Office for Nuclear Regulation

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MSC7 Supply Chain Arrangements - Contract Specification and Procurement

Executive summary

Purpose of Intervention

The purpose of this intervention was for ONR to assess NNB’s arrangements for specifying equipment for HPC. This is to give assurance that equipment NNB procures from suppliers for Hinkley Point C (HPC) Power Station will fulfil its nuclear safety requirements.

Interventions Carried Out by ONR

NNB’s specification process was sampled as part of Nuclear Island Consent and was judged at that time to be adequate for the current stage of the project. This intervention has not re-examined the same technical areas. Instead the intervention has focused on the strategic management arrangements and NNB’s application of those arrangements, using one supplier (Darchem) as an example.

We carried out this intervention in two parts. The first part was an inspection of NNB’s corporate specification process, on 13/08/2019. The second was an inspection at Darchem on 05/09/2019 examining the implementation of those arrangements at a Tier 1 supplier.

Key Findings, Inspector's Opinions and Reasons for Judgements Made

The key findings are that:

Given the complexity of the project, NNB’s specification arrangements are also complex, and some aspects of the specification process are part of their procurement process. Within the procurement process, we found that NNB has detailed arrangements for equipment procurement, including readiness reviews and supplier quality assessment. We judge that this aligns with relevant good practice for procurement.

However, after the contract has been signed the procurement process ends, and the detailed technical design is often not complete when the contract is signed. Therefore we note that the specification process continues after the contract is signed. We were not clear about NNB’s documented arrangements for managing the developing technical specification.

We found that NNB contracts EDF SA’s Responsible Designer (RD) to create their technical specifications and to approve their suppliers’ interpretation of them.  This is an acceptable practice provided that the licensee exercises an intelligent customer role, to give it control over activities carried out on its behalf. We found that NNB had a strategy of sampling technical specifications received from RD in order to meet its intelligent customer role. ONR will interact further with NNB to understand this approach because, on the evidence of this intervention, it may not fully meet ONR’s expectations for an intelligent customer. ONR has raised a regulatory issue to understand this in further detail; the scope is captured within the regulatory issue.

ONR sampled the implementation of NNB’s arrangements for specification at the Tier 1 supplier, Darchem. We found that Darchem have complied with NNB’s technical specification and are regularly communicating with NNB on technical issues. We consider that Darchem has adequate quality arrangements for manufacturing to the specification.

We examined the Inspection and Test Plan (ITP) for a pipe section being manufactured for HPC unit 1 by Darchem. The ITP is the means by which the steps of manufacture are controlled. We found that NNB had asked Darchem to complete certain steps out of sequence from the original plan in the ITP. NNB has also asked Darchem to proceed with manufacture using procedures that have yet to be approved in accordance with NNB’s arrangements. We accepted Darchem’s assurance that these issues will be addressed before the equipment leaves the factory. However, to verify this assurance, ONR has raised a regulatory issue to re-inspect the quality documentation before the equipment is received at HPC.

We found that NNB has contracted with EDF SA Framatome to undertake quality witnessing activities for the equipment being manufactured by Darchem. This is an acceptable practice provided that NNB (as Licensee) exercises an intelligent customer role, to give it control over activities carried out on its behalf. However, we found that NNB’s own quality supervision arrangements are focused on approving the supplier organisation as part of procurement, rather than on direct oversight of the quality of manufacture. ONR will revisit this area as part of a future planned intervention to understand whether it meets the expectations for managing and overseeing the quality of suppliers’ manufacturing.

Conclusion of Intervention

For this intervention ONR’s objectives were to confirm that NNB’s supply chain management arrangements are delivering specifications that adequately describe the equipment, will implement safety case requirements and include appropriate levels of quality assurance.

From our sample of evidence, we found that NNB has adequate arrangements for managing specifications within their procurement process up to the point that a contract is signed. The link to safety case requirements is via RD’s activities to draw up specifications. We also consider that NNB’s supplier Darchem has made adequate arrangements to implement NNB’s specification. NNB has contracted with organisations within the EDF SA Group to perform certain activities on its behalf in the specification and manufacturing quality control processes. Relevant good practice expects that NNB should be an intelligent customer for these activities, and NNB has certain arrangements in place for this role. However, more work is needed by NNB to demonstrate that their arrangements are sufficient to meet the requirement for intelligent customer oversight of technical specification and quality of manufacturing.

The volume of manufacturing for NNB is currently increasing, so we consider that our findings in this Report, if unaddressed, could have a notable potential impact on future nuclear safety. Therefore we have rated this intervention AMBER, seek improvement, and have raised two   regulatory issues for ONR to follow up with NNB.