Government halts search and rescue bidding process

Channel 4 News revealed last month that the Ministry of Defence had discovered that one of its officials had been passing commercially sensitive information to the preferred bidder.

Ministers have now suspended the bidding process and Ministry of Defence (MoD) police are investigating how the information came to be in the possession of CHC Helicopter, a member of the Soteria consortium hoping to win the £6bn contract.

Channel 4 News Political Correspondent Cathy Newman has learned that the aborted deal will cost the taxpayer £10million.

“After handing the winning consortium commercially-sensitive details, the MoD official – a former squadron leader called Mike Nash – went and got a job with the company,” she reported. “The rival bidders complained and the scandal is now the subject of a police investigation.

“A senior source at the MoD told me today that inquiries were focussing on claims that no fewer than three officials were – as he put it – ‘hawking themselves around’ to try to secure a lucrative position with the companies bidding to run the helicopter search and rescue service.”

The deal was supposed to replace the RAF’s Sea King helicopter fleet, but there is a risk that the privatisation will now be delayed.

“The Government has sufficient information to enable it to conclude that the irregularities that have been identified were such that that it would not be appropriate to proceed…” Transport Secretary Philip Hammond

In a Commons statement, the Transport Secretary, Philip Hammond said: “The Government has sufficient information to enable it to conclude that the irregularities that have been identified were such that that it would not be appropriate to proceed with either the preferred bid or with the current procurement process.

“The Department for Transport and the Ministry of Defence will now consider the potential procurement options to meet future requirements for search and rescue helicopters in the United Kingdom, including options to maintain continuity of search and rescue helicopter cover until new longer term arrangements can be put in place.”

Mr Hammond said Soteria had alerted the Government in December to “irregularities” in the bidding process.

“The irregularities included access by one of the consortium members, CHC Helicopter, to commercially-sensitive information regarding the joint MoD/DfT project team’s evaluations of industry bids and evidence that a former member of that project team had assisted the consortium in its bid preparation, contrary to explicit assurances given to the project team.

“The Department for Transport and the Ministry of Defence will now consider the potential procurement options to meet future requirements for search and rescue helicopters in the United Kingdom, including options to maintain continuity of search and rescue helicopter cover until new longer term arrangements can be put in place.”

The current fleet of Sea King helicopters were built in the Yeovil constituency of the Liberal Democrat MP, David Laws. He told Channel 4 News that the MoD had been alerted to “inappropriate behaviour” by officials and the winning bidder two years ago, but no actions seemed to have been taken.

The Conservative MP Douglas Carswell, told the programme that the incident raised “serious questions” about the whole way defence procurement was handled.

“Billion pound contracts are signed without a proper competitive tender process,” he said. “Officials pass from big government departments to big business – and all the while the taxpayer gets poor value for money.”

Professor Ron Smith, a defence economist at London University, told Channel 4 News that millions of pounds of costs would be incurred, both from the bidding process so far and the extra maintenance needed for the fleet of ageing Sea King helicopters to keep them operating until new aircraft are built.

Two consortia put in bids to build and operate the aircraft and with the Soteria bid suspended, the other consortium could re-tender in the future.

But without other bids as well, the Government could lose out financially, said Prof Smith. "If there's only one competitor for the private finance initiative, then the Government will be in a very difficult negotiating position."

Channel 4 News contacted two of the companies involved in the consortium that was not chosen as preferred bidder.

Lockheed Martin said it was monitoring the situation before deciding whether to re-bid. Babcock said it had no comment.

Maintenance of the Sea Kings is currently carried out by the multinational firm, AgustaWestland. The company, whose Yeovil plant built the Sea Kings, is likely to continue its work longer than expected.

It is possible the Government could decide to abandon the privatisation, leaving AgustaWestland in charge of maintenance, the military responsible for eight bases and the Maritime and Coastguard Agency running the four other bases.

A spokesman for the Department of Transport said it was "too early to say" if Soteria would be ruled out from submitting another bid, but stressed that the previous procurement process had been cancelled.

Labour MP Brian Donohoe, whose Central Ayrshire seat includes the helicopter search-and-rescue base in Prestwick, said there were no safety concerns in the “immediate future”.

But he told BBC Radio’s Good Morning Scotland programme: “My main concern is that the service itself will suffer as a consequence of this continuing delaying of the process.

“I understand it is highly probable that there will be a proposal to have the Sea King – the present kit – upgraded in order that the service will be able to be maintained.

“There now needs to be almost an immediate decision taken for the upgrading of the Sea King to take place.”

‘Grossly embarrassing’

Also speaking to BBC Radio, the North East Fife Liberal Democrat MP Sir Menzies Campbell said the latest disclosures were “grossly embarrassing all round”.

He added: “It reflects badly due to the fact that it had to be the bidders who came forward with this information.

“What it will raise once again is the nature of the relationship of the people who work for the MoD and commercial organisations.”

Soteria said in a statement that it had been designated preferred bidder because of the “value, expertise, dedication, excellence and exceptional technical solution” it could provide.

It added that it was confident it could do what the Government had asked.