asked the Secretary of State for Northern Ireland if private contractors carrying out reimbursable cost contracts for his Department will be subject to the cash limit constraints which apply to public sector employers, and in what way, or if such contractors will be automatically reimbursed for extra labour costs irrespective of the level of wage and salary settlements they may enter into.
There is a limit on the funds available in any one financial year to meet expenditure on contracts placed by Northern Ireland Departments. Any unexpected increase in the cost of existing contracts would reduce the volume of other work which could be undertaken in that year.Contractors carrying out reimbursable cost contracts, understood to mean prime cost contracts, will not be reimbursed automatically for extra labour costs irrespective of the level of their wage and salary settlements. Reimbursement of operatives' wages is in accordance with the conditions of contract which provide for increases only in accordance with the appropriate working rule agreement. The conditions for Northern Ireland Departments set by the Department of Finance exclude reimbursement of any increased costs in respect of salaried staff. Reimbursement is therefore controlled by the conditions of contract.