Stewart Penney/LONDON

The UK's Defence Evaluation and Research Agency (DERA) could be split up to smooth US concerns over the planned privatisation of the research and development body.

Washington is worried that UK Ministry of Defence plans to fund DERA through a public-private partnership (PPP), as announced in the 1998 Strategic Defence Review, will make available to third parties sensitive technology shared between the two countries.

The US Department of Defense says it is prepared to bar the UK from sharing such technology. In an effort to combat the threat, London has reportedly revived a plan to merge "core competencies" - essentially research elements - into the MoD, while offering the rest of DERA - including its advisory service - to the private sector through a PPP.

The chairman of DERA's trade unions, Sean Clarke, says only 3,000 of its 12,000 employees would remain part of the core business, and that only 6,000 personnel would be required in the section subject to the PPP.

"We are not opposed to a PPP in principle, but it has to work and we will fight any break-up," he says. A partial privatisation is regarded as necessary to maintain research and development spending at a time of shrinking defence budgets.

DERA's core competencies would include the Centre for Defence Analysis, the chemical and biological warfare capability at Porton Down, its library service (key to providing the MoD's "intelligent customer" capability) and areas believed to include access to US surveillance satellite data.

Clarke claims splitting DERA would increase costs that the agency has been striving to contain since its formation in 1991. The unions have proposed an IPOC (independent publicly owned company), involving employee share ownership, as an alternative means of raising money while keeping DERA in the public sector.

The unions are to be consulted by March. The MoD says it will decide in late April and is "committed to a PPP, while meeting the need for a centre of excellence for advice and research".

Source: Flight International