The preferred delivery model

3.7  In November 2014, the Authority produced a business case recommending that its Board and the Department of Energy & Climate Change (the Department) approve a move to option 3, the market-enhanced site licence company. The business case showed the market-enhanced site licence company option outscored the other options on all evaluation criteria. In summary, the Authority assessed the main advantages of this option:

•  Simplicity of relationships and accountabilities between the main parties.

•  Improved ability to incentivise long-term outcomes in smaller-defined packages of work given inherent uncertainties on the site.

•  Better alignment of objectives and incentives between the Authority and the leadership in Sellafield Limited.

•  More enduring and motivating leadership within Sellafield Limited.

•  Better access to the market for enhancing and developing capability.

•  More opportunities to transfer delivery risk from Sellafield Limited to the market.

3.8  The Authority concluded that the market-enhanced site licence company could bring significant savings and benefits compared with the alternatives. The Authority's business case states that the appraisal was designed to compare the three options, not to provide a baseline against which to measure the costs and benefits of the new model. The main reasons for the higher forecast net benefits of the market-enhanced site licence company are reduced costs through lower payments to the private sector partner and the potential for greater efficiency savings. We have not audited the assumptions underpinning the Authority's analysis.

3.9  In January 2015, Ministers at the Department and HM Treasury and the Department's Accounting Officer approved the Authority's recommendation and the Authority decided to terminate its contract with Nuclear Management Partners. It will cost the Authority around £430,000 to break the contract with Nuclear Management Partners. Figure 10 shows a timeline of events between the Authority's decision to continue its agreement with Nuclear Management Partners and the decision to terminate for convenience.