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17 Jan 06. The FT reported today that a consortium led by Qinetiq, the former state-owned military research body still 19 per cent-owned by the Ministry of Defence, has won the lion’s share of a multi-billion pound defence training contract, one the UK’s biggest public finance initiative schemes.

Industry executives said on Tuesday night that the Qinetiq group had won the
contract to provide all non-military technical training to the UK armed forces.
This makes up most of a £16bn PFI scheme, known as the Defence Training Review.
The contract award will be a bitter disappointment to a rival consortium led by
VT Group, the support services company, and BAE Systems, Britain’s biggest
defence group.

Ministers are expected to announce the deal later on Wednesday. Shares in
Qinetiq rose 4.75p to 212.50p in early London trading.

The Qinetiq-led consortium, which includes Land Securities, Raytheon and EDS, is also well-placed to win the remainder of the 25-year PFI scheme, supplying all
non-technical, non-military training to the army, air force and navy. This
includes logistics, police, personnel, security, languages and intelligence.
Defence executives had not expected Qinetiq to win both parts of the £16bn deal.
It is competing with a consortium led by Babcock International, another support
services company, on the non-technical package.

However, employing the Qinetiq group to supply all of the non-military training
could lead to significant cost savings, a factor that has become important as
the MoD struggles to pay for all of its weapons projects.

A decisive factor in Qinetiq’s success may have been the decision to choose RAF
St Athan in Wales as the location for its engineering and technical training
site and its engagement of regional politicians in support of the bid. The
consortium expects to create about 4,000 jobs at the site.

Qinetiq’s success will be received with disappointment in the West Midlands, given that the BAE and VT bid was based at RAF Cosford.

The winner of the technical part of the PFI deal will supply training in aeronautical and electro-mechanical engineering as well as communications and information systems.

The MoD has embarked on a series of multi-billion pound PFI deals as it looks to shift financial risk to the private sector. It estimates that outsourcing non-military training will save £3bn in the next 25 years.

The BBC reported that the government is expected to announce a new defence training academy will be based at St Athan, creating 5,000 jobs and £58m annually to the local economy.

It would be the largest single government investment in Wales ever and follows setbacks in attempts to make St Athan a centre of aviation excellence.

Defence Secretary Des Browne is expected to make the official announcement in a statement to MPs. The academy would teach skills from aeronautical engineering to security.

St Athan was competing against a rival bid from RAF Cosford in Shropshire, but Welsh MPs believe months of lobbying will end in backing for the Vale of Glamorgan site. This really will be a red letter day for the people of Wales

Recruits from the Army, Navy and RAF would all be trained at the centre instead of at separate locations with the new academy expected to be fully operational by 2013.

If Wales scoops both parts of the £14bn contracts, it will have a major impact on the south Wales economy. With up to 10,000 service personnel on the new campus, local suppliers and other businesses will be cashing in with implications for transport and housing in the area.

Vale of Glamorgan MP John Smith said he was “very confident” the Metrix consortium – which is bidding for the contracts – St Athan would be awarded the two MoD contracts.

He said: “I think we’ve always had by far the best bid, by far

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