Examination of Witnesses (Questions 40-59)
DR FRANCES
SAUNDERS, MR
PETER STARKEY
AND MR
MARK HONE
28 NOVEMBER 2006
Q40 Mr Jenkins: Where is the money
coming from?
Dr Saunders: The money is coming
from our retained profits from the time Dstl started. So we have
been able to hang on to the cash we have generated as an organisation,
and that is sitting on our balance sheet at the moment and we
are able to spend that cash.
Q41 Mr Jenkins: Retained profits.
Do you not pay a dividend to the MoD?
Dr Saunders: We do pay a dividend
to the MoD.
Q42 Mr Jenkins: Who decides how much
is retained profit and how much is the dividend then?
Dr Saunders: That is something
that we agree with MoD's Finance Director.
Q43 Mr Jenkins: So you decide it
amongst yourselves?
Dr Saunders: Yes.
Q44 Mr Jenkins: Then you have this
pot of money and you decide what to do with it.
Dr Saunders: No, we have to get
agreement from the Minister to spend that money on our rationalisation
programme. We have generated this pot of money but we still have
to go and ask.
Q45 Mr Jenkins: So the Minister was
in agreement to reduce from 15 sites to three sites, and he knew
where the three sites were going to be?
Dr Saunders: Absolutely, yes.
Q46 Mr Jenkins: All in the south
of England.
Dr Saunders: Yes.
Mr Hancock: I wonder if I ought
to declare an interest here, Chairman, because my house is right
opposite the site at—
Mr Jenkins: No, not unless it is on it.
Chairman: We will take that interest
as duly declared, just in case.
Q47 Mr Jenkins: Who exactly owns
the 15 sites?
Dr Saunders: I can provide a detailed
breakdown of who owns each site.[2]
2
Q48 Mr Jenkins: Can you tell me how many
sites you own and how many sites QinetiQ own?
Dr Saunders: QinetiQ own the Malvern
site, QinetiQ own the Farnborough site. QinetiQ actually own Fort
Halstead but we have a long-term lease on Fort Halstead.
Q49 Mr Jenkins: So who owns the three
sites you are going to establish on?
Dr Saunders: We own Portsdown
West, we own Porton Down and, as I said, we have a 97-year lease
on Fort Halstead.
Q50 Mr Jenkins: So the majority of
the ones that are being released are owned by QinetiQ?
Dr Saunders: Yes.
Q51 Mr Jenkins: So they can sell
the sites and realise a lot of money on it.
Dr Saunders: They actually have
more of the people on those sites. If you take the Malvern site,
we are a minor lodger on that site; they have far more people
on that site than we do. So what they will choose to do with that
site will be part of their strategy. Again, we only have two small
buildings on the Farnborough site. That is dominated by QinetiQ.
Q52 Mr Jenkins: If they can de-scale
that or de-people those sites they can sell those sites and the
money goes back to QinetiQ.
Dr Saunders: That would be the
case, yes. I believe that is true.
Q53 Mr Jenkins: Was that part of
the rationale why you chose these sites to locate on?
Dr Saunders: No. We did want to
split ourselves off from QinetiQ in some ways so there was not
any confusion about what they were doing and what we were doing.
So we wanted to have distinctive sites that were definitely our
sites, and I think there was certainly something of that in it.
We chose the sites on the basis of what made most sense from the
point of view of the type of work we are going to be doing in
the future and the numbers of people that it made sense to put
into those buildings and that sort of site. We did quite a lot
of analysis of different options—a three-site option, a
two-site option and a four-site option—to look at what would
be the best cost-benefit analysis for our move, and this three-site
option came out as the best balance. That is what we briefed to
the Minister to get the decision.
Q54 Mr Jenkins: In your cost benefit
analysis did you put into the equation the impact on the community
for moving to any one of the sites?
Dr Saunders: We did consider the
cost in terms of what we might have to do to make sure that we
work well with the community, like road improvements, thinking
about green transport, and so on. So we did think about those
sorts of things but we did not specifically model, say, the impact
on the community.
Q55 Mr Jenkins: So there is 550 staff
moving to Porton Down but you have not worked out the effect that
would have on the local schools—
Dr Saunders: Yes, we have done
that. As part of planning we did that. That was not a part of
the original cost benefit but in going up to Salisbury Council
over the planning application that we have made, yes, we have
looked at that.
Q56 Mr Jenkins: And it works out
to be okay?
Dr Saunders: The discussions we
have had with the local authorities have actually been very positive
and they believe that this is going to work quite well.
Q57 Mr Jenkins: Have you been asked
to make any contribution towards the cost?
Dr Saunders: Yes, we have been
asked to make contributions to the costs of roads, and we have
agreed to do all of that—so upgrading one of the roads at
Porton and maybe putting in some traffic lights; building a roundabout,
those sorts of things. So £3 million or so of investment
will be put into that to make those improvements.
Q58 Willie Rennie: Can we look at
the joint ventures, Ploughshare and DDA? Can you paint a picture
of how they all fit together?
Dr Saunders: Ploughshare Innovations
Limited was set up as a wholly owned subsidiary of Dstl to act
as our agents for exploiting the intellectual property that we
generate as part of our research. They can exploit that in a number
of different ways, but the two main ways are: to license that
technology to companies that might already have products and would
need a licence or could develop their product further to enhance
it and would take a licence on our technology to make that happen.
The other thing they can do, if there is no existing industry
out there and no existing companies, is to look at developing
a start-up company using the IP and taking it to a point where
they, maybe, have a product to market or they have developed a
prototype, at which point that start-up company could be sold
or it could develop into a fully fledged company downstream. So
we currently have a number of so-called joint ventures but they
are actually start-up companies where Dstl, and now through Ploughshare,
has put the intellectual property into the joint venture and a
couple of venture capitalists have put in the money to take the
IP from a proven concept to a prototype and help develop the business.
Q59 Willie Rennie: How does that
compare with the DDA?
Dr Saunders: The DDA's remit is
rather different; it is not there to license Dstl technology to
companies, nor is it to manage joint ventures or start-ups. Its
main remit has been to work with SMEs and, particularly more recently,
to look at spinning in technology into MoD.
2 See Ev 36 Back
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