1.1 Sellafield is the UK's largest and most hazardous nuclear site. It includes two operational nuclear fuel reprocessing plants, and waste treatment and storage plants as well as legacy storage ponds and silos for nuclear waste material from the UK's first generation of nuclear plants. The Nuclear Decommissioning Authority (the Authority) owns Sellafield and 16 other UK licensed civil nuclear sites. The Authority is an arm's-length body, sponsored by the Department of Energy & Climate Change.
1.2 The Sellafield site is hazardous because of the historic build-up of contaminated buildings and untreated waste on the site and the age of its facilities. Since nuclear operations began in the 1940s, successive operators did not give sufficient thought to decommissioning or retrieving and disposing of radioactive waste. There are around 240 buildings on the site that are operating nuclear facilities or buildings containing radioactive materials. Some are deteriorating or fall short of modern standards and pose significant risks to people and the environment. The Authority's estimate of the lifetime cost of decommissioning and cleaning up the site has been increasing year-on-year.
1.3 In 2005, following the restructuring of the UK nuclear industry and the creation of the Nuclear Decommissioning Authority, the Authority implemented a 'parent body organisation' model for the operation of its nuclear sites. Under this model the site licence companies manage the sites under management and operations contracts with the Authority. The Authority sets strategic objectives for the sites and the site licence companies develop, implement and maintain a plan to meet those objectives. The main rationale for this model was to have private sector owners of the site licence companies, to provide leadership and enhance the companies' competencies and capabilities. The Authority selects the parent body organisations for the sites through competitive tenders.
1.4 Under this model, in November 2008 the Authority appointed Nuclear Management Partners Limited, a private sector consortium of AECOM (formerly URS), AMEC Foster Wheeler and AREVA, as 'parent body' owner of Sellafield Limited, the licensed operator of the site.1 The Authority reimburses Sellafield Limited for its expenditure on the site and pays base and performance fees to Sellafield, who may pass them to Nuclear Management Partners as dividends. The Authority regains ownership of Sellafield Limited when the agreement ends, but the agreement also includes a clause allowing early 'termination for convenience'.
1.5 In September 2013 the Authority continued its agreement with Nuclear Management Partners into the second 5-year period of the 17-year agreement. In January 2015, after a strategic review of the delivery model at Sellafield, the Authority announced its decision to terminate its contract with Nuclear Management Partners and implement a new delivery model.
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1 The Sellafield site includes three licensed sites: Sellafield, Windscale and Calder Hall.