The Ministry of Defence is close to awarding two 25-year contracts worth a total of £12 billion to companies including the defence group QinetiQ, The Times has learnt.

Last week, the MoD’s investment approval board (IAB), its top decision-making body on spending, gave the green light to a £2 billion PFI to supply pilot and aircrew training to all three British Armed Forces — the military flying training system (MFTS).

The IAB is also just weeks away from picking a partner for an even bigger programme to provide technical training in engineering, electronics and other topics — the £10 billion defence training rationalisation (DTR).

Both contracts are designed to replace a variety of existing, disparate training regimes run by the Royal Navy, Royal Air Force and the Army.

Three rival consortiums are bidding for DTR: MC3, made up of BAE Systems, VT Group and Carillion; Metrix, a joint venture between Land Securities and QinetiQ; and Holdfast, consisting of Babcock International and Carillion.

The winner will start to provide services to the military next year, with full service scheduled to begin in 2012.

Metrix is believed to be a clear favourite to win at least part of the programme, but the selection of QinetiQ is bound to stoke controversy.

Three rival groups are hoping to be selected for MFTS. They include Ascent, a joint venture between VT Group and the US defence giant Lockheed Martin; Sterling, which consists of Thales, of France, and Boeing, of the United States; and Vector, a US joint venture between KBR and Northrop Grumman.

QinetiQ, which floated on the stock market earlier this year, was once part of the MoD’s research unit and is still 19 per cent owned by the Government.

The IAB’s decision on MFTS is likely to be signed off by Des Browne, the Defence Secretary, and the Treasury over the next few weeks. An announcement is expected early next month.

The defence training rationalisation programme could take longer to approve because of last-minute political wrangling.

The winners on both contracts will work in partnership with the MoD to manage all training from the moment that recruits are picked through to their qualification. They include everything from tuition to the construction and maintenance of lecture halls, airfields and barracks and even the supply of food in military canteens.

The military flying training system will include the acquisition of flight simulators and possibly jet trainer aircraft.

The British Armed Forces have privatised key activities in recent years, including warship maintenance, transporting tanks and refuelling fighter jets.

The contracts are attractive to private companies because they lock in revenues and profits for decades. The MoD currently spends £4.2 billion a year on training, or 20 per cent of its annual budget. It wants to make better use of the money by reducing waste and duplication.

QINETIQ

The Government cut its stake from 56 per cent to 23.9 per cent, gaining about £290 million