18. What assessment he has made of the level of competition in the bidding process for the GoCo contract. (901496)

I refer the hon. Member to the statement I made in the House on 10 December, which explained that I have decided to terminate the present Government-owned contractor-operated competition for defence acquisition in view of the fact that only a single proposition was received. I was therefore unable to ensure a sufficient level of competitive tension in the negotiation stage of the process to ensure value for money for the armed forces and the taxpayer.

What has been agreed with both the Cabinet Office and the Treasury on the freedoms and flexibilities for the Defence Equipment and Support plus alternative option, and when does the right hon. Gentleman think it will it be match fit?

On the freedoms and flexibilities package, we have agreed that it will be possible to operate outside the civil service pay structures and that there will be flexibility in the appointment process so that we do not have to go through the overly bureaucratic civil service appointment process. The organisation will also be able to engage some private sector strategic support for specific areas of the business where we know weaknesses exist. On match fitness, we envisage a process that will take three years in round terms to get DE&S plus to the level of the competent and qualified organisation that we would like to see.

Most commentators say that the Secretary of State has botched the GoCo process, wasted two years and squandered millions of pounds, yet he does not seem to be any closer to resolving the problems with procurement. Does he agree?

No, I do not, as the hon. Gentleman will not be surprised to hear. Defence acquisition is one of the most complex business areas in the country. It has a long history of challenge, as has been recognised under both Governments, and we are working on what I hope will be a long-term solution. The Gray report was commissioned by the previous Government, and we have sought to maintain a thread of continuity from the thinking that underpinned it. Unfortunately, it has not been possible to proceed to a GoCo at this time, but I believe that the exercise has been extremely valuable in informing this process, and it is clear that DE&S is making incremental progress, even though the step change that we were hoping for with GoCo was not able to be delivered.