Socio-Economics delivered through Procurement WCSSG MEETING – THURSDAY 6 TH JANUARY th January 2011 Dick Raaz, Managing Director, LLW Repository Ltd

6 th January CONTENTS Presentation Objective Establishment of LLW Repository Ltd Employment Statistics Procurement Context Procurement & Contracting Strategy Case Study – Vault 9 Other Socio-Economic Vehicles

6 th January Presentation Objective To demonstrate how LLW Repository Ltd (LLWR) delivers socio-economic benefit through its procurement and contracting practices and other mechanisms.

6 th January Establishment of LLW Repository Ltd LLWR Site separated from Sellafield Ltd Autumn PBO (UK Nuclear Waste Management) took over operations at LLWR April Management System & Procedures adopted from Sellafield Ltd provide fundamental foundation for procurement/socio-economic practices. Gradual change-out and development of procedures to suit the needs of a much smaller entity (SME) and the evolution of business operations. Fit for purpose systems/practices.

6 th January Employment Statistics (1) Total LLW Repository Employees =116 ASWs (Agency Supplied Workers)= 28 CSWs (Contract Supplied Workers)= 5 Reachback= 9 PBO= 7 TOTAL=165

6 th January Employment Statistics (2) Workforce Demographics 1= Copeland : 61% 2= Allerdale : 21% 3= Cumbria : 11% 4= Other : 7% Total Salary Bill = Approx £12.5M of which 82% retained in West Cumbria, 93% in Cumbria.

6 th January Procurement Context As provided for in LLWR Procurement & Contracting Strategy, we ensure compliance with the following Statutory and Contractual obligations: –Public Contracts Regulations (PCR) –LLW Repository Ltd Management & Operation (M&O) Contract with NDA. –NDA Collaborative Procurement Strategy. –NDA Socio-Economic Strategy.

6 th January LLWR Procurement & Contracting Strategy (1) Although the transfer of shares in LLWR to the new PBO took the company into private sector ownership, LLWR remains a publicly funded body having an M&O Contract with the NDA, requiring compliance with Public Sector Procurement Rules. Accordingly the site is required to comply with the public sector directive of the European Union (EU). This is in line with LLWR policy of adopting best practice procurement processes.

6 th January LLWR Procurement & Contracting Strategy (2) Socio-Economic Criteria: Selective use of appropriately weighted socio-economic evaluation criteria as part of the ITT process enables LLWR to directly and indirectly (through sub-contractors) encourage the following: –Partnering with the local supply chain. –Use of local labour. –Use of local suppliers. –Training. –Encouragement of youth development. –Mitigating actions to limit impacts on local community. –Support to and sponsorship of local organisations. –Support to Community Projects (financial and other).

6 th January LLWR Procurement & Contracting Strategy (3) Up to a maximum of 10% socio-economic weighting is applied to relevant contracts. Where applicable a KPI (Key Performance Indicator) is attached to contract award to ensure selected contractors deliver their socio-economic promises enclosed within the tender. This approach currently being applied to the PCM Decommissioning Works opportunities. LLWR Project Managers monitor progress and evidence delivery of contractors socio-economic promises. LLWR Project Managers enforce the company policy to be a good neighbour.

6 th January Case Study – Vault 9 (1) Approximate Spend = £22M –Cumbria 66% –North West Region 13% –National 21% LLWR – direct employment of an additional 8 local staff for the duration of the contract (£1.1M). LLWR Support Contracts – 15 Cumbrian contractors (£0.9M) 1 Main Contractor. –28 Sub-Contractors of which 11 were Cumbrian businesses (9 West Cumbrian). = 79% of spend retained in NW

6 th January Case Study – Vault 9 (2) ~£0.5M in accommodation costs for travelling workforce over a 2 year period. £20K in local charitable donations by contractors. Local staff employed and resources relocated and retained in West Cumbria. Corporate training and job specific training provided to all of the workforce.

6 th January Other Socio-Economic Vehicles ~£60K local community donations. Involvement with community initiatives e.g. Cumbria Community Foundation, Communities that Work, Energy Coast Business Cluster, Drigg Bursary. Support LLWR Personnel involved in community roles/activities e.g. Mountain Rescue, School Governors, Councillors, JP’s. Benefit in Kind – provide specialist expertise to assist community groups/schemes e.g. Engineering, Project Management, Communications, Advice, Guidance. Mitigating actions to minimise impact on local community.