§ Mr. David ShawTo ask the Secretary of State for Defence if he will make a statement on the achievements of his Department and his policies in helping small businesses over the last 12 months compared with the previous 12 months; and if he will publish the performance indicators by which his Department monitors those achievements and the statistical results of such monitoring.
§ Mr SainsburyTo assist in obtaining better value for money, the Ministry of Defence has implemented a number of measures to broaden its competition base, In particular, in November 1986 my noble Friend the Minister of State for Defence Procurement launched the small firms initiative which particularly sought to encourage small firms to bid for MOD business. The success of the initiatives can be measured by the degree of involvement of new companies in our competitions.
Over the last three years the MOD has made total 554W payments each year to small firms of about £1,000 million. The number of small firms receiving payment on direct contract has increased from some 4,000 in 1986–87 to over 7,000 in 1988–89. In 1987–88 some 1,500 firms sought advice from the newly formed small firms advice division, and in 1988–89 the figure was more that 2,500. In recognition of the division's success, in November 1988 my noble Friend relaunched it as the new suppliers service, with the aim of making the benefits of this service available to potential new suppliers of all sizes (including foreign companies).
The small firms initiative is still a key element in encouraging competition and the new suppliers service retains a cell dedicated to dealing with small firms. In 1988–89 about 3,000 companies of all sizes approached the division for advice, either direct—by telephone or letter—or at the 60-odd sessions involving seminars or "meet the buyers" held throughout the United Kingdom last year. The seminars allow MOD's procurement policies and procedures to be explained to a large audience, and the "meet the buyer" sessions enable a wide range of individual queries to be dealt with at one forum; such events have been held, increasingly, in association with regional development agencies, the CBI and other interested bodies.
The new suppliers service is responsible for producing the booklet "selling to the MOD" which offers important guidance on MOD's policies and procedures, useful background information and contact points. The fourth, much expanded, edition was published last autumn, containing much new information, not only on selling directly to the MOD but to our prime contractors. A fifth edition is planned for later this year.
The service is also responsible for promoting the small firms research initiative (as part of the small firms initiative) aimed at encouraging small firms to bid for research work. In 1987–88, 32 firms won business totalling £1.1 million. In 1988–89, 38 firms won business worth £1.3 million. The trend is encouraging and the level of interest by small firms remains high.
Registration of new companies on the defence contractors list remains high. In 1988, 300 new small firms were registered, the same as in 1987.
The tangible results of the SFI show that a high level of interest continues, and that the demand for briefings and advice remain high as well. We shall continue to encourage small firms and monitor their response, and the contributions which this makes towards better value for money.