Search and rescue sell-off ditched as bids all at sea

THE privatisation of Britain's search and rescue helicopter service was abandoned today amid concerns about alleged misconduct in the bidding process.

The last-minute decision to scrap the competition for the 6 billion contract came after military police were called in to investigate alleged mishandling of commercially sensitive information by former Ministry of Defence staff.

The move, announced in a joint statement to the Stock Exchange by the UK Department of Transport and the Ministry of Defence, will force ministers to go back to the drawing board in planning the future of the service.

It could mean a major expense for the Government if it has to extend the life of the Sea King helicopters currently used for search and rescue.

It emerged last month that the Royal Bank of Scotland had pulled out of the Soteria consortium, which had been named as the preferred bidder.

In December, negotiations on the contract were halted after Soteria, which also includes Sikorsky (part of United Technologies Corp), French defence group Thales and Canadian helicopter services firm CHC, said it had become aware of an unspecified "possible issue" with its bid.

That move came just hours before Transport Secretary Philip Hammond was due to confirm the sale was going ahead.

The police probe, which is expected to continue for some weeks, is understood to focus on the role of a military officer who helped to set the evaluation criteria for the privatisation before leaving to join CHC.

Today Mr Hammond said in a statement to parliament: "The Government has sufficient information to enable it to conclude that the irregularities that have been identified were such that it would not be appropriate to proceed with either the preferred bid or with the current procurement process.

"The Department for Transport and the Ministry of Defence will now consider the potential procurement options to meet future requirements for search and rescue helicopters in the United Kingdom, including options to maintain continuity of search and rescue helicopter cover."

The consortium was due to take over search and rescue for 25 years from 2012, but the switch to a new provider could now be delayed for several years.

British 24-hour search and rescue operations are carried out from 12 bases, of which eight are operated by the military.

The existing Sea King helicopters are nearing the end of their operational life and ministers will have to decide whether to approve expensive interim measures to extend that life until the privatisation process can be re-run or an alternative way forward agreed.