§ Mr. Campbell-SavoursTo ask the Secretary of State for Defence whether the contract for the battlefield artillery target engagement system with Marconi is a fixed-price contract; and if he will make a statement.
§ Mr. Sainsbury[holding answer 12 November 1987]: I refer the hon. Member to the answer I gave to the hon. Member for Leyton (Mr. Cohen) on 2 November at column 605.
§ Mr. Campbell-SavoursTo ask the Secretary of State for Defence whether there have been any cost over-runs to his Department on the procurement of the battlefield artillery target engagement system; and if he will make a statement.
§ Mr. Sainsbury[holding answer 12 November 1987]: The costs of the project have been estimated more accurately as it has progressed and reassessed at the various stages of approval. Since the introduction of the present incentivised contract arrangements in 1985, costs remain within forecast levels.
§ Mr. Campbell-SavoursTo ask the Secretary of State for Defence what penalty clauses in the contract for the battlefield artillery target engagement system have been exercised.
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§ Mr. Sainsbury[holding answer 12 November 1987]: The contract contains no "penalty clauses" as such. Discipline over the prime contractor is exercised through the target cost-maximum price incentive arrangement. If cost overruns take the contract cost above the target cost the prime contractor's profit will be eroded. Should the contract price reach the maximum price, all further costs to complete the contract will fall to the prime contractor. The contract also contains the standard default clause, standard condition 14, which enables the MOD to purchase the goods elsewhere if the prime contractor does not produce on time or to specification, and to recover the extra cost from the prime contractor.
§ Mr. Campbell-SavoursTo ask the Secretary of State for Defence (1) whether the original specifications on the battlefield artillery target engagement system project, as negotiated at the time the contract was given, will be met when the equipment is delivered to his Department; and if he will make a statement;
(2) what was the cost of each change from the original contract specification in the case of the battlefield artillery target engagement system project;
(3) how many changes to the battlefield artillery target engagement system were negotiated by Marconi with his Department after the original contract was placed;
(4) why changes to the contract for the battlefield artillery target engagement system were not submitted for competitive tender; and if he will make a statement.
§ Mr. Sainsbury[holding answer 12 November 1987]: The current contract requires that the full specification be met. Since the placing of the contract in 1985. a large number of minor revisions to the specification have been agreed, some at the company's instigation and some at the MOD's. This process is not unusual in a project as large and complex as BATES. The value of these changes is estimated at less than 1.5 per cent. of the total project cost. To reopen the prime contract to competition for every minor change would be wholly impracticable.
§ Mr. Campbell-SavoursTo ask the Secretary of State for Defence what was the original contract cost of the battlefield artillery target engagement system to his Department at the time the original contract was let.
§ Mr. Sainsbury[holding answer 12 November 1987]: The original contract was placed at an estimated cost of some £30 million at 1981–82 prices for full development on a cost-plus basis. The scope, terms and conditions of that contract are not comparable with the present contract which is let against a full technical specification on a target-cost/maximum price incentive basis, and includes the first slice of production.
§ Mr. Campbell-SavoursTo ask the Secretary of State for Defence when Marconi Command and Control Systems secured the contract for the battlefield artillery target engagement system.
§ Mr. Sainsbury[holding answer 12 November 1987]: The current contract (for full development and initial production) for the BATES project was let from 1 April 1985. This contract subsumed the earlier full development contract which had been let in 1982.