Contracts (Control of Prices).

Part of Oral Answers to Questions — Royal Air Force. – in the House of Commons on 18th July 1935.

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Photo of Mr Philip Lloyd-Greame Mr Philip Lloyd-Greame , Hendon

No, Sir; the standard of prices previously paid for aircraft supplies will not be accepted as the basis of new contracts without full consideration of all relevant factors, including the effect that increased and steady output over a given period may have upon the contractors overhead expenses and the rate of profit to be allowed. I should perhaps explain that the prices previously paid, where there has not been competitive tendering, have been based on independent technical estimates of the cost of production. Finally, I may add that in the case of all major orders which it is necessary to place as a matter of urgency, the "Instructions to Proceed" now being issued contain a clause providing for the examination and verification of costs by inspection of books in the event of disagreement as to the price to be paid.