§ Mr. KeetchTo ask the Secretary of State for Defence what level of profit his Department permits contractors to make on non-competitive contracts; and if he will make a statement. [109967]
§ Dr. MoonieThe level of profit included in prices negotiated for non-competitive government contracts is calculated in accordance with the Government Profit Formula. Copies of the Reports on the Annual Reviews and triennial General Reviews of the Government Profit Formula for Non-Competitive Contracts, produced by the Review Board for Government Contracts (a non-departmental public body), are available in the Library of the House. These advise on the appropriate calculation of profit on non-competitive contracts for the year in which the contract is priced.
§ Mr. KeetchTo ask the Secretary of State for Defence how many non-competitive contracts, to what aggregate value, were let during the last year for which records are available; and if he will make a statement. [109966]
§ Dr. MoonieThe total number of contracts placed by the Ministry of Defence during Financial Year 1998–99 was 55,496, of which 8,616 were non-competitive. The total value of the contracts was £7.09 billion, of which the non-competitive element was worth £2.3 billion. These figures exclude Local Purchase Orders, the average value of which is less than £500.
Making the best use of competition at prime and sub-contract level, is the MOD's preferred means of supplier selection, for achieving value for money in the delivery of defence capability. Where competition is not practicable, or is dispensed with on value for money grounds, contract placement is normally accompanied by price agreement at the outset.