QinetiQ (pronounced [kɪ.ˈnɛ.tɪk], as in kinetic energy) is a British defence technology company, formed from the greater part of the former government agency DERA when it was split up in June 2001 (with the smaller part becoming Dstl). The Chief Executive at inception was the present day Chairman Sir John Chisholm. The current CEO is Graham Love. As a privatised company, QinetiQ is now one of the largest defence research organisations in the world and employs over 11,400 people.
QinetiQ is a science and technology company, with a number of commercial and military products. One example is the semi-intelligent ultrasound scuba diver detector called Cerberus. The defence research sites that now form QinetiQ were previously involved in the invention of liquid crystal displays, the technology for one type of flat panel speakers, microwave radar, Chobham armour, and thermal imagers. In recent years QinetiQ has also developed software products, especially those for the defence and security industries. Examples include the "SURVIVE" vulnerability and recoverability assessment tool, which was originally developed to assess the vulnerability of ships to weapon attack, but has been expanded to cover: naval recoverability (damage control, firefighting, capability restoration); escape and evacuation; explosive safety; and, in recent years, tri-service vulnerability (aircraft, vehicles) and infrastructure (buildings, fortifications, etc.). In so doing, it has become Europe's leading tri-service vulnerability assessment tool.
QinetiQ has a long term agreement (25 years) with the UK Ministry of Defence (MoD) to manage military ranges. This agreement is the Long Term Partnering Agreement (LTPA). It is a major stakeholder in the UK Defence Technology Centre which places military research contracts on behalf of the MoD.
QinetiQ also has a 15 year agreement with the MoD under the MAritime Strategic Facilities Agreement (MSCA) to provide strategic maritime facilities and capabilities, including hydromechanic facilities at Haslar, biomedical facilities on the UK's South Coast, and submarine structures, survivabiltiy and shock testing facilities at Rosyth.
The major UK sites are at Farnborough, Hampshire (the historical Royal Aircraft Establishment) and Malvern, Worcestershire (the historical RSRE/RRE/TRE), each having more than 2,000 employees. Trials aircraft are flown out of Boscombe Down, Wiltshire (the historical A&AEE). The number of UK employees is believed to be around 9,000 as of April 2005.
Controversy also arose around the fact that retail investors were to be excluded from the Initial Public Offering (IPO) due to QinetiQ's complexity and the fact that institutional investors would require less complicated marketing and financing. This led to contrasts with the 'Sid' campaign for British Gas plc in 1986, where retail investors were encouraged to buy shares, both with discounts and a large advertising campaign. The issue was partially resolved by allowing some brokerage firms to place orders in the IPO as part of a combined order, allowing the firm to purchase as though an institutional investor, but on behalf of clients. While this did not result in a public campaign or retail investor discounts, it did allow many investors to purchase shares directly in the IPO.
The company floated on 10 February 2006, with an IPO of 200p per share, which gave QinetiQ an initial market value of £1.3bn. On 13 February 2006 (the Monday after the Friday IPO) QinetiQ shares closed at 219.5p per share, valuing the company at over £1.4bn. However, by late March 2006 QinetiQ shares dropped 15% from that peak (7% from the IPO price) to 186p each.
Speculation that a consortium including QinetiQ may be about to win a £10bn MoD training contract helped push their share price back above 190p in early Nov 2006. It was announced on 17 January 2007 that the QinetiQ-led Metrix consortium was the preferred bidder for package two of the MoD's Defence Training Rationalisation programme, worth approx £16bn.
In February 2007 the acquisition of ITS Corporation, a provider of IT services to the US government and its agencies, was announced. The disposal of Aerospace Filtration Systems (formerly part of Westar) was announced at the same time. In June, QinetiQ Group plc announced that its U.S. subsidiary Apogen Technologies Inc. had completed the acquisition of 3H Technology LLC, a specialist IT company with US government and commercial clients. In October, the company completed the acquisition of Boldon James Holdings Limited. Boldon James is a UK-based provider of software solutions for high end secure messaging, primarily for military, government and security customers worldwide.
In September 2005, Graham Love replaced Sir John Chisholm as Chief Executive. John Chisholm became Executive Chairman; the previous chairman Dame Pauline Neville-Jones having resigned earlier in the year. In October 2006, ex-CIA Director George Tenet joined QinetiQ as an independent non-executive director.
In November 2007, the NAO reported that taxpayers could have gained "tens of millions" more and was critical of the incentive scheme given to QinetiQ managers, the 10 most senior of whom gained £107.5m on a total investment of £540,000 in the company's shares. The return of 19,990% on their investment was described as "excessive" by the NAO. The role of QinetiQ's management in negotiating terms with the Carlyle Group, while the private equity company was bidding for the business, was also criticised by the NAO. Carlyle bought a third of the business for £42m which grew in value to £372m in less than four years. However, the Ministry of Defence defended the sale:
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