Kenneth Fletcher
WC Monitor
1/16/2015
After the U.K. government’s decision this week to terminate Nuclear Management Partners’ contract to manage Sellafield, the site will now seek a “strategic partner” in industry for a long-term agreement to aid cleanup work. Under the new plan announced this week, ownership of site license company Sellafield Ltd. will revert from NMP to the Nuclear Decommissioning Authority over a transition period expected to take 12-to-15 months. The strategic partner deal could last up to 10 years “with relatively low cost termination terms and specified breakpoints corresponding to the ends of particular phases of work,” according to an NDA report on the Sellafield transition. “The principle of using a Strategic Partner to develop and augment capabilities has been successfully used elsewhere, both in the private sector and in government contracting; for example the Olympic Delivery Authority and CrossRail, and is a recognized way of introducing private sector capabilities to publicly-funded programs,” the report says.
NMP, composed of URS (now owned by AECOM), Amec and AREVA, has managed Sellafield since 2008 as owner of Sellafield, Ltd. under a contract worth up to £9 billion ($13.6 billion) for up to 17 years. However, site management has received strong criticism in recent years due to cost overruns and schedule delays. In October 2013, the NDA decided on a five-year extension to NMP’s contract to manage Sellafield, a decision met with opposition by some lawmakers and other stakeholders. At the time, the NDA emphasized that it could terminate the contract early if improvements weren’t undertaken.
NMP Performance Has ‘Improved Significantly’ Since Contract Renewal
But NMP has made significant progress in the last year, and the early termination was not based on performance issues, U.K. Secretary of State for Energy and Climate Change Ed Davey told members of Parliament this week. The decision was taken after a recent review the site’s parent-body organization management model, a step taken after recommendations last year by Parliament’s Public Accounts Committee. “It is worth putting on record the fact that the performance of Nuclear Management Partners since the contract renewal has improved significantly, so this decision has not been taken on account of the performance of NMP,” Davey told the House of Commons. He added later: “It has been taken because Ministers and the NDA questioned the model that we inherited from the last Government. We then put in place a proper review of that model.”
Government Takes Issue With Parent Body Model
In the parent body model in place with NMP, the private sector manages Sellafield, Ltd., which operates the site. “The full uncertainty and volatility of the Sellafield site therefore has to be managed through a single contractual interface,” according to the NDA report. Under the new model, the NDA will take over Sellafield, Ltd., and manage work through the strategic partner and a series of smaller contracts. Sellafield, Ltd., will procure “services required from the market on bespoke terms where uncertainty and volatility can be managed and commitments in relation to outcomes more readily achieved,” removing the “additional interface” of NMP, the report states.
No Changes on Tap for Magnox or Dounreay
While the parent body model is also in place at other NDA sites, including Dounreay and the Magnox sites, the government has not indicated that any changes are coming at those sites. “The existing model continues to work well elsewhere in the NDA’s estate where the challenges are better understood and suitable contracts have been developed,” according to a U.K. Department of Energy & Climate Change statement.
During the transition period at Sellafield, there will be “detailed engagement” with the workforce, supply chain, regulators and the community, the NDA report states. That includes “discussions with NMP, notice of termination of the contract between NMP and the NDA, changes to the SLC Board and executive team that arise from NMP’s departure and finally the transfer of the SLC shares from NMP back to the NDA,” according to the report. “During this period the procurement process for the Strategic Partner will commence.”
NMP ‘Surprised and Naturally Disappointed’
NMP said this week it did not expect the decision to terminate its contract. “We are surprised and naturally disappointed, especially in light of the considerable progress made at Sellafield since NMP was awarded the contract in 2008,” NMP General Manager Iain Irving said in a statement. “NDA has made it very clear that it is the contractual model that it is being revised and has acknowledged the progress made by NMP over the last six years.”
NMP emphasized the progress achieved since the contract extension. “The last 12 months have seen some of the Site’s highest levels of performance, whilst, over the last two years we have consecutively achieved the Site’s best overall safety records,” Irving said. Davey also highlighted some of NMP’s recent achievements. “If we look at its performance over the past year, we can see that it has delivered on things that no one has delivered on for years,” he said. “For example, the sludge-packing plant, which is needed to take out the toxic sludge from B30—a pond that has been there for decades—has now been commissioned and is ready for operation. That is a big achievement and I pay tribute to NMP for that. The decision has not been taken on account of performance.”
