SAFESPUR – April 2008 AWE - SUPPLY CHAIN OPPORTUNITIES Tony Morris - Head of Procurement DD: ; m:

PRESENTATION OUTLINE l The Contract l Organisation l Expenditure Patterns l Project Examples l Future Developments

THE AWE SITES AWE Aldermaston AWE Burghfield

The Company MoD AWE Management Limited Joint Venture Company Equal Shares BNFL Lockheed Martin and Serco AWE plc Executive Board All AWE staff Licence of Premises, Plant and Machinery Contract with MoD 100% Ownership Other Stakeholders including regulators and the LLC AWEML Board delegates AWE plc to perform the contract. AWEML does not employ any staff Golden Share

10 YEARS; NOW 25 YEARS “…. whilst giving the contractor scope to manage the support areas in a way that allows the full range of commercial decision making to be applied.” MOD - AWE ML CONTRACT

SUMMARY OF CONTRACT l Output Driven, M&O l Target Cost Incentivised Fee l Firm 5 years, Fixed 10 years l Restrictions: IPR, Parent Co, Liability l Legacy funding separate l Assets owned by MOD

SUMMARY OF CONTRACT l Incentivised on performance with annual review of measures (self assessment) l Regulatory requirements incorporated in contract l Basis of the contract is to “Run the Business” l MOD interface through the NW Integrated Project Team (IPT)

“Alongside the modernisation of our conventional forces, as set out in last year’s White Paper, the Government remain committed to maintaining the effectiveness of the nuclear deterrent, including making the necessary investment at the Atomic Weapons Establishment, Aldermaston, and to keep open the options for a successor to Trident until a decision is required, probably in the next Parliament.” FUTURE INVESTMENT Defence White Paper 21 July 2004

AWE Major Projects Research & Applied Science Stockpile Manage ment Systems Engineering Infrastructure Assurance Business Management & Finance

Procurement Organisation Core Services/ Strategic Sourcing Materials Facilities Engineering and Construction DI Support DTES DSM/ DRAS/ DSE Delivery Teams Performance Management Policy, Process Procedures, Performance Measurement, Analysis compliance, Audit Contract Support Contract Engineering, Templates, Models, Dispute Resolution, Legal Support, Audit, Review Project Strategies within defined options Project Deliverables Contract Management Optimal Purchasing within architecture Order Management Expediting Receipting Variations Cross Business requirements Sourcing Purchasing Agreements Supplier Relationship Supplier Performance Corporate Strategy Supplier Relationship Supplier Resourcing Incentivisation Strategy DMP Roles

Organisation Chart Procurement Manager Derek Morrison Tel: Procurement Manager Mark Allen/Peter Isaac Tel: Head of Procurement Tony Morris Procurement Manager Nigel Lowe Tel: Major Projects Support Category Management Engineering & Construction Category Management Materials & Services Procurement Performance Management Operational Directorate Delivery Procurement Change Manager Mark Allen Tel: Procurement Manager Fiona MacGowan Tel: 54925

SUPPLIER SEGMENTATION H L LH £250k Financial Value Strategic Value AWE Suppliers List £8K  £1k LH (151) HH (36) LL (847) HL (85)

Key Supplier Categories 80 strategic suppliers including the following categories: -Engineering and Construction -Design Houses -Facilities -IT/Telecoms -Consumables -Training /Universities -Temporary Staff

Contract Modular Architecture PRISM 1 Instructions to Tenderers PRISM 2 The Project Specific Requirements PRISM 3 AWE Standard Requirement s PRISM 5 Contract Terms & Conditions PRISM 4 Information to be returned with Tender Industry Forms GC/Works 1&2 Industry Forms NEC Industry Forms IChemE AWE Modular 1. Professional Services AWE Modular 2. People AWE Modular 3. Product AWE Modular 5. Purchase Order T&Cs AWE Modular 4. Product & Site Services

1 Professional Services 2 Non AWE Staff 3 Products 4 Products & Site Services Annex M Programme Early Warning Compensation Defects/ Inappropriate Supply EVM Annex M Programme Early Warning Compensation Defects/In-Supply Tests Issued Property Long Term Support S/W Licences Imports/Duty Annex M Programme Early Warning Compensation Defects/In- Supply Plus clauses for “Products” Articles of Agreement & General Conditions 1 to 35 Annexes A to L 5 PO Terms & Conditions Default Conditions

DECOMMISSIONING LEGACIES l Programme to 2019 l £20-25m pa l Planning / Characterisation design l Safety documentation l Modular containment / HVAC l Size reduction / Cutting operations l Waste / Environmental monitoring l Waste Disposal (RA / Haz / Non-Haz)

DECOMMISSIONING CURRENT PROGRAMME l D7 - Tritium l A1 - Pu Gloveboxes l A50 - Pu Gloveboxes l A37 - Demolition l A25 - Demolition / clearance l R61 - On hold, pending demolition

Questions?