Government terminates contract to manage Sellafield early

Will Green is news editor of Supply Management
13 January 2015

The UK government has announced it is terminating a contract to decommission Sellafield less than a year into a five-year extension of the original deal.

Nuclear Management Partners (NMP), a consortium of private sector firms that has been managing the site since 2008, said it was “surprised and disappointed” at the decision.

Ed Davey, secretary of state for energy and climate change, said the Nuclear Decommissioning Authority (NDA) “had concluded that a change in model is now the best way forward” and management of the site will return to the NDA.

The move follows criticism of Sellafield’s management by the National Audit Office in 2012 for not delivering value for money. Last year the Public Accounts Committee criticised the extension of the contract and said the NDA “must monitor progress and terminate the contract if NMP’s performance does not improve quickly”.

NMP was awarded the contract in November 2008, and this was extended by another five years in October 2013, to run from April 2014. Under the terms of the original five-year deal the contract period could be extended to up to 12 years.

Under the change Sellafield will become a subsidiary of the NDA and a “strategic partner” from the private sector will be sought to “advise and assist the Sellafield Ltd executive team”. Sellafield consumes 60 per cent of the NDA’s £3 billion annual budget.

John Clarke, CEO of the NDA, said: “This decision is the result of careful consideration and review of various commercial approaches in use where the combination of public and private sector comes together to deliver complex programmes and taxpayer value.

“I believe we can build on progress to date and drive further improvements in performance and value for money by enhancing the capability of Sellafield Ltd through a different approach.”

Davey said: “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.”

Iain Irving, general manager at NMP, said the consortium had achieved savings of “over £650 million”. “We are surprised and naturally disappointed, especially in light of the considerable progress made at Sellafield since NMP was awarded the contract in 2008,” he said. “NDA has made it very clear that it is the contractual model that is being revised and has acknowledged the progress made by NMP over the last six years.

“The last 12 months have seen some of the site’s highest levels of performance, while over the last two years we have consecutively achieved the site’s best overall safety records.”

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