§ Mr. Tony BanksTo ask the Secretary of State for Defence how many competitively placed contracts with his Department since 1979 have been subject to an upward revision of price after the original acceptance date.
§ Mr. Sainsbury[holding answer, 6 November 1987]: The information requested cannot be provided without disproportionate effort and cost. However, one objective of competition is to establish an agreed price or pricing arrangement at the outset. If the contractual requirement is varied by my Department we will consider whether an adjustment to the contract price is appropriate.
§ Mr. Tony BanksTo ask the Secretary of State for Defence, pursuant to his reply of 22 October,Official Report, column 874 (1) if he will give the number of non-competitively placed contracts subjected to selective post-costing in each year since 1979; and what was the total number of non-competitively placed contracts in each of the same years;
(2) how many non-competitively placed contracts since 1979 were (a) subject to selective post-costing and (b) found to reveal a lack of equality of information at the time the price was fixed;
(3) when was the original decision taken to subject non-competitive placed contracts to selective post-costing examination;
(4) if he will make it his policy to subject all non-competitively placed defence contracts to post-costing examination.
§ Mr. Sainsbury[holding answer, 6 November 1987]: The total number of non-competitive contracts and value amendments placed in each financial year since 1979–80 is:
Year Number 1979–80 20,453 1980–81 21,082 1981–82 20,656 1982–83 20,988 1983–84 19,539 1984–85 17,385 1985–86 16,220 1986–87 15,612 (Statistics for new contracts only are not available for the whole of the period).
These include those priced on the basis of cost plus percentage fee for profit (of which the proportion has reduced from 22 per cent. to 6 per cent. by value over this period); those priced on actual costs with incentives to minimise costs; those priced on estimates, but where the value is low and it would be inappropriate to include the 341W right to post-cost; and those priced on estimates which include the right to post-cost. This latter category includes a very small proportion (on average some 1,200 contracts a year) of contracts placed non-competitively.
The right to post-cost contracts selectively derived from the 1968 agreement between the Government and the CBI for the pricing of Government non-competitive stores contracts. It would not be consistent with the terms of that agreement for all eligible contracts to be post-costed. However about 50 per cent. by value of eligible work is post-costed and the selection ensures appropriate coverage of companies, values and types of work.
The number of contracts post-costed in each year since 1979 is:
Year Number 1979 84 1980 81 1981 80 1982 69 1983 96 1984 66 1985 78 1986 67 I will write to the hon. Member shortly about the number of contracts since 1979 where post-costing indicated a lack of equality of information at the time the price was fixed.