Better Defence Acquisition

Baroness Clark of Kilwinning Excerpts

Monday 10th June 2013 Commons Chamber

[Mr Hammond]

I am sorry to say that where there is a single supplier or a national security reason for our having to procure in the UK, we cannot magic up a competitive marketplace. What we can do in such circumstances is control the pricing of those contracts. At the moment, under the current regime, profit is clearly controlled but costs are not, and there is no incentive for contractors to control and manage their costs. What we are proposing is a regime where, as now, profit is controlled but where there are clear financial incentives for contractors to control their costs and get them down. By working in this way—by aligning the interests of defence with those of the contractors—we will drive out cost and increase the amount of deliverable military capability to our armed forces.

[Katy Clark (North Ayrshire and Arran) (Lab)]

What implications will this announcement have on complex weapons systems and in particular on establishments such as Defence Munitions Beith in my own constituency, which houses and services such weapons systems?

[Mr Hammond]

In terms of our procurement of weapons systems and of contractor support for weapons systems, the DE&S will work as the agent of the Secretary of State. I am not sure that I can put my finger on the precise function of the establishment mentioned by the hon. Lady, but we have a separate programme to outsource some of the defence logistics and commodity procurement activities, which I mentioned earlier. None of theses plans will be changed by whether DE&S is run in future as a GoCo or as a fully public sector DE&S+ model.