Nuclear decommissioning Agency and the importance of contract management

Interesting piece in the Times about the Nuclear Decommissioning Agency (NDA):

Two of Britain’s most highly paid civil servants have been axed and dozens more jobs are under threat at the quango charged with cleaning up nuclear plants, The Times has learnt. The Nuclear Decommissioning Authority confirmed yesterday that William Roberts, the chief financial officer, and Jim Morse, the director of assurance, have been placed on gardening leave after an “organisational efficiency review”.  They were both earning more than £212,000 a year, including £25,000 in bonuses — higher than the Prime Minister’s £197,689 salary.

As well as losing two top guys (and I don't know how long they will continue to get paid on their gardening leave), the Times reports;

The NDA also published a business plan this week which called for a 20 per cent cut in the £64 million budget used to pay salaries and run the NDA’s headquarters in West Cumbria.  The organisation employs about 315 people directly but the bulk of its spending is paid to subcontractor companies, which employ more than 18,000 people spread across its sites. The spokesman said that the efficiency review was continuing, with further announcements expected in the next few months.

Great, you might think, cutting back on those overpaid civil servants.  Except...have a look at where the money really goes.

The authority spends £2.8 billion per year overseeing the clean-up of 19 contaminated UK nuclear sites...used to pay subcontractor firms such as Amec and Areva, which are employed to operate the Sellafield site.

So let's get this in perspective; the work, several £ billion a year's worth, has been outsourced to some very large, switched on, profit maximising, red in tooth and claw firms.  The total pay bill, the 'intelligent client' function if you like, is (before the cuts) around 2.5% of the £2.8 billion cost of the third party spend.  I suggest that, if you don't get some pretty switched on managers to handle this external spend, then the taxpayer will not get a good deal on this £2.8 billion.

Now, I'm not saying that these guys were worth their £200K salaries; and 8 directors sounds a lot.  But I have a couple of friends - very impressive, tough, contract and capital project managers -  who have been approached about jobs at the NDA; jobs managing these suppliers.   And what was on offer to them was a long way short of their market rates.

So what are the odds that the suppliers are rubbing their hands together at the prospect of less oversight and management? What are the odds that the £2.8 billion grows and costs overshoot?  Anyone like to have a small wager?

And as well as this specific issue, just bear in mind when we get into the world of public sector 'cuts' after the election; some civil servants actually save us taxpayers a lot of money.  Sack them and you will notice. The trick, of course, as we enter the new age of public sector austerity, is identifying the right civil servants to keep....

Voices (2)

  1. NDAemployee:

    The axing of the two directors mentioned comes as no surprise, as all that ever seemed to happen in the NDA was a power struggle between directors on how the organisation should function. On one hand, you had the accountants view, and on the other, that of a ‘go get them’ hard nosed ex-Bechtel project manager, each whom seemed to undermine the former CEO. With the departure of Sir Anthony Cleaver as Chairman, the arrival of Stephen Henwood, and the disgraceful axing of the only man with a firm grip of the wheel, Dr Ian Roxburgh, NDA is now and will be for some time, ineffective, as it goes through yet another (the sixth so far ?) internal reorganisation. It is often said, and never more so than in successful companies, that the most prized asset are the resources. Funny that we get rid of the best, most respected resource of all (Dr Roxburgh)

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