Written statement to Parliament

Nuclear Decommissioning Authority

Statement by Edward Davey on Nuclear Decommissioning Authority (NDA) announcement of a change to its commercial model at Sellafield.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Rt Hon Edward Davey

I would like to inform the House that the Nuclear Decommissioning Authority (NDA) is today announcing a change to its commercial model at Sellafield, its largest and most complex site.

The government closely monitors the work of the Nuclear Decommissioning Authority (NDA) and its contractors. Our goal is to ensure that the nuclear legacy is made safe, decommissioned and cleaned up, and in a way that best delivers value for money.

The government agreed last year with the Public Accounts Committee’s conclusion that it was a priority to consider what contractual model might best deliver improved performance and value for money at Sellafield. In the meantime, we endorsed the Nuclear Decommissioning Authority’s decision to roll the current Parent Body Organisation (PBO) contract forward into the second term (from 1 April 2014) to ensure that the progress made in the first five year term could be built upon. Sellafield Limited (the Site Licence Company which operates the site under the ownership of the PBO) continues to make progress and is currently on track to deliver against its key performance measures and milestones in 2014/15.

Despite this progress, the NDA has concluded that a change in model is now the best way forward. The current arrangements brought stability to the site from 2009, have allowed for effective planning and delivered important progress on key projects in the last 6 years. However, it is now clear that Sellafield’s complexity and technical uncertainties present significantly greater challenges than other NDA sites, and it is therefore less well suited to the transfer of full site-wide responsibility to the private sector via a PBO structure.

Under the new arrangement, Sellafield Limited will become a subsidiary of the NDA and will continue to be led by a world class team, who will be appointed and governed by a newly-constituted Board of the Site Licence Company. Engagement with the supply chain at all levels remains central to this new approach. The new model will, in due course, see a strategic partner appointed by Sellafield Limited, to strengthen the programme management and commercial capability at the site as well as playing a key role in managing capital projects and contracts. This approach is recognised as best practice in other major projects, such as Crossrail and the Olympics.

NDA and Sellafield Limited will manage the transition to the new arrangements, expected to take around 15 months to complete, in close co-operation with workforce representatives, Nuclear Management Partners (NMP), the supply chain, the regulators and the local community. The continued safe and secure operation of the Sellafield site will remain the over-riding focus during the transition and under the new structure.

We recognise the achievements of the site in the last 6 years and thank NMP for their support in stewarding Sellafield through a crucial phase of delivery and planning. We anticipate their constructive and supportive position on this change.

Published 13 January 2015