Several companies are bidding on Britain's state-owned Defence Support Group, which the government has put up for sale. Here, Defence Support Group members work on vehicles in Camp Bastion, Afghanistan. (Defence Support Group)

Feb. 10, 2014 - By ANDREW CHUTER – Defense News

LONDON — Babcock, KBR and Dyncorp International are among the companies that have submitted proposals to purchase the British state-owned Defence Support Group (DSG) vehicles and weapons support operation, according to industry and other sources.

The Defence Ministry declined to release the names of companies that responded to a sale pre-qualifying questionnaire (PQQ) sent by the government in December.

Companies were required to return the PQQs by the close of Jan. 31 to remain in the bidding process. A shortlist of finalists for the purchase is expected by the end of the month.

Executives and others said the number of bidders that submitted initial proposals via the PQQ process could be in the double figures.

Babcock, KBR and Dyncorp all submitted PQQs, the sources said. All the companies declined to comment on whether they had submitted a bid.

Other companies cited as being interested include British support services contractors Carillion and Germany’s armored vehicle builder Rheinmetall.

Neither Carillion nor Rheinmetall was able to immediately comment.

Bidders such as Babcock are operating alone but others, such as KBR and Carillion, are understood to be acting as a consortium lead, the executives said.

Serco, one of Britain’s largest support companies, is not involved in the bidding, the executives said. The government is hoping to raise £200 million (US $328 million) to £300 million with the sale of the company, said one defense analyst in London.

The Conservative-led coalition government announced it was putting DSG up for sale — along with some other defense operations — as part of its 2010 strategic defense and security review. But the process has been slow going, in part, by the need to get the business in shape for the future. Most recently, there have also been issues over third party intellectual property rights.

“In December [2013] we published a pre-qualifying questionnaire. The deadline for responses was the end of January, and we are now in the process of evaluating those response,” an MoD spokesman said.

Information released by the MoD to contractors said the ministry reserves the option to retain shares in DSG.

The government hopes to complete the sale by the end of the 2014/15 financial year, or soon after. Failure to seal a deal by then could see the sale run into a general election planned for May 2015.

DSG’s main customer is the British Army. Working from eight main sites in the UK and a base in Afghanistan, the company operates as an “arm’s length” organization from the MoD servicing and upgrading the bulk of Britain’s armored vehicle fleets, as well as other vehicles and small arms used by the military.

DSG is also earmarked to play a role in the Warrior infantry fighting vehicle upgrade program being led by Lockheed Martin UK, and the General Dynamics Scout specialist vehicle program.

The sale comes as Britain prepares to transform its land equipment support arrangements in part by moving to what is known as a strategic support supplier arrangement, where the contractor is responsible for delivering equipment availability.

The DSG military avionics business is not included in the sale process and remains under government control.