TAXPAYERS lost £90m through the part-privatisation of Malvern-based QinetiQ when it was sold for less than it was worth, a House of Commons report has revealed.

The Ministry of Defence arranged to sell off the former Defence Evaluation and Research Agency to a private equity group during a "rushed" deal by "profiteering" company directors, say a committee of MPs.

The 2003 sale of a minority stake in the company happened when the market for technology stock was weak.

This week's report by the House of Commons Public Accounts Committee said the Carlyle Group was offered an "unbeatable hand" when other bidders were eliminated by the MoD.

The MoD began the sale before QinetiQ's most important contract had been finalised, making it hard to judge the company's true value, the report says.

This allowed Carlyle to negotiate a £55m reduction in its £374m offer after being appointed preferred bidder for the agency.

But the MoD nevertheless agreed to sell the group 2.5 per cent more of QinetiQ than they had specified in their bid.

To date the privatisation has generated £576m in proceeds for the taxpayer, but the report maintains the MoD should have obtained £90m more from the initial sale.

A spokesman for QinetiQ, which carries out research for the MoD and advises on the procurement of equipment, said: "QinetiQ strongly refutes any accusation that members of its senior management team acted inappropriately and without integrity.

"The QinetiQ management team was specifically selected and appointed by the Government with a mandate to commercialise the Ministry of Defence research laboratories.

"The Public Private Partnership option was based on the Labour Party manifesto policy of a third way, neither fully public nor fully private."