U.K. Scraps Sellafield Nuclear Contract

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - The U.K. government has taken over control of the massive clean-up operation at the Sellafield nuclear site just six years into the potential £22 billion ($33.4 billion) contract awarded to consortium Nuclear Management Partners (NMP).

The contract has been scrapped in the wake of a review carried out by the U.K.'s Nuclear Decommissioning Authority (NDA) in 2013 that cited delays, mismanagement and cost overruns. NMP, which comprises AECOM (NYSE:ACM) (Los Angeles, California), AMEC Foster Wheeler PLC (NYSE:AMFW) (London, England) and France's Areva S.A. (EPA:CEI) (Paris, France), won the contract in 2008 against competitive bids from rivals groups CH2M Hill, Serco-Bechtel-Babcock & Wilcox and Fluor-Toshiba. It was worth £1.3 billion per year for its estimated 17-year lifespan.

Sellafield consumes 60% of the NDA's £3 billion ($4.5 billion) annual budget and houses the vast majority of the U.K.'s civil nuclear waste. The ageing site in Cumbria also has commercial operating plants that provide significant NDA income alongside historic waste stores and an enormous construction programme.

After a year-long review of the options, the NDA concluded that "simplifying the relationship between the NDA and Sellafield Ltd. will bring greater clarity and focus on achieving progress and value for money". It likened the approach to those taken with other large infrastructure projects such as London's Crossrail and the recent Olympics.

Ed Davey, Secretary of State for Energy and Climate Change, said: "Sellafield is the biggest and most complex nuclear site in Europe, so it's right that we keep the way it's being managed under constant review. We have seen great examples of how this approach can work with Crossrail and the Olympics -- and I'm confident we'll see similar results at Sellafield."

John Clarke, NDA's CEO, commented: "This decision is the result of careful consideration and review of various commercial approaches in use where the combination of public and private sector comes together to deliver complex programmes and taxpayer value. I believe we can build on progress to date and drive further improvements in performance and value for money by enhancing the capability of the Site Licensed Company (Sellafield Ltd) through a different approach."

NMP expressed its disappointment at being replaced.

"We are surprised and naturally disappointed, especially in light of the considerable progress made at Sellafield since NMP was awarded the contract in 2008," stated Iain Irving, NMP General Manager. "NDA has made it very clear that it is the contractual model that it is being revised and has acknowledged the progress made by NMP over the last six years. During NMP's tenure of the contract, we have achieved savings to the U.K. taxpayer of over £650 million and we have invested around £23 million from our fee in West Cumbria, making a real difference to the local community."

Industrial Info reported last May on how safety at Sellafield was the number one priority for the U.K.'s newly formed independent watchdog, the Office for Nuclear Regulation (ONR). It highlighted ongoing delays there that hindered the attempts to reduce the 'hazard and risk' onsite. For additional information, see May 29, 2014, article - Sellafield a 'Priority' for U.K. Nuclear Regulator.

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