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The privatisation of defence research firm QinetiQ could have secured more money for the taxpayer, a National Audit Office (NAO) report has concluded.

So far the government has accrued over £800 million from Qinetiq, which was floated on the stock exchange to become a FTSE 250 company last year. The Ministry of Defence (MoD) now holds a 19 per cent stake in the firm.

The NAO report acknowledges the important value of making its strategically vital business sustainable, but disagrees with the government over its ability to improve the value of the 2003 sale.

US firm Carlyle valued Qinetiq at £374 million, significantly less than the initial seven bids' valuations of between £450 million and £600 million.

Furthermore the NAO report says ten senior Qinetiq managers received shares worth £107 million from an investment of just over £500,000 – a profit exceeding the incentivisation benefits such returns would bring.

"The move to privatise QinetiQ was effective in safeguarding the viability of a business of national importance and secured half a billion pounds for the taxpayer," NAO chief Sir John Bourn said.

"However, I believe more money should have been secured for the public purse."

Defence minister Baroness Taylor said it was important to remember that the sale's original intention, to "protect defence interests", had been achieved.

She added: "As the largest shareholder it is the taxpayer who has gained the most from the increase in QinetiQ's value. The value that MoD received for the sale of a minority stake in QinetiQ to the Carlyle group was determined by the market in a competitive process."

The NAO report rejects the latter claim, saying the naming of Carlyle as preferred bidder "turned a competitive process into one of negotiation".

Prime minister Gordon Brown was accused of being "financially naïve" over the sale by Liberal Democrat acting leader Vince Cable in parliament yesterday.

Mr Brown responded: "QinetiQ is serving its country under its new ownership and QinetiQ is very important to the MoD's future procurement plans."