3Improving future performance
Relationships with the regulators
16.Because of the risks associated with defence and civil nuclear sites and the handling of nuclear material, they are subject to strict regulation. When constructing new facilities, the site operator is usually required to obtain the regulators’ agreement that the design and construction meet safety and regulatory requirements. Safety cases will include detailed information on the material used, how the facility has been built to required engineering standards, the requirements for examination and testing of equipment, and evidence that nuclear risks have been reduced as far as possible.26
17.Regulatory arrangements for nuclear sites involve the Department, the site operators and one or both nuclear regulators. The Office of the Nuclear Regulator licenses defence sites operated by third parties. The Defence Nuclear Safety Regulator oversees sites owned and operated by the Department. The Department must pay for the infrastructure it needs, but it is the site operator that holds the nuclear licence and must satisfy the requirements of the regulator. Because the Department does not operate most of the nuclear-regulated sites, it does not hold a regulatory role and as a result has been less able to influence value for money.27 The National Audit Office reported that all parties accepted that some ‘gold-plating’ of specifications had taken place, such as over-engineered blast doors at MENSA.28
18.The Department said that the importance of improved relationships with the regulator was one of the three most important lessons it had learned from these projects.29 In response to past problems, it had improved the dialogue via senior leadership groups which brought together different responsible parties. At Aldermaston, this was the A6 group and at Devonport, the D6. These groups discussed regularly how projects were progressing and were designed to involve regulators early.30
19.The Department considered that the more the different parties worked together, the greater likelihood that money would be well spent, and the Chief Executive of the Submarine Delivery Agency confirmed that all future infrastructure projects would take as joined-up an approach to planning as possible.31 A Defence Nuclear Organisation team is also now located on site at MENSA and there is a shared cost management system to share schedule and cost data in real time.32
20.We asked the Department whether the current regulatory model was the best way of working. It said it was not contemplating constitutional changes to regulatory arrangements and there was much learning possible with the regulatory community that did not require such change. There was now a good, constructive dialogue with the regulators, and at Devonport, for example, the Department stated that substantial costs had been taken from future infrastructure plans as a result of working with the regulators to make a quite radical improvement.33 It added that ONR did not try to make the Department choose the most expensive facilities and were pragmatic and reasonable.34
The importance of a corporate memory and skills
21.Many of the mistakes made on these infrastructure projects were similar to those on which the National Audit Office and the Committee have reported in the past, and have also been seen in the civil nuclear sector and in the United States.35 The Department could not explain why it had not learned from these experiences, and had started building before requirements were sufficiently mature. It also could not explain why it had taken so long to identify the problems at MENSA between 2013 and 2015. It fully accepted the NAO conclusions and recommendations, and said it would not operate or contract in the same way in the future.36
22.The failure to learn from the past underlines the importance of maintaining a robust corporate memory within the Department, particularly given that its specialist staff are in demand and may be expected to move to posts as part of the normal churn of government. The creation of the Defence Nuclear Organisation in 2016 was, in part, designed to consolidate knowledge in one place. We asked the Director-General Nuclear how she ensured an accumulation of institutional memory. She told us there was deep expertise within the organisation, not least the Submarine Service, as well as amongst weapons and nuclear scientists. Some had 20–30 years of experience, but the Department was also developing new staff and bringing people in from outside the organisation.37 A nuclear strategic workforce planning project was established in spring 2019 and is identifying necessary actions to address skills gaps.38
23.Despite this, there are shortages of personnel with crucial specialist skills. The Department noted, for example, there was a lack of those able to write safety cases, which contain the information the regulators need to be able to draw evidence-based conclusions on whether nuclear standards have been met.39 The Permanent Secretary told us that he wanted a mix of internally grown staff and external expertise, but thought it was critical that the Department thought carefully about its talent management and developed its own people.40 He said that the Department wrestled with the challenge of having sufficient specialists but there were not as many as the country needed. He continued to discuss how to improve the position with the Department for Business, Energy and Industrial Strategy and the Department for Education.41
Ownership of the sites
24.The Department uses eight nuclear-regulated sites. It owns and operates two of them, with contractors owning or operating the others.42 We asked the Department whether it was considering taking on the risk and owning some of the assets that are currently held by site operators directly. The Department acknowledged that the scale of the risks of nuclear activity, civil or military, means these risks are typically too large for private companies and ultimately rested with the state, regardless of ownership. It accepted that historically the contracts that it had signed had not reflected this reality as well as they should have done, and some of the current tensions arose from that. The Department told us that consideration was being given to where ownership should lie for future projects, aligning it more closely with the real adoption of risk by the Department. It was harder to change existing arrangements, where it was bound by contract law. It did, however, have ‘step-in’ rights if needed.43
25.We asked the Department about the ownership of intellectual property where it is not the site owner, and why, when it had contracted, it did not at least jointly own the intellectual property. The Department said that it made a balanced decision about who should best own or use the facilities and intellectual property. Sometimes the contractors have the intellectual property that the Department wished to benefit from, and on other occasions, it generated it.44
26 C&AG’s Report, para 1.9
27 C&AG’s Report, para 2.5, Figure 7
28 C&AG’s Report, para 2.7
29 Q 66
30 Q 58
31 Q 58
32 Q 60
33 Qq 92–93
34 Q 102
35 C&AG’s Report, Figure 11, para 3.19
36 Qq 60, 70–71
37 Q 68
38 Letter from Sir Stephen Lovegrove, 25 March 2020
39 Q 104
40 Q 67
41 Q 99
42 C&AG’s Report, para 1.3
43 Qq 89–90
44 Qq 82–84
Published: 13 May 2020