§ Mr. Evennettasked the Secretary of State for Defence what steps he is taking to ensure that competitive tenders are sought when awarding defence procurement contracts.
§ Mr. ButlerThe Ministry's procurement staff are under instructions to secure competition for our requirements whenever it is practicable and reasonable to do so. We are also encouraging our main contractors to make maximum use of competition in their subcontracting. For a fuller account of the steps being taken I would also refer the hon. Member to the reply given on 25 April at column505.
§ Mr. Hargreavesasked the Secretary of State for Defence what steps he is taking to spread United Kingdom defence contracts amongst small and medium sized businesses.
§ Mr. ButlerMOD policy is not to discriminate between large and small firms as such. If a small firm is competent to meet MOD requirements it is given an opportunity to tender for business on equal terms with its larger competitors. The Ministry does not apportion orders 1119W so that small firms obtain a predetermined share of defence business but adopts a policy of making departmental procedures as widely known as possible to enable small and medium sized enterprises to compete for either direct MOD contractors. This policy is being implemented by the distribution of the highly successful booklet "Selling to the MOD" (30,000 to date — currently being updated); attendance by MOD officials at "Meet the Buyer" type seminars throughout the United Kingdom and presentations to representatives of small firms and trade associations on future MOD requirements.
§ Mr. Hargreavesasked the Secretary of State for Defence what percentage of United Kingdom defence contracts were single sourced for the past three years; and if he will make a statement.
§ Mr. ButlerThe percentage, by value, of defence equipment contracts placed on a single source basis, where competition between two or more companies was not possible has been as follows:
Per cent. 1981–82 77 1982–83 79 1983–84 78 These percentages relate to contracts placed on sole sources and priced either under the Government profit formula for non-competitive contracts or by reference to prices established by market forces.
Contracts staff are under instructions to use competition wherever it is practical to do so. Where this is not possible risk pricing under the Government profit formula for noncompetitive purchases provides a positive incentive to contractors to keep their costs to a minimum. Where a fixed price based on estimated costs cannot be agreed the Department seeks to introduce other incentives to the same end. Cost plus percentage fee contracting is resorted to 1120W only as a means of last resort. Where work is priced by reference to an established market price the Ministry would expect to achieve an appropriate discount.