QinetiQ sale investigated by watchdog

A government watchdog is to investigate the Ministry of Defence's (MoD) partial sale of defence technology company QinetiQ.

The privatisation of the company has sparked controversy due to the £42m paid by US company, the Carlyle Group, for a third of QinetiQ in 2002.

The National Audit Office (NAO), which scrutinises public spending, is to investigate why, three years on, the Carlyle stake is worth more than £300m.

An NAO spokesman said: "The basic question we will be asking is whether QinetiQ is good value for money. We thought it was important to announce we are going to do something but we are still at a stage of deciding what the scope is."

QinetiQ declined to formally comment on the matter but said it had been expecting an inquiry.

Shares for the company are expected to float next month in a deal which values the company at £1.3bn.

Five years ago, the Defence Evaluation and Research Agency (Dera) was split into two organisations: the Defence Science and Technical Laboratory and QinetiQ, half of which is still owned by the MoD.

Last year, Dame Pauline Neville-Jones, former chairwoman of QinetiQ questioned UK ID cards, saying the current government lacks "the balls" to make the scheme mandatory.