Technical Meeting on Procurement Activities
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1 ROSATOM STATE ATOMIC ENERGY CORPORATION ROSATOM Technical Meeting on Procurement Activities Country Presentation - Russia Andrey Meshcheryakov Deputy General Director, CPO Consolidated Nuclear Equipment Procurement Directorate JSC September 8, 2014 Vienna, Austria
2 Agenda 1. Overview of Rosatom and its procurement activities 2. Evolution of Rosatom procurement practices and key achievements 3. Examples of tools for dealing with Counterfeit, Fraudulent, and Substandard Items (CFSIs) 2
3 Rosatom integrates facilities throughout the whole value chain of nuclear energy: from uranium mining to NPP construction, operation and decommissioning Key Activities of Rosatom* Fuel fabrication Mining TVEL Research and development 15 research organizations ARMZ U1 Conversion and enrichment TVEL Tenex NPPs engineering & construction Power equipment and services Gas centrifuges manufacturing TVEL Spent nuclear fuel treatment FCNRS, NUKEM Technologies Power Generation Rosenergoatom NIAEP - ASE Rusatom Overseas Atomenergomash Rusatom Service * Boxes include names of key Rosatom subsidiaries in the relevant sector 3
4 Recently commissioned NPP EPC projects Russia, Rostov NPP, Unit MW, 2009 Russia, Kalinin NPP, Unit MW, 2012 Iran, Busher NPP, Unit MW, 2011 India, Kundankulam NPP, Unit MW,
5 Rosatom nuclear innovations targets wide variety of applications Nuclear Icebreaker Fleet - #1 nuclear fleet in the world - Assures stable functioning of Northern Sea Route Fast Reactors (Gen IV) - #1 fast neutron reactor in the world - #1 operating fast neutron reactor in the world - Broad development programme Small and Medium Size Reactors - Variety of different designs with referent parameters - #1 floating NPP in the world is being built - #1 successful public-private partnership for developing SMR Nuclear Medicine - Isotope production (curable 2 kinds of cancer, earlier diagnostic) - Cyclotrons - RFP laboratory 5
6 Company overview: key figures 40+ countries Current Rosatom business presence Revenue people Number of employees EBITDA 30 nuclear units Simultaneous implementation Contract portfolio for the 10-year term * Annual Report figures 6
7 Agenda 1. Overview of Rosatom and its procurement activities 2. Evolution of Rosatom procurement practices and key achievements 3. Examples of tools for dealing with Counterfeit, Fraudulent, and Substandard Items (CFSIs) 8
8 Creation of Rosatom from the Ministry of Atomic Energy and tough competitive markets were the challenges Rosatom Procurement faced Rosatom General Context The Ministry of Atomic Energy of the Russian Federation State Corporation Rosatom Challenges for Rosatom Lack of transparency and openness especially in the procurement function 1) Cost pressure and demand for higher efficiency Large number (c. 350) and high diversity of companies operating under Rosatom brand (from scientific organizations and equipment design-bureaus to large manufacturing units) Number of non-profit organisations Domestic electricity market Competitive market environment Global nuclear technology market Strategic Goals for Rosatom Procurement Unification of procurement processes enterprise-wide Elimination of corruption in procurement function Achievement of savings and improvement of efficiency in procurement function 1) According to Transparency International-Russia audit results,
9 Evolution of Rosatom Procurement Practices Development Procurement at Divisions Each subsidiary administered its own procurement procedures and methodologies Purchasing was administered predominantly at subsidiary level 2009 Enterprise-wide Procurement Rosatom creates enterprise-wide regulating procurement bodies A unified transparent system of procurement procedures and tools is implemented based on Unified Industry Purchasing Standard 2013 World-Class Procurement Rosatom CEO approves Procurement optimization plan, including implementation of category management, inventory management tools, personnel motivation, etc. Time 10
10 To achieve strategic goals a number of initiatives were implemented in Procurement at Rosatom in Areas for Change Initiatives Description Procurement processes standardization Procurement automation Education programs Corporate culture Unified Industrial Purchasing Standard was adopted by all Rosatom enterprises thus standardizing procurement processes across all of the c. 350 Rosatom companies The Central Arbitration Committee - a special independent authority - was established to help to resolve conflicts between suppliers and procurement representatives E-Procurement comprised by number of electronic systems introduced to support the procurement standard, increasing transparency and decreasing workload for suppliers (through electronic bidding functionality) Integrated IT-systems implemented for a purpose of automation and standardization of procurement transactions and control procedures over entire procurement process from planning purchases to awarding contracts Education programs for suppliers and internal customers launched at Rosatom learning center covering main aspects of the corporate procurement: bidding procedure, handling complaints, etc. Role of procurement in the organization changed dramatically. Each procurement employee complies with high professional standards and is considered as a reliable business-partner High transparency culture spread across entire organization. All employees are provided with information brochure Memo on fraud prevention which contains information on how to behave in potentially fraudulent situations KPIs KPI system developed and implemented across the Procurement function to support implementation of strategic goals 11
11 Next priorities for Rosatom include effective management of demand and supplier base Transparency and Control Unified Industry Purchasing Standard Achievement of open and transparent purchasing in competitive environment Deployment of tools that allow to limit corruption Roll-out of basic IT infrastructure to support purchasing processes Implementation of strategy to de-monopolize long lead equipment market Building basis for gathering market intelligence on suppliers and price levels Procurement Excellence Effective Integrated Planning and Supplier Management Standardization of demand (including unified stock item catalogues) Design and implementation of category strategies (including forecast of price levels) Development of supplier strategies for each of the categories Materials management based on target inventory levels Savings achieved through stimulating competition Savings achieved through strengthening Rosatom s market position, standardization of technical requirements and improving internal efficiency 14
12 Agenda 1. Overview of Rosatom and its procurement activities 2. Evolution of Rosatom procurement practices and key achievements 3. Examples of tools for dealing with Counterfeit, Fraudulent, and Substandard Items (CFSIs) 15
13 Safety important equipment quality assurance (tender phase) Decision on selection and evaluation requirements/criteria choice, required authorizing documents list development + Equipment procurement RfP development + Equipment supply contract development Procurement notice publication on the official web-site and e-trading platform Participants applications acceptance Applications analysis, audit if necessary*. Admission to the evaluation Evaluation of applications Best offer selection, signing a contract *If the current state of the participant does not meet the requirements of the procurement documentation, as well as in the case if proposal for the supply of equipment doesn't meet technical requirements - participant shall not be admitted to the evaluation process 16
14 Safety important equipment quality assurance (contract execution phase) Development and approval of design documentation Development and approval of quality assurance programs, quality plans Factory audit ability for manufacturing check Control and approval: DEZ*, Engineering company, Developer, Rostekhnadzor and Rosatom authorized quality control organization** Technology and control operations assessment during the manufacturing process Production tests (if necessary) Acceptance inspection on the factory Final check on the NPP site Each stage is considered complete only after all the necessary corrections are made! * DEZ Consolidated Nuclear Equipment Procurement Directorate JSC ** Order of interaction according to the regulatory documents 17
15 Thank you for your attention!
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