HMS Vanguard's DASO Trident missile being launched
UK

MOD Renationalises Nuclear Warhead Manufacturing

The private contract for the warheads has been outsourced for the past 20 years.

HMS Vanguard's DASO Trident missile being launched

Outsourcing giant Serco has revealed that the Ministry of Defence (MOD) will renationalise management of the Atomic Weapons Establishment (AWE).

AWE is responsible for the manufacturing of Britain’s warheads and the private contract, of which Serco held a 24.5% stake, which had initially been expected to run for 25 years – with the contract used to research and develop warheads on the Vanguard-class nuclear submarines.

However, bosses at Serco have reassured investors the removal of the contract, which had been outsourced for the past 20 years, is unlikely to affect future profits.

Instead, they expect profits to rise 35% this year, with the firm benefiting from the huge increase in Government spending during the coronavirus pandemic.

Defence Secretary Ben Wallace confirmed the contract will end by June 2021 in a written statement to Parliament on Monday.

"Under the revised arrangements, AWE plc will become an Arms-Length Body wholly owned by the MOD," he said.

"It will continue to be managed by a world leading team and a new Board will be appointed by the MOD.

"The new business model will see AWE plc continue to draw on private sector specialist support to strengthen capability as well as playing a key role in managing capital projects and contracts.

"This approach is recognised as best practice in other major complex programmes."

Serco said they were "proud" to have been involved with AWE for the last 20 years and will work with other shareholders and the MOD to "ensure a smooth transition" to the new arrangements.

Others with a stake in the private contract were Lockheed Martin, with 51%, and Jacobs, with 24.5%.

AWE will add around £17m in profits to Serco’s accounts for 2019, but the company told investors that profits for 2020 are as expected – around 35% higher than in 2019.

Last year AWE paid £82m in dividends to shareholders, and last month Serco revealed it is hopeful it can restart dividend payments to its own shareholders.

It comes following a recent extension to a contract for its work over the NHS Test and Trace programme.

Cover image: HMS Vanguard launching its Trident missile in 2005 (Picture: MOD).