Flow down conditions

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• Flow down conditions
• David Hughes,
• Head of Procurement,
• Management Services Sellafield

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Today's Aim

• Implications of the NDA Contract upon Tier 2 and
  lower tiers
• Savings challenge

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NDA Contract

• Implications of the NDA Contract
• Key provisions of CTI5
• - for British Nuclear Group Sellafield Ltd
• - for Tier 2 and lower tiers
• Flow downs
• - Mandatory
• - Reasonable endeavours

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Key Provisions

• Key provisions of CTI5 for British Nuclear Group
  Sellafield Ltd
• Adherence to EU procurement rules
• Procurement Plan
• Make/Buy Process
• Treatment of Affiliates
• Apply flow downs
• Obligation to maintain skilled workforce
• NDA approvals

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Prior Approval

• NDA prior approval requirements
• Contracts in excess of site specific limit
• Obligations survive Tier 1 contract
• Assets
• Cost re-imbursement or time and materials
• Termination payment exceed 15 of contract value
• Make decision exceeds 1M pa
• Impact on skilled workforce obligations
• Affiliates

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Tier 2 and below

• Key provisions of CTI5 for Tier 2 and lower tiers
• Only new obligation to accept flow downs and
  cascade
• .. But yet more emphasis on
• Transparency of opportunities
• Open, transparent competition
• Incentive pricing
• Performance contracts
• Risk/reward balance
• Predictability of performance

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Flow downs

• Flow downs
• Applicable to all contracts gt 25K
• 2 categories
• - mandatory
• - reasonable endeavours

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Mandatory

• Mandatory flow downs (examples)
• Change control discipline
• Comply with extent Trade Union agreements where
  they relate to sub-contractors employees
• Arising IP to be owned by the NDA
• Termination for convenience (no profit loss
  compensation)
• CT03 Allowability of cost principles in any cost
  reimbursable contract.

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Reasonable Endeavours

• Reasonable endeavours flow downs
• Internal Procedures/Quality Management System
• Inspection and Audit
• Co-operate on CTI5 compliance

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The Savings Challenge

• Savings challenge
• Drive for best value
• But includes price
• Consistency of approach
• Track record
• Pressure will continue
• Mutual challenge

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