of any change under review, alongside development of a longer-term solution.

2.8 One contractor suggested that where all the reports that can be demanded are requested at the same time, they are submitted on the same day. The SSRO’s view is the requirements of Regulation 30 allow for this to happen as they only stipulate the latest date by which reports must be submitted.

3. Regulation 22 data fields

3.1 Stakeholders were either supportive of the auto-population of all Regulation 22 fields in the Contract Cost Statement or provided no comments on this proposal. The SSRO considers that this change should be made. As the change will also require DefCARS development which is currently not a high priority for version 7, the SSRO is planning to implement this change in a later version.

4. Contract Completion Report

4.1 The MOD stated that the Contract Completion Report (CCR) guidance should not refer to forecast costs as in the CCR contractors are required to report actual or estimated costs. Up to 5 percent of the costs reported in a CCR can be estimated without explanation and 5 per cent or greater with explanation as specified in Regulation 22(6). The MOD considered that the term ‘forecast’ included in the SSRO’s draft CCR guidance should not be used.

4.2 In DefCARS, the SSRO uses the following cost categories in all contract reports: Forecast, Actual and Forecast, Provisional Actual and Final Actual. The ‘Forecast’ cost category has the same meaning as estimate in the context of Allowable Costs. The SSRO considers the consistent use of the same cost categories in all contract reports to be helpful for contractors. Given the widespread application and usage of the cost categories, including ‘Forecast’ costs, we have for now decided to retain the current cost categories, but amend our CCR guidance to make clear that costs in a CCR should largely be actual costs with a small proportion of the costs still estimates, as per the requirements of Regulation 22(6). The SSRO will log the issue raised by the MOD in order that it can be given due consideration as part of its future work priorities.

4.3 The MOD also suggested one minor amendment which related to incentive adjustment reporting which has been made to the Table 29 of the reporting guidance on contract reports.

4.4 The MOD suggested that the term ‘Protection from Excess Profits and Losses’ has been replaced with ‘Final Price Adjustment’ in their guidance and suggested that the SSRO should do the same in its reporting guidance and DefCARS. We have logged this issue to be addressed in due course, taking into account views from industry stakeholders.

4.5 A defence contractor and ADS Group challenged the SSRO on the requirement set out in its guidance to report an annual profile of sunk costs (costs prior to a contract being amended to become a QDC) in a separate spreadsheet. The SSRO explained its position in relation to this reporting issue in response to comments from stakeholders as part of the Quarterly Contract Report (QCR) and Interim Contract Report (ICR) guidance consultation which was part of the version 6 update. Our response issued to the Reporting and IT sub-group in May 2019 is set out in Table 2.

Table 2 – Extract from stakeholder response document

Theme	Stakeholder summary	SSRO response
Reporting costs prior to a contract becoming a QDC	Some industry stakeholders indicated a reluctance to report costs prior to when a contract was amended to become a QDC. ADS also supported this view.	Regulation 26(6)(b) relating to the QCR and Regulation 27(4)(d) relating to the ICR require the contractor to report an annual profile of estimated costs at the time of agreement. This is split by the contractor’s reporting structure in the QCR and the defined pricing structure in the ICR. The SSRO’s guidance is that contractors should report the total costs of a QDC both for the period before and after a contract was amended to become a QDC in order to meet this requirement. No further change to guidance has been made although the SSRO remains open to hearing more from stakeholders about this topic.

4.6 One contractor suggested that it should be clear which fields in DefCARS are autopopulated as this was not always specified in guidance. The SSRO recognises that greater transparency about how DefCARS autopopulates reports may be required and will consider how best this can be done in discussion with the Reporting and IT sub-group.

4.7 ADS Group raised a query about the autopopulation of the CCR and whether this should always be from the last submitted report. Currently CCRs are only autopopulated based on previously reported information if the last report was an ICR. At this stage we do not propose making any changes until we have made an assessment of how it might best be implemented.

4.8 ADS Group also suggested that the Defined Pricing Structure (DPS) used in the CCR should not need to be changed from that used in previous reports as the contract will have completed. It is possible that there could have been a contract amendment between a previous ICR and the CCR which would require a change to the DPS. In such circumstances as indicated in our guidance the MOD may request an on-demand Contract Reporting Plan to reflect the changes to the DPS or the contractor may choose to submit such a report voluntarily.

4.9 The SSRO has implemented other minor wording changes to its CCR guidance as suggested by stakeholders.

5. Compliance activities

5.1 The MOD had no amendments that they wanted to suggest to the compliance activities guidance. A contractor suggested a minor amendment to guidance to make it clearer that a correction needs to be made to a report in order to be able to respond to compliance issues. The SSRO has considered this and concluded that the circumstances in which a correction report needs to be submitted in response to an issue was clear in the draft guidance and has not made any changes.

5.2 One contractor suggested that when an issue is raised against a contract, DefCARS should:

• by default, record that there is an action for the contractor,
• but where a contractor responds to an issue the next action should lie elsewhere and should be recorded as such.

5.3 The SSRO agrees that actions should be correctly recorded against the responsible person but is satisfied that the current review status indicators do show who is responsible for acting next in the review process.

5.4 ADS Group suggested changes to the wording of the compliance review status indicators used in DefCARS. These are currently (MOD Verification Complete and No Current Issues Identified by the SSRO). The SSRO considers that the wording of the review status indicators should remain unchanged as they indicate who is required to or has taken action. For example, only the MOD undertake verification and the indicator ‘MOD Verification Complete’ makes this clear to industry users of DefCARS. We will keep this matter under review following the consultation on the compliance methodology which will take place in October and November 2019, should further comments be made by stakeholders.

5.5 Reporting and IT sub-group members asked the SSRO to investigate whether an Administration User report could be created in DefCARS to allow them to see all open and/or resolved issues across all contracts which a contractor has on DefCARS. Another request was to ensure that users who receive a notification email to inform them that issues have been raised against a report are aware of who else has received the email. The SSRO will log these suggestions and consider in future whether such changes should be prioritised.

6. Removing comments data fields

6.1 There was support for removing comments data fields from DefCARS although one contractor suggested that excessive use of pop-up windows could be “cumbersome and time-consuming”. We will seek views on the current use of pop-up windows from the Reporting and IT sub-group to determine if this is a significant issue. One contractor suggested that two particular fields (one on the payments page and one on the report submission administration page of DefCARS) be retained. Having considered the range of responses, our view is that the separate comments functionality allows comments to be attached to any fields in DefCARS and therefore is proceeding to implement the proposal, but this will not happen until a later version.

7. Minor changes

7.1 The SSRO consulted on a number of minor changes to reporting guidance and/or DefCARS and our response to them is explained in Table 3. Due to the need to prioritise DefCARS developments related to new legislation some areas which the SSRO had consulted on cannot now be implemented until after version 7.

Table 3 – Response to minor changes

Minor change	Stakeholder feedback	Our response
To simplify adding a description of ‘other’ and specialist equipment lines in the defined pricing structure (DPS) in DefCARS.	One contractor confirmed this was a positive development.	We intend to make this change in a future update after version 7 has been released.
To issue an automatic notification email for Defence Contractor Administration Users within contracting companies when the SSRO or MOD add a new QDC or QSC to DefCARS.	One contractor said this was helpful as the contractor will be more aware and can challenge this addition if necessary.	We are making this change in version 7 and have extended it to potential as well as actual QDCs and QSCs. Notifications will only be sent where the contracting company already exists on DefCARS. Guidance (see Table 1 of the guidance on DefCARS functionality) and DefCARS have been amended.
To enable Administration Users to filter between active users and those whose accounts have been suppressed in DefCARS.	One contractor confirmed this was a positive development.	We are making this change in version 7. Guidance (see paragraph 3.28 of Appendix 1 of the guidance on DefCARS functionality) and DefCARS have been amended.
To add a warning pop-up in DefCARS that makes clear that costs entered for ‘Other’ cost recovery rate types on the ‘Cost Recovery Rates’ page do not flow through to the ‘Cost Breakdown’ page.	One contractor suggested that the SSRO should clarify how a contractor enters costs arising from an ‘other’ rate if those costs are not reflected in the cost breakdown page. Another contractor suggested that guidance should be clear why the four rate types are included in SSRO guidance.	We intend to make this change in a future update after version 7 has been released.
To retain the inputs provided by the contractor in the CSA calculator in DefCARS when the final calculated % amount is overwritten. To add a validation warning to flag where the figure does not match the calculated amount.	Once contractor indicated that the validation warning should remain where these figures did not match.	We are making this change in version 7. Guidance (see Table 8 of the guidance on contract reports) and DefCARS have been amended to reflect this. The validation warning associated with this remains unchanged.
To standardise currency data collection in the payments page, by having the same ‘drop down list of currencies’ approach to that in the Assumptions – Exchange Rate page.	No issues raised with this development.	We intend to make this change in a future update after version 7 has been released.
To make clearer what information is required and not required when providing information on variance, events and circumstances in DefCARS.	One contractor said that they supported the proposed change but application and interpretation of the reporting requirement remained difficult.	We intend to make this change in a future update after version 7 has been released.
Additional guidance on how to add, edit and delete subcontracts	No issues raised with this development.	No changes to DefCARS are needed but a change has been made to reporting guidance.
Ability to copy and paste for key deliverables.	No issues raised with this development.	We intend to make this change in a future update after version 7 has been released.

8. Presentational changes to reporting guidance

8.1 There was unanimous support for splitting the existing reporting guidance into three separate documents. The following reporting guidance documents have been created:

a) Preparation and submission of contract reports;

b) Preparation and submission of supplier reports; and

c) The functionality of the Defence Contract Analysis and Reporting System (DefCARS).

9. Conclusion

9.1 This response document and version 7 of the reporting guidance have been published on the SSRO website on 13 December 2019. The SSRO continues to welcome feedback on improvements to its reporting guidance. For any assistance with reporting please contact helpdesk@ssro.gov.uk or 0203 771 4785.