asked the Secretary of State for Defence 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.
No. Contractors carrying out reimbursable cost contracts will be subject only to the terms and conditions of those contracts. It is however open to the Ministry of Defence to adjust the financial limits normally included in such contracts to govern the progress of the work and the associated level of expenditure, should this be necessary for any reason, including cash limit constraints. The level of wage and salary settlements is entirlely a matter for the contractor.