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NDA secures new delivery partner for £22 billion Sellafield Ltd contract
24 November 2008
The Nuclear Decommissioning Authority (NDA) today completed one of the UK’s largest and most complex public procurement programmes when the shares in Sellafield Ltd transferred from British Nuclear Group Ltd to a specially created private sector consortium – Nuclear Management Partners Ltd.
Nuclear Management Partners Ltd (NMP) will own the shares in Sellafield Ltd for up to 17 years, the potential length of new and updated contracts between the NDA, NMP and Sellafield Ltd. The value of the work covered is worth £1.3bn in its first year and over the full lifetime of the contract approximately £22bn.
Today’s news signals the successful conclusion of a two-year competitive process by the NDA to secure a world-class parent body for Sellafield Ltd, held in accordance with EU procurement rules.
Energy and Climate Change Minister Mike O’Brien said:
“This is an important milestone in tackling the UK’s civil public nuclear legacy. The Government established the NDA to get to grips with the legacy after decades of inaction. We are using competition to bring in world class expertise to clean up sites in the most efficient way.
Sellafield is the biggest and most technically challenging site and we look forward to seeing significant progress under NMP’s management.”
Stephen Henwood, Chairman of the NDA said:
“Today is the culmination of enormous effort to successfully complete, on schedule, not just the NDA’s biggest and most significant competition, but a public sector procurement of vital importance to UK PLC.
It also signals a new relationship between the public and private sector, based on partnership delivery, to tackle the most significant nuclear decommissioning, clean-up and socio-economic challenges at the sites managed and operated by Sellafield Ltd. This partnership will deliver increased performance and value for money for the taxpayer.”
Tom Zarges, Chairman of NMP said:
“NMP is delighted to have secured this contract after a very rigorous selection process. We are committed to working in partnership with the NDA, the workforce, the supply chain and the local community to realise our shared vision, and to make the Sellafield sites world class operational and decommissioning centres of excellence.”
This afternoon an invited audience of over 150 stakeholders witnessed the signing of a partnering charter between the NDA, NMP and Sellafield Ltd, at the Sellafield Centre in West Cumbria. Stakeholders present were drawn from local, regional and national government, regulators, the nuclear industry and supply chain, and the trade unions.
BackgroundThe Nuclear Decommissioning Authority (NDA) is a non-departmental body set up under the Energy Act 2004, responsible for the decommissioning and clean-up of the UK’s civil public nuclear sites. The NDA does not directly manage the sites but contracts out the delivery of site programmes to Site Licence Companies (SLCs), who are responsible for day-today operations. Each SLC has a Parent Body Organisation (PBO), which owns the shares in that SLC for the duration of the contract with the NDA.
Sellafield Ltd is the Site Licence Company that manages and operates, on behalf of the NDA, the reprocessing and waste storage facilities at Sellafield, the former nuclear power stations Calder Hall and Windscale (all in West Cumbria), the Capenhurst nuclear site and an Engineering Design Centre at Risley in Cheshire.
In November 2006 the NDA launched a competition in accordance with EU procurement rules to secure a new Parent Body for Sellafield Ltd. Nuclear Management Partners Ltd were chosen as the NDA’s preferred bidder on 11 July 2008 and a transition agreement between the two parties was entered into on the 6 October 2008.
Nuclear Management Partners Ltd is a Special Purpose Vehicle created specifically to bid for the Sellafield PBO competition and consists of URS’ Washington Division, AMEC and AREVA NC.
Today the NDA and NMP entered into a contractual arrangement via a Parent Body Agreement, and the NDA and Sellafield Ltd agreed a Deed of Variation to the existing Management & Operations Contract to take account of the new Parent Body arrangements. The Parent Body Agreement specifies the obligations of the Parent Body as owner of the site licence company in areas such as financing, deployment of key resources and the enhancement of performance in key areas. The Management & Operations Contract embodies the delivery of all work across the Sellafield Ltd sites in accordance with specified terms and conditions.
The award of the Parent Body Agreement is initially for a period of five years with the potential of further extension periods, subject to performance, to a total of 17 years. The Management & Operations Contract offers business initially to the value of around £1.3 billion per annum with associated fee of approximately £50 million per annum, subject to the specified level of improved performance and efficiency of Sellafield Ltd being met.