QinetiQ

Defence written question – answered on 13th March 2002.

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Photo of Bernard Jenkin Bernard Jenkin Shadow Secretary of State for Defence

To ask the Secretary of State for Defence if he will list (a) real estate properties and (b) intellectual property rights that the Government have transferred or plan to transfer to QinetiQ, indicating (i) how each property has been valued, (ii) if he plans to make such transfers at full market value and (iii) what arrangements there will be to claw back increases in the value of such properties.

Photo of Dr Lewis Moonie Dr Lewis Moonie Parliamentary Under-Secretary, Ministry of Defence, Parliamentary Under-Secretary (Ministry of Defence) (Veterans)

holding answer 11 March 2002

The information is as follows:

(a) The real estate properties transferred to QinetiQ are listed:

List of QinetiQ owned sites
Name Location Size(21)
Aberporth Aberporth, Ceredigion 48
Alverstoke Gosport, Hampshire 9
Angle Pembrokeshire 19
Aquila Bromley, Kent 10
Bedford Enclave Clapham, Bedford 6
Bedford Tunnels Clapham, Bedford 35
Bedford Twinwoods Clapham, Bedford 21
Bincleaves Weymouth, Dorset 3
Chertsey Chertsey, Surrey 121
Christchurch(22) Christchurch, Dorset 3
Cobbet Hill Woking, Surrey 76
Farnborough Codey Farnborough, Hampshire 149
Fort Halstead Sevenoaks, Kent 135
Fraser Eastney, Portsmouth, Hampshire 5
Funtington North Chichester, West Sussex 16
Haslar(22) Gosport, Hampshire 16
Hurn Main Bournemouth, East Dorset 98
Hurn Barnsfield Bournemouth, East Dorset 143
Hurn Saddleheath Bournemouth, East Dorset 20
Hutton Moor West Super Mare, North Somerset 6
Malvern Main Site Malvern, Worcester 28
Malvern Science Park Malvern, Worcester 5
Pershore Throckmorton, Worcester 110
Portsdown LBTS Portsmouth, Hampshire 11
Pyestock North Farnborough, Hampshire 53
Pyestock South Farnborough, Hampshire 34
West Drayton Heathrow, Middlesex 2

(21) Approximate hectares

(22) These sites are a mixture of freehold and leased land.

Note:

Sizes are approximate and have been rounded.

In addition QinetiQ are leaseholders at a number of other sites.

(i) GVA Grimley, an independent professional valuation company, were engaged by DERA to perform a valuation exercise to determine the "fair value" of the property portfolio as at 30 June 2001. The methodology used for the valuation was:

(a) Non-specialsed properties—existing use value

(b) Specialised properties—depreciated replacement cost

(c) Properties surplus to requirements—open market value

(d) Properties held as investment—open market value.

(ii) All properties were transferred to QinetiQ at the values calculated by GVA Grimley using the most appropriate methodology, as outlined in (i).

(iii) All sites where freehold or leasehold title has transferred to QinetiQ are subject to a clawback arrangement contractually agreed with the MOD. This limits QinetiQ's ability to make abnormal profits on disposal. The clawback agreement was based on the valuations conducted by GVA Grimley in 2001, with an allowance for inflation over the 12-year period of the agreement. It provides for MOD to share a proportion of any additional receipts above this value; this proportion starts at 50 per cent. and decreases gradually over the life of the agreement.

This clawback agreement provides an appropriate balance between sharing future benefits from estate sales and incentivising the company to manage its assets efficiently.

(b) Due to the volume involved, it is not possible to list all the Intellectual Property (IP) transferred to QinetiQ (e.g. over 3,000 patents that have been assigned to the company).

The basic principal adopted was that QinetiQ should be put in the same position as any other defence contractor, i.e. where IP had been generated within that part of DERA that was to become QinetiQ then QinetiQ should own the IPR. As with the rest of industry, MOD retains free user rights where public money was used to create the IP.

(i) and (ii) There was no valuation attributed to the IP at vesting as value will be realised within the value of future sales of MOD's shareholdings.

(iii) IP clawback provision has not been provided in this PPP. This mirrors MOD policy, which is not to include any form of levy agreement when letting contracts for research and technology with other parts of industry, the reason for this being that in contrast to equipment it is virtually impossible to trace the research and technology that may have been used to generate future revenue. As a significant shareholder in QinetiQ for the next few years, we believe that the freedom and encouragement to exploit results commercially represents better overall value for money than pursuing a clawback arrangement where the extent of bureaucracy would be great and the potential returns difficult to obtain.

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