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Lord Jenkin of Roding: My Lords, the kindest thing that I can say about the long letter that the noble Lord, Lord Whitty, sent to my noble friend Lady Miller of Hendon, with copies to several of us, is that I found it very difficult to believe that he had read it before he signed it. I, too, look forward to hearing his response to my noble friend.

7 p.m.

Lord Whitty: My Lords, the letter attempted to find a way through what is a complex area. The central point is that Members of the Grand Committee felt that there

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was a hidden agenda to squeeze BNFL and UKAEA out of tendering for NDA sites, or even those sites that they currently occupy. I shall therefore try to set out the position on competition and site management in a slightly shorter style, so that noble Lords will understand it.

One misunderstanding arises from the fact that we must distinguish between the site licensee companies, BNFL and UKAEA, on the sites that they occupy, which will remain in place, and the contractors, the senior strategic management, which is what we are dealing with here with the competition that we are discussing. In other words, much of the anxiety about expertise and the skilled workforce employed in that area relates to site licensees, rather than the senior strategic management. The reference in the letter and in our previous debate to internationally competitive companies relates to the ability to deliver strategic management of such sites.

The amendment would require the NDA to refrain from restricting BNFL, UKAEA or other suitably qualified or experienced UK or EU companies from tendering for contracts to manage NDA sites.

Baroness Miller of Hendon: My Lords, the amendment would not restrict them; it would ensure that they had no restriction.

Lord Whitty: My Lords, I said, "refrain from restricting". Clearly, competition for strategic management will be subject to EU procurement rules, as the noble Baroness said—that was a slightly misleading part of my reply to the debate—and other international agreements on procurement, which is why restriction to UK or EU companies may not be appropriate here, which is a subsidiary point about the amendment. Fair and open competition is essential to ensure that the NDA gets the right skills mix in to double site management.

That is regardless of which company is involved or its nationality—although we must here bear in mind the national security situation. We want the company and the management personnel who can best deliver the NDA's objectives for a particular site. That is why we have chosen to test the market and why we are opening up the competition. Restricting people who a priori clearly already have that expertise and knowledge of the site would defeat the purpose of that competition.

We certainly do not intend, therefore, to restrict UKAEA or BNFL from competing for contracts to manage their own or other sites. Indeed, provided that they comply with the terms of EU procurement rules, we want them to continue to improve the efficiency of their own organisation and to benefit from the sharpening up that competition will bring. In order to assist that, we tabled our own amendment towards the end of Part 1 of the Bill—I think it is Amendment No. 171—which will clarify that the UKAEA can itself play a full role in the competitive process. Those amendments have been discussed with UKAEA and we are working very closely with both the UKAEA

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and BNFL to help their managements create a viable contractor capability so that they can compete in these contracts.

Lord Maclennan of Rogart: My Lords, will the Minister clarify that point? There seems to be a possibility that some of us are operating at cross-purposes simply through lack of understanding. Is the Minister saying that the Government are ready to entertain the possibility of the UKAEA being an operator of choice for the first period and having a single contract with sufficient duration to enable it to get on with the job—say, for five years? If that is what he is saying, then that is a matter of great reassurance.

Lord Whitty: My Lords, I am not sure that I am saying that. I am not specifying a time scale, but the part of the contract that could subsequently be subject to competition would be the strategic management of the site. Therefore we are not talking about the role of the vast majority of current employees of BNFL and UKAEA on those sites. There is then a separate question of whether sites which are not UKAEA or BNFL at the moment could come under the responsibility of the NDA, where the UKAEA and BNFL could compete for the strategic management of those sites as well, subject to certain constraints. It is not the Government's intention to exclude them from that site. That is the central point, which the amendment was intended to correct—in other words, to prevent the exclusion, from being able to compete for other sites as well as for their own sites. The intention is that competition will apply at the strategic management level on all such sites.

Lord Campbell-Savours: My Lords, if they are not to be excluded then we can presume that in terms of the discussion that has taken place they are going to be satisfied?

Lord Whitty: My Lords, the UKAEA and BNFL understand that position and are in support of what will, it is to be hoped, become an amendment adopted by this House at a later stage in relation to clarifying some slight complexities of the UKAEA position. It recognises that it will be able to compete. That does not necessarily mean that it is happy with the fact that it will have to compete for the strategic management. Clearly there are anxieties that there will be knock-on effects in relation to UKAEA and BNFL and its workforce by opening it up to competition on those sites that they currently control. It would be wrong to give the impression that BNFL and UKAEA are utterly happy with that position, but they are happy that they will not be excluded from competing, given that we recognise the need to ensure that such experienced companies do have the opportunity to compete.

Clearly it is important for those companies to have clarity where the noble Baroness accused us of having a hidden agenda. There is no hidden agenda to exclude BNFL and UKAEA from being able to show that they

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were best placed to provide the services on that site. If we were to adopt this amendment, so that there was a specific reference to incumbent site operators in that respect, then we would get into the area where it would appear that we were giving them a competitive advantage over other potential contractors for running the strategic management of that site. That is one of the reasons why, even though the amendment is in a sense reflecting what would be the position anyway, it could be interpreted as being protective of site managers—certainly on those sites they currently run themselves—when the whole point of the changed approach is to make the strategic management of those sites subject to open, fair competition and issues of security and technical competence, and to competition internationally in this field. I hope, of course, that the UKAEA, BNFL and other British contractors would be able to benefit from the sharpness of competition in this country by competing elsewhere.

The complexity of the position has, perhaps, led to the belief that we were doing down BNFL and the UKAEA in that respect and with regard to their perhaps understandable resistance to changing and opening up to competition the sites that they control. It is not our intention to exclude them from the process, but it is our intention to make the process open to competition, which should be free, open and, if necessary, international. For those reasons, I cannot accept the amendment.

Lord Jenkin of Roding: My Lords, I have one question. The Minister has talked repeatedly about the strategic management of sites. What has happened to the phrase "site licensee"? I thought that we had the NDA, the site licensee and the contractors. What is the new entity "strategic management of the site", if it is not the site licensee?

Lord Whitty: My Lords, the site licensee will be managed by the senior strategic management. The site licensee may continue to be BNFL or the UKAEA, even if the strategic management were to be allocated through competition elsewhere. It most circumstances, that probably would be the case, certainly for the immediate period. That distinction has been there since the Bill was produced and, in essence, it was in the original White Paper.

Baroness Miller of Hendon: My Lords, we have ended up exactly as we started. The first answer that the noble Lord gave me in Committee was totally unsatisfactory and misleading. The letter was so convoluted that there was no way that anyone could understand it. With the greatest respect to the Minister, I am by no means certain that I understand the position one bit more or consider it one bit fairer.

All that I knew at the beginning was that anyone could compete for the licences of BNFL and the UKAEA but they were not able to compete for somebody else's licence. I may have misunderstood, so I will test the opinion of the House. The Minister will not mind if we win, because we will have what he says he wants.

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7.12 p.m.

On Question, Whether the said amendment (No. 35) shall be agreed to?

Their Lordships divided: Contents, 31; Not-Contents, 53.

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