§ 56. Mr. WATTasked the Secretary to the Admiralty whether contracts are now entered into by his Department on the principle of cost plus percentage; and, if so, will he say whether this method has. been successful as a money-saving device in spending the money of the people?
§ Dr. MACNAMARAI would refer my hon. Friend to the recent Second Report of the Select Committee on National Expenditure which, in paragraph 47, deals with the question of Admiralty contracts, and, in Appendix I., describes the steps taken by the Admiralty and other Departments to limit the profits of employers, producers, and middlemen. I might also refer my hon. Friend to the evidence which I gave on 4th May, 1916, before the Public Accounts Committee on the Navy Appropriation Account, 1914–15. The competitive tender is recognised as the proper method of contractual arrangements; but there are certain classes of contract for which, particularly during the War, competitive tender is not a practical course.
§ Mr. WATTWill the right hon. Gentleman say whether all shipbuilding contracts, or nearly all, are on this cost plus percentage basis?
§ Dr. MACNAMARAAll repairs are under that system; with regard to new construction, I should say a very great deal. In order, however, to avoid the temptation to spin out expenditures in order to increase the over-all profit, we are now fixing establishment charges and profit in advance.