In June 2001 DERA, the UK Defence Evaluation Research Agency, was split in two. Most of it, about two thirds, was privatised to become the company now known as QinetiQ; the rest remained a government agency now called DSTL, or Defence Science and Technology Laboratories.
The idea was to privatise the entire agency, as is the current trend with public sector organisations in Britain. A growing proportion of the agency's business was commercial rather than defence projects; DERA had been successful in transferring technology from defense into commercial projects, such as healthcare and bespoke computerised systems.
A complication was that the American DOD would not work with an international private company. DERA's links with various American research agencies made a total privatisation impossible without abandoning or splitting numerous projects. For this reason a small part of DERA remained under government control, and so able to continue work with the Americans.
The rest became QinetiQ. As a private company rather than a government agency it was able to pursue projects more aggressively (DERA was not allowed to claim any revenue from patents or inventions) as it finds new applications for defence technology in other fields.
Currently (2002) 60% of QinetiQ's work is defence orientated, but the commercial proportion is growing.
QinetiQ is widely known for its somewhat silly name. They may have a point... many people working there still add a 'U', so it's not surprising others have difficulty with it. But apparently it does mean something! PR-speak ON:
"Qi" is Chinese for Intelligence; "Net" represents the company's use of networked technology, and well established links with other members of the defence and technology community, and "iQ" is, erm, also for Intelligence.
More confusion is added by not being obvious as to how to pronouce it... just pretend it's spelt "Kinetic" and you'll be alright.
QinetiQ still uses many sites around the UK, including Malvern and Farnborough as the main locations, and many other smaller, more specialised sites at Winfrith, Portsdown West and Fort Halstead.