HC Deb 23 March 1959 vol 602 cc906-7
36 Mr. Beswick

asked the Minister of Supply (1) to what extent the form of contract commonly agreed by his Department for the development of an aero-engine includes a penalty clause to be applied when the manufacturers' estimates and calculations are inaccurate or incomplete;

(2) if he will make a statement on his future policy with regard to development contracts for aero-engines;

(3) to what extent, since the losses of some millions of pounds on the Bristol Proteus I aero-engine and the Bristol Brabazon aircraft, the technical staff of his Department has been strengthened for the more effective checking of estimates and calculations submitted to him by the manufacturers engaged on development contracts

Mr. W. J. Taylor

Development contracts for aero engines do not include a penalty clause because the work to be done by its very nature renders initial estimates and calculations liable to a wide margin of error. This is inevitable when embarking on a new development which will take some years to complete and for which success, in its original conception, cannot be guaranteed. There has been some strengthening of the technical staff: but improvement in checking estimates and calculations depends more on improvement of techniques of estimating and the effort to this end has been increased.

It is our policy to include in development contracts provisions designed to enable the Department to keep a close watch on rises in the cost, and the causes of them, to review regularly the value of the project and to ensure that the Department is not liable for any increase over the estimate unless it has been specifically approved.

Mr. Beswick

May I put three questions to the Parliamentary Secretary, as he has answered three Questions of mine together? Firstly, when we have a case such as the RA29, where the Comptroller and Auditor General points out that the company deliberately withheld certain information about research costs and, in fact, gave only a two-year estimate instead of a four-year estimate, is there no question of revising the money to be paid to such a firm? Is it not a little odd that there should be no penalty clause since, as the Comptroller and Auditor General points out, the Ministry itself would be under a liability to pay substantial damages if it were to fall down on its contract?

Finally, can the Parliamentary Secretary say what action is being taken following the Second Report of the Select Committee on Estimates, 1956–57, in which, in paragraph 122, it said: Your Committee consider that the whole basis of the Research and Development contract urgently needs reconsideration". Are we to take it from the hon. Gentleman's reply that no consideration has been given to that at all?

Mr. Taylor

The hon. Gentleman will appreciate that I cannot reply to a question which relates to specific projects which are at present under consideration by the Public Accounts Committee. It would not be in accordance with the practice of this House for me to comment on that until the Committee makes its Report.

Mr. Beswick

Is the Parliamentary Secretary not aware that I was quoting not from the last Report of the Comptroller and Auditor General but from the Report of the Select Committee which considered identical criticisms and complaints of the present Comptroller and Auditor General's respected predecessor? May I ask him again, has any action at all been taken consequent upon the criticism made by the Select Committee in 1956?

Mr. Taylor

I am aware of that. It does not alter the substance of my previous reply.