Defence: Expenditure

Ministry of Defence written question – answered on 18th July 2017.

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Photo of Kevan Jones Kevan Jones Labour, North Durham

To ask the Secretary of State for Defence, what steps he is taking to reduce inflation in defence labour costs.

Photo of Harriett Baldwin Harriett Baldwin The Parliamentary Under-Secretary of State for Defence

Competition remains the main mechanism for delivering value for money in the defence programme. Our policy of agreeing firm prices, or setting an agreed variation of price formula in our contracts to account for inflation, further incentivises contractors to control costs. Where competition is not possible, we work with our large defence contractors to agree labour rates which are considered reasonable for use in single source contracts. The Single Source Contract Regulations, introduced under the Defence Reform Act (2014), provide the Department with enhanced access to information from a supplier on costs, including labour costs, and an option to take disputes to the Single Source Regulations Office for a legally-binding determination.

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