HC Deb 27 March 1958 vol 585 cc701-10

Motion made, and Question proposed, That this House do now adjourn.—[Colonel J. H. Harrison.]

9.15 p.m.

Mr. John Dugdale (West Bromwich)

I wish to raise a constituency matter and, as we have just been hearing about the importance of constituency matters being represented in this House in the case of large constituencies, I hope that hon. Members will bear with me while I deal with this subject.

A firm in my constituency, Messrs. Hampson Industries, manufactures articles of great importance to the aircraft industry, and as long ago as July, 1955, it was invited to tender for a 20-kilowatt serving trolley. This is used in servicing aeroplanes to see that the electrical equipment is in proper condition. In September of that year Ministry of Supply officials visited the firm and said they found the work satisfactory. In fact they were impressed by the design which they saw. On 9th November Messrs. Hampson were told that the Ministry of Supply would decide later whether to give an order. Apparently the Ministry could not make up its mind at that time.

The Ministry continued in correspondence with the firm without saying that it had actually given the contract to another firm. That is rather a curious procedure. I do not know whether it is something which the Ministry often does—give a contract to one firm without telling the other firm and keep up correspondence with a firm which apparently had been rejected and give it the idea that it was still in the running.

After a time Messrs. Hampson objected to this and asked whether something could be done. They were told unofficially by a high-ranking civil servant that it would be to their advantage to make a unit as soon as possible. It seems a strange way of going about matters, but that was what the firm was told. Accordingly, a unit was made, but nothing happened. Some months elapsed and the next thing was that in early October, 1956, fifteen months after the firm was first asked to tender, the matter was mentioned, in conversation, to the present Paymaster-General who at that time was the Minister of Supply.

As we know, the right hon. Gentleman is a man of great force and drive and he at once took action. He said that the unit was to be accepted as an alternative to the competitor's unit. That was something which had never been done before. On 30th October the Ministry of Supply, having, apparently, been prodded into this action by the Paymaster-General, asked Messrs. Hampson what they wanted. That would appear to be a curious request after all this time. Messrs. Hampson said that what they wanted was an order and that they had been trying to get their machine tested for months. The Ministry of Supply might well have been aware of this. Still, nothing happened until 6th December.

Then the Paymaster-General again looked into the matter. This time he met the managing director of the firm, as a result of which meeting he said that the firm was to go ahead and produce the machine and have it tested later. On 31st January, 1957, the unit was tested and found to be satisfactory. During the months that followed, the machine, which might have been of great service to the R.A.F., was not being produced. On 5th April, after agreement on prices, instructions were issued to the Ministry of Supply to collect the unit from the works. All tests were completed by the end of May. The R.A.F. was quite satisfied with them although the Ministry of Supply officials had previously given the impression that the machine was of no use at all.

Meanwhile a new Minister had arrived at the Ministry of Supply. The Paymaster-General had gone. No doubt the new Minister was occupied in settling in, and going into a number of other matters, besides the question of this machine. The matter was allowed to drop, and again there was delay. The next thing that happened was in August, 1957, some months afterwards, when Messrs. Hampson were asked for specifications and prices. The Ministry of Supply already had those in its possession, but again asked for them. The firm was asked to quote for certain additions, which it did. In October, 1957, the firm asked what had happened and was told that its tender would be accepted strictly on grounds of price and that it must reduce its price. This it did.

On 10th December, 1957, the firm was informed that its tender was declined, not on price at all but on delivery and on technical grounds, something quite different, which the firm had never been told about before. To say that the rejection was on technical grounds was rather curious, because the unit had previously been approved by the Ministry's own design department, and as to delivery it was the Ministry which had been responsible for two years' delay. It was equally strange therefore to turn down the offer on grounds of delivery.

In December, 1957, Hampson's approached me and I wrote to the Minister. The Minister replied: You wrote to me on 16th December about the disappointment which Hampson Industries feel at the loss of the contract for a relatively small Air Ministry requirement of electrical servicing trolleys. I suppose when one is running anything as big as a large Ministry, like the Ministry of Supply, one feels that a small firm and a small unit are of no importance. This is only a small firm; it has only 100 employees, but to the firm this was a large order, even if it was not so to a Minister of Supply, sitting at the head of the Ministry. Hampson's had spent no less than £8,000 on developing the trolley, and it kept the production space open all this time while the Ministry was making up its mind.

The Minister made a very curious remark in his letter. He said: It would, I think, be undesirable, from all points of view, for the firm to be represented at our meeting. In other words, I, the Member of Parliament, was not to take these gentlemen to the Minister because it would be undesirable. The curious thing is that the Paymaster-General had been willing to see them without the Member of Parliament. Why should it be undesirable for the present Minister to see them with their Member of Parliament. This is something very strange about which I should like to have an answer. The date for the meeting was fixed but then the meeting was postponed. I have no doubt the Minister was busy. He wrote to me and explained the situation.

I thought that the time had come when the matter should be brought to a head, and brought to a head in public. It is a lamentable state of affairs. It is true that it concerns only a small order, but it is an order related to the safety of aeroplanes and should, therefore, be of great importance to the Ministry of Supply. Nearly three years have gone by. Why? I can only suppose that it is due to a lack of co-ordination not only between the Air Ministry, the R.A.F. and the Ministry of Supply but between the different departments in the Ministry of Supply itself.

So far as I understand the matter, the Ministry of Supply design office has the last word in all these things. At the head of that office there are two men, one of whom has admitted to Hampson's directors that he is unfamiliar with the unit concerned. So we are left with one man upon whose word, apparently, the fate of this order was to depend. This is, as I have said, a small machine. The Minister implies that it is unimportant but, though it is small, it is of great importance to aeroplanes.

If this happens in the case of a small machine, how are we to know that it does not happen in the case of large machines? If this happens with a servicing trolley, what happens with a bomber? This has revealed a state of affairs so unsatisfactory that something should be done about it. It points to something in the Ministry which might spread from small things to the very largest machines for which that Department is responsible.

The Prime Minister is a very busy man and has plenty to occupy him, but I think that he might take time off for at least an hour. Having gone into the affairs of the Ministry of Supply, I think that he would find that it well worth his while to order an inquiry into its organisation, to make quite certain that it is an organisation capable of dealing with such matters as this, and not, as many of us think it is today, an organisation that is defective in many respects.

9.27 p.m.

The Parliamentary Secretary to the Ministry of Supply (Mr. W. J. Taylor)

The right hon. Member for West Bromwich (Mr. Dugdale) has raised an issue of great importance, because the basis of his case is that the Minister of Supply has discriminated unfairly against Hampson Industries in allocating contracts. This is a most serious allegation—

Mr. Dugdale

I want to make it quite clear that I am not saying that the Ministry has discriminated with malice aforethought, but that this is due to lack of co-ordination, and incompetence, which is quite different.

Mr. Taylor

Whatever the right hon. Gentleman meant he certainly conveyed the impression that there had been unfair discrimination against this firm in the allocation of contracts. I repeat that that is a most serious allegation to make against a Government Department, and one that can be answered only after a most thorough-going investigation. I have made such a thorough investigation into all the facts of this case.

The right hon. Gentleman, some months ago, drew the attention of my right hon. Friend to a number of contracts about which the firm had complained. I have personally studied the circumstances in which each contract was placed, and the facts that I shall lay before the House tonight are based on the result of this careful and impartial examination. Before I do that, I should like to make one or two references to the implied charge of discourtesy on the part of my right hon. Friend and of officials of the Ministry that have been made by the right hon. Gentleman.

First, I should like to dispose of the suggestion that my right hon. Friend or my Department treated either the right hon. Gentleman or the firm with discourtesy. As the right hon. Gentleman said, the firm wrote to the Minister on four occasions last year, and I am sure that the right hon. Gentleman, with his experience of Ministerial office, would not suggest for a moment that a Minister should reply personally to every firm which is dissatisfied with its share of Government contracts. Each of these letters, with the exception of the last, received an acknowledgement or a reply of some kind from the Department, although I must admit—and I have read the correspondence—that those replies were not of a nature which could bring any comfort, in the circumstances, to Hampson Industries Ltd.

The answer to the final letter was on the point of being despatched when the right hon. Gentleman took up this matter with my right hon. Friend. He made an appointment to discuss this case in January of this year with my right hon. Friend. Unfortunately, at the last moment this appointment had to be cancelled because of pressure of urgent business. I apologise to the right hon. Gentleman for the fact that it was not possible to arrange another appointment before he went on a trip abroad, but he was told that my right hon. Friend would be glad to see him as soon as possible after his return from India.

The right hon. Gentleman has not taken advantage of that offer and, if I may say so with all due respect to him and to the House, I think it is rather a pity that he did not do so, because I feel strongly that it is desirable that complicated and technical matters of this nature should not be discussed on the Floor of the House of Commons and that Departments should not be asked to justify in this way their judgment on tender competition before a Member has used every other means that he has at his disposal of obtaining satisfaction.

This is, as the right hon. Gentleman said, rather a small firm as firms go, in the national picture. Hampson Industries Ltd. is a small private company with an issued capital of £1,000 and it employs a labour force of about 100. It manufactures generating sets, water pumping sets and other electrical equipment of this type. During the last six or seven years the Ministry of Supply has placed a number of contracts with this firm for the repair, development and production of equipment to a total value of £90,000. I understand that the firm has also had other work for other Government Departments. I hope that the right hon. Gentleman will agree that £90,000 worth of work which this firm has done for the Ministry of Supply is not an unsubstantial volume of work, having regard to the size of the firm.

In the correspondence, the right hon. Gentleman sent us details of seven tenders in which the firm considered that it had been treated unfairly. Let me say, at the outset, that in judging this tender competition, the Department is under no, obligation to accept the lowest tender, although, of course, we aim to do so where other factors are evenly balanced. Nevertheless, the form which is sent with each invitation to tender and which was sent to Hampson Industries Ltd. in each of the cases which we are discussing tonight, contains the following words: The authority"— and that means in this case the Minister of Supply— shall be under no obligation to accept the lowest or any tender. The Ministry of Supply, like any other purchaser, has to bear in mind such other factors as technical merit and dates of delivery.

I have referred to seven tender competitions which the firm has complained about. In one of these the firm has complained because it was not invited to tender. This was the case of a requirement for a large and complicated set. We restricted the competition to those firms with the greatest facilities for and experience in the work involved. In four of the remaining six cases the prices quoted by Hampson's were not the lowest. In some of these the firm's equipment did not meet the specification in that it was over weight, and the delivery dates were unsatisfactory. In the remaining two cases the equipment was required urgently by the Air Ministry and the only way of obtaining deliveries in time was to place the orders with the firms whose equipment had already been developed and tested to the required standards. Hampson's had no suitable equipment available at that point of time.

The right hon. Gentleman went into some detail about the big order, the order for the 20 kW ground service trolleys for aircraft. One of the last two competitions was for the 20 kW ground service trolley. This is the firm's main grievance, I believe, and the right hon. Gentleman went into it in some detail, and I think I ought to give him the full facts about this equipment. He went through the whole story as he has it, with the dates and the state of development, the competition, alternative equipment, and so on, and I hope he will follow me when I give him the details as I have sifted them out of this long and complicated record.

This trolley is a mobile generator which provides the power and testing equipment for servicing Javelin all-weather fighters. The story goes back to 1955, when the Air Ministry's technical requirement called for the development of a prototype to be completed before Javelins came into service. Tenders were received in August, 1955, of which only those by Hampson's and one other firm were technically acceptable, Hampson's quoting, in this case, the lower price. First deliveries were, however, required urgently by the Air Ministry, and since the other firm had offered better delivery dates it was decided to accept its tender. The development was completed satisfactorily by this firm and a production order was subsequently placed with it.

Secondly, in May, 1956, Hampson's informed the Ministry of Supply that it was developing a trolley to meet this requirement as a private venture. That means that there was no Ministry of Supply or Government money involved in the undertaking. The firm foresaw, by developing this private venture, considerable prospects of worldwide business. It was, of course, made clear to the firm that the Department was under no obligation to order this equipment at any stage. It was purely a venture on the firm's part, freely entered into in the ordinary way of private enterprise in an effort to improve the firm's business.

Hampson's development went on for another year after that, and the set did not become available in a form suitable for trials until April, 1957. Works tests and service trials were then carried out during the following months and completed by August, 1957. These proved that the equipment Hampson's had submitted would, subject to minor alterations, meet the requirement, but I cannot agree that the Service trials proved that the Hampson trolley was in any way superior to any other trolley produced at that time, a claim which has often been made by the firm.

These trials showed, in fact, that there was very little, if anything, to choose technically between this trolley and the one already on order. A specification framed to include the Hampson design was drawn up and Hampson's and the firm already in production were invited to tender, each to its own design, for a production order in September, 1957.

The other firm which had previously received a development and production contract from the Department submitted a lower tender, but before the contract was awarded Hampson's represented to the Department that it had tendered to a higher quality than the other firm. To meet Hampson's, both firms were given an opportunity of revising their tenders. I must say, as one with some experience of these matters, that that seems to me to be going quite a long way after a tender has been received. The firm can clearly read what is involved in the specification. To be given an opportunity to go back and resubmit a tender to fit in with some other competitor seems to me to be going rather further than I personally would have been prepared to go with any firm with which I was connected before I came to this House.

As I have said, both firms were given an opportunity of revising their tenders. The other firm confirmed its previous tender, but Hampson's introduced lower standard components and submitted a slightly lower tender. However, the revised Hampson set provided for a large number of new components and would have required at least four months' further trials before production could start. The Air Ministry said that it was unable to accept further delay, so the contract was given to the other firm.

The conclusion to which I have come after a very careful study of all this rather complicated evidence is that the officials of the Ministry of Supply confirmed have been scrupulously fair in the decisions they have made. Indeed, I might almost say that they have gone out of their way to meet Hampson's and to ensure that firm getting a square deal in our tender considerations.

Since the right hon. Gentleman has been frank in making his allegations against the Department—he was not very kind at the end of his speech—I hope he will not mind if I am equally frank. Hampson's has complained to the Department every time it has been unsuccessful in tendering for our orders. We have endeavoured to satisfy the firm by explaining the grounds on which its tenders have been rejected. I am sorry that the firm remains dissatisfied. I have been engaged in the engineering business for many years and, in my time, have submitted a great many tenders. I have also missed a great many orders. Indeed, I should have been better off if I had missed some of those I received. However, few of us are fortunate enough to be able to guarantee success in everything we do. We cannot be successful all the time. That is really the short story of this case.

Of course, it is disappointing when a tender is rejected, but one has to learn to accept these disappointments and to take them with good grace. It is no good making accusations of discrimination or unfairness every time one loses a tender. I suggest to the right hon. Gentleman that it is unfair to the officials concerned to make very vague allegations without the slightest evidence with which to support them. If he can produce real evidence as to individuals, dates and times which bears investigation, or calls for investigation, I shall be very glad to look into the matter further. But I can find not a shred of evidence of favouritism or discrimination in our dealings with this firm.

As I said before, Hampson's has, in the past, received a substantial amount of work from us, and we shall continue to consider the firm for future contracts on its merits. I can only express the hope that, in the light of our debate this evening, the right hon. Gentleman will accept my assurance that our relations with the firm will, as far as we are concerned, continue to be friendly, and I hope that we may proceed in future to do business in a happy and amicable spirit. I should like to add that if this kind of matter were taken to a logical conclusion and every contract was the subject of discussion here, we should get into a really intolerable situation.

The right hon. Gentleman asked me a specific question. Why, he asked, did the former Minister of Supply, the present Paymaster-General, see the firm without a Member of Parliament, and why did my right hon. Friend refuse to see the firm with a Member of Parliament? I repeat that if every firm which had dealings with the Ministry of Supply sought personal interviews with the Minister, with or without their Members, life would be quite intolerable. I hope that the right hon. Gentleman will not take it amiss, or feel in any way offended because of the quite reasonable actions my right hon. Friend has taken in this case.

Mr. Dugdale

I do not, and I sincerely hope that the Paymaster-General does not, take amiss the remarks which have just been made about him.

Mr. Taylor

I hope so, too. Nothing I have said could give any offence to the Paymaster-General. It is merely a question of personal judgment. The Paymaster-General judged it in one way, and my right hon. Friend judged it in another. I meant nothing which could give offence to my right hon. Friend.

Question put and agreed to.

Adjourned accordingly at fourteen minutes to Ten o'clock.