§ Mr. Austin-WalkerTo ask the Secretary of State for Defence (1) what assessment he has made of the future metrology needs of each business section of the Defence Research Agency; and if he will make a statement;
(2) if he will place in the Library a copy of the full financial appraisal made by his Department or the Defence Research Agency before finalising the sale of the mechanical metrology laboratory in Woolwich;
(3) what place the proposals to sell off the mechanical metrology laboratory have in his programme of asset selling or privatisation of activities within the Defence Research Agency; and if he will make a statement;
(4) what account has been taken of the Transfer of Undertakings (Protection of Employment) Regulations 1981 in respect of the proposed sale of the mechanical metrology laboratory at Woolwich;
(5) what consultations took place, and with whom, prior to his granting approval to the Defence Research Agency to offer the mechanical metrology laboratory for sale;
(6) if he will list the dates (a) of publication and circulation of the Defence Research Agency consultative document on the proposed sale of the directorate of quality assurance and technical support's mechanical metrology laboratory, (b) when the option 4 was chosen as the preferred option and (c) of the initial approach to and subsequent appointment of Capita Corporate Finance Ltd;
(7) what assessment he has made of the risk to the Ministry of Defence as purchaser, both in terms of quality and price, of having to deal with a private sector monopoly provider if the sale of the directorate of quality assurance and technical support's mechanical metrology laboratory proceeds;
(8) what extent the cost/benefit analysis of option 4 contained in the Defence Research Agency's consultative document on the proposed sale of the directorate of quality assurance and technical support's mechanical metrology laboratory includes possible redundancy costs;
(9) if he will set out his proposed timetable for the sell-off of the directorate of quality assurance and technical support's mechanical metrology laboratory at Woolwich; and if he would be willing to extend this to facilitate an in-house bid being made;
(10) if he will make it his policy that the DQATS mechanical metrology laboratory will remain in Woolwich.
§ Mr. AitkenThis is a matter delegated to the Defence Research Agency under its framework document. I have therefore asked the chief executive to reply direct to the hon. Member.
Letters from Mr. J. Chisholm to Mr. John Austin-Walker, dated 20 May 1993:
In today's written answer the Minister of State for Defence Procurement informed you that I would be replying directly to your question regarding the future metrology needs of the DRA.
We carried out extensive consultations with military customers, looked very carefully at out own DRA needs, and retained consultants to advise, amongst other things, on the commercial propects. As a result of this, we concluded that there was an ongoing requirement for mechanical metrology but that the MOD/DRA demand was insufficient to take up the full capability of the Laboratory. What we are seeking to 264W do, therefore, is to find a private sector buyer who would be able to combine the potential MOD/DRA customer base with his existing commercial market and offer a cost-effective service to both us and to industry at large.
In today's written answer the Minister of State for Defence Procurement informed you that I would be replying directly to your request that the investment appraisal carried out for the posssible sale of the Mechanical Metrology Laboratory should be placed in the Library.
The financial case for each of the possible options for the future of the Mechanical Metrology Laboratory is summarised in the Consultative Document issued to staff and Trade Unions. I have today arranged for a copy to be placed in the Library. The release of any more detailed financial information could jeopardise the commercial confidentiality of the terms of sale.
In today's written answer the Minister of State for Defence Procurement informed you that I would be replying directly to your question regarding the possible sale of the DRA's Mechanical Laboratory.
It has recently become apparent that the likely future income of this Mechanical Metrology Laboratory is insufficient to cover its costs. Rather than simply closing down the Laboratory I have, therefore, begun to explore the possibility of finding a private sector buyer. This is a logical response to a very specific problem. It is not part of any wider policy of privatisation.
With regard to asset selling, the DRA will, of course, be vacating a large number of sites over the next few years as part of its rationalisation programme and those sites will be handed back to the Ministry of Defence for alternative use or disposal. The site of the Mechanical Metrology Laboratory at Woolwich will eventually be treated in exactly the same way.
In today's written answer the Minister of State for Defence Procurement informed you that I would be replying directly to your question concerning the application of the Transfer of Undertakings (Protection of Employment) Regulations to the proposed sale of the Mechanical Metrology Laboratory at Woolwich.
The legal view is that the 'TUPE' regulations will apply to the sale of the Laboratory and I would expect potential buyers to take account of that in putting together their bids. There are a number of non-mobile staff in the Laboratory to whom a commitment has been given that they will have the opportunity to opt to return to the MOD. This commitment will be honoured.
In today's written answer the Minister of State for Defence Procurement informed you that I would be replying directly to your question regarding the proposed sale of the Mechanical Metrology Laboratory.
Following consultation within the Ministry of Defence, Ministerial approval was given in April 1993 to initiate consultations with the staff and trades unions and at the same time to test the market for potential buyers for the Laboratory. No final decision will be taken regarding the sale until we have considered the outcome of the staff and TU consultation, which has now been completed, and evaluated the offers received.
In today's written answer the Minister of State for Defence Procurement informed you that I would be replying directly to your question regarding the proposed sale of the Mechanical Metrology Laboratory.
The Consultative Document was published and circulated to staff on 1 April 1993. It put forward Option 4 as the preferred solution but whether this is subsequently confirmed will depend on the outcome of the consultation exercise that has just been completed with the staff and trades unions and the evaluation of offers received from potential purchasers.
Capita Corporate Finance Limited were retained by the Defence Research Agency in February 1993 to carry out a financial appraisal of the Option for the Laboratory, including possible sale. They are now assisting us in the advertising of the Laboratory and will advise us on the acceptability of bids received. It will, however, be for me as 265W Chief Executive of the Defence Research Agency to decide what final recommendations to make to the Minister of State for Defence Procurement.
In today's written answer the Minister of State for Defence Procurement informed you that I would be replying directly to your question regarding the impact of the possible sale of the Mechanical Metrology Laboratory on the service provided to Ministry of Defence customers.
The market for mechanical metrology is characterised by a diversity of both public sector and private sector suppliers. Most of the services offered by our Laboratory could be provided by alternative sources, which is why we have looked at closure as a possible option. Our Laboratory does, however, have some particular skills and capabilities which, whilst not enough to justify its retention by the DRA, are of sufficient advantage to our customers to prompt us to look for ways of sustaining its continued existence in the private sector. Survival in the private sector would, however, depend upon the Laboratory being able to attract new commercial customers and retain existing MOD ones whether owned by the DRA or by a private sector concern, it would not be a monopoly supplier.
In today's written answer the Minister of State for Defence Procurement informed you that I would be replying directly to your question regarding the increase of redundancy costs in the cost/benefit analysis of the way ahead.
We have taken into account all the costs associated with each of the options available to us. That includes the redundancy costs that might arise in the event of a sale proceeding and not all staff transferring to the new owner.
In today's written answer the Minister of State for Defence Procurement informed you that I would be replying, directly to your question regarding the timetable for the possible sale of the Mechanical Metrology Laboratory, and the feasibility of accommodating an in-house bid.
Expressions of interest were invited from private sector firms on 27 April by Capita Corporate Finance Limited who are handling the mechanics of the process for us. Final bids will be invited from the three or four most promising firms sometime in early July. We expect to be in a position to make our selection and put a recommendation to Ministers in early August.
I do not believe there is any future for Mechanical Metrology within the DRA, which is why I have been exploring the option of a sale. An in-house bid is not therefore appropriate. The reason we are pursuing the possibility of a sale for the Laboratory is that whilst the quality of the work provided is excellent, the volume and demand cannot meet costs. The Laboratory does not have the skills and network of contracts to exploit possible commercial markets which is what a potential buyer would bring. An in-house bid would, therefore, not be feasible unless augmented by considerable additional resource. I would not, however, discourage a proposal for a 'management buy-out' although this would, of course, have to be evaluated alongside other offers from the private sector.
In today's written answer the Minister of State for Defence Procurement informed you that I would be replying directly to your question regarding the future location of the Mechanical Metrology Laboratory.
The DRA is already committed to withdrawing from Woolwich by 1995–96 as part of its rationalisation programme and I understand the MOD is intending to close the site shortly afterwards. It is not, therefore, feasible for the Mechanical Metrology Laboratory to remain on the site in the longer term although we have made it clear to potential purchasers that they could negotiate an agreement with the MOD to keep the Laboratory on the site for a transitional period.
§ Mr. Austin-WalkerTo ask the Secretary of State for Defence when it is proposed to establish the directorate general test and evaluation as an agency; and if he has266W considered incorporating the present directorate of quality assurance and technical support's mechanical metrology laboratory within the proposed agency.
§ Mr. AitkenAlthough the Directorate General of Test and Evaluation has been identified as a candidate for agency status I have not yet taken a final decision. The Mechanical Metrology Laboratory has not been considered for inclusion within DGT&E, but there is no reason for the task to be retained within the public sector and the aim of the Defence Research Agency—the current owner—is to offer the facility for sale as a going concern.