Ministry of Defence contracts watchdog calls for extra clout to tackle "market abuse"

Single Source Regulations Office chair Clive Tucker says there are “compelling reasons” to enhance his watchdog's authority over non-competitive military contracts

The Ministry of Defence, Whitehall. Picture credit: PA Images

By Jim Dunton

20 Jun 2016

The chair of Ministry of Defence contracts watchdog the Single Source Regulations Office (SSRO) has called for the organisation to be given tougher enforcement powers as part of the fledgling body’s first governance review.

Clive Tucker said in a speech to the Defence Acquisition Conference that there were “compelling reasons” to enhance the SSRO’s authority and allow it to issue compliance or penalty notices.

The SSRO regulates the government’s procurement of so-called “single source”, or non-competitive military goods, works and services. It operates under the Defence Reform Act 2014, but its remit does not cover government-to-government sales, and the contracts it covers are referred to it by the MoD. 

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The first review of the organisation’s governance is due to complete by the end of 2017 and a preliminary consultation for key stakeholders is running until the end of this month.

In his speech, Tucker said the issue “at the heart” of the review was that while the current governance framework gave the SSRO an oversight role, it had no power to take any enforcement action.

 "Can you imagine if the Financial Conduct Authority was aware of market abuse but was unable to prosecute?" – SSRO chair Clive Tucker​

“The SSRO may only make determinations when asked to do so by one of the contracting parties and we have no powers to issue compliance or penalty notices,” he said.

“If the single source regulatory framework is to fulfil its potential, then the right single source defence contracts need to be brought within the framework, pricing controls must be correctly applied and data robustly collected.

“We believe that there are compelling reasons for giving the SSRO the power to take enforcement action.

“Other economic regulators have power to take enforcement action in support of the schemes they oversee: Can you imagine if the Financial Conduct Authority was aware of market abuse but was unable to prosecute?”

The SSRO’s current consultation is also seeking views on removing minimum thresholds for qualifying contracts, simplifying the organisation’s funding, and reducing reporting requirements for low-value contracts.

Prof John Louth, a director at the Royal United Services Institute told CSW there was a case in favour of increasing the SSRO’s powers and – potentially – for relocating it to the Cabinet Office or the Department for Business, Innovation and Skills to reinforce its independence.

He added that the calls for increased powers were seen as a safeguard for the future, rather than a reflection of current problems that were not being dealt with.

“They’re not saying there’s a huge contracting problem; they’re saying there is an increasingly complex picture and that if they can sort out the rules early on, that would be better than having to respond to issues as they emerge,” he said.

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