QinetiQ Group Plc (LON:QQ) has signed a ground-breaking agreement with the UK Ministry of Defence (MOD) to modernise 16 of the country’s critical defence facilities, firmly positioning the UK as a world-leader in the generation and assurance of military capability.
This amendment to the Long Term Partnering Agreement (LTPA), a 25-year contract under which QinetiQ provides experimentation, test, evaluation and training support to the MOD, secures £1.3bn of revenue until 31 March 2028.
As global threats and adversaries become more sophisticated, UK armed forces require modern, advanced environments to create new military capabilities, test their effectiveness and train defence personnel to use them safely and successfully. This amendment creates highly efficient new ways of working, saving £85m of taxpayers’ money, and enables QinetiQ and the MOD to invest £190m in modernising the infrastructure, equipment, and working practices across all 16 MOD-owned sites.
This contract amendment transforms QinetiQ’s ability to enable the delivery of the MOD’s future programmes, such as the Queen Elizabeth Class aircraft carrier, Dreadnought submarine and future combat aircraft. It will also drive international growth by attracting additional overseas customers. The investment projects include:
·noise and electromagnetic signature measurement to enhance the “stealth” performance of ships, submarines and aircraft, enabling them to better evade detection;
·ground-based evaluation of electronic warfare, communication and advanced weapon systems, to enable operational advantage; and
·a new digital test and evaluation ‘backbone’ to accelerate the processing of critical data and associated information, to enable simultaneous testing across multiple locations, essential for supporting new, complex defence capabilities.
The capital investment will be funded by QinetiQ and subsequently recovered from the MOD over the life of the contract using the same mechanism as the amendment signed in December 2016, ensuring appropriate rates of return for QinetiQ in line with its capital allocation policy. The level and phasing of this investment is consistent with the guidance given by QinetiQ at its Interim Results in November 2018.
Defence Secretary Gavin Williamson said:
“Ensuring our cutting-edge equipment is tried and tested before it is sent to the frontline is crucial to our military’s capability.
“This £1.3bn investment will not only guarantee our Armed Forces’ have the reliable, state-of-the-art weaponry they need, but will also support jobs across the nation.”
Steve Wadey, QinetiQ Chief Executive, said:
“Today’s agreement enhances our contribution to the safety and operational effectiveness of UK armed forces in an era when threats to our security remain acute and are changing rapidly. In line with our strategy, we are introducing innovative ways of working and making selective investments to reinforce the UK’s position as a world-leader in the generation and assurance of military capability. This will enable us to support the MOD’s future programmes and win more work from both UK and international customers.”
Chief Executive Officer at DE&S, the MOD’s procurement agency, Sir Simon Bollom said:
“This latest contract amendment under the LTPA demonstrates how we are continuing to support our key defence programmes by investing in essential test and evaluation services.
“This is another example of how DE&S is working collaboratively with industry and the Front Line Commands to ensure our Armed Forces have the best value equipment and training to meet the operational demand.”
To hear more from QinetiQ and the MOD about what this amendment means, please view this video https://youtu.be/wP52kib4aUE