Select Committee on Defence Minutes of Evidence

Supplementary memorandum from QinetiQ (25 February 2003)

  You wrote to me on 4 February requesting further information and clarification for the Defence Committee following our oral evidence on 21 January 2003. In your letter you requested information on three points:

1.  What Carlyle's stake in QinetiQ will be in terms of shares and debt held.

2.  The results of the QinetiQ staff surveys in relation to staff acceptance of the path now being followed by QinetiQ.

3.  Disputed rights to intellectual property.

  With regard to question one, the QinetiQ Board and its management were not directly involved in the transaction between the MoD and Carlyle. Your query is best pursued directly with them. In answer to your specific enquiry as to whether there were any changes in QinetiQ's debt and equity structures between the publication of the 2001-02 Accounts and the completion of the deal, I can confirm that there has been no change in the equity structure of the company, although, of course, debt may vary from time to time as a consequence of trading.

  With regard to question two, in his evidence to the committee, Sir J Chisholm was referring to the most recent survey results then available which related to responses given to a poll conducted among 500 senior QinetiQ staff at the end of 2001. Since giving evidence to the Committee, the results of a survey concluded in December 2002 have become available. This survey was conducted among a much wider sample of 1,300 respondents. It included many more staff at more junior levels and explored issues not covered in previous surveys. The data are therefore not strictly comparable. Please see the attached table for detail of the relevant questions asked.

  It should be noted that the 2002 survey which, overall, shows a slight decline in staff confidence, was conducted at a time of great uncertainty for the company, before the deal had been completed and before the staff could be fully briefed. Since then staff have expressed their confidence in the future of the QinetiQ by oversubscribing the share issue.

  With regard to question three, intellectual property rights—you enquired as to which companies have made specific complaints. The only company to have approached QinetiQ directly is Advanced Systems Architecture Ltd. Since QinetiQ's authority to use intellectual property belonging to other companies is controlled by MoD, the matter has been dealt with by MoD. We are aware that at least one other company matter has approached MoD. QinetiQ is actively helping the Department to respond to the points it has raised. In their reply to you, MoD will, no doubt, provide full information this point.

  I hope this letter clarifies the position in relation to those matters for which QinetiQ has responsibility.

"I feel confident that QinetiQ can adapt to working in the private sector"

	strongly agree	tend to agree	neither agree/disagree	tend to disagree	strongly disagree	don't know
2001	14	43	16	19	7	1	100
2002	8	36	26	23	6	1	100

"I feel confident that my Division or function can adapt to working in the private sector"

	strongly agree	tend to agree	neither agree/disagree	tend to disagree	strongly disagree	don't know
2001	not asked in 2001 survey						0
2002	19	40	18	15	7	1	100

"I believe the organisation will provide increased opportunities for me personally"

	strongly agree	tend to agree	neither agree/disagree	tend to disagree	strongly disagree	don't know
2001	17	35	13	20	12	3	100
2002	7	29	24	26	12	2	100

"I feel confident that QinetiQ is well placed to expand its business with commercial customers"

  (different scale used in 2001 question)

	strongly agree	tend to agree	neither agree/disagree	tend to disagree	strongly disagree	don't know
2001	11	53		31	3	2	100
2002	9	35	23	24	8	1	100

"I feel confident that QinetiQ has a bright future"

	strongly agree	tend to agree	neither agree/disagree	tend to disagree	strongly disagree	don't know
2001	14	38	19	18	9	2	100
2002	9	35	28	20	6	2	100

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Prepared 9 April 2003