Transition to the new model

3.10 Under the Authority's revised model, Sellafield Limited will be assisted by private sector partners rather than being owned by a private consortium (Figure 11 overleaf). The main features of the proposed model are:

•  the Authority will take back ownership of Sellafield Limited as a subsidiary, and will act as strategic authority and owner;

•  the Sellafield Limited Board will be chaired by an independent non-executive director, with support from three independent non-executive members. The Authority will provide two non-executive directors;

•  up to four Sellafield Limited executive directors, including the chief executive officer, will also sit on the Board; and

•  Sellafield Limited will recruit a strategic partner and potentially a number of programme partners from the private sector to provide it with additional expertise.

3.11 Under the market-enhanced site licence company, the Authority proposes that the strategic partner will support Sellafield Limited in three phases:

•  the development of a revised site strategy, including identifying where there are gaps in Sellafield Limited's capability and breaking up the site into more manageable packages with better-defined scope;

•  implementing the site strategy, including procuring programme partners to manage key projects and programmes; and

•  supporting delivery of decommissioning and clean-up through management of contracts and integration of activities across the site.

3.12 The Authority envisages that payments to the strategic partner and the programme partners will be through a combination of cost-reimbursement,  fees for delivery of key milestones, and a share of savings made against target costs. The Authority considers that the majority of potential fees for the strategic partner and programmes partners will be available in the final phase, upon delivery of savings and meeting milestones.

3.13 The market-enhanced  site licence company model is similar to those that we have seen on, for example, the construction programme for the London 2012 Olympic and Paralympic Games and Crossrail. The Olympic Delivery Authority appointed a delivery partner to provide expert support and resource in managing the programme and to take control of overall management of construction activities. Crossrail Limited appointed a project delivery partner, to manage the contractors responsible for the construction of the Central Section Works and the interfaces with other parties such as Network Rail and London Underground. It also brought in a programme partner to provide overall programme and project management and control.

3.14 The Authority has appointed its Sellafield Programme Director as Senior Responsible Officer for the transition to the new model, and has set out an outline plan for the transition programme, which it expects to further develop with Sellafield Limited and Nuclear Management Partners. The Authority will firm up the plan by May 2015. The baseline plan for the main critical activities is to:

•  confirm the senior management team for the transition period, including the chair and chief executive, and any ongoing requirements for secondees from Nuclear Management Partners by March 2015;

•  serve the 'termination for convenience' notice to Nuclear Management Partners on 31 March 2015;

•  finalise the transfer of shares in Sellafield from Nuclear Management Partners to the Authority on 31 March 2016;

•  issue an Official Journal of the European Union (OJEU) notice for the procurement of a strategic partner for Sellafield Limited, with appointment expected in 2016; and

•  appoint programme partners as required.

3.15 While the transition process is underway, the Authority expects that staff from Nuclear Management Partners will continue to lead and work on the site, to ensure maintenance, safety, security and delivery over the transition period. Following share transfer, Nuclear Management Partners' staff will progressively move out of their roles and be replaced by a new management team over a period of six months. As with previous years, the Authority expects there to be fees available to Sellafield Limited during the transition period and that these will be linked to performance on the site. However, the Authority is in the early stages of defining how Nuclear Management Partners will be incentivised and compensated during transition.

3.16 The Authority recognises that there are key risk areas associated with the transition to the new model:

•  Stakeholder responses to the proposed change in delivery model 

The Sellafield workforce is one of the key stakeholder groups and the Authority considers that, on the whole, they are likely to be supportive of the change.

•  The Authority's  capability and capacity to implement the transition 

The Authority states that it will augment its capacity to manage the change with advisers; a senior, interim appointment to help manage the process; and use of project management capability within Sellafield Limited.

•  Securing suitable people to replace secondees from Nuclear Management Partners 

The Authority is confident in the capability of the current chair and managing director to start the process.

•  Obtaining and managing a strategic partner 

The Authority and Sellafield Limited are taking advice from the market about the availability of suitable companies and expect to apply lessons from other relevant best practice and the Authority's competitions, which it has overseen for other nuclear sites.

•  Realising the expected benefits of the transition 

The Authority expects to take steps to improve its capability as sponsor of Sellafield Limited to help realise the expected benefits. A related risk is that Sellafield Limited is unable to incentivise the strategic partner and programme partners in a way that provides the expected performance improvements. As mitigation, the Authority's contract management team will support Sellafield Limited with the procurement and contractual terms for the strategic partner, and the Authority and Sellafield Limited will seek the support of the strategic partner with the development of contractual incentives for programme partners.