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Parliament's public spending watchdog has slammed the Ministry of Defence for delays and a billion-pound cost increase on three nuclear facilities.
The National Audit Office (NAO) said in a report that starting work too early on three infrastructure projects would lead to delays of between 1.7 and 6.3 years and a combined cost increase of £1.35bn on projects now set to cost £2.5bn.
The report Managing infrastructure projects on nuclear-regulated sites focused on construction works at three sites: the new £1.8bn nuclear warhead assembly and disassembly facility (Mensa) in Burghfield, near Reading; £474M of refurbishment works at a nuclear reactor core production facility at Raynesway, near Derby; and new £240M facilities for Dreadnought submarines at Barrow-in-Furness in Cumbria.
The projects were contracted out to the AWE consortium, which includes Lockheed Martin, Serco and Jacobs, Rolls-Royce and BAE Systems. The NAO said MoD relied too heavily on a single contractor for the three projects and that its inability to regulate the sites reduced the chance of it securing value for money.
The way that the MoD set up the contracts also means that it, and not its contractors, must foot the bill for cost increases as it failed to effectively distribute financial risks.
NAO comptroller and auditor general Gareth Davies said: “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.”
The watchdog said that while it recognised that the MoD faced “unique nuclear regulatory challenges” alongside the risks facing every construction project, it was “disappointed” it failed to respond appropriately to the challenges.
The NAO said the MoD started construction too soon, was unable to react to changes and unable to procure “cost-effective designs”. This meant the ministry was unable to deliver value for money.
The Mensa facility was completed in October 2019, while the first of the reactor core production facilities is due for completion in early 2020. The NAO also confirmed the first Dreadnought facility building is mainly complete.
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I worked on one of these projects. Rolls-Royce let contractors run riot. There has been no direct supervision by Rolls-Royce and so, companies that are corrupt know that they can get away with murder. One company let their contractors book whole days that they were not working and then charged it to the Rolls-Royce. No one from Rolls-Royce was checking hours or if people were working. There has also been countless contractors on the site that have been paid A LOT of money by Rolls-Royce, yet they have never been needed on the project. The project that I worked on was a complete shambles, there is no wonder why they have over-spent.