[A-List] UK arms trade: growing US links

["Michael Keaney" <michael.keaney@xxxxxx>]

Qinetiq continues US defence assault

Heather Tomlinson
Tuesday September 14, 2004
The Guardian

The firm that is to MI5 and MI6 what Q is to James Bond has made its second
acquisition in the United States in a month as it seeks access to key
American defence contracts.

Government-backed technology business Qinetiq intends to buy Westar
Aerospace & Defense Group for $130m (£72m), a move that comes on top of its
$163m purchase of engineering group Foster-Miller earlier this month.

Westar is a contractor for the US Air Corps and also does missile defence
work. Qinetiq operates in similar areas and is doing consultancy work on the
feasibility of missile defence systems for Nato. Qinetiq's scientists carry
out classified research for the Ministry of Defence and the security
services.

It does some work for the US government - but not highly classified research
because it is a British firm. Westar and Foster Miller have employees with
"tickets" that allow them to do top secret work for the American government.
Both purchases are awaiting approval from the US department of defence
because the acquirer is a British firm.

As Qinetiq seeks to become more commercial ahead of an expected flotation on
the UK stock market, it is seeking to tap into the vast defence and security
budget of the US and is benefiting from the recent close relationship
between the two countries.

"It is an undeniable fact the US and UK find themselves shoulder to shoulder
in Iraq which creates a halo effect, which is beneficial to UK companies
seeking to enter the US market," said Qinetiq chief executive Sir John
Chisholm.

The UK government decided to privatise its defence scientific research some
years ago and created a state-owned private company to house the scientists
which became Qinetiq. In 2002 a 34% stake was sold to US private equity
house Carlyle Group, which has links with former US president George Bush Sr
and former prime minister John Major.

The American acquisitions will be integrated during the coming year in
preparation for the expected flotation on the stock exchange, at which point
the MoD will sell the remainder of its holding.

The firm has been trying to commercialise its technology; although
successful in terms of research it has rarely been so in exploiting its
discoveries.