Annex A: Maximum penalty amounts

Contents: This section of the SSRO’s penalties guidance sets out the maximum penalty amounts that can apply in different circumstances.

The maximum penalties are specified in Regulation 50. The amounts specified in the regulations are the upper limits and not an indication that every penalty issued should be set at that amount.

Info: Note that Regulation 50 specifies different maximum penalties depending on the price(s) of the qualifying contracts [Refer: regulation 2(1)] , but the guidance below depends on the value(s) of qualifying contracts [Refer: regulation 5] .These terms are not necessarily interchangable.

The maximum financial penalties which can be issued are stated below:

1.

For the following breaches of record-keeping and reporting duties:

failure to keep relevant records [Refer: section 23(1)] ;
refusal to allow the Secretary of State to examine relevant records [Refer: section 23(5)(a)] ;
refusal to provide further information or explanation related to relevant records to the Secretary of State [Refer: section 23(5)(d)]
failure to make available a copy of any specified relevant records (in hard or electronic form) for the purpose of enabling those records to be examined. [Refer: section 23(5)(b)]

Info: Part 4 requires primary contractors and persons which are required to submit supplier reports to keep relevant records (defined in section 23(2)). It prescribes the period for which records must be kept (regulation 20), and a procedure for the Secretary of State to examine the records and require copies to be made available or further explanation given (regulation 21). Section 23(3) sets out the purposes for which the Secretary of State may examine relevant records. This includes auditing records provided under section 24 (which are the reports on qualifying defence contracts, see Part 5) and section 25 (which are the reports on overheads and forward planning etc, see Part 6).

Value of qualifying defence contract	Maximum Penalty
Less than or equal to £50m	£20,000
>£50m but <£200m	£100,000
>£200m but <£500m	£250,000
>£500m but <£1bn	£375,000
>£1bn	£500,000

[See section 7 of this guidance for details of discounts available for early settlement.]

[Refer section 5 of this guidance: for repeated and persistent contraventions the maximum penalty available is increased by 20%.]

2.

In cases where a person has failed to assess or failed to correctly assess whether a sub-contract is a qualifying sub-contract or has failed to notify the relevant parties prior to signing the sub-contract. [Refer: regulation 61]

Value of qualifying defence contract	Maximum Penalty
Less than or equal to £50m	£50,000
>£50m but <£200m	£250,000
>£200m but <£500m	£500,000
>£500m but <£1bn	£750,000
>£1bn	£1,000,000

[Refer section 5 of this guidance: for repeated and persistent contraventions the maximum penalty available is increased by 20%.]

3.

In cases where a person has failed to submit by the relevant due date the following reports required by section 24 the Act and Part 5 of the Regulations:

Contract reporting plan;
Contract notification report
Quarterly contract report
Interim contract report
Contract completion report
Contract costs statement
On-demand contract report

SSRO guidance: The SSRO's reporting tool DefCARS facilitates the submission of reports. The SSRO issues contract report guidance about how to submit contract reports.

Value of qualifying defence contract	Maximum Penalty
Less than or equal to £50m	£20,000
>£50m but <£200m	£100,000
>£200m but <£500m	£250,000
>£500m but <£1bn	£375,000
>£1bn	£500,000

[Refer section 5 of this guidance: for repeated and persistent contraventions the maximum penalty available is increased by 20%.]

4.

In cases where a person has failed to submit by the relevant due date the following reports required by section 25 the Act and Part 6 of the Regulations:

Actual rates claim report
QBU actual cost analysis report
Estimated rates claim report
QBU estimated cost analysis report
Rates comparison report
Strategic industry capacity report
Small or medium enterprises (“SME”) report

SSRO guidance: The SSRO's reporting tool DefCARS facilitates the submission of reports. The SSRO issues supplier report guidance about how to submit supplier reports.

Value of all qualifying defence contracts and qualifying subcontracts to which the person who has been given the penalty notice, or any person associated with that person, is party	Maximum Penalty
Less than or equal to £50m	£20,000
>£50m but <£200m	£100,000
>£200m but <£500m	£250,000
>£500m but <£1bn	£375,000
>£1bn	£500,000

[Refer section 5 of this guidance: for repeated and persistent contraventions the maximum penalty available is increased by 20%.]

5.

In cases for failures to submit a completed contract pricing statement required under Regulation 23 and the estimated rates agreement pricing statement required under Regulation 38 in time:

Value of qualifying defence contract	Maximum Penalty
Less than or equal to £50m	£50,000
>£50m but <£200m	£250,000
>£200m but <£500m	£500,000
>£500m but <£1bn	£750,000
>£1bn	£1,000,000

[Refer section 5 of this guidance: for repeated and persistent contraventions the maximum penalty available is increased by 20%.]

6.

If a penalty notice is issued in relation to a contravention concerning the submission of misleading reports under section 31(3)(b) of the Act or in relation to a failure to notify the Secretary of State of the occurrence or likely occurrence of a relevant event, circumstance, or information under section 31(3)(c) of the Act, then the amount of the penalty is to be calculated as if the contravention were a breach of contract (and is to be calculated in accordance with the general law of contract having effect in England and Wales).

Note: The annotations on this page are applied to underlying text taken from the SSRO's penalty guidance, available at ssro.gov.uk. Errors or ommisions can occur, or updates may not be reflected. Always check the source document.