§ 9. Mr. R. Gibsonasked the Secretary of State for Air what instructions are given by his Department with regard to the auditing of sub-contracting items appearing in the accounts of a contractor with his Department; and to what extent a scrutiny is made of the sub-contracting firm's books?
§ The Secretary of State for Air (Sir Kingsley Wood)The instructions governing the auditing of sub-contracting items are too lengthy and detailed to be capable of being satisfactorily summarised within the limits of an answer to a Parliamentary Question; but they make specific provision for the scrutiny of the sub-contractor's books by the Department where the amount of sub-contracting involved is substantial. The extent to which the power of scrutiny is actually exercised necessarily varies according to the size of the order, the relation of the prices to those paid elsewhere for similar work, and the extent to which the main contractor has been able to secure a competitive price or in some other way to ensure that the sub-contract prices are fair and reasonable.
§ Mr. GibsonThe right hon. Gentleman uses the word "substantial" with regard to items which are brought under scrutiny. Does that mean that the items bear a certain proportion to the amount, or otherwise how is the word "substantial" determined?
§ Sir K. WoodPerhaps the hon. and learned Member will put a further Question on that point. It will really depend on whether the particular item is of a substantial amount or not.
§ Mr. GibsonThe right hon. Gentleman gave me a similar answer to a previous Question and it was for the purpose of arriving at what the word "substantial" meant that this Question was put.
§ Sir K. WoodI should not like to give a reply which was not similar.
§ Mr. GibsonAlthough the Question is much different?
§ Sir P. HannonMay I ask whether the Select Committee on Public Accounts will have every facility to deal with sub-contractors' accounts and books and estimates?
§ Sir K. WoodYes, Sir. Whatever facilities I can give will be given.
§ 10. Mr. R. Gibsonasked the Secretary of State for Air whether contractors with his Department are required to disclose any interest they may have in a subcontracting firm dealing with his Department's contract?
§ Sir K. WoodIt is not the practice of the Air Ministry to require a main contractor to disclose any interest he may have in a sub-contracting firm. In fixed-price contracts, the Air Ministry is not in any case concerned. As regards other contracts, all information necessary for the fixing of an equitable price is obtained in the course of the Department's cost investigations.
§ Mr. GibsonCan the right hon. Gentleman indicate why certain companies have recently formed subsidiary companies which have been dealing with the Department?
§ Sir K. WoodNo, Sir. But if the hon. and learned Member would like me to investigate a case I will gladly do so.
§ Mr. ThorneMay I ask whether subcontractors are under the same obligations as to hours of labour?
§ Sir K. WoodYes, Sir, I think that is so.
§ Sir Richard AclandIs it not the case that the Ministry is allowing sub-contracts to be made with firms which have not much capital behind them?
§ Sir K. WoodI hope not, but if the hon. Member will give me a case I will look into it.