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Business Comment

Jim Armitage: MoD should beat a retreat on this sell off

Outlook The Ministry of Defence's privatisation of the Defence Equipment and Support organisation really should be stood at ease while the Government rethinks.

It seemed a good idea at first: contract out to an expert private company the buying of military kit and services, rather than see the generals continually fleeced by the arms and support industries.

Tendering for this new role has begun, but the bidding has been far from enthusiastic. The trouble is, these are often complicated procurements with a high chance of going wrong for the contractor doing the buying – both in terms of profitability and bad publicity.

Profit-wise, it's hard to stack up because the military will retain the final power to specify the precise kit it wants. So shaving costs by doing away with the military's demands for unnecessary bells and whistles will be difficult.

As for the risk of bad PR, decent potential bidders have often already got other, more lucrative, MoD jobs on. They don't want to jeopardise those with the potential failure of this risky new one.

Such are the risks that bidders have decided to hold hands in consortia rather than go it alone.

But those groupings seem fairly unstable too. The US engineer KBR and Britain's Qinetiq pulled out of early-stage teams, while engineers CH2M Hill and WS Atkins are both trying to encourage their partner Serco to drop out of their consortium because they don't want to be tainted by the ankle-tagging scandal.

Let's beat a retreat on this privatisation before it resembles the charge of the Light Brigade.