The latest report from the National Audit Office (NAO) on Britain’s Trident renewal programme has demonstrated, yet again, how nuclear weapons siphon vast sums of public money into the coffers of private contractors.
The report covers three Ministry of Defence (MoD) infrastructure projects that are critical to the renewal programme: the construction of a new nuclear warhead assembly facility at the Atomic Weapons Establishment (AWE Ltd’s) Burghfield site; the building of new facilities at BAE System’s shipyard in Barrow-in-Furness, where the new nuclear-armed Dreadnought class submarines will be built; and the construction of new facilities at the Rolls Royce owned Ranesway site, where the company will build the submarines’ reactor cores. The three projects are running behind schedule and overbudget, with a combined cost increase of £1.35 billion to date:
Reiterating the NAO’s previous criticisms, the report explains how Trident’s reliance on monopoly contractors puts the MoD at a disadvantage in contract negotiations. The result is contractual arrangements that put the risk of extra costs on the MoD, not the companies involved.
This means that British taxpayers will cover the extra £1.35 billion in costs. The money is coming out of a £10 billion contingency fund already allocated to the Trident renewal programme, however, as the Campaign for Nuclear Disarmament warned, this level of overspending only three years into the project suggests that the overall costs could exceed the £205 billion previously estimated. This money could be spent on any number of socially beneficial projects, such as building renewable energy infrastructure or affordable homes, instead of boosting the profits of major weapons companies.
The contractual arrangements give the companies “little or no incentive to manage projects cost-effectively”, the NAO report states. Under the MoD’s contract with BAE Systems covering the new Barrow-in-Furness facility, the company is paid all its costs plus an agreed profit margin. BAE has so far received an additional £108 million due to increased costs on the project. BAE also receives a management fee which increases in line with the costs that it incurs, thus giving the company an incentive to increase costs. BAE has earned an additional £10 million in management fees because of the costs increases identified in the report.
Moreover, the report notes that there are MoD concerns with BAE’s performance at the Barrow site but, under its contract, the company has no liability for costs and damages relating to non-performance under the contract.
In 2014, the UK government introduced regulations designed to secure better value for money when it contracts with “single source” (monopoly) providers. The MoD’s contract with AWE Ltd (a consortium of Lockheed Martin, Jacobs Engineering and Serco) has now been brought under those regulations and AWE Ltd took on a greater share of the risk of cost increases. Before the renegotiation, the contract rewarded AWE for delays in the project; the costs for the delayed work were classed as a saving, for which AWE would receive a gainshare payment, and the MoD continued to pay all AWE’s management fees during the delays, contributing to a £97 million cost increase.
However, Rolls Royce has simply refused to renegotiate its contract to comply with the Single Source Regulations. The MoD’s contract with the company “does not include performance measures and has limited termination opportunities should performance deteriorate”, the NAO report states.
The costs of Trident are spiralling and the arms industry is the only winner. As well as AWE Ltd, BAE Systems and Rolls Royce, there are several other companies involved with the project, including Babcock International, which maintains the Navy’s nuclear-armed submarines, and others that have contracts related to the Trident II (D5) missiles, such as Boeing, General Dynamics and Northrop Grumman (for the full list see: Susi Snyder, “Producing Mass Destruction” (PAX, 2019)).
The good news is that Trident’s reliance on the private sector creates an extra point of leverage for disarmament campaigners. We can continue to pressure the UK government to abandon its attachment to weapons of mass destruction, but we can also pressure the companies involved to cease production.
The Don’t Bank on the Bomb campaign does this by persuading financial institutions to take their money out of nuclear weapons producers, creating a reputational and financial risk for those companies if they continue to undertake nuclear weapons work. Anyone who has a bank account, a pension fund, or who is simply a concerned citizen, can get involved. If you live in Scotland, our website has a wealth or resources to help you.
- sign CND’s petition to scrap Trident;
- tell your bank and pension fund to stop investing in companies that undertake nuclear weapons work;
- write to your local councillors asking them to support a resolution that calls on their pension fund to divest from the companies involved;
- post about your support for nuclear weapons divestment on social media and encourage others to act too.