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Contract Costs

Volume 124: debated on Tuesday 8 December 1987

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To ask the Secretary of State for Defence what proportion of contracts are awarded on a cost-plus basis.

In 1986–87 about 6 per cent. by value of contracts were placed on the basis of cost-plus percentage fee for profit. The proportion has declined from 22 per cent. in 1980–81 and reflects the aim of introducing cost incentives into defence non-competitive contracts.

What proportion of Marconi's cost-plus contracts are the subject of the fraud inquiries by the MOD police? May I have an assurance that MOD police will not be restrained in any way or restricted in carrying out those inquiries? I can tell the Minister that I am handing the documents about fraud at Marconi that the MOD police also have in their possession to Sir Gordon Downey, the Comptroller and Auditor General, so that the Public Accounts Committee, too, can examine every area that the Ministry of Defence police are examining.

The hon. Gentleman will be aware from earlier replies on this subject that in this matter the Ministry of Defence police are under the direction of the Director of Public Prosecutions. I am glad to hear that if the hon. Gentleman has any documents that he thinks are relevant to these sensitive matters he will pass them not only to the Public Accounts Committee but to the investigating authorities.

Will my hon. Friend confirm that the Ministry of Defence policy of changing from cost-plus contracts to tendering has not only saved the Minister of Defence a great deal of money, but that that money has been used to buy other much needed conventional weapons?

I am glad to be able to confirm what my hon. Friend has said. The introduction of a greater degree of competition into Ministry of Defence contracts is not only saving the taxpayer money, but is giving the services more equipment for the same amount of money.