Desperate for cash, the Government sells it's remaining stake in defence research firm QinetiQ for a knockdown £257million in a depressed market. So ends the saga of incompetence that has robbed taxpayers of countless millions, while vastly enriching a handful of former civil servants. Somebody should write a history of this Government's handling of QinetiQ as a textbook for whelk-stall owners on how not to run business.
Credit Crunch Affects £11 bn( or is it £12bn) contract
Credit Crunch hits £11bn Forces deal after development land value plummetsBy KARL WEST All By This Author - 12/09/2008A controversial £11bn contract to provide training to Britain's armed forces is in danger of collapsing as a result of the credit crunch.
The QinetiQ-led Metrix Consortium, which also includes property firm Land Securities and American engineer Raytheon, is preferred bidder on the giant Defence Training Rationalisation deal.
Metrix won the contract back in January 2007 with a plan to slash the Ministry of Defence’s training estate from 30 sites to about ten, with a main campus at St Athan in South Wales.
It had planned to keep costs low by selling off the unwanted land and buildings to either housebuilders or commercial property developers.
However, the value of development land has plummeted since the contract was awarded as the credit crunch has frozen the market.
It is thought the cost of the training proposal has rocketed by £1bn to £12bn, as debt is more expensive and Metrix’s ability to offset rising costs with land sales has diminished.
One senior industry source said: ‘DTR is in trouble. We know that for a fact because they (Metrix) can’t afford it. QinetiQ went for the big bang with the property deals but the value of that property is no longer worth what it was since the credit crunch.’
It is understood the MoD is scheduled to meet next week with the consortium, which is due to present its ‘new financial model’.
The ministry insisted it remains ‘fully committed’ to delivering the project at St Athan, but admitted it is still in discussions with the consortium about how it is going to fund its training plans without compromising the scope of the project.
The MoD said: ‘A contributory factor adding to the complexity (of talks) has been the impact of the increased cost of borrowing and cost growth. Negotiations with Metrix are ongoing and both parties are working hard to drive down costs and obtain maximum value for money for the taxpayer.’
Metrix declined to comment. The decision to award the huge deal to QinetiQ (up 1/4p at 2141/4p) caused uproar because, at that time, the Government was the defence firm’s biggest shareholder with 19%.
However, the holding was sold for £257m this week.