HC Deb 14 January 2002 vol 378 c59W
Mr. Hancock

To ask the Secretary of State for Defence what contractual safeguards are in place in the event of a company winning a Ministry of Defence contract going bankrupt; and if he will make a statement. [25869]

Dr. Moonie

In the event of various circumstances of insolvency or bankruptcy such as the appointment of an administrative receiver, or a receiver, or a company being wound up, the Ministry of Defence has the right to terminate the contract without recompense to the contractor. This is achieved by the terms of DEFCON 515 (Bankruptcy and Insolvency) which is included in all MOD headquarters contracts. The most effective means of dealing with this issue is to have a system that reduces the risk of placing contracts with suppliers of limited financial capability. The MOD employs such a system, but that risk cannot be entirely eliminated.