Privatisation of Britain's Defence Evaluation and Research Agency (DERA) is expected to be announced this week by Defence Secretary Geoff Hoon. The controversial stock market flotation, which ministers hope will raise more than £250 million, is to be revealed this week after Chancellor of the Exchequer Gordon Brown decided to allow the Ministry of Defence to keep all the proceeds of the sell-off to fund new equipment purchases and peacekeeping operations. High level defence sources say Hoon is to make an announcement in the House of Commons tomorrow or Wednesday on the fate of DERA. Armed Force Minister John Spellar confirms an announcement is likely but the government is still trying to co-ordinate its presentation with a number of other initiatives next week. It is understood that the government has decided to go forward with the proposal outlined earlier this year to spin off three-quarters of the science and testing organisation into the private sector as "New DERA".
The remaining elements, which include the chemical and biological warfare research centre at Porton Down, will remain under government control. These plans called for DERA to be floated on the stock exchange next year, with the government retaining a "golden share" to prevent foreign ownership. There will be limits on individual holdings and the sale will be aimed at institutional fund holders rather than existing defence and aerospace companies. Sir John Chisholm, DERA chief executive, is unable to confirm details of the government plans. "We are awaiting the government's answer imminently," he says. "The government has said it will make announcement before the Parliamentary recess at the end of the week." Speaking exclusively to Flight Daily News, Sir John says the "overwhelming feeling in DERA is one of relief that at last we appear to have a clear way forward." Any announcement this week will bring over a year of uncertainty to an end, after plans to sell off DERA as a single entity were heavily criticised. "That had a number of strong objections," says Sir John.
The House of Commons Defence Committee (HCDC) called it appalling. The US Department of Defence was concerned who it would work with. UK industry preferred a partition. In April/May the Ministry of Defence proposed an alternative. My impression is that the HCDC thinks it is better than the previous one and I think the US probably understands the proposal. They are also closer to what UK industry say they were looking for. "I think DERA staff's concern is that it at long last has something that promises to bring the uncertainty to an end. The unions would prefer another solution, one that keeps DERA in the public. No solution exactly matches everyone's objective. Sir John has long been a keen supporter of moves to privatise DERA. "We are in a market for business," he says. "We have to be good to win business and have to provide competitive rewards for our staff. It is difficult to do both under the current constitution."
Source: Flight Daily News