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Update to WCSSG: Socio-Economics in Procurement Richard B. Petch

Update to WCSSG: Socio-Economics in Procurement Richard B. Petch Deputy Commercial Director, Sellafield Ltd 6 January 2011. Contents. Apologies from Keith Case, Commercial Director Procurement Context : Sellafield Ltd M&O Contract Public Contracts Regulations [PCR] 2006

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Update to WCSSG: Socio-Economics in Procurement Richard B. Petch

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  1. Update to WCSSG: Socio-Economics in Procurement Richard B. Petch Deputy Commercial Director, Sellafield Ltd 6 January 2011

  2. Contents • Apologies from Keith Case, Commercial Director • Procurement Context: • Sellafield Ltd M&O Contract • Public Contracts Regulations [PCR] 2006 • NDA – Collaborative Procurement • Acquisition Strategy • Contract Analysis SE Benefits • Supply Chain Engagement • The Future

  3. Procurement Context [1] • Sellafield Ltd’s Management & Operation Contract [M&O] is with the NDA • Funded via the Public Purse as a ‘Contracting Authority’, therefore bound by PCR 2006: • Creates a ‘level playing field’ for suppliers • Prohibits favouring local supply chains [“post-code” purchasing] • Permits ‘sustainability’ to feature • ‘Responsiveness of service’ encouraged by SLC

  4. Procurement Context [2] • NDA Strategy for Collaborative Procurements via the Shared Service Alliance [cross-NDA Estate] • M&O - Give encouragement and support to activities benefiting the social and/or economic life of communities near the sites – comply with EU procurement regulations [PCR]

  5. Procurement Context [3] • In 2009/10 Sellafield Ltd spent £798M [58% ASFL] in the Supply Chain • £240M [30%] in 2009/10 (not including SL direct employee wages and contracts <£500k) retained in Cumbria • SL cannot enforce contractual obligations on Socio Economic benefit where there is no link to SL delivery fee • Plus £365M of direct SL employee wages go to Cumbrian households [2008/9], of which >98% are resident in West Cumbria • >£3.1M donated to beneficiaries in 2009/10 via Sellafield Ltd’s Socio-Economic Plan

  6. Procurement Context [4] – Acquisition Strategy Purpose: • Accelerated hazard reduction • Fit for purpose assets • Access to key resources • Economic operation (VfM) Move to strategic partnerships and alliances where they deliver transformation in performance and deliver improved value • Engage partners at the Lifetime Plan level • Extend the durations of contracts to fit the ‘workscope’ • Design contracts that reflect and incorporate NDA drivers • Enable partnerships and alliances to collaborate with each other • Commercial models that reward outcomes not ‘activity’

  7. Procurement Context [5] - Analysis To identify realised benefits of socio-economic strategic intents within Sellafield Ltd Procurements: Process Selected 20 contracts per Zone [Operational Plants, Decommissioning, Major Projects, Infrastructure and Functions] Focus of Collated areas of strategic intents along the common Analysis themes of: • Jobs Created/Preserved • Infrastructure Development • Use of local suppliers • Other benefits

  8. Procurement Context [6] - Analysis Initial analysis of ~25 key contracts demonstrates: • Continued employment >1500 local workers in local supply chain • 4 contracts totalling £18M per annum exclusively utilise local supply chain for labour and materials • 177 new jobs created locally in 2009/10 [incl Apprenticeships] • Commitment for 2 new local warehouse/office facilities to be opened • ~ £60k local charitable donations • Generally supply chain partners have delivered on their promises • Analysis of remainder of the 100 contracts is ongoing – further update will be made available to WCSSG in Spring 2011

  9. What else are we doing? Socio-Economics in Procurement: • Consistency from our Procurement teams in developing and assessing socio-economic elements within tenders; • Planned briefing sessions to the supply chain; • Ongoing review of socio-economic commitments made by our suppliers; • Supporting Energy Opportunities Supply Chain Project/Britain's Energy Coast in 2011 socio-economic benefit report [CRED V2] • Broadening and strengthening into a Sustainability Programme

  10. What else are we doing? Supply Chain Engagement and Support at all levels:

  11. What the Future Will Look Like • Flexible, effective delivery model that engages T2 T3 & T4 leading edge organisations capable of meeting the challenge • Identification and realisation of maximum value from each relationship on a two way street basis • Better value for money • A ‘local’ skilled resource base aligned to SL changing demand • Progressive alignment of resource to point of ‘need’ • West Cumbria centre of excellence • Accelerated hazard reduction - Fit for purpose assets - • Access to key resources - Value for money

  12. Thank You

  13. Questions?

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