The Atomic Weapons Establishment, which makes and maintains the UK’s nuclear warheads, has admitted putting employees at risk.
Failings in safety procedures led to one member of staff being injured in a fire at the AWE's complex in Aldermaston in Berkshire on August 3, 2010.
There were no radiological implications as the fire took place in a part of the plant which deals with conventional explosives but residents nearby were evacuated.
Production at one of the site's buildings was suspended in January this year over separate safety concerns following a routine inspection.
AWE pleaded guilty at Reading Crown Court to a single count of breaching safety law in relation to the 2010 fire.
Bernard Thoroughgood, prosecuting for the Health and Safety Executive, told the court that senior management bore responsibility for the failures.
"It is the prosecution's case that the facts show that management at a more senior level than those in the particular building (where the fire happened) are here culpable and at fault," he said.
"When failures continue over time, that goes way beyond those making decisions on an hour-to-hour basis - it goes right up to senior management."
AWE is owned by a consortium of the Jacobs Engineering Group, Lockheed Martin UK and Serco, but the Government has a "golden share" and is the proprietor of the site where the fire broke out.
The company is responsible for building and maintaining warheads for the UK’s Trident nuclear deterrent and carries out related research in hydrodynamics, materials science, supercomputing and plasma physics.
As the "duty holder", AWE failed its workers in terms of "hazard identification, risk assessment, training, supervision, monitoring and audit", the court heard.
The injured worker, Ashley Emery, received burns to his face and arm and was left with a "visible scar" on the arm.
He was working late in the evening with highly flammable material while wearing "inadequate" personal protection gear in a building containing high explosive material.
When he noticed bubbling which troubled him, he moved back but was caught by a fireball.
In fragments of a statement read to the court, Mr Emery described how he was "overwhelmed by a bright orange flash and whooshing sound".
"He found this very distressing, very shocking and has not felt able to return to being an explosives worker," Mr Thoroughgood said.
"He describes a variety of flashbacks, nightmares and worries that he did not use to have and he has had some medication, as he explained, for anxiety and other problems."
The fire was attended by 68 personnel from three fire and rescue services, including AWE's on-site crew.
It had not been possible to determine beyond reasonable doubt the exact cause of the blaze but it was probably an electrostatic discharge, the court heard.
The prosecutor admitted the fire posed a low risk of detonation, but added that any explosion within the room would have had "potentially very damaging" effects.
"When dealing with explosives one is faced with consequences and the consequences if there had been a detonation here would have been very severe indeed," he said.
He claimed there had been "conservatism" in the production methods used at the plant, which prevented the introduction of better procedures.
The court heard that AWE had turnover of £868.3m in 2012 and profits after tax of £11.3m. It has more than 4,000 employees at the Aldermaston plant.