Britain’s defence ministry will take back 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, Serco said on Monday.
The three companies have managed an entity called AWE Management, which controls the Atomic Weapons Establishment, since 2000, with Lockheed Martin holding 51 percent and Serco and Jacobs holding 24.5 percent each.
“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,” the government said.
Serco said it was told by Britain’s Ministry of Defence (MoD) late on Friday that AWE plc would transfer back under the direct control and management of the MoD as of June 30, 2021.
Based in Aldermaston in southern England, AWE maintains the warheads for the Trident nuclear deterrent and is required to retain the capability to design a new weapon, should it ever be required.
Shares in Serco fell 13 percent in early deals on Monday after the company said it would lose the contract.
The company said AWE was expected to contribute about 17 million pounds ($22m) to both underlying trading profit and pretax profit in 2020.
It said, however, assuming a smooth handover of the contract next year, it expected profit in 2021 to remain broadly in line with current consensus and at similar levels to expectations for 2020.
Sky News, which first reported the news, said it was not clear if the companies would receive compensation for the termination of the 25-year contract, which was due to run until 2025.
Analysts at Jefferies said they expected some compensation was likely as the consortium was now meeting its targets after a period of underperformance about five years ago.
The MoD did not immediately respond to a request to comment.