Skip to main content

Defence Contracts (SMEs)

Volume 533: debated on Monday 10 October 2011

4. What progress he has made on increasing the number of small and medium-sized enterprises bidding for defence contracts. (72902)

This Government value the flexibility, responsiveness and innovation that SMEs bring to defence, which is why we are taking a number of actions to make it easier for them to participate in defence programmes, both as direct suppliers and as subcontractors. We are simplifying our bidding and contracting processes to make them easier for SMEs. I now chair an SME forum for representatives of small businesses, so that they can better understand and respond to the particular issues they face in doing business with the defence community. We will also set out a number of more specific measures in the White Paper that we will publish later in the year on equipment, security and technology.

I thank the Minister for that answer. I recently met Stephen Shepherd of S Dawes Weaving and Chris Blackadder of Howorths Textiles—both are manufacturers in Nelson, in my constituency. Those SMEs are interested in bidding for more work from the MOD. I would be grateful if the Minister could offer them and other SMEs in my area any advice on bidding for and winning more contracts.

I am happy to reassure my hon. Friend, and Mr Shepherd and Mr Blackadder, that we have a cunning plan to help SMEs, as I hope my original answer suggested. For example, we are revising our internal guidance to ensure that SMEs are not rejected at the pre-qualification stage on the basis of rigid turnover-to-contract value ratios. I would be very happy to arrange for Mr Shepherd and Mr Blackadder to meet departmental officials to ensure that they are fully informed of the opportunities they now have.

In answer to a question I tabled in June, the Minister suggested that only about 50 of some 6,000 new contracts placed directly by the MOD in 2010-11 across the UK are known to have been awarded to Scottish-based SMEs. Given that that is based on an estimate, does he not agree that it is unacceptable that the MOD does not have the actual figures so that we can scrutinise the amount of work going to SMEs and, at the same time, end some of the myths promoted by the separatists?

I sort of agree with that question and I sort of do not. I do not think that it is our job to keep careful records of exactly which SMEs get which business, but it is part of our job to ensure that Scotland shares fully in the benefits of defence expenditure. I get very surprised when the Scottish nationalists frequently represent Scotland as in some sense losing out, which the hon. Gentleman alluded to in his question. That is simply not the case. I have visited Scotland on many occasions over the past few months and seen the massive footprint of defence in Scotland and the massive contribution made to employment and jobs, all of which will be at risk in an independent Scotland.

Westland helicopters has a licensing agreement with Boeing to build Chinook helicopters. Why was the order for 14 new Chinooks worth £1 billion given direct to Boeing rather than the licensing agreement being used to give the order to Westland so that it could take on half the work?

I think it is stretching a point a bit to define AgustaWestland as an SME, but nevertheless I am happy to confirm that I happen to have in front of me the previous Government’s defence industrial strategy, which says of AgustaWestland that it is important to understand that AgustaWestland’s role is

“neither predefined nor guaranteed, but dependent on their performance and the value for money of their propositions.”

Our position is very similar and I am happy to be able to confirm to my hon. Friend that the contract we have for the construction of the new Chinook helicopters will lead to some £350 million-worth of work flowing to the British supply chain, which—

Last week, in a written answer, the Minister confirmed that the MOD’s estimate for the number of contracts issued in the last financial year was 2,370 in England but only 50 in Scotland. Does he believe that that is fair and equitable?

I do not know about you, Mr Speaker, but I am a half-full man, and the Scottish nationalists seem to be talking about half-empty glasses. I think the hon. Gentleman is quoting extremely selectively from the answer I gave him and, for what it is worth, I share his disappointment about the SME performance. I do not believe the figures or trust them, because they are extraordinarily low. I have seen the vibrancy of the Scottish defence sector for myself on a number of visits and I believe that the share of business is much higher. I invite the hon. Gentleman to abandon his ludicrous plans for an independent Scotland and join me in building a still more robust defence industrial base in Scotland rather than talking it down all the time.

I congratulate the Minister on the steps he is taking to encourage more SMEs to bid. One criticism we often hear from SMEs is that they are lured into bidding for contracts, only to lose out to much larger firms at the last round with little or no feedback from the MOD. May I encourage the Minister to ensure that in such cases SMEs get full feedback on why their bids have failed?

I absolutely agree with my hon. Friend, who makes a very powerful point. If any hon. Member has an example of an SME receiving inadequate feedback from my Department, I want to hear about it. SMEs deserve full feedback. They have an awful lot that they can bring to defence; their innovation and the cost savings they can offer are extremely important and they must be told why they have failed when they do fail.