APPENDIX 2
Memorandum submitted by the Defence Manufacturers
Association (10 January 2003)
I am aware, via the Secretary to the DIC, that
you are open to receiving unsolicited comments from representatives
of the defence industry in preparation for the Committee's next
investigation into the privatisation of QinetiQ.
The position of the Defence Manufacturers Association
is to accept that the current and planned status of QinetiQ as
a fait accompli. There is nothing to be gained at this
point in tilting at the windmill of the principle of privatisation,
or indeed the selection of Carlyle as the partner. The Government
is set on a course and we will do best for our members by working
with the grain of that reality.
Some companies have IPR issues outstanding and
we see our most effective role here as being to ensure that as
many companies as possible know that they should check as to whether
they apply to them and are a matter of concern. If they do and
have trouble resolving them directly with QinetiQ then we are
happy to intercede on their behalf. In our experience to date,
direct negotiations have resolved most of them.
We have welcomed the intention of the MoD to
place (albeit more slowly than industry would prefer) an increasing
amount of non-Dstl defence research to open competition whilst
noting that, to date, QinetiQ have won some 50% by value of contracts
so awarded. This should nevertheless present new and, over the
years, increasing opportunities for companies. We also welcome
the clear statement by the MoD that such work will only be open
to UK companies/universities etc (except where no appropriate
UK capability exists). There is some concern that QinetiQ itself,
however, is currently placing less of its own work outside than
it previously did and this is counter-balancing the benefit to
industry of the MoD`s action. We hope and acknowledge that this
will probably be a short term situation driven by the immediate
wish to prepare QinetiQ for final flotation.
The consensus view of the DMA Council is that
the quicker that QinetiQ becomes close to being a true member
of industry (given that that is the ineluctable aim) the better.
QinetiQ and the rest of industry would then be operating on a
level playing field of financing, overheads, business opportunities
and other factors that all involved would understand. As the Committee
may know QinetiQ became a member of the DMA some time ago after
a vigorous debate within both organisations. This relationship
has proved to be very helpful during recent developments, whilst
not stifling the expression of strong opinions at times.
On a separate but related note, we believe that
it is helpful for future developments if Industry is as aware
as possible of future MoD research programmes and aspirations.
This helps them to prepare for future competitive opportunities.
With the strong support of the MoD Defence Equipment Capability
community the DMA arranges regular briefings along these lines
and we would be pleased if the Committee could commend the MoD
and encourage them to continue to support such activities.
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