Public Accounts CommitteeWritten evidence from Nuclear Management Partners

Further to discussions with the Clerk of the Committee in recent days, it is with regret that I have to decline the invitation to appear before the Public Accounts Committee on Monday 4th November. Unfortunately, unlike the other witnesses, we were only given notice of the invitation to attend on the afternoon of Wednesday 30th October and it has proven impossible to rearrange existing commitments from my base in the United States.

I would like to take this opportunity to stress that we fully respect our accountability to Parliament, and, as you know, have taken part in very constructive discussions with select committees including yours in the past. However, we were simply not able to make due arrangements in the short time frame to attend the session, and provide the level of engagement which the committee warrants.

I therefore felt it important to share some thoughts and information in writing, which I hope will be useful for your considerations.

First and foremost, please be in no doubt that NMP and our parents are fully aware of our responsibilities and obligations to our customer, the UK Government and the taxpayer in managing the Sellafield site.

The challenges at Sellafield are unprecedented, with complexities and technical demands far exceeding any other nuclear site in the world. The range of technologies and processes is the broadest in the industry, all interwoven in the complex infrastructure of a congested site footprint. Importantly, the uncertainties regarding historic wastes and aging facilities makes the primary mission of high hazard clean up an extremely challenging programme with inherent complications in planning and delivery.

Consequently, the first term of our contract has taken us on quite a learning curve, characterised by many successes but also a number of disappointments and areas for improvement. In the context of this highly challenging programme, we are proud of the progress that has been made in a number of areas, but equally recognise that all has not gone to plan and we have learned from this experience. NDA has made it very clear to NMP where improvements are needed and we are clear on our customer’s requirements going forward. The priorities for site performance, the enabling requirements for supporting services and the alignment necessary among ourselves, the NDA, and Government have been emphasised and incorporated.

Some of our customer’s requirements are in direct response to the findings of the PAC earlier in the year and, over the last nine months, we have been working actively with NDA to address the recommendations of the report issued in February.

I would like to briefly inform you of progress against each of the recommendations:

Recommendation 1: Benchmarking

Sellafield Ltd is working closely with the NDA and the supply chain to improve the robustness of plans to provide greater certainty and predictability of cost and schedule. We are investing in skills and capability, particularly in benchmarking, assessment and justification of both schedule and estimating uncertainties.

Recommendation 2: Major Projects

We have strengthened the management teams in Major Projects, Decommissioning and Commercial and Contract Management and implemented further training and skills development across the organisation.

Recommendation 3: Risk Transfer

SL has developed its capability in financial risk management through a combination of external consultant support, recruitment and development of its in-house team. These, together with improvements in SL’s processes and practices, are beginning to deliver improvements in the organisation’s ability to transfer risk away from the tax payer.

Recommendation 4: Efficiency Savings

This is of course covered in the National Audit Office Report being considered by the committee.

Recommendation 5: Value for Money

As the committee will note from the Sellafield Ltd Annual Report and Accounts of 2012–13, that Executive costs and NMP’s fee was reduced from previous years. We have been rationalising the Executive Team and replacing NMP secondees with Sellafield staff through a process of employee development.

Fee is of course directly related to performance and our reduced fee in 2012–13 reflects some of the disappointments I referred to earlier.

Recommendation 6: Regional Economic Development

We set out to play a full and positive role in support of regional economic development. Whilst some of our early ideas have not proven possible to bring to fruition amidst changing economic conditions, we have nevertheless invested more than £22.5 million into the local socio-economic projects over the last five years. This is a significant investment from the private sector that has been honoured irrespective of fee outcomes. Notwithstanding this investment, we understand and regret that there have been disappointments in the local community and we appreciate that we need to do more to satisfy our local stakeholders who, quite rightly, have high expectations of the Parent Body at Sellafield. We understand the need to gain more added value from the taxpayers investment in Sellafield through local economic and supply chain development, and we will deliver this over the coming months and years by implementing a more strategic and inclusive approach.

Finally, I would like the committee to be aware that we have a renewed strategy for Sellafield, underpinned by a well defined plan for the future. That strategy will focus all of Sellafield Ltd’s and NMP’s activity on safe, secure site stewardship, demonstrable progress and driving a return on investment. Our job now is to use our experience of the last five years to reliably deliver our customer’s mission, while further accelerating the pace of change and providing value for money to NDA, Government and the UK tax payer.

We are confident our partners and customers at the NDA can assist the committee on Monday and give the most effective account of those issues which the committee intends to explore. Naturally we will be available to assist the NDA immediately following the session and provide additional details on any specific queries that arise.

It has been our privilege to work with the NDA and Sellafield Limited for the past five years and we look forward to building upon our relationships, through close communication and transparency. I look forward to cooperating fully with this committee and others on any future enquiries and apologies again that we are not able to participate on Monday.

Thomas H. Zarges
Chairman