§ Mr. Harold Walker
asked the Secretary of State for the Home Department if private contractors carrying out reimburseable cost contracts for his Department will be subject to the cash limit 359W constraints which apply to public sector employers, and in what way, or if such contractors will be automatically reimbursed for extra labour costs irrespective of the level of wage and salary settlements they may enter into.
§ Mr. Whitelaw
There are cash limits on amounts available for procurement by my Department. Any unexpected increase in contractors' costs would reduce the amounts of business they can be given. For Government contracts, where the price may be varied to take account of changes in wages and material costs, the variations are calculated from formulae normally based on published indices. These formulae are not affected by cash limits, nor are prime cost contracts in which approved costs incurred by the contractor are reimbursed.