The majority of defence procurement, both manufacture and research and development, is both large-scale and complex. Consequently, it lends itself more to prime contracting through large defence industry companies or research organisations. Therefore, small and medium-sized enterprises are mainly involved in subcontract work.
The Ministry of Defence provides advice and guidance to all companies interested in becoming defence suppliers, either as prime contractor or subcontractors. For example, the Department provides a helpdesk facility, seminars and web portals, which SMEs can access for information about opportunities to work with the Ministry of Defence.
The Ministry of Defence is also a participant in the small business research initiative, a cross-departmental initiative, which is designed specifically to increase the success of smaller firms in obtaining contracts from Government bodies to conduct research and development.
I thank my right hon. Friend for that reply. He will be aware that I have a number of small firms in my constituency that would benefit enormously from Government research contracts that do so much to help to secure stable funding, which is important in early-stage business, and which the US seems better at doing than the UK. Can my right hon. Friend therefore tell me how close he is to reaching the targets set by the small business research initiative for giving Government contracts to small business?
My hon. Friend asks an important and interesting question. The issue does not just affect her constituency, although I would guess that her constituency has quite a concentration of such companies, because those companies are spread throughout the United Kingdom. Under the small business research initiative, Departments were committed to a target of purchasing at least 2.5 per cent. of their R and D from SMEs by 2004–05. The Ministry of Defence's estimate is that, currently, some 5 per cent. by value of the MOD's research budget is taken by SMEs. That is a good start, but there is more to be done.
In supporting Mrs. Campbell in her question, would not the Minister accept that the development of the Nimrod MRA4 at BAE Systems, Woodford, is hugely beneficial to a large number of smaller businesses that supply BAE Systems? Could he give me an update on when the Government are to order those sophisticated aircraft, which would not only guarantee jobs at BAE Systems, Woodford, but would be of huge assistance to a large number of smaller businesses that supply the aerospace and defence industries?
I agree with the broad thrust of the hon. Gentleman's remarks, as I made clear in response to my hon. Friend Mrs. Campbell. In terms of the final decision, the price must be right, and tough negotiations with the company are taking place. The hon. Gentleman might have noticed that, last Friday, I announced that the MRA4 will be based at Kinloss, although that was not well received by the MP for that area at the time.