Office for Nuclear Regulation

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HM Nuclear Installations Inspectorate

Relicensing the Atomic Weapons Establishment Sites to AWE plc

THE RE-TENDERING EXERCISE

Background

30. Hunting BRAE's management contract expired on 31 March 2000. MoD decided that from April 2000 AWE plc, which employs the managers and workforce, should operate the sites directly but with top level management and financial input provided by a management contractor. Amongst other things, this would allow continuity in the event of any future change of management contractor, possibly avoiding the need for another licensing project and the renegotiation of all the services contracts.

Selection of the New Contractor

31. Responsibility for selecting the new contractor rested entirely with MoD. In preparing the invitation to tender, and in evaluating the bids, MoD considered a range of factors including safety, security, cost and the retention and development of scientific capability. Bids for the new contract were received by MoD at the end of May 1999 from 3 consortia: Hunting-BRAE / DERA3, AWE Management Ltd (comprised of BNFL, Lockheed-Martin and SERCO), and AWE 2001 (comprised of Babcock, W S Atkins and SAIC).

32. The tendering process included:

- a presentation by NII to prospective bidders, dealing with licensability and regulatory requirements. NII advised MoD and the bidders that the timetable for relicensing would be jeopardised if the bids involved proposals for significant changes to existing safety management systems, or arrangements for compliance with licence conditions, since NII would need time to assess the proposals thoroughly. The inference was that bidders would find it advantageous to carry forward existing practices and defer changes until after relicensing, when changes could be regulated under the licence conditions.

- submission to NII, via MoD, of the draft Safety Management Prospectuses (SMP) which were submitted as an integral part of each bid (these represented each bidder's vision of the SMP that it would put in place for AWE plc, as the prospective licensee, if successful).

- consideration by NII of bidders' proposals for carrying forward the ten-year decommissioning and waste management strategy.

- feedback to MoD, and the bidders, on NII's provisional view of the licensability of AWE plc on the basis of the draft SMPs and decommissioning / waste management plans, and advice on areas where improvements might be made.

33. NII's involvement in the process was limited to ensuring that AWE plc, however constituted after 1 April 2000, would be potentially licensable. MoD and the bidders understood that the advice provided by NII did not represent a final decision on licensability, and that NII would need, inter alia, to reassess the final version of the SMP following the formal award of the contract by MoD. Other factors relevant to licensability to be considered by HSE would include security of tenure of the sites, financial standing, coverage for decommissioning liabilities, and the underwriting of the absolute liability assumed by the licensee of a nuclear site.

Transitional arrangements

34. In order to minimise potential difficulties should a bidder other than Hunting BRAE Ltd be successful, the MoD programme allowed a 3 month transitional period, from January to March 2000, when the new management team would work alongside Hunting-BRAE Ltd to develop and implement the arrangements set out in their management prospectus etc.

3 DERA: The Defence Evaluation and Research Agency, which is an agency of MoD.