The Ministry of Defence in the Government of United Kingdom (U.K.) has announced to take back the direct control of the Operations and Development of the country’s nuclear weapons from a consortium of Lockheed Martin, Serco and Jacobs Engineering in June 2021.
These 3 companies have managed an entity called AWE Management Limited (AWE ML), which controls the Atomic Weapons Establishment (AWE), since 2000. AWE is responsible for the design, manufacture and support of warheads for the U.K.’s nuclear weapons. In AWE, Lockheed Martin owns 51% share and Serco and Jacobs Engineering hold 24.5% each. The contract was awarded to AWE in 1999 under 25 years contract.
As per the contract, AWE is also responsible for retaining the capability to design a new weapon, if required. The AWE is based at Aldermaston in Southern England. Serco said it was informed about the termination of the contract during the weekend.
The Defence Ministry believes that termination of contract will help improve its agility in managing the U.K.’s nuclear deterrent and deliver value for money to the taxpayer. It is to be noted that AWE was expected to contribute about U.S. $ 22 million to both its underlying trading profit and Profit Before Tax in 2020.
A Statement from Defence Ministry of U.K. stated, “The change in model will remove the current commercial arrangements, enhancing the MoD’s (Ministry of Defence) agility in the future management of the UK’s nuclear deterrent, whilst also delivering on core MoD objectives and value for money to the taxpayer.”
It further read, “The decision was taken in order to simplify and further strengthen the relationship between the MOD and AWE plc, enhancing the MOD’s ability to invest in the development of the workforce, technology and infrastructure, and therefore in the future of AWE plc.”
Its still not clear if Ministry of Defence would compensate Lockheed Martin, Serco and Jacobs Engineering for ending the contract before time.
It is to be noted in 1993, the Ministry of Defence entered into a Government owned Contractor operated arrangement with Hunting-BRAE whereby Hunting-BRAE operated the AWE on behalf of the Government. In 1999, following a competitive tender, a new 25-year contract was awarded to AWE ML.
Post this in July 2019, the Defence Ministry triggered the Successor Arrangements clause with AWE ML to explore alternative and viable management options before the expiry of the contract tenure. After a thorough review, the Defence Ministry decided that AWE should become an Arms-Length Body and will be wholly owned by the Ministry.
