HC Deb 22 March 1988 vol 130 cc187-8
7. Mr. Burns

To ask the Secretary of State for Defence how many companies are now on the register of defence contractors; and what steps he is taking to increase this number.

Mr. Sainsbury

In order to encourage the widest possible participation in Ministry of Defence work, we have introduced both the MOD contracts bulletin and the booklet "Selling to the MOD". Also, we attend "meet the buyer" exhibitions and we offer advice through the small firms division. Currently, there are about 9,000 companies on the defence contractors' list.

Mr. Burns

I am grateful to my hon. Friend for that reply. Does he agree that the increase in the number of companies on the register of defence contractors is assisting the Government in obtaining better value for money in fulfilling defence contracts?

Mr. Sainsbury

I very much agree with my hon. Friend. It was gratifying that, in 1987, 3,780 applications for inclusion in the list were received, which represented an increase of 30 per cent. over the previous year. Over 45 per cent. more companies were accepted for inclusion in the list last year than in the previous year. This is making a major contribution to the Department's obtaining the best possible value for money in competitive procurement.

Mr. Campbell-Savours

In the case of Marconi, a company on that list, may I have an assurance that if, and when, fraud is found in respect of its contracts with the Ministry of Defence, no deal will be done behind closed doors between Ministry of Defence officials and the company? Will the Minister confirm that those people found to be responsible for fraud will be prosecuted in the British courts?

Mr. Sainsbury

I am sure that the House is by now well aware of the hon. Gentleman's interest in this matter. I hope that he is also now well aware that the investigation currently under way is under the direction of the Director of Public Prosecutions and, therefore, is a matter for my right hon. and learned Friend the Attorney-General.

Mr. Michael Marshall

Is my hon. Friend aware of the trend in the United States for increasing numbers of contracts to be placed in the service sector, whether in information technology, computers or even procurement, on behalf of the defence authority? Does he believe that there is an opportunity in this country to move in the same way and to put out to contract much of the task that is frequently tackled in-house?

Mr. Sainsbury

I very much agree with what my hon. Friend has said. Of course, contracts for services, like contracts for the supply of goods, can be subject to competition, and, wherever possible, we subject them to competition. In addition, where services provided in defence establishments can be provided more satisfactorily and economically by the private sector, we are prepared to put them out to contract, and we have an ongoing and successful programme in that respect.

Mr. Rogers

Does the Minister accept that, given the increasing numbers of contractors, there is an urgent need for the proper supervision of contracts? The Minister talked down my hon. Friend the Member for Workington (Mr. Campbell-Savours), although he gave the House proof of the absolute scandal of defence contractors ripping off the British taxpayer. It is about time that the Minister got to grips with these defence contractors and stopped this fraud.

Mr. Sainsbury

I can assure the hon. Gentleman that I take as serious a view of any potential fraud as does the hon. Member for Workington (Mr. Campbell-Savours). We are anxious to ensure that no such fraud occurs. I hope he will agree that competitive contracting is one of the best ways of ensuring that the Ministry obtains value for money. As I have already pointed out, the matter to which the hon. Member for Workington referred is being investigated, and that investigation is now under the direction of the Director of Public Prosecutions. It will be up to him and my right hon. and learned Friend the Attorney-General to decide what prosecutions, if any, should result.

Mr. Hind

Does my hon. Friend agree that many of the contracts where problems have arisen have been cost-plus contracts, many of which were inherited from the previous Labour Government, and that the changes in policy that have been brought about by the movement away from cost-plus contracts to tenders have cut out a great deal of the potential for fraud and brought about much better value for money?

Mr. Sainsbury

My hon. Friend is right. Unfortunately, we inherited from the previous Government a large proportion of contracts which had been placed on a cost-plus basis and they were an invitation for potential overcharging. Indeed, since many Ministry of Defence contracts are of long duration they unfortunately take some considerable time to work through the system. I am glad to say that we have reduced the proportion of cost-plus contracts to a much lower proportion of the total than in 1979, and we seek to bring it down even further. That, combined with applying the shortest possible contract conditions, is making it much less likely that there will be a repetition of some of the unfortunate cases of the past.