Watchdog warned of Sellafield contract risks

Cleaning up the small site's historic radioactive contamination is considered one of the world’s most hazardous and toughest nuclear jobs

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The nuclear decommissioning regulator warned the government that they both risked losing "credibility" if they allowed a US-led consortium to continue overseeing the detoxification of Sellafield in Cumbria, it emerged yesterday.

John Clarke, the chief executive of the Nuclear Decommissioning Authority (NDA), issued the stark warning in a letter to Stephen Lovegrove, the permanent secretary of the Department for Energy and Climate Change (DECC), in December, less than a month before Nuclear Management Partners (NMP) was stripped of its contract.

NMP, which comprised US engineering giant URS, France’s Areva, and London-listed Amec, had previously been widely criticised for failing to control costs and being behind schedule on a number of major projects.

Cleaning up the small site’s historic radioactive contamination is considered one of the world’s most hazardous and toughest nuclear jobs. But there had been frustration with NMP’s performance since it won the contract in 2008, with the projected cost now almost £80bn.

Mr Clarke warned that “remaining with the status quo… potentially poses significant risks to NDA’s and DECC’s credibility should we continue with the current model despite the growing evidence it does not represent best value for money”.

 

NMP’s management responsibilities will gradually be transferred to the NDA under a fresh structure over the coming year. This is particularly embarrassing as NMP was awarded an unexpected extension to its deal in late 2013.

Mr Clarke was damning of NMP’s work in a number of areas, including its corporate governance and failing to implement “consistent and focused and  processes and practices”.

He added: “In short, NDA’s desired outcomes for Sellafield are not being delivered to the extent that I, as accounting officer, or the NDA’s board believes is necessary.”

Mr Clarke ruled out replacing  the US consortium with an alternative private sector group, warning that “the level of fee that may need to be paid to attract alternative suppliers into a more onerous contract is unlikely to be defensible on value-for-money grounds”.

The NDA believes that NMP will be a “good leaver”, but has put in place precautions in case it becomes a “bad leaver” over the next 15 to 18 months.

In reply, Mr Lovegrove approved the changes on 12 January, urging that a “robust implementation plan” needed to be ready quickly.

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