§ Mr. E. Smithasked the Financial Secretary to the Treasury whether he will make a statement on the procedure and method adopted in the giving out of contracts for the erection of ordnance factories and other establishments required for war purposes; are any buildings erected on a percentage basis; if so, what is the arrangement made; is there a penalty clause in the contracts; and is there Government supervision or check of material used and on the carrying out of the contracts?
§ Captain CrookshankIt is not possible to describe all forms of building contract within the limits of a Parliamentary answer. Contracts, which are normally competitive, may be on the basis of a fixed price, with or without a variations clause, or on the basis of prime cost with profit at a fixed sum, or with profit varying with savings achieved in relation to484W a target. There are several variants of these methods. I am not aware of any cases of contracts where the profit is a percentage of the cost. It is usual for works contracts to provide for liquidated damages to be payable in respect of default or delay. Arrangements are made for the supervision of materials as to quality in all cases and as to quantity in cases where the contract includes the element of prime cost.