Public Accounts CommitteeFurther Supplementary written evidence from the Nuclear Decommissioning Authority

I am writing in response to your request for “a note of the key measures that NDA are going to take to decide whether or not to continue or terminate the contract” and the further suggestion that such a note should focus on “the top few, with some clear, measurable objectives”.

Working with my Executive Team, I will continue to monitor Nuclear Management Partners (NMP) and Sellafield Ltd (SL) performance and make regular reports to the NDA Board and Government on progress. These reports will inform future decisions by the NDA Board regarding the continuation or termination of the contract with NMP. Such decisions will be a matter of judgement, informed by a data set that will include both quantitative and qualitative information, but my advice to the Board will not be formulaic and will ultimately come down to a management judgement made in the context of significant uncertainty of the task at Sellafield.

Whilst of course we will continue to make quantitative assessments of project schedule and cost against plans, as well as assessing operational performance, safety performance and savings against targets, the key areas of remediating the legacy ponds and silos and improving the capability and capacity of the workforce will take time to address. Whilst I fully expect to see incremental changes it would in my view be unrealistic to expect the overall metrics in these key areas to change dramatically in the next 12 to 24 months. The impact of NMP’s leadership and capability improvements at Sellafield will take time to show through in output metrics, and indeed can be obscured by the underlying uncertainty and complexity of many of the key programmes on the site.

Therefore a more significant element of my consideration will be the qualitative assessment of how effectively the Sellafield Board and Executive team is driving the enabling activities required to achieve systematic and sustainable improvements in the conduct of the business. I will also want to see evidence that NMP is fully engaged with and supporting SL in driving forward effective interventions in capability improvement and organisational modernisation.

I have previously sent you a summary of the Sellafield Excellence Plan, which sets out eight focus areas underpinned by 31 workstreams and describes the associated quantitative and qualitative metrics. Furthermore, in preparation for commencement of the second contract term in April 2014, we are in the process of refining and agreeing with NMP specific annual targets based on these metrics.

So, in the meantime, and in response to your specific request for the “top few objectives” I would point the Committee towards the following six areas as being the most significant in assisting me in my ongoing judgements regarding continuation or termination:

1.Schedule and cost performance (projects).

2.Operational performance.

3.Safety performance.

4.VFM—savings against targets.

5.Capability Improvement.

(a)Engineering (design, asset care and maintenance)

(b)Commercial (procurement and contract management)

(c)Programme and Project Management

6.Behaviours.

(a)Governance

(b)Leadership and Management

(c)Alignment (with NDA and within NMP/SL)

(d)Socio Economics, Stakeholder and industrial relations

Of course in order to retain and strengthen the option of termination I will continue to maintain and further develop two alternatives to the current PBO, operating under the current model and contract. Those two alternatives being:

(i)To go back to the market to secure a different contract and/or contractor; or,

(ii)To bring the Tier 1 ownership and parenting of the SL enterprise into a subsidiary of NDA and seek to engage more effectively with the private sector via smaller, more tightly-definable packages of work at Tier 2.

It is important, however, to be clear I will move away from the current arrangements only if I am confident that the arrangements I move to will offer a greater probability of success. There are no guaranteed routes to success at Sellafield and change simply to satisfy the desire for change, whilst giving the welcome appearance of taking firm action, also risks losing the progress that is being made so far.

I would like to re-iterate that I remain committed to open and transparent engagement and will continue to make sure that your committee, and the NAO, have access to any and all of the information and rationale I am using to establish the environment and contractual constructs in which we stand the best chance of making progress at Sellafield. However, there will be circumstances where, in exercising our duties effectively, it would not be appropriate to make the same information available to the general public.

Finally, I would welcome a substantive NAO study in 2015 to look broadly at NMP and SL performance, to consider NDA’s ability to develop and maintain credible alternatives and to evaluate the NDA’s approach to selecting between these alternatives.

John Clarke
Chief Executive

12 December 2013