US giants pull out of bid to run MoD buyer

A heavyweight team of US engineering giants has pulled out of the race to run the £14bn Ministry of Defence agency that buys the army's tanks and missiles.

In the latest blow to a globally unique idea that critics claim is the hugely risky privatisation of national security, URS and KBR were not on the shortlist to oversee Bristol-based Defence Equipment and Support yesterday.

This significant reduction of competitive tension adds to fears that the bidders and the MoD will struggle to surmount the potential for acute conflicts of interest.

An announcement on the bid teams was expected earlier in the summer, but was delayed. A Whitehall source said that during those weeks URS and KBR "took another look at this, and decided it wasn't for them".

This leaves two consortiums, which are also led by huge US engineers – the only companies considered to have the capabilities necessary to take on the agency's 17,000 staff.

One team is fronted by CH2M Hill, which oversaw the construction of the London 2012 Olympics, and also includes Atkins and Serco, both FTSE 100 companies. Bechtel, the California-based engineer which is looking after the development of Crossrail, heads a group that also comprises accountant PricewaterhouseCoopers and PA Consulting.

An Independent on Sunday investigation last month showed that all of the companies involved would be conflicted if they took over the agency. For example, several would be in a position where they could hand contracts to themselves or their major clients.

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