Contingent Liabilities:Written statement - HCWS759

Ministry of Defence
Made on: 12 June 2018
Made by: Guto Bebb (The Parliamentary Under Secretary of State for Defence)

Contingent Liabilities

I am today laying a Departmental Minute to advise that the Ministry of Defence (MOD) is retrospectively notifying Parliament about contingent liabilities not previously disclosed, due to procedural errors. HMT recognise the urgency for these contingent liabilities to be laid before Parliament and have approved them in principle. Final approval is expected pending the outcome of a wider Departmental review, as part of the Balance Sheet Review, being conducted by Her Majesty’s Treasury.

The Minute describes the contingent liabilities that the MOD holds against three Air Command contracts, two Defence Infrastructure Organisation (DIO) and one Navy Command contract. It is usual to allow a period of 14 Sitting Days prior to accepting a contingent liability, to provide hon. Members an opportunity to raise any objections. Regrettably, this was not done ahead of contract award in these cases and I sincerely apologise for our failure to do so. The purpose of the Minute is to regularise the position with Parliament. The contracts remain fully enforceable and the associated contingent liabilities will be reported in the 2017-18 MOD Annual Report and Accounts.

Failure to notify these contingent liabilities prior to the award of the associated contracts has been reported to the Public Accounts Committee. The Department has noted the Committee’s concerns about this situation and fully accepts the need to follow the correct approvals and reporting procedures. Air Command, DIO and Navy Command have put in place a series of measures to address this issue including staff briefing, mandated training, improving the clarity of internal guidance and procedures and additional controls in the approvals process, to ensure compliance.

If the liability is called, provision for any payment will be sought through the normal Supply procedure.

If, following the laying of the Departmental Minute, a Member signifies an objection by writing to me, I undertake to examine the objection and respond to the member concerned.

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