§ Mr. Arthur Lewisasked the Secretary of State for Defence whether he is satisfied that the present system operated by his Department of the cost-plus policy for defence contracts does not ensure that the higher the manufacturer's costs the higher their profits; and if he will take steps to re-examine the system to reduce the cost to his Department.
§ Mr. PattieOur policy is to place contracts wherever practicable on a fixed price or other arrangement under which an incentive to control costs operates on the contractor. Some 75 per cent. by value of contracts fall into that category.
Certain contracts, however, do not lend themselves to being placed on such terms, and it becomes necessary to resort to a cost-plus arrangement. Each case is examined on its merits, the continuing aim being to avoid so far as possible the cost plus form of contracting.