The sale of a stake in QinetiQ to The Carlyle Group was completed in February 2003. Starting in 1998, the overall PPP process included: options studies and public consultation; the division of DERA into QinetiQ and Dstl; the formation of QinetiQ as a limited company; the conduct of the competition resulting in the selection of Carlyle as MOD's Strategic Partner; and the completion of the legal negotiations and due diligence process necessary to complete the transaction. Work on many of these activities was conducted in parallel and they have not been separately costed.
MOD's total expenditure on advisers throughout these stages of process was approximately £17.5 million over 5 years. This includes a cost of approximately £9.2 million for legal advice, broken down by financial year as shown in the following table.
£ million Financial year Amount 1999-2000 0.4 2000-01 0.7 2001-02 2.3 2002-03 4.5 2003-04 1.3
The remaining £8.3 million covered a range of specialist financial, accounting, banking and other technical advice. In order to provide appropriate incentives, a significant proportion of this total was paid on completion of the sale as a success fee, and was calculated as a percentage of the value achieved at sale. Consequently, it is not possible to accurately attribute these costs across individual financial years.
In addition to these fees, Dstl incurred £1.6 million of general advisory costs and £0.25 million of legal costs relating to its formation.
The legal and advisory costs incurred by QinetiQ and The Carlyle Group are a matter for those two organisations.