Background to the report

The Ministry of Defence (the Department) maintains a submarine-based continuous at sea nuclear deterrent to support the government’s national security policy. To do so it relies on a network of equipment, people and infrastructure, often referred to as the Defence Nuclear Enterprise (the Enterprise). The infrastructure includes sites critical to producing, installing, operating, maintaining and disposing of nuclear reactor cores and weapons. These are known as nuclear-regulated sites (sites). Some, but not all, sites are owned by the government, with several of the most significant ones owned or operated by contractors. For these sites to operate, independent regulators must provide assurance that they, and the facilities within them, can safely handle nuclear materials.

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The Department currently has a number of large and complex construction projects for facilities at nuclear-regulated sites. We examined three projects, currently valued at £2.5 billion, where construction has already started:

  • MENSA: The Department is building a new nuclear warhead assembly and disassembly facility at the Department-owned and Atomic Weapons Establishment (AWE)-operated site in Burghfield (Reading).
  • Core production capability (CPC) facilities: The Department is replacing facilities at the Rolls Royce-owned and operated site in Raynesway (Derby) so it can produce the latest nuclear reactor core designs.
  • Primary build facility: The Department is building new facilities at the BAE Systems-owned and operated shipyard in Barrow-in-Furness (Cumbria), which will allow a modular-build approach for the Dreadnought-class submarines

Content and scope of the report

To ensure value for money during the early project stages, the Department must overcome both the inherent risks affecting all complex infrastructure projects, as well as the unique nuclear regulatory challenges. This report examines if the Department’s management of these projects to date represents value for money. It assesses whether the Department works with site operators and regulators to produce cost-effective designs; if commercial arrangements transfer risks; and how these projects are managed. In doing so, it aims to set out lessons for the Department to consider when completing these projects and planning its next cycle of such projects, as well as for others managing similarly complex work.

Against this background, this report examines:

  • Progress to date with infrastructure projects on nuclear-regulated sites (Part One);
  • The Department’s approach to the nuclear regulatory environment (Part Two); and
  • Whether the Department’s project management aligns with accepted programme and commercial management standards (Part Three).

Report conclusions

To maintain the continuous at sea deterrent, the Department must complete three critical infrastructure projects, valued at £2.5 billion, on its nuclear-regulated sites. It has made some progress, with the MENSA facility to assemble and disassemble nuclear weapons and the CPC facilities now taking shape. However, these three projects experienced problems in their earlier and riskier stages, with a cumulative £1.35 billion cost increase and delays of between 1.7 and 6.3 years. Given the interdependencies across different elements of the Nuclear Enterprise, such delays have broader implications which the Department must manage.

The challenges with these projects were not unique. It is therefore disappointing to see that in their early days the Department made the same mistakes, also experienced by others, as were made more than 30 years ago. To secure value for money, the Department should have managed the inherent challenges of these projects, such as not starting construction too soon and allowing some flexibility, as well as addressing the risk of not having a statutory role to agree cost-effective designs. In not doing so, the Department’s early management of these projects has not delivered value for money. More recently, the Department has started to get to grips with the challenges through revised commercial, regulatory and governance arrangements, although it is too early to tell whether these will be effective.

“While these infrastructure projects are complex, the MoD has encountered similar challenges before in its nuclear work. Although it has recently introduced changes to enhance its oversight of the projects and improve its contracts with suppliers, it should have learnt earlier from past mistakes and the experience of others in the nuclear sector. Instead, the MoD’s failure to mitigate commercial and delivery risks early on has led to project delays and cost increases, as well as impacting its wider work.”

Gareth Davies, head of the NAO

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Publication details

Press release

View press release (10 Jan 2020)

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