HL Deb 22 June 1988 vol 498 cc756-7

2.52 p.m.

Baroness Sharpies asked Her Majesty's Government:

How many small businesses will have the opportunity to tender for defence contracts.

The Minister of State for Defence Procurement (Lord Trefgarne)

My Lords, through the small firms initiative, these businesses are especially encouraged to bid for defence work. In 1986–87 some 4,000 small firms received direct payments from the Ministry of Defence totalling over £1,000 million. Last year 746 more firms came on to the defence contractors list, of which about 40 per cent. employed fewer than 200 people.

Baroness Sharpies

My Lords, I thank my noble friend for that very encouraging reply. Am I right in assuming that most of those small firms deal with the Ministry of Defence through the main contractors? Does the Minister agree that in the past large contractors have been very slow in paying small businesses and that in some cases payment has been outstanding for as long as 90 days? Is he able to put pressure on the large contractors to pay their small suppliers more quickly?

Lord Trefgarne

My Lords, my Answer referred to firms which have a direct relationship with the Ministry of Defence. There are an infinitely greater number of small firms working as subcontractors to the main systems contractors to the Ministry of Defence—something in excess of 2,000. As for payment terms applied by main contractors to small firms, we have recently invited the main contractors to agree to a code of practice which we shall be putting into some of the terms of our own contracts. The main contractors will be required to treat their subcontractors no less favourably than the main contractors are treated by us.

Lord Irving of Dartford

My Lords, in the past firms have been deterred from tendering by long and complicated bureaucratic procedures. Will the Minister ensure that such impediments no longer exist so that many more firms will come forward?

Lord Trefgarne

My Lords, the small firms initiative to which I referred in my original Answer was launched just over a year ago. One important feature of that initiative is a small firms advice division which is available to advise small firms on how to understand and operate the contractual arrangements which the Ministry of Defence has in place. At the same time, we are looking at ways of simplifying the tendering and contracting procedure, particularly where comparatively small sums are involved.