Support to Defence and Security Sectors
Customers in this space are dominated by work for UK and Overseas Governments, such as the MoD or US Department of Defence (DoD). Even when the work is for a UK Industry prime contractor, the ultimate customer is often Government. Where this is the case, it is likely that the ultimate customer will expect the Prime Contractor to flow down contractual terms and conditions (T&C's) to all non competitive sub-contractors. You may well therefore be subject to these T&C's
Government customer work is often dominated by Value for Money (VFM) considerations, with the customer needing to be able to prove this. In the absence of competition, such value may need to be demonstrated by an audit of the books of the contractors. If appropriate, such 'open book accounting' will be a contractual requirement so its worth looking out for.
Audits for the MoD and US DoD are usually undertaken by the MoD audit branch, Cost Assurance and Analysis Service (CAAS). Whilst their reports will be available to your customer, your customer (MoD or industry) have no rights to personally access your accounts. Since MoD customers are charged for these audits, audits will usually be undertaken only on larger projects or where there the customer believes there is due cause to think that such an audit is necessary.
The Single Source Regulations shift the audit requirements back to the supplier where the contract is deemed a qualifying contract. Whilst the reporting requirements for suppliers are onerous, no action is needed unless after being awarded a contract you are informed in writing that your contract has been designated a qualifying contract. Qualifying contracts will be single tender and at least initially are likely to be multi-million pound contracts.
Never ignore written confirmation of a qualifying contract and train your staff to keep a look out for such a notification since there will be actions flowing from the notification that need to be followed. It is likely that you will need the part-time services of an organised accountant to ensure that all necessary reports are filed on the due dates through the life of the contract to avoid financial penalties.
Government customer work is often dominated by Value for Money (VFM) considerations, with the customer needing to be able to prove this. In the absence of competition, such value may need to be demonstrated by an audit of the books of the contractors. If appropriate, such 'open book accounting' will be a contractual requirement so its worth looking out for.
Audits for the MoD and US DoD are usually undertaken by the MoD audit branch, Cost Assurance and Analysis Service (CAAS). Whilst their reports will be available to your customer, your customer (MoD or industry) have no rights to personally access your accounts. Since MoD customers are charged for these audits, audits will usually be undertaken only on larger projects or where there the customer believes there is due cause to think that such an audit is necessary.
The Single Source Regulations shift the audit requirements back to the supplier where the contract is deemed a qualifying contract. Whilst the reporting requirements for suppliers are onerous, no action is needed unless after being awarded a contract you are informed in writing that your contract has been designated a qualifying contract. Qualifying contracts will be single tender and at least initially are likely to be multi-million pound contracts.
Never ignore written confirmation of a qualifying contract and train your staff to keep a look out for such a notification since there will be actions flowing from the notification that need to be followed. It is likely that you will need the part-time services of an organised accountant to ensure that all necessary reports are filed on the due dates through the life of the contract to avoid financial penalties.
Defence and Security customers expect you to protect their information
The work you do for these Government customers may be open source information, or products or services that are in the public domain, but it is possible that in the course of your supply you will hold Government information and even acknowledgement that you are a supplier may be confidential. Therefore it is important that in accepting such work you confirm what if any information will need to be held and whether the contract itself is to be considered confidential. A related concern will be when the contract requires you to hold confidential information from a third party source. You cannot rely on whether you were passed the information correctly; if you suspect you have such confidential information you need to treat it as confidential and consult your customer to confirm. These questions are important because there is a cost implication of the answers and that knowledge can ensure that any compliance costs are factored into the price of the work.
Single Source Regulations
Applies only to single source contracts and only then when you receive written notification of a qualifying contract. Once received you need to act quickly.
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Non Competed work
Value for Money considerations mean you may be required to provide open book accounting, evidence that you haven't overcharged the authority nor made excessive profit.
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Costing systems
If you are planning non competed work for UK Government customers, it is worth checking with an accountant familiar with such work to ensure you are recording all relevant costs in your systems correctly to meet any audit requirements.
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