MoD under fire over Qinetiq bid for £10bn PFI training deal

Government accused of conflict of interest because of its 20 per cent stake in privatised weapons agency

The Government has been accused of having a "clear conflict of interest" over its handling of a contest to award a £10bn military training contract, the country's largest Private Finance Initiative to date.

Des Browne, the Secretary of State for Defence, is set to name the preferred bidder for its defence training rationalisation (DTR) programme, a 25-year contract to provide skills training to the armed forces, as early as October. Among the bidders is Qinetiq, the former state-owned Defence Evaluation and Research Agency, which was floated this year and in which the MoD still holds a 19.3 per cent stake.

The involvement of Qinetiq in the bidding process created a "clear conflict of interest," said Mark Pritchard, the Conservative MP for The Wrekin in the West Midlands. "The Government can use its privileged position to award itself a multi-billion contract, not necessarily to facilitate best value for the taxpayer or to provide the very best training for our soldiers. The Government is in a near-impossible position to be able to make an objective and unbiased judgement."

Qinetiq has lost a quarter of its value since it floated in February, cutting the MoD's stake to about £200m. Winning the contract would guarantee Qinetiq and its bidding partners multi-billion-pound revenue streams for years to come. The MoD would be a beneficiary of any boost to the value to Qinetiq.

However, an MoD spokesman said the Qinetiq connection was irrelevant. "There has been an extensive and robust evaluation methodology in place to ensure that bidders' proposals meet defence training requirements and are evaluated on an equitable basis," he said.

The MoD operates 10 training sites; the number will be reduced drastically under the DTR contract. The MC3 consortium, made up of VT, BAE Systems and Carillion, is proposing to operate two sites, one in Cosford in the West Midlands and the other in Bordon, Hampshire. Rival bidder Metrix, which includes Qinetiq, Land Securities, Trillium, Raytheon Systems and Serco, proposes one site at the RAF St Athans base in South Wales.

Mr Pritchard said he would appeal to the European Commission and the Department of Trade and Industry to examine the bid process if the Qinetiq group succeeded.

However, Chris Bryant, Labour MP for Rhondda in South Wales, said: "The quality of the bid is the only question that the MoD should look at. Grandstanding about political issues is irrelevant to this."