Q121 Angela Browning: In the future, just coming back to where I started with the very clear recommendations that the NAO Report gives to your Department, not just with your ongoing relationship with QinetiQ but any future privatisations of this nature, or government for that matter, would you agree that one would have expected that negotiation to take place?
Mr Jeffrey: I would certainly agree that if we were in the same position again, and I would be very surprised if we were in exactly the same position because, as Mr Schofield said, this was a very complex negotiation, we should be aiming to recoup our own costs from the privatised entity as well.
Q122 Angela Browning: I appreciate the complexity of it but I assume a due diligence exercise was carried out.
Mr Jeffrey: Yes.
Q123 Angela Browning: At what point?
Mr Jeffrey: A due diligence exercise was carried out certainly by the company.
Q124 Angela Browning: As a result of their due diligence exercise were any specific issues raised that the Committee should know about in terms of how these negotiations proceeded?
Mr Jeffrey: I am not quite sure which due diligence exercise you are addressing. It was certainly the case that once Carlyle had been identified as the preferred bidder they undertook due diligence.
Q125 Angela Browning: Of course.
Mr Jeffrey: And it was out of that that came these issues that were referred to in earlier questions to do with the Long Term Partnering Agreement and the pension fund.
Q126 Angela Browning: I thought that might have been the case. Can I ask you then was it the case that when they raised these issues, such as the reimbursement of costs, were these part of the negotiations that took place as a part of issues that were raised more latterly after due diligence?
Mr Jeffrey: The expectation that Carlyle's costs would be recovered from QinetiQ was embedded in the original bid.
Q127 Angela Browning: I would just raise with you, although obviously we are not party to the detail of that negotiation, it just looks like a rather weak negotiating hand, frankly, from where I am sitting. I hope that the lessons will be learned from it.
Mr Jeffrey: There are lessons to be learned from this, I do not deny that, and we will certainly be seeking to learn them.
Q128 Angela Browning: Thank you. My time is just about up but I think, Chairman, I have time for just one for Sir John. The ten senior managers-what was the process followed to identify them? Was it by job title or by individual person?
Sir John Chisholm: When I was asked to go and see Carlyle the main topic of conversation was for Carlyle to get my view of who was most important for the company.
Q129 Angela Browning: By job title or person?
Sir John Chisholm: Obviously, they were interviewing me as well because it was not at all clear that I would be chief executive either, so they wanted to choose their management team and it would be natural to come to me and ask what my views were, and so we went through much more than ten of the top management team and the ten who were most important were identified then.
Q130 Angela Browning: Could you just answer my question? Was it because of their individual experience and skill or was it based on the job title they held within the organisation?
Sir John Chisholm: The two were highly linked together.