Qinetiq Regulatory News (QQ.)

QinetiQ secures £1bn contract amendment to deliver modern air ranges and test aircrew training, enabling military capability for the future

2 December 2016 - QinetiQ announced this morning that it has been awarded a £1bn contract amendment to the Long Term Partnering Agreement (LTPA) from the UK Ministry of Defence (MOD), under which Test & Evaluation (T&E) services have been delivered since 2003, committing approximately half the core LTPA revenues until 31 March 2028. Under the amendment QinetiQ will modernise and operate the air ranges at MOD Aberporth and MOD Hebrides, and test aircrew training through the Empire Test Pilots' School at MOD Boscombe Down. Importantly, efficiencies delivered through this programme enable future MOD and QinetiQ investment in developing further world-class T&E.

In today's world of rapidly evolving and sophisticated threats it is crucial that the UK Armed Forces develop and deploy advanced military capability quickly and flexibly to protect national interests. Modernising the delivery of T&E is a critical enabler to the success of this outcome. Working alongside the MOD, QinetiQ has established this programme to ensure that the UK is at the forefront of world-class competitive air ranges and test aircrew training, relevant to the current and future needs of the UK Armed Forces as well as government and industry customers around the world.

The MOD and QinetiQ have agreed to invest approximately £180m in modernising facilities, equipment and developing new ways of working as part of QinetiQ's wider strategy to lead and modernise T&E across the lifecycle, from experimentation and research of new capabilities through to training and rehearsal of current capabilities. This new approach will be delivered by working in collaboration across the defence enterprise, including Small Medium Enterprises (SMEs), to foster innovation and develop future skills, with the QinetiQ investment being recovered from the MOD over the life of the contract.

Minister for Defence Procurement, Harriett Baldwin said: "This new deal will ensure our Armed Forces get world-class training and testing facilities and services while making substantial efficiencies, ensuring excellent value for money for the taxpayer.

"Backed by a rising Defence budget and our £178 billion equipment plan, all three sites will continue to have a major role in supporting our defence capability. This investment will help secure their futures for the longer term."

Steve Wadey, QinetiQ CEO, said: "This contract amendment represents a huge step forward in the modernisation of UK Defence T&E to enable the safety and operational advantage of our Armed Forces in the 21st century. Our investment demonstrates that we are committed to transforming our ways of working with both UK MOD and wider industry, to deliver air ranges and test aircrew training that are relevant and competitive for the UK Armed Forces as well as government and industry customers around the world. I am particularly excited that this programme also enables us to plan and begin implementation of further enhancements to the UK's T&E capabilities to address current and emerging threats through the next decade and beyond."

There will be a conference call for QinetiQ analysts and investors at 0745 hours UK time on 2 December 2016.

Dial in details: +44 (0) 20 3003 2666 Password: QinetiQ.

This announcement contains inside information and the person responsible for making this announcement is Jon Messent, Company Secretary.

ENDS

Notes for Editors:

The Long Term Partnering Agreement (LTPA) is a 25 year contract between the MOD and QinetiQ. The LTPA is valued at around £5.6 billion and came into effect in April 2003. The company operates 17 core MOD sites and ranges delivering: test, evaluation, training support, and a variety of specialised services, across the air, land and sea domains. Its outputs enable much of UK Defence's Capability development, providing services to about 70% of the Defence Major Projects Portfolio.

To ensure the UK has the capabilities required for experimentation, demonstration and rehearsal of military capability, QinetiQ will invest approximately £95m in modern tracking equipment, instrumentation and range infrastructure at the MOD Aberporth and MOD Hebrides ranges. These changes will help reduce the overall operating costs of the ranges ensuring they remain competitive and have the capabilities required to support defence exports and attract international customers, building on the success of the At Sea Demonstration 2015* and Unmanned Warrior** 2016.

At MOD Boscombe Down, QinetiQ will work with partners in the RAF's Air Warfare Centre to introduce a new test pilot syllabus from 2019 that will meet future military test pilot training needs while also offering a new commercial test pilot qualification, opening up new opportunities for a wider range of students to attend. QinetiQ will invest approximately £85m to replace the oldest aircraft in the current flying fleet with new, systems-rich aircraft that will deliver the new syllabus while costing less to maintain, reducing the overall running costs of the school.

*At Sea Demonstration https://www.youtube.com/watch?v=wzYhOlrzlS8 

**Unmanned Warrior https://www.youtube.com/watch?v=yEbhn9UYQCA 

About QinetiQ:

QinetiQ is a leading science and engineering company operating primarily in the defence, security and aerospace markets. We work in partnership with our customers to solve real world problems through innovative solutions delivering operational and competitive advantage.

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