The privatisation plan, worth £6 billion, had been put out to tender and a bidder, the Soteria consortium, had been identified as the favoured party to take over the service currently run by the RAF, Royal Navy and Maritime and Coastguard Agency.
In December, warning signs appeared when an expected announcement that the SAR service would pass to a commercial provider was postponed due to a “possible issue”, according to the Transport Secretary, Philip Hammond.
"We regret the further uncertainty that this entails for all those involved in providing the UK's search and rescue service," he said at the time.
Now, it has been confirmed that the entire bidding process has been halted, Hammond saying this week that Soteria had admitted "irregularities regarding the conduct of their bid team".
These included the fact that CHC Helicopter, part of the Soteria consortium, wrongly obtained details of MoD and Department for Transport evaluations of bids, which gave Soteria an unfair advantage in the bidding process.
MoD police are investigating the matter, while the Government has been forced to reboot the bidding process for privatisation of the SAR service.
The Government would, said Hammond, continue to "consider the potential procurement options” while “including options to maintain continuity of search and rescue helicopter cover until new longer-term arrangements can be put in place".
In the short to medium term, the main option would appear to be an upgrading of the existing Sea King fleet.
Vice-Admiral Sir Alan Massey, Chief Executive of the Maritime and Coastguard Agency, told the House of Commons Transport Committee that he was "completely satisfied with the service our search and rescue helicopters provide at the moment”.
But, he added, if he were to be asked “how things are going to be in 2016 it might be different”.
Some believe that, when re-investment in new hardware finally comes, it should not come from private business.
Bob Crow, General Secretary of the Rail, Maritime and Transport Union, said: "This whole sordid and botched episode shows that the raw greed of the private sector should never be allowed anywhere near the life-or-death rescue services on the high seas.
"Millions of pounds of taxpayers' money has been wasted and the whole plan should now be scrapped, not shelved."
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