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7. Mr. David Watts (St. Helens, North) (Lab): What reforms the Department is making through the Defence Procurement Agency to improve the performance of industry in delivering equipment to the armed forces. 
The Minister of State, Ministry of Defence (Mr. Adam Ingram): The Department has initiated several reform processes to improve the performance of industry in delivering equipment to the armed forces. These comprise a programme of measures to apply the principles of smart acquisition more effectively, a programme of key supplier management and the more effective contracting initiative to improve the management of risk.
I congratulate the Minister on the efficiencies that his Department has already made, but does he agree that the Treasury Wood report seemed to suggest that some European countries have found ways to ensure that they get more contracts out to their own companies? Will he see what he can do to change his procurement policies to ensure that British companies are given the same fair treatment?
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Mr. Ingram: My hon. Friend was right to use the phrase "some European countries", because it is not standard practice across the EU. The European Defence Agency was set up primarily to look at what is happening across the board on research and development, to examine procurement structures and how the various regulations and protocols apply and to ensure that there is a level playing field across Europe. That will take some time, but we have embarked on implementing all that. The UK has a competitive market, which benefits us greatly because it sharpens our industries in being the best at getting equipment delivered on time and on cost. We can then market our products to friendly and allied Governments. A major change is taking place in this sector and I believe that, over time, we will see a level playing field develop throughout Europe.
Mr. Michael Jack (Fylde) (Con): Can the Minister confirm that the improvements in procurement procedures in connection with tranche 2 of the Eurofighter give him confidence that BAE Systems and other partners will be able to make a strong case to his Department for confirming tranche 3? In that context, will he also confirm that the public expenditure totals for 2007 in the pre-Budget report contain an element of funding to finance tranche 3 should a yes decision be made?
Mr. Ingram: The right hon. Gentleman is active in promoting the cause of that aircraft, but in defence we have to work across the whole breadth of procurement streams. My right hon. Friend the Secretary State explained exactly where we stand on tranche 3. The negotiations will continue and a decision is not due, if my memory serves me correctly, until 2007. We will continue to discuss and negotiate with the company accordingly.
Mr. Kevan Jones (North Durham) (Lab): My right hon. Friend would agree that small and medium-sized enterprises have difficulty in accessing many defence projects. Will he join me in congratulating Northern Defence Industries on its work to allow SMEs in the north-east to access defence contracts? What encouragement can he give to organisations such as NDI to ensure that small companies that have not had work in the defence sector in the past can in the future?
Mr. Ingram: My hon. Friend raises an important issue. I have met Northern Defence Industries in the past three weeks and was impressed by the commitment of some of the companies to investing in research and development that will place them well within the supply chain for larger companies, as is required. We need to engage more with companies, but companies themselves, through their associations, also have a role to play and need to be clear about what they seek to achieve. I pay tribute to NDI for its clear strategy.
There are only so many procurement decisions to take at any point in time. We have to maintain the vibrancy of SMEs, because there are key capabilities among them. I have had the privilege of visiting a number of companies as well as of talking to their associations and I think that they are well placed. We have a robust
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manufacturing and research and technology base in this country. If it were not for defence procurement, much of that would not exist.
Mr. Gerald Howarth (Aldershot) (Con): Is it not the case that nothing betrays the failure of the much-vaunted smart procurement policy so much as the decision to bail out Swan Hunter for the relatively straightforward off-the-shelf design for the landing ships dock, which has suffered a staggering 60 per cent. cost overrun, described by the procurement Minister in the other place as value for money for the British taxpayer? Why were Ministers not frank with this House and admit that that decision amounted to financial assistance to a yard that had failed to honour its contract and a substantial pre-election bung to a company in Labour's north-east heartland? It will make no difference because on 6 May the Minister and I shall be swapping places.
Mr. Ingram: Dread the day for British industry. I ask the hon. Gentleman to look back at the procurement decisions taken when his party was in Government and the delays and problems associated with them. Many of the problems are still being visited on the Ministry of Defence, which is why we have had to radicalise and rationalise our strategies to gain a better focus and ensure that we get better value for money.
The Secretary of State for Defence (Mr. Geoffrey Hoon): The Ministry of Defence is supporting the Iraqi Interim Government in providing security in Iraq, as mandated by United Nations Security Council resolution 1546. Our priority is to enable Iraqis to take responsibility for their own security. British military personnel and Ministry of Defence civil servants work closely with the Iraqi Interim Government and coalition partners to train capable and effective Iraqi security forces, properly equipped to deal with counter-insurgency. In Multi-National Division (South-East), we also assist the Iraqi Interim Government by providing framework security and engaging in counter-insurgency operations that currently the Iraqi security forces are not able to undertake on their own.
Something in the order of 136,000 members of the Iraqi security forces have been trained. That includes 57,000 police, 15,000 border guards, 12,000 members of the regular army and around 38,000 members of the national guard. Our forces are in Iraq only with the consent and agreement of the Iraqi
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Interim Government and they will be there only so long as it is necessaryso long as there is a job to doand not a day longer.
Mr. Julian Brazier (Canterbury) (Con): The Secretary of State will know that several thousand reservists and territorials will head for Iraq in the next few weeks. In a helpful briefing, the Under-Secretary of State for Defence, the hon. Member for Hove (Mr. Caplin), made it clear that the replacement for statutory instrument 1997/309, which deals with conditions of service out there in Iraq, is ready and drafted, containing many things that the reserve forces want. Will it be tabled before they go?
Mr. Hoon: The order will be tabled shortly. I take this opportunityI know that the hon. Gentleman will join meto congratulate our reservists on their tremendous work. It is a voluntary mobilisation and we are enormously indebted to them for their willingness to take on hugely difficult and demanding tasks.
Mr. Harry Barnes (North-East Derbyshire) (Lab): Have the Iraqi Government asked for any extra military help from Britain following the withdrawal of Dutch troops to the west of Basra? If there has been such a request, what has been our response?
Mr. Hoon: We are responsible, obviously, for leading coalition forces in MND(SE). I have paid tribute to the contribution of Dutch troops over a long period. We look forward to the arrival in MND(SE) of Australian forces. In the meantime, we shall continue to provide security throughout the southern area, which we are responsible for and are pleased to be able to undertake.
Hugh Robertson (Faversham and Mid-Kent) (Con): Earlier, the Secretary of State drew the House's attention to the number of foreign fighters operating in Iraq, many of whom get there across the border with Syria. What practical measures are being taken to seal that border where possiblefor example, with electronic surveillanceand how have such measures been affected by recent events in Damascus?
Mr. Hoon: Certainly, a determined effort is being made. It is a priority to train border guards and, as I said, some 15,000 have been trained so far. The borders are long and porous, given the geography and terrain. We look for greater co-operation from Syria because it is important that it plays its part in refusing access to Iraq across its border. Nevertheless, a continuing effort will be made to train appropriate personnel on the Iraqi side of the border to ensure that foreign fighters cannot gain access to that country.
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