Examination of witnesses (Questions 140
WEDNESDAY 28 FEBRUARY 2001
CLIFFORD and MR
140. You will have probably seen rumours of
30 to 130 million, 70 to 80 million is your best estimate?
(Baroness Symons of Vernham Dean) Best estimate as
of today, but obviously we will keep you informed of any changes
141. Can you please give us now, or if you cannot
will you write to us, a breakdown between consultants' fees, physical
works, computer site reconfiguration and other main aspects?
(Baroness Symons of Vernham Dean) Yes, I can give
you some figures, not now but certainly I will write. Again they
will have a health warning on them at the moment because they
will not be complete figures. Those are estimates but we will
certainly give you what we have got to work on at the moment.
142. Who will pay for these conversion costs?
(Baroness Symons of Vernham Dean) Sir John pays the
lion's share but some of it does come to MoDwhere it reflects
MoD's own advice costs.
143. These costs will be a burden on New DERA?
(Baroness Symons of Vernham Dean) Sir John was describing
a little earlier that he has not yet completed his financial report
for the year, and I think he is due to do that over the course
of the next month or so. Then those will be in the public domain.
144. I take it that not all of the 70 to 80
million will come out of the 250 million the MoD has been promised
from the sale proceeds, they will be left on the balance sheet
of New DERA?
(Baroness Symons of Vernham Dean) Perhaps you would
like to explain how it will work.
(Sir John Chisholm) You are right, the costs have
to be borne off the trading fund. The assets of the trading fund
including those liabilities, so to speak, go into the PLC and
have to be taken into consideration by investors when the time
145. The plan continues that MoD will receive
approximately £250 million having sold a vehicle which will
include some debt?
(Baroness Symons of Vernham Dean) We hope that we
will receive as much as we can persuade the Treasury to part with.
The figure of £250 million as being in the public domain,
I am sure you will recall that the last time we discussed this
I was rather reticent to go nap on any of these figures because
I am sure that is a discussion that we will wish to continue with
146. In our last report we commented on the
Nomura sale and the fact the MoD got very little and the Treasury
got a hell of a lot.
(Baroness Symons of Vernham Dean) Yes. Well, from
the point of view of an MoD Minister, of course, we would like
to see a substantial amount of money coming to the MoD. I am sure
that our friends in the Treasury will be robust in their arguments
147. Probably win in the end.
(Baroness Symons of Vernham Dean) Who can tell, Chairman,
I would not throw in the towel at this stage and, with your admirable
support, I am sure we will make some progress.
148. The figure of 250 will not be eroded?
(Baroness Symons of Vernham Dean) I regard the figure
of 250 as an opening point price. I very much hope that we will
be able to build on that. These are all bargains, as I am sure
all of you around the table will know, the discussions continue.
I do not think we will be dipping under that.
149. In your response to our last report on
the future of DERA it was noted that you were "... exploring
the potential to re-invest a proportion of the privatisation receipt
in research and development...". How are your plans firming
up on that front?
(Baroness Symons of Vernham Dean) We have not got
any firm plans to give you on how we are going to deal with any
of the receipt. I hope that we do invest a certain amount on research
and development because I do think that overall that is where
the thrusts of the arguments in Government are taking us. I know
that my colleague, Lord Sainsbury, is extremely interested in
how we are going to deal with the receipt. We have not, as yet,
got anything firm to tell you about in respect of that.
150. Intellectual property rights. Can I ask
what intellectual property rights will be owned by New DERA or
rather, to be more specific, because obviously you are not going
to give us a long list now, are there any outstanding disputes
about this? How much has it cost to untie the ownership claims
on DERA's IPR? Are there people out there in the private sector
who feel the work they have done is technically the property of
(Baroness Symons of Vernham Dean) Can I say, before
I give further detail, this is a process that is going on at the
moment and is due to be completed by the vesting date and is then
subject to an independent audit. It has not been completed as
of now, physical separation has. We have dealt with the computer
side. The winnowing out on the intellectual property is still
going on at the moment. You have the detail on this, Terence.
(Mr Jagger) I was just going to say, obviously we
are absolutely determined that New DERA should only go into the
market with IPR it is entirely entitled to and should not take
any foreign governments' IPR or industry IPR. That is a position
we have explained at length.
151. Sorry, or any industry IPR, what do you
mean by that?
(Mr Jagger) IPR may exist in New DERA because the
MoDhas spent money with New DERA in the past and that is New DERA's
IPR and we will have, as Sir John was explaining earlier, free
user rights. Undoubtedly there has been a lot of information shared
with the UK Government, with the MoD from industry and from foreign
partners which has gone to DERA in the past because it has been
part of the MoD in support of Government work. All of that is
being extracted and New DERA will take none of it into the private
sector with it. Sir John has been managing an extremely comprehensive
programme called RASP which will cover everyone's records, paper
records, software models, e-mails on their hard disk.
152. We have heard rumours of costs of up to
23 million. Can I just pursue this a little further because I
want to be clear I have understood it. One of the concerns when
I was a consultant in the industry a very long time ago, even
in those days, was that MoD usually in letting contracts for research
has a contractual position which is legally much stronger than
in practice you would normally want to enforce. If you have let
a contract with a particular company you own the property rights
at the end of it but normally the company would allow you to get
on and use them because they actually carried the work out and
very often ended up subsidising it themselves. When you say there
will be no industry research IPRs left with New DERA, do you mean
no IPRs funded by industry or do you mean no IPRs carried out
by industry because there are a lot of smaller companies who,
I imagine, that distinction will be particularly important to?
(Mr Jagger) I am not clear that the understanding
of exactly how our contracts are let is correct, if I may say
so. If we let a research contract at the moment, the IPR belongs
to the contractor, it belongs to whoever it may be. We keep free
user rights for all defence purposes and if they can use it for
some civilian purpose we may take a licence but it is actually
their IPR if it is a non MoD body. As far as your second point
goes, I am talking about the actual ownership of the IPR and access
to it. New DERA will not have access to or be allowed to use any
intellectual property that belongs to anyone other than the MoD
other than by agreement with that external organisation.
Mr Brazier: I am delighted to hear that.
Can we come on to the US position now.
153. Can I just follow up one point on that
because I tabled a parliamentary question only about a month ago
asking for a list of the IPRs that will go with New DERA or be
retained and I did not get an answer, or I got an answer but certainly
not a list. Will you be able to produce a list in due course of
what goes where?
(Mr Jagger) The list would be a huge document.
154. Surely someone has got to know it, have
(Mr Jagger) No, I do not think they have. What we
have to do is to do an exercise to take out all the intellectual
property that is not New DERA's or to which New DERA is entitled
to access in support of an MoD contract. What remains lies where
it falls so the intellectual property, for example, in Porton
Down will belong to the Secretary of State and DSTL will hold
it. Intellectual property which is in New DERA and has been funded
by the MoD will be part of New DERA, MoD retaining the user rights.
155. That strikes me as a recipe for absolute
confusion. Surely what you are saying is what the MoD want to
keep it will have to name and everything else will basically go
across to New DERA, is that what you are saying?
(Sir John Chisholm) It is actually the other way round.
156. That is not what you said before, if we
look it up. You are now saying that New DERA will have to have
it named and everything else will stay with the MoD. What are
you saying? Surely even if you are saying one of those, a list
of one could be produced.
(Mr Jagger) I do not think we are saying absolutely
either of those things. We are going through all the intellectual
property which is physically within New DERA and saying "Is
this the MoD's? Is it legal and appropriate for it to go into
the private sector with New DERA?" If the answer is no or
if there is any doubt about it then we are taking it out of New
DERA. It is a very long, complicated and painful process involving
hundreds of thousands of records.
157. The key thing is transparency. Someone
must know somewhere which IPR is with who, surely, even if it
is at least one of the groups involved having it.
(Baroness Symons of Vernham Dean) I think we are talking
about hundreds of thousands of bits of information and I think
that to give a list of hundreds of thousands of bits of information,
even if it was a practical thing to do, would involve time and
expenditure which would be really quite extraordinary. Would it
help if we were to give some indicative headings of the sorts
of information that will go one way or the other? I really am
enormously reluctant to involve people in something that I do
not think would add to the sum of the whole knowledge.
158. My next question is are you contemplating
squabbles, including legal squabbles?
(Baroness Symons of Vernham Dean) No, we are not,
absolutely not. This is a process that will be very carefully
audited, as I have said. It will be looked at independently. As
I say, I do think that lists of hundreds of thousands of bits
of information would not be particularly helpful to you or, indeed,
to anybody else.
159. There would be a security aspect too.
(Sir John Chisholm) Can I make a comment? I think
it is useful to distinguish between intellectual property and
intellectual property rights, they are frequently used the same
way in the same sentence. What we have been mainly talking about
here is intellectual property, of which there is a vast amount.
Every document, every file, every computer programme, all of that
is intellectual property. All of that is being carefully audited
at the moment and New DERA can only keep that which it has been
audited that it should keep. Okay? That is the first point. Intellectual