Defence Equipment: Procurement

(asked on 13th December 2023) - View Source

Question to the Ministry of Defence:

To ask the Secretary of State for Defence, what steps his Department has taken to manage the impact of inflation on the Equipment Plan.


Answered by
James Cartlidge Portrait
James Cartlidge
Minister of State (Ministry of Defence)
This question was answered on 21st December 2023

The Department is actively mitigating the impact of inflation on the Equipment Plan through: (1) Firm pricing a proportion of existing contracts with industry so that inflationary risk sits with the supplier. (2) Forward purchasing utilities up to three years in advance to provide price stability. (3) Utilising a forward purchase scheme for Euros and Dollars.

The Department has also implemented changes to commercial policy such as making greater use of index-linked fixed price contracts to prevent firms from either applying high premia on firm price bids or not bidding entirely. The MOD is also engaging with its main suppliers to discuss how inflation will be treated in future contracts, which includes the Department’s view of what is reasonable for payroll costs.

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