§ The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Bach):My honourable friend the Minister of State for Defence (Mr Adam Ingram) has made the following Written Ministerial Statement.
I am pleased to announce that the Government have accepted the recommendations in the Review Board for Government Contracts 2003 general review of the profit formula for non-competitive government contracts.
This package of measures, to be implemented from 1 July 2004, represents a significant modernising of the current profit formula arrangements, and is consistent with the department's defence industrial policy.
The measures that will be introduced include an alternative profit calculation methodology, a recognition that there are varying degrees of risk associated with defence non-competitive contracts, arrangements for addressing "profit on profit", a formula for sharing excess profits and unconscionable losses, and incentives to encourage timely submission of post-costing certificates.
12WSA copy of the report has been placed in the Libraries of both Houses.