§ Mr. Ellis Smithasked the Financial Secretary to the Treasury what is the amount of profit allowed to firms carrying out Government contracts in cases where the price cannot be fixed; and what methods are adopted to check the costs?
§ Captain WallaceAs stated by my right hon. Friend the Chancellor of the Exchequer in reply to the hon. Member for Central Southwark (Mr. Day) on 28th January, 1937, the policy of His Majesty's Government is that, in cases where it is impossible to secure effective competitive tendering, contracts should be settled on the basis of allowing a fair and reasonable profit, having regard to the circumstances of each case, including such factors as the extent of the orders and a reasonable return on the capital assets directly employed. The information necessary to determine a fair price is obtained by such methods as examination of contractors' books by the Defence Departments' Accountants or by the preparation of technical estimates of costs.
§ Mr. Ellis Smithasked the Financial Secretary to the Treasury whether all firms or associations of manufacturers carrying out contracts for any State Department have accepted the contract terms and the Government system of costing; and will he give particulars of any exceptions?
§ Captain WallaceThe Government system of costing has been applied in numerous cases and to a wide range of articles, and where it has been proposed that system and the contract terms have been generally accepted. A few firms3316W and associations of manufacturers have, however, declined to agree to costing, and other methods of checking their prices have had to be adopted.