HC Deb 26 April 1988 vol 132 cc194-5
9. Mr. Latham

To ask the Secretary of State for Defence whether he will make a statement on new measures taken by the procurement executive of his Department following publication of the report, "Learning from Experience" concerning overspending on defence contracts.

Mr. Sainsbury

The report "Learning from Experience" acknowledged the many improvements that have been made in procurement procedures in recent years and highlighted the importance of adherence to these procedures. With regard to new measures, a key recommendation—that the chief of defence procurement should extend his central scrutiny of projects to include technical issues—has already been implemented. Implementation of other measures is under way.

Mr. Latham

After the quite abysmal waste of public money revealed by that report and other reports from the Public Accounts Committee and the Select Committee on Defence, is it not absolutely essential that Mr. Levene should be given the power to hire and fire the best commercial brains in order to bring these costs under control?

Mr. Sainsbury

I can tell my hon. Friend that although the PAC looks at projects that have caused problems, not all the stories are of failure. 'There is an increasing number of success stories as a result of the new procedures that we have implemented and of Mr. Levene's work. Three recent examples are 3D radar—long-range air defence—new bridging for the 1990s, and a submarine electronic surveillance system. Those are all recent contracts with an aggregate value of more than £400 million; a saving against the expected budget price of more than £100 million.

Mr. Cartwright

Is it not the case that on a number of occasions the Ministry of Defence has been required to reduce the standard of its specification for a weapons system to meet what the contractor could actually provide? What extra steps are being taken to strengthen the ability of his Department to test the claims of a contractor before a contract is placed?

Mr. Sainsbury

As the report brought out, in arriving at a satisfactory production contract it is important to observe the correct procedures in determining what can be achieved and to ensure that there is a precise specification. One of the lessons of "Learning from Experience" is the importance of adhering to those procedures. On a number of occasions when things have gone wrong it was because production was entered into before capability had been accurately determined. That was the main cause of the problem.

Mr. Ian Bruce

My hon. Friend has given an excellent reply in terms of ensuring that the procurement executive is close to development. Does that mean that the thought of moving the sea systems controllerate away from the research establishments is now further from his mind?

Mr. Sainsbury

As my hon. Friend is aware, we are examining the implications and any advantages that might arise from the co-location of those parts of the sea systems controllerate that are presently at three or four different locations. No recommendation has been made to Ministers at this stage.

Mr. Sean Hughes

Why has it taken the Government nine years and four Secretaries of State to wake up to what has been called by the hon. Member for Rutland and Melton (Mr. Latham) an "abysmal waste"? Would a fraction of that waste have been tolerated in other aspects of public service, still less in a grocery chain?

Mr. Sainsbury

The hon. Gentleman will understand that if a contract has been entered into after perhaps rushing the procedures, or without competition, it takes some time to get it back on the rails. Most of the contracts giving rise to the kinds of problems to which my hon. Friend referred earlier are those which were entered into by the last Labour Government.