27 Jan 2011

MoD suspends contract sell-off after leak to winning bidder


A £6bn privatisation of Britain’s search and rescue service has been halted after the Ministry of Defence discovered one of its officials had been passing sensitive information to the winning bidder.

MoD suspends contract sell-off after leak to winning bidder

Channel 4 News understands the MoD employee subsequently went to work for one of the companies which won the private-finance contract.

The winning consortium consisted of Thales, RBS and CHC Helicopter. It clinched the deal last year, and had been due to start running search and rescue helicopters by 2013.

However, the contract has now been suspended because the government is concerned the losing bidder could take it to court.

RBS said tonight it had now pulled out of the consortium. It’s understood this is because of concerns about the MoD official’s activities.

An MOD spokesperson said: “An announcement regarding the review of the [search and rescue] proposal has been postponed for commercially sensitive reasons. It would be inappropriate to comment on any specific aspect in advance of a further announcement.”

A senior Conservative backbencher said the revelation by Channel 4 News tonight was typical of the cosy relationship between the MoD and big business.

Douglas Carswell, who has campaigned for greater government transparency, said the “revolving door” between defence contractors and the department was costing taxpayers money, and worsening the MoD’s financial problems.

The contract is now likely to be readvertised, which risks delaying the privatisation, and landing the taxpayer with a bill to provide a stop-gap search and rescue service.

The FT is tonight reporting that the military police have been brought in to investigate the deal.

Prince William, a search and rescue pilot, was reportedly so incensed about the privatisation that he lobbied the prime minister about it.

Government insiders insisted that the decision to halt the project had nothing to do with the Prince’s behind the scenes manoeuvring. It’s thought that his contract will have come to an end before the privatisation was due to take effect.