QinetiQ seals £1bn deal with MoD: Chief exec says it will give UK's armed forces an "operational advantage"

Oliver Gill
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German Air Force trains near Alamogordo, New Mexico
QinetiQ was listed as the 52nd largest defence contractor in the world in 2011 (Source: Getty)

Defence engineering company QinetiQ received some Friday cheer after agreeing a £1bn deal with the UK government.

And even better, the deal is cracking value for money... according to the government at least.

"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," said Harriett Baldwin, the minister for defence procurement.

Unfortunately, the market didn't think the deal was as great a value for the firm, with shares down over one per cent in trading.

Read more: Cobham share price rises as it poaches finance boss from QinetiQ

The contract is an amendment to a "long term partnering agreement (LPTA)" the Farnborough-based company has with the Ministry of Defence (MoD).

QinetiQ (pronounced "kinetic") updated the market today with a statement packed to the rafters with buzzwords. It will continue to deliver "test and evaluation (T&E)" services, and the MoD will commit half of the core LTPA revenues until 2028.

Read more: Qinetiq reports a solid first quarter result

Simply put this means the company – listed by Defence News as the world's 52nd largest defence contractor in 2011 – has a contract extension to deliver services at three MoD sites: Aberporth, Hebrides and Boscombe.

Someone else who had got that Friday feeling was the chief exec of QinetiQ, Steve Wadey, who said he was "excited" by the news.

"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," he said.

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