§ 15. Mr. Keelingasked the First Lord of the Admiralty whether any recent contracts have been placed on a cost-plus-percentage basis; and whether he can give an assurance that all future contracts will be made either at a fixed price or on a cost plus fixed profit basis?
Captain HudsonNo recent contracts have been placed on a cost-plus-percentage basis, the disadvantages of which 166 are fully realised. It is Admiralty policy to place contracts oh a fixed price basis as far as possible. The chief exception is ship repair and conversion work, the great bulk of which is done on a cost basis under the terms of the Emergency Repairs Agreement. This provides for payment of a fair and reasonable profit. In reply to the second part of the Question, I can assure my hon. Friend that, save in exceptional circumstances, no contracts will be placed on a cost-plus-percentage basis.