HAL - as I understand the process, the MCA didn't have the aviation expertees to simply invite tenders from industry to provide the service; they couldn't ask any civilian companies for impartial advice as this would unlikely to be available as any company with the knowledge and expertees would inevitably be a future bidder. Instead they turned to the Military and asked for some assessment of potential platforms, capability etc and from this SAR H was born.
For a while it was very blue sky thinking (as much as you can get in the military) with pretty much any option (helicopter, balloon, fast ship etc) open to a feasibility study to see if it could become the future SAR platform.
Eventually common sense and reality kicked in and it became a competiton initially to provide the interim contract and now the full 2012 contract using (surprise, surprise) helicopters based in the same places as they always have been (unless there is a last minute surprise for all of us).
The MCA have to be an integral part of the process because they will control part or all of the final structure ( unless there is a radical move to make it all military
). Despite the empire building aspirations of the previous Chief Exec, I think the MCA will accept whatever the outcome is of the process.
On the pay question, the problem with trying to tie down military pay rates is that the job can be done by a first tourist Fg Off on £40k or a PA Sqn Ldr on £65k - both can be SAR captains or co-pilots whereas your civilian Captain and FO rates will be more rigid I suspect.