London (Brussels Morning) The Ministry of Defence is to take back control of nuclear contracts that have been in the hands of a private consortium, as from next year.
“Under the revised arrangements, AWE plc will become an arms-length body wholly owned by the MoD. It will continue to be managed by a world-leading team and a new board will be appointed by the MoD”, said Defence Secretary Ben Wallace in a statement to parliament.
The private consortium, involving Lockheed Martin, Serco and Jacobs Engineering, will hand over management of the Atomic Weapons Establishment, which designs, manufactures and supports nuclear warheads for the UK, from June 2021.
The contract awarded to the consortium was to last until 2025 but the government reportedly ended it early, citing reasons related to value for money and to manage and align MoD and AWE priorities more easily.
An industry executive told Defense News the government invoked a “termination of convenience” clause to end the agreement early.
“It was not performance related. Lockheed Martin and its partners could be due compensation”, they said.
According to Sky News, a source familiar with the deal said the move “bore the fingerprints” of Dominic Cummings, a trusted adviser of the prime minister who has urged the MOD to trim the fat on its spending since the last general election.
Serco, which has a 24.5 percent stake in the company, took a hit from the news it learned late Friday, with shares falling 13 percent on Monday.
The British plc, which delivers hundreds of public service contracts worldwide, still retains numerous contracts with the UK government, including running the government’s test and trace programme.
Wallace also said that AWE would draw on the private sector to help “strengthen capability as well as playing a key role in managing capital projects and contracts”.