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SIXEP Continuity Plant Project: Accounting officer assessment 2020 (HTML)

Updated 12 June 2023

Department for which the accounting officer who made the assessment is responsible:

Department for Business, Energy and Industrial Strategy

Project title:

SIXEP Continuity Plant (SCP)

Main scheme project stage:

Outline Business Case approved by BEIS on 20 May 2020. Project is in the Construction phase.

Introduction

It is normal practice for Accounting Officers to scrutinise significant policy proposals or plans to start or vary major projects, and then assess whether they measure up to the standards set out in Managing Public Money. From April 2017, the government has committed to make a summary of the key points from these assessments available to Parliament when an Accounting Officer has agreed an assessment of projects within the Government’s Major Projects Portfolio.

This Accounting Officer Assessment was made of the SCP Project following its Outline Business Case (OBC) approval and progression into the detail design phase. I have made the assessment as the Principal Accounting Officer for the Nuclear Decommissioning Authority.

Background and context

Through spent nuclear fuel and waste management operations Sellafield site produces liquid effluent which requires treatment to remove radioactivity before discharge into the sea. The continued availability of effluent treatment underpins the government’s UK Discharge Strategy and commitments under the Oslo Paris Conventions (OSPAR) and is essential for delivery of the site missions including high hazard and risk reduction activities (HHRR) to retrieve waste from and make safe legacy fuel storage ponds and waste silos.

This capability is currently delivered by the Site Ion Exchange Effluent Plant (SIXEP). facility which has been operational since 1985 and is already beyond its original design life. The effluent treatment capability currently provided by SIXEP is needed until circa 2060 when SIXEP would be 75 years old. There is significant risk of failure of the main effluent treatment process vessels and in-cell pipework, and a timely replacement of capability is required to prevent an extended outage which would result in intolerable environmental consequences and delay to risk reduction delivery.

The SCP project will design, construct, commission, and handover a new radioactive effluent treatment facility to replace the current capability. This is a mission critical requirement for Sellafield and the NDA Mission to “deliver safe, sustainable and publicly acceptable solutions to the challenge of nuclear clean-up and waste management.”

The effluent treatment process generates secondary intermediate level radioactive waste. At present this is stored in tanks provided in the original plant. With extension to the plant lifetime, additional storage will need to be provided. Government policy is that intermediate level waste is immobilised in preparation for disposal in a deep geological disposal facility. SIXEP waste management (SWM) will deliver additional storage, retrieval, and treatment of SIXEP secondary waste.

Programme context

The SIXEP Continuity Plant (SCP) project is one of the key components of the broader SIXEP Capability Programme, The SIXEP Capability Programme business case was approved at NDA Board in February 2022.

The SIXEP capability programme will achieve its objectives by providing:

• Waste storage capacity: Optimise existing waste storage capacity, progress modifications within SIXEP to introduce additional capacity, and establish future waste management and treatment capabilities through the SIXEP Waste Management (SWM) workstream. *New build (SCP): Construction of a SIXEP Continuity Plant (SCP) to mitigate the SIXEP failure risk, providing assurance of continued effluent abatement in support of High Hazard Risk Reduction and safe storage of fuel in ponds.
• Donor plant management: Ensure that donor plants consider the need for contingency arrangements, in the event of a prolonged SIXEP outage.
• Asset care: Deliver asset care and plant improvement plans to enhance the robustness of plant/process arrangements, to maintain the operational performance of the SIXEP estate (existing and new assets) to 2057 and Post Operational Clean Out (POCO) to 2060.

Assessment against the Accounting Officer standards

Regularity

The NDA was established in accordance with the Energy Act 2004, to make provision relating to the civil nuclear industry including radioactive waste, with designated responsibilities including the treatment, storage, transportation, and disposal of hazardous waste. Sellafield is a Site Licence Company operating under a nuclear site licence and responsible to NDA for day-to-day operations and the delivery of site programmes. Retrieval of high hazard materials from the Sellafield Legacy Ponds & Silos remains an area of specific focus, with the objective of urgently reducing the intolerable risk that they pose.

The SCP project has legal basis, Parliamentary authority, and Treasury authorisation; and is compatible with the agreed spending budgets. Its funding is controlled as part of the Sellafield Ltd annual site funding allocation, provided by NDA. It reports on progress through the quarterly Government Major Project Portfolio (GMPP) submission.

Effluent treatment facilities at Sellafield support the UK Strategy for Radioactive Discharges which describes how the UK will continue to implement agreements reached at the 1998 Ministerial Meeting of the Oslo and Paris Conventions (OSPAR) Commission to protect the marine environment of the North-East Atlantic and subsequent OSPAR meetings on radioactive substances, particularly the Radioactive Substances Strategy (RSS). In June 2018, the government published its review of the 2009 UK Strategy for Radioactive Discharges.

Overall assessment: My assessment is that the regularity test is satisfied.

Propriety

The SCP Outline Business Case (OBC) was approved in May 2020 following SL and NDA assurance and governance between September 2019 – April 2020.

The project has completed a Fraud Risk Assessment, the Public Sectors Equality Duties Assessments and provided a written summary of the Supply Chain Risks to the Department during BEIS governance and assurance reviews.

The project is subject to considerable scrutiny and challenge through programme, NDA and BEIS governance and assurance arrangements, which ensure all significant spend and procurements are justified, value for money, and subject to financial and process scrutiny. The SCP project is designated as a Government Major Project Portfolio project and is subject to regular Infrastructure and Projects Authority (IPA) assurance reviews.

Key remaining risk and uncertainty for the SCP project cost & schedule range includes development and manufacture of specialist valves, national supply chain capability / capacity and complexities of construction and integration with other facilities.

The Programme and Project Partners (PPP) have been engaged from 2019 to complete the detail design, deliver the procurement, construction, installation, and commissioning of SCP.

Overall assessment: My assessment is that the propriety test is satisfied.

Value for money

The value for money assessment, as presented in the SCP Outline Business Case continues to be robust. It is assessed that in comparison to alternative proposals or doing nothing, the SCP project delivers best value for the Exchequer as a whole.

The benefits of this project accrue largely from:

1. Providing future effluent treatment capability that mitigates the risk of failure of SIXEP and hence the risk of delay to High Hazard Risk Reduction (HHRR).
2. Incorporating flexibility to mitigate the risk that as HHRR progress new effluent parameters require future changes in design to provide effective abatement.
3. Offering contingency storage to accommodate uncertainty in future rates of arising of spent ion exchange secondary waste, allowing time for solutions for final treatment and disposal to be optimised.

The project has applied appraisal techniques consistent with HM Treasury’s Green Book to select the best economic option (a partial replacement of SIXEP) based on value for money and meeting programme schedule requirements.

The OBC for the project included an allowance for optimism bias based upon the project’s size, scale, complexity, and maturity.

In compiling the business case for the SCP Project, 3 primary options were considered and assessed against the NDA Value Framework:

1. Do nothing – this was discounted as not a credible scenario.
2. Refurbish/supplement the existing SIXEP facility (chosen option).
3. Full Replacement– this would deliver too late to mitigate the risk and would cost significantly more than option 2.

From the assessment carried out, validated by the Sellafield Ltd Enterprise Development Committee (EDC) and Sellafield Ltd Chief Technology Officer, the conclusion was that the preferred option was option 2, a partial replacement. SCP uses the existing ‘front end’ of SIXEP and replaces the core process only. The only other realistic option of a complete replacement (option 3) would involve more scope to interconnect to existing donor plants and downstream routes, it was rejected as the additional complexity would delay the project and increase the probability of being too late to mitigate SIXEP failure.

With respect to the delivery of the SCP Project, the PPP Contract model for Project Delivery is a trailblazer in its structure. The 20-year PPP Delivery Model was approved and deemed value for money by HMG and Major Project Review Group (MPRG) in March 2019. The model is an early adopter of the Infrastructure Client Group’s ‘Project 13’ which is a key enabler to the Cabinet Office’s Construction Playbook. Following the establishment of the PPP, the model has since been benchmarked by several leading infrastructure clients (Ministry of Defence and Sizewell C) to inform future capital investment strategies.

The incentivisation model rewards project performance and achievement of outcomes, providing low level returns through the delivery stages, with capped rewards upon successful project completion. The model aims to drive long term benefits through the delivery of the Sellafield Ltd portfolio of major projects, ensuring that opportunities are realised, and efficiencies found and built upon. The profit model ensures partners are paid modest profit during delivery of the project with maximum profit potentially paid on successful project outcomes. Sellafield Ltd has been able to secure a competitive fee and profit structure based on pragmatic risk share due to the Sellafield Ltd ‘multibillion’ 20-year capital project portfolio. The model moves away from the use of punitive damages to drive performance and instead establishes a sustainable collaborative relationship to enable both parties to invest in transforming the project delivery environment at Sellafield. The costs of this programme fall to BEIS, through the funds allocated to the NDA.

Overall assessment: My assessment is that the value for money test is satisfied.

Feasibility

It has been assessed that the SCP project can be implemented accurately, sustainably, and to the intended timetable.

The SCP project is based on the technology in use in the SIXEP facility which has operated successfully since 1985, and which contributed to a major reduction in the environmental impact of Sellafield at that time. The facility follows design and construction concepts similar to other plants on the Sellafield site.

The design of the new facility includes flexibility to accommodate potential changes in the treatment process required as the legacy silo waste begins to be retrieved.

The ‘required by’ date of SCP remains a time at risk position noting an increased risk of SIXEP failure beyond 2025. The forecast delivery envelope for benefit realisation at OBC is between 2028 – 2032 and this remains on track.

Overall assessment: My assessment is that the feasibility test is satisfied.

Conclusion

As the BEIS Accounting Officer, I have considered this assessment of SIXEP Continuity Plant. The case received scrutiny and approval by the BEIS Accounting Officer in May 2020. It has undergone relevant scrutiny within the NDA Group, and I am content to align my approval to this given the information provided to BEIS at that date.

I have prepared this summary to set out the key points which informed my decision. If any of these factors change materially during the lifetime of this project, I undertake to prepare a revised summary, setting out my assessment of them.

The summary included in this letter will be published on the government’s website (GOV.UK). Copies of this letter will be deposited in the Libraries of the House and sent to the Comptroller and Auditor General and Treasury Officer of Accounts.

Sarah Munby
Permanent Secretary, BEIS
20 May 2020