1.17 One of the key areas of concern for the defence industry was the ability of QinetiQ to exploit commercially the wealth of intellectual property it had been given by the defence industry. Because DERA was seen as an extension of the Department, contractors had in the past exchanged intellectual property with DERA without regard to whether this was required under their contract and sometimes without maintaining thorough records.
1.18 The Department and DERA management undertook an extensive audit of all intellectual property held by DERA, known as the Records Audit and Separation Project. Under this process all intellectual property held by DERA, some 148,000 records, was classified to determine where it had come from and processed accordingly. The intellectual property that had been internally generated by DERA could transfer to QinetiQ if the relevant division was transferring. Intellectual property relating to international collaboration projects was in most cases transferred to DSTL and all intellectual property originating from the defence industry could only be retained by QinetiQ if it supported ongoing work for the Department. The Department did more than was legally required in auditing the intellectual property and there have been no legal challenges to date.
1.19 Although the defence industry was consulted throughout the process, the Department judged it impractical to involve it in adjudicating on the treatment of specific intellectual property. After completion of the exercise, defence contractors were sent a list of all intellectual property originating from them, detailing how it had been treated. It was often difficult, however, to establish the provenance of intellectual property as the challenging timetable for the exercise, which was largely completed between November 2000 and June 2001, meant that the descriptions were often inadequate. These limitations damaged the confidence that defence industry members of the Commercial Policy Group14 had in the robustness of the exercise. The Department considers that further work would not have changed the views expressed by industry critics, who were likely to be sceptical of the benefits of privatising DERA given their position as competitors.
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14 The Commercial Policy Group is a joint Ministry of Defence and defence industry body that itself is a subgroup of the National Defence Industry Council.