The Ministry of Defence's relationship with big business is under fire as it emerged that the former head of strategic weapons is now working for an engineering giant which is bidding for sensitive military contracts.

Clive Billiald, who left the department earlier this year, is now a senior business development manager at US-based Bechtel. He is working on Bechtel's bid to take over Defence Equipment & Support (DE&S), the £14bn-budget MoD agency that buys military helicopters and missiles.

Prior to looking after strategic weapons and a stint overseeing the construction of submarines, Mr Billiald was for two years a private secretary to the chief of defence materiel – the senior civil servant that looks after DE&S. The current chief, Bernard Gray, is trying to push through revolutionary plans to semi-privatise the agency in the hope that the private sector's commercial nous would lead to guns and ammo being bought at a cheaper price.

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The MoD has been accused of having a "revolving door" policy on the private sector, which sees senior civil servants and generals end up in well-paid jobs with defence contractors that value their inside knowledge.

Critics believe that officials who have been privy to such sensitive matters of national security should receive at least short-term bans from working for companies that bid for MoD work.

A spokesman for the Public & Commercial Services union, which is concerned that outsourcing DE&S to the private sector could cost thousands of jobs at the agency's Bristol base, said: "Unfortunately this happens time and again. A senior MoD official leaves on the Friday and on the Monday is doing a very similar job for a defence contractor. Quite clearly there should be procedures to stop this happening."

Bechtel has already been criticised for hiring No. 10's former defence policy adviser, Richard Freer. He is currently working on a waste treatment project in the US, but is expected to ultimately look at defence bids for Bechtel.

The two consortiums – the other is led by CH2M Hill, the US engineer behind the London 2012 Olympics – pitching to run DE&S are ravaged by potential conflicts of interest. Many businesses within the consortiums work for defence giant BAE Systems, meaning they would be awarding lucrative contracts to a key customer.

A Whitehall source said: "This [Mr Billiald's employment with Bechtel] will no doubt raise more concerns about conflicts of interest and access around this controversial privatisation. It's frankly ridiculous that this appointment can be deemed acceptable given the commercial conflicts and concerns it raises."

Bechtel said: "We have fully complied with the Government's business appointment rules."

The MoD said: "All former MOD staff who take up posts in business are subject to the rules set out by the Independent Advisory Committee for Business Appointments."

Top men in the 'revolving door': How they switched to private firms

Dr Richard Freer A private secretary in the No. 10 policy unit, he swapped the MoD earlier this year for Bechtel.

Lt Gen Sir Mark Mans He announced formation of the Defence Infrastructure Organisation, is now with Capita's defence division.

Brigadier Jim Bowden He was DIO's head of policy and strategy. Today he works for KBR, which has contracts with that agency.