FROM: BARONESS SYMONS

D/MIN(DP)/ECS/1/4/8 -
20 December 2000

THE FUTURE STRATEGIC TANKER AIRCRAFT

The Future Strategic Aircraft Tanker project will provide the MOD with air-to-air refuelling capability to replace the existing fleet of VC10 and TriStar aircraft based at RAF Brize Norton. Over the last two years we have been exploring with industry the potential for meeting this equirement via a service contract provided under the Private Finance Initiative. Four consortia provided us with outline proposals in November 1999.

I am writing to inform you that we now intend to undertake a formal assesment phase for the programme designed to confirm whether a PFI deal will offer the required capability at best value for money. We intend to invite the pre-qualified consortia to submit competitive bids in response to an Invitation to Negotiate which will be issued on 21 December 2000. A copy of our press release is attached.

As you know, our work on the Public Sector Comparator indicates that RAF Brize Norton is likely to remain the most cost effective Main Operating Base for FSTA bcause there is significant synergy between that unit and the air-to-air refuelling capability. However, we are keeping an open mind and DERA is seeking to offer its Boscombe Down airfield to the competing consortia as a potential alternative base. A final decision on the programme will not be taken until 2001. If PFI remains the preferred option we expect to see the first aircraft enter service around 2007.

We have undertaken formal Consultation with the MOD Trades Unions and will keep them informed as the programme proceeds.

TO: All Salisbury District Council, Wiltshire
County Council & Parish Council Members

8 January 2001

Dear Member,

RE: CANCELLATION OF SPECIAL NORTHERN AREA COMMITTEE MEETING OF 16 JANUARY 2001

Please note that the Special Northern Area Committee meeting scheduled to take place at 4.30pm on Tuesday 16 January 2001 at Antrobus House, Amesbury has, necessarily, had to be CANCELLED.

The decision to cancel the Special meeting, which had been convened to allow Members to consider the Future Strategic Tanker Aircraft Project at DERA, Boscombe Down, was taken owing to insufficient information having been provided by the applicants to allow informed decision-making to take place.

In addition, please note that owing to the above cancellation, the DERA application will now not be considered by the District Council's Planning Committee on 24 January 2001.

Should you have any queries about the cancellation please do not hesitate to contact either me (01722 434428) or John Hammond, Assistant Area Planning Officer (01722 434380).

Yours sincerely,

Helen Collar
Northern Area Co-ordinator

Ministry of Defence

Monday 15 January 2001

MR ROBERT KEY MP (SALISBURY)(CON)

54
WRITTEN

To ask the Secretary of State for Defence, when he intends to publish the legislation for the DERA PPP described in his Department's Performance Report 1999-2000. (145402)

Geoffrey Hoon MP

I refer the hon Member to the announcement I made in the House on 24 July 2000 (Official Report, columns 778-779) about our intention to proceed with the implementation of the Core Competence model for the DERA public private partnership. Under Core Competence, around three-quarters of the current DERA organisation will be turned into a company, referred to as NewDERA. For strategic reasons, the remainder will be retained within the Ministry of Defence to carry out functions that could not appropriately be transferred to the private sector.

The necessary legislation to amend the existing DEA Trading Fund Order to remove those operations which will form the basis of the new company was laid before Parliament on 17 January 2001. Copies of the draft Defence Science and Technology Laboratory Trading Fund Order 2001 are available from the House of Commons Votes Office.

Tuesday 23 January 2001
PQ Ref No 0319L

Ministry of Defence

Monday 15 January 2001

MR ROBERT KEY MP (SALISBURY)(CON)

55
WRITTEN

To ask the Secretary of State for Defence, what the vesting date will be for NewDERA plc; who the directors of the company are; and if he will place in the Library the articles of association of the company. (145403)

Geoffrey Hoon MP

I can advise the hon Member that, subject to the approval of the amended Trading Fund Order laid before Parliament on the 17 January 2001, the vesting day for NewDERA will be the 1 July 2001. The Chief Executive of the new company will be Sir John Chisholm who is the Chief Executive of the current DERA organisation. In December 2000 it was announced that Sit John Egan will become the Chairman of the new company. The other members of the Board will be chosen in due course. A copy of the articles oassociation will be placed in the House at the point of vesting.

Tuesday 23 January 2001
PQ Ref No 0320L

RK/JCR/bosc

22nd January 2001

Sir John Chisholm MA CEng
Chief Executive
DERA
DRA Farnborough
Hampshire
GU14 6TD

FSTA PROJECT - BOSCOMBE DOWN

I enclose for you a substantial number of representations which I have received from constituents concerning this project.

Most of the corespondents have also written to the Planning Authority. In addition to these representations, I have received literally dozens of e-mails all saying much the same thing.

When NewDERA is floated on 1st July, and given that Ministers have repeatedly told me that they will take no decision on the FSTA Project until 2002, please will you let me know if, following privatisation, the decision as to whether to pursue the FSTA bid will rest with the new owners - presumably a wholly-owned Government company, or with Retained DERA, or alternatively with the Ministry of Defence?

enc

Thank you for your letter of 22 January 2001 enclosing representations from a number of your constituents in respect of DERA's proposal to offer the airfield at its Boscombe Down site as a main operating base for the Future Strategic Tanker Aircraft (FSTA). These have been noted.

You also ask where the decision whether to pursue with FSTA bid will rest once DERA has been privatised. AS Baroness Symons explained in her letter of 11 December 2001, the intention is that DEA's activities at Boscombe Down will transfer to the privatised part of DERA. It follows, therefore, that the decision as to whether or not to carry on with the FSTA will fall to the plc that NewDERA will become. We shall, of course, need to balance a number of factors, not least the much diminished prospects for Boscombe Down if we are unable, over the next few years, to attract new business to the airfield to defray the high operating costs. Obviously our position will be more secure if we can obtain long-term contracts from our MOD customers before we go into the plc, but even then our future sustainability will require some element of diversification which will in turn require local support.

I appreciate the the DERA FSTA experience has not yet been a happy one particularly since it became tangled up with the whole issue of the legitimacy of the Government's 18/84 planning procedure. I very much hope, however, that even if this project does not go forward we shall be able to get off on a better footing in the future in persuading the local people of the merits of diversification for the airfield.

I hope this is helpful, and please feel free to get in touch with either myself, Liz Peace or Rob Little if you would like to discuss Boscombe Down issues further.

Ministry of Defence Thursday 26 April 2001 MR ROBERT KEY MP (SALISBURY) CON

57
NAMED DAY WRITTEN

To ask the Secretary of State for Defence, what (aa) consultancy and (b) other fees were paid in finding a name for the public company taking over the role of NewDERA. (158863)

Geoffrey Hoon MP

(Holding reply Thursday 26 April 2001)

I refer the hon Member the answer I gave on 24 April (Official Report, column 233) to the rt hon Member for Walsall South (Mr George).

NewDERA

Mr. Bruce George: To ask the Secretary of State for Defence what the cost was of the new name and logo selected for NewDERA. (157333)

Mr. Hoon: DERA announced on 5 April that its new name, when it becomes a plc in July, will be QinetiQ. The name will also serve as a logo.

The process for generating and deciding on a new name cost £42,000. The design work needed to devise an associated corporate identity for all areas of NewDERA where the name will be used has cost a further £365,000.

The application of this design work to new stationery, signs, marketing literature, etc. is still ongoing with a view to formal introduction when the plc is formed on 1 July.

It is too early to calculate the final cost of this. It is important to note, however, that even if the name had not been changed, such work would in any case have been required in order to adapt NewDERA to its new status as a plc.

Ministry of Defence

Thursday 5 July 2001

MR ROBERT KEY MP (SALISBURY) (CON)

43
NAMED DAY WRITTEN

To ask the Secretary of State for Defence, if he will list the prime contractors and their partner companies who have responded to the invitation to negotiate on the Future Strategic Tanker Aircraft project; what locations they have specified for their main operating base; and if any of the bids include any role for DERA or QUINETIQ at Boscombe Down airfield. (867)

Dr. Lewis Moonie MP

We received bids on 3 July from two consortia: Air Tanker, consisting of Cobham, Thales, Brown & Root, EADS and Rolls Royce, and a consortium consisting of BAE Systems, Boeing, Serco and Spectrum Capital. Evaluation of the bids, which are complex and commercially sensitive, has only just begun. I am withholding further information under Exemption 7 of the Code of Practice on Access to Government Information. I shall, however, write to the hon Member as soon as our analysis of the bids permits.

8th July 2001

Dear Robert,

I undertook to write to you and provide further information in response to your Parliamentary Question opf 5 July 2001, (Official Report, column 247W), about the Future Strategic Tanker Aircraft (FSTA) project.

Whilst we remain at a very early point in our analysis and I cannot yet provide a fully detailed answer to your question, I can now confirm the both bidders have indicated that RAF Brize Norton remains their proposed Main Operating Base. However, you will wish to be aware that this potential PFI deal is subject to a detailed negotiation process and as such, no final decisions have yet been taken. Over the coming months we will explore the detail of the bidders proposals before reaching conclusions about the most operationally and cost effective solution. I recognise that the choice of operating base remains a highly sensitive issue both in Salisbury and West Oxfordshire adn that the issue is the subject of media speculation. I will wite to you again as soon as a final decision has been made on the aspect of the pogramme.

In the meantime we will continue to work with the bidders to understand the detail of the proposed solutions to this complex PFI programme. We currently plan to have fully completed our assesment, including the potential for the involvement of Quinetiq, by the middle of next year.

I am placing a copy of this letter in the Library of the House.

Best wishes,

Dr. Lewis Moonie MP

Website: robertkey.com   E-mail: rob@robertkey.com

AN OPEN Letter TO WE MAYOR AND COUNCILLORS OF AMESBURY

I would be grateful if you would be so kind as to acquaint the Mayor and Councillors with the latest information I have about the future of Boscombe Down Airfield. I will release this letter to the media and post it on my website.

Soon after the General Election I tabled a Parliamentary Question to the Secretary of State for defence about the two prime contractors and their partner companies who had bid to run the future strategic tanker aircraft project. I attach the answer I received on 5 July, together with a letter from Defence Minister Lewis Moonie dated 8th July. The Minister stated that RAF Brize Norton is their preferred main operating base. This was confirmed to me in letters dated 16 July and 18 July from BAE Systems and from Air Tanker -representing the two consortia involved.

On Thursday 26 July I went to QinetiQ at Boscombe Down for a briefing by the FSTA Project Director. Following vesting day on July 2, Boscombe Down Airfield (BDN) is still owned by the MOD. It remains a Government Aerodrome operated under Military Flying Regulations. It is operated and managed by QinetiQ on behalf of MOD. It is not leased to QinetiQ. There is an interim licence in place which runs until the end of March 2003, by which time MOD and QinetiQ will have decided whether to introduce a lease of between 10 and 99 years, which might or might not include an option to buy the freehold.

Meanwhile QinetiQ is a wholly-owned Government Company. Its employees are no longer civil servants. The objective remains one of floating the company in the city - but not before summer 2002.

In my judgment it is now extremely unlikely that BDN will ever be the main operating base for the tanker fleet. However it is possible that with the Aircraft Testing and Evaluation role already at BDN, the future dual-use tankers envisaged could become regular visitors for routine testing and evaluation over the 25-year period of the FSTA contract. This would certainly help maintain the workforce - but would not on its own be enough to sustain BDN in the long run. Therefore alternative and additional long-term work will need to be found, from the MOD, from new sources - or both.

Given the decision by both consortia not to use BDN as the FSTA main operating base, QinetiQ must decide whether to withdraw their existing Planning Application with Salisbury District Council. I understand that the FSTA Project Leader at BDN hopes to be in a position to make a statement about the way forward in the week beginning 6 August.
I hope this information is helpful.

Yours sincerely,

• QinetiQ, formerly the larger part of DERA (Defence Evaluation and Research Agency) incorporates the bulk of the MOD's non-nuclear research, technology and test and evaluation establishments in its heritage.
• In July 2000 the Government agreed to a programme that would see the bulk of DERA being set up as a Public Private Partnership (PPP). In July 2001, three-quarters of the agency became a wholly government owned plc called QinetiQ (pronounced ki' ne tik as in 'kinetic energy'). This is a precursor to eventual flotation, now likely in early 2002. A quarter of the Agency was retained within the MOD as Dstl (the Defence Science and Technology Laboratory) to manage the research programme, systems research and the International Research Collaboration along with other sensitive areas eg CBD (Chemical & Biological Defence), Porton Down.
• QinetiQ is one of Europe's largest research organisations. Among its staff it employs many leading scientists and internationally acclaimed experts. It offers a unique range of services, consultancy advice and test facilities. These include indoor and outdoor ranges for air, land and sea launched weapon effectiveness trials, wind tunnels, underwater target ranges and marine testing facilities, automotive test tracks and climatic testing laboratories.
• As DERA its pioneering research and development last century included the invention of liquid crystal displays (LCDs), carbon fibre, the technology for flat panel speakers, infra-red sensors and microwave radar, as well as Chobham armour, and shaped charges. DERA combined and inherited the technology and expertise from Government defence research sites throughout the UK.

35
WRITTEN

To ask the Secretary of State for Defence, if he will make a statement on the Future Strategic Tanker Aircraft project. (36175)

The Rt Ron Adam Ingram JP MP

The Future Strategic Tanker Aircraft (FSTA) is planned to replace the RAF's fleet of VCIO and TriStar air to air refuelling/air transport aircraft towards the end of the decade. The current fleet is based at RAP Brize Norton in Oxfordshire. Bids for this prospective PFI programme were received from two consortia in July 200I. Both bidders have proposed the continued use of RAF Brize Norton as the main operating base for the FSTA fleet and our negotiations with them are proceeding on this basis. Subject to satisfactory progress in these negotiations, we expect to decide later this year whether PFI offers the best value for money and, if it does, which of the two consortia is our preferred bidder.