The Government has delayed a decision on the management of the Atomic Weapons Establishment, which is currently run by British outsourcer Serco and US giants Lockheed Martin and Jacobs Engineering but has been plagued with cost overruns and delays.
The three firms have a contract to look after AWE sites, which have operational and construction costs of about £1bn a year, at Aldermaston and Burghfield in Berkshire. The AWE designs, manufactures and maintains warheads, and has drawn protests by anti-nuclear campaign groups.
But the AWE has seen cost overruns and delays to projects such as the £634m Project Pegasus, an enriched uranium components plant which is under construction, and Project Mensa, a facility for assembling warheads.
A source close to the consortium has pointed to problems of corrosion at existing facilities, which are up to 65 years old.
The Lockheed-led consortium, AWE Management Ltd, announced in July that it was cutting 500 jobs to “ensure long-term efficiencies”.
Serco, which is run by Sir Winston Churchill’s grandson, Rupert Soames, was fined £280,000 in 2013 following a blast at the site.
It emerged earlier this year that the Ministry of Defence was reviewing its contract with the consortium, which had been due to run to 2025, after a series of independent reviews. It is believed that recommendations in these reports included bringing the contract in-house at the MoD, so that the private sector would become a support partner rather than lead work at the AWE. Another option is to re-let the contract, should the MoD conclude that the consortium has not fulfilled its obligations.
It is also understood that the MoD has the right to stop the contract quite suddenly because of the sensitive nature of an organisation that is vital to national security.
Industry sources said they had been told by officials that the outcome of the MoD’s review would be ready in June, but no update has been given.
The AWE is funded in five-year tranches, with the latest coming to an end in 2017. This would be a natural point to bring in a new consortium, if that is the chosen option, and the long selection process would need to get underway this year.
A spokesman for the MoD said: “The commercial arrangements in place with AWE and the Ministry of Defence continue to be routinely reviewed and assessed. There is no specific closing date for this activity.”
- More about:
- Business News