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Defence Contracts

Volume 122: debated on Tuesday 10 November 1987

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To ask the Secretary of State for Defence what proportion of defence contracts in the latest year for which figures are available were subject to competition; and how this compares with 1979–80.

The proportion of defence contracts placed by competitive tender or otherwise by reference to market forces in 1986–87 was 53 per cent. The comparable figure for 1979–80 was 30 per cent.

Has my hon. Friend made any assessment of the impact of the competition initiative in reducing defence costs, and has that had any effect on the proportion of contracts that have been awarded to smaller defence contractors?

It is difficult to make an accurate assessment of what the price would have been for any particular contract if it had been awarded other than by reference to competition. However, we are confident that substantial savings are being achieved, and a number were listed in the "Statement on the Defence Estimates". On the percentage of contracts going to smaller firms, which we regard as important, we are striving through the small firms initiative to ensure that the maximum number of small firms have a real opportunity to participate in work for the Ministry of Defence.

Is the Minister aware that much the more meaningful comparison between now and 1979–80 in respect of defence contracts is that, unlike then, a gap is now opening up between commitments and resources, which some analysts compute as being as high as £8 billion? When he gets back to his Department, will he ask his right hon. Friend the Secretary of State why there was no mention of that in the Defence Estimates?

The hon. Gentleman will be aware that the Government are spending substantially more on defence than would have been spent under a Labour Administration. Furthermore, we are ensuring that we get the best possible value for money in our expenditure.