The government has been forced to pay nearly £100m in a settlement with two US companies for mishandling the way it awarded a £6.1bn nuclear decommissioning contract. Ministers have ordered an inquiry headed by the former boss of National Grid to find out why the procurement process was so flawed. Labour said the payout showed “dramatic levels of incompetence”. The government body tasked with decommissioning old reactors will also terminate the contract it awarded for cleaning up a dozen of the UK’s old nuclear sites nine years early. In a written statement, Greg Clark, business secretary, said: “This was a defective procurement, with significant financial consequences, and I am determined that the reasons for it should be exposed and understood; that those responsible should properly be held to account; and that it should never happen again.” Former National Grid chief executive Steve Holliday has been appointed to lead an independent inquiry into what went wrong. The inquiry will look at how the mistakes were made and by who, how the litigation was handled, and the relationship between the NDA and the government departments. Holliday will report to Clark, with an interim report due to published in October. The government now has the daunting task of starting a new tendering process for the 12 sites, as the deal with Cavendish Fluor Partnership will end early, in September 2019 instead of 2028. Clark said he wanted to stress the deal was “no reflection” on the performance of the consortium, which will continue clean-up work over the next two years.
Guardian 27th March 2017 read more »
The government has been forced to pay £100m of taxpayers’ money to two US engineering companies after mishandling a £6.1bn contract to clean up 12 redundant UK nuclear power sites. Ministers have admitted that the public procurement was “defective” as they announced an inquiry headed by Steve Holliday, former boss of National Grid. The Nuclear Decommissioning Authority meanwhile announced it was terminating the contract to handle the clean-up operation in 2019, some nine years earlier than planned. Labour said the payout showed “dramatic levels of incompetence” while the Scottish National Party described the situation as a “debacle”.
FT 27th March 2017 read more »
Babcock International shares fell in early trading on Monday after the UK engineering company said it would end its contract with Britain’s Nuclear Decommissioning Authority in 2019 for the clean up of 12 Magnox reactor sites in the UK. The move will reduce the value of Babcock’s pipeline by around £800m, cutting revenues from 2020-21 by £100m a year. Shares were trading at £8.77, down 4.3 per cent at publication time. Babcock said in a statement the Cavendish Fluor Partnership (CFP), in which it has a 65 per cent stake, has come to a mutual agreement with the NDA to bring to an end the Magnox decommissioning contract at the end of August 2019, having operated the contract for a full five years. Babcock said it had become apparent that the work that needs to be done at the 12 Magnox sites is now materially different in volume from that specified in the NDA’s tender, and this puts the contract at risk of a legal challenge.
FT 27th March 2017 read more »
An inquiry has been launched after a multi-billion pound nuclear contract was branded “unsustainable” and had to be cancelled, nine years before it was due to end. Greg Clark, the Energy Secretary, announced in a written statement today that the Nuclear Decommissioning Authority was terminating its contract with Cavendish Fluor Partnership (CFP) for to decommission and manage 12 magnox sites. This 14-year deal was announced in September 2014 following a two-year £6.1bn tender process. CFP is a joint venture between British plc Babcock International and American firm Fluor. Mr Clark said: “It has become clear to the NDA through this consolidation process that there is a significant mismatch between the work that was specified in the contract as tendered in 2012 and awarded in 2014, and the work that actually needs to be done. “The scale of the additional work is such that the NDA board considers that it would amount to a material change to the specification on which bidders were invited in 2012 to tender.”
Whitehaven News 27th March 2017 read more »
BBC 27th March 2017 read more »
Daily Mail 27th March 2017 read more »
The failure of the contract award process was “inevitable” according to nuclear power expert Dr Paul Dorfman, from University College London’s Energy Institute. “They were set up to fail and have failed because the understanding of costs and complexity to nuclear decommissioning is changing all the time,” he said. “Magnox reactors were thrown up in a rush to give electricity too cheap to meter and create plutonium and there was no thought of how they would be decommissioned. “Each Magnox reactor is bespoke so decommissioning each one is different with its own complexities and challenges. The more we learn about dealing with the ‘back end’ of nuclear power, the more we see how complex and costly it is.”
Telegraph 27th March 2017 read more »
Taxpayers face a £100 million compensation bill after the government mismanaged the awarding of a £6 billion nuclear clean-up contract. The Nuclear Decommissioning Authority has agreed to settle with companies that lost out on the 14-year deal after the High Court ruled last summer that it had “manipulated” and “fudged” the tender process. It meant that the wrong company won the work to decommission 12 UK nuclear sites dating from the 1960s. The move opens the door for other bidders to attempt to reclaim their bid costs, which could run to an additional £50 million, according to one source. The contract was awarded in 2014 to Cavendish Fluor Partnership, a joint venture between the UK’s Babcock International and Fluor, a Texas-based firm. However, the consortium cannot be asked to take on the extra work because that could increase potential compensation claims by companies that wrongly lost out in the tender. Some industry sources have complained that the government plumped for an unrealistically low bid for the work at the outset. Another losing bidder, UK Nuclear Restoration Ltd, which is a consortium of Amec Foster Wheeler, Atkins and Rolls-Royce, said yesterday that the settlement “raises serious concerns” about the procurement process and that it has raised the implications of the judgment with the government and the NDA.
Times 28th March 2017 read more »
Written ministerial statement by Energy Secretary Greg Clark on NDA settlement and contract termination plus inquiry. I would like to inform the House that the Nuclear Decommissioning Authority (NDA) has today announced its decision to terminate its contract with Cavendish Fluor Partnership (CFP) for the management and decommissioning of 12 redundant Magnox sites (including 2 research sites) which, together with the Calder Hall reactor on the Sellafield site, formed the UK’s first fleet of nuclear power stations.
Wired Gov 27th March 2017 read more »
TAXPAYERS will have to cough up tens of millions of pounds in compensation because the government has had to scrap a private contract to clean up redundant nuclear power stations. Clean-up firm Cavendish Fluor Partnership was awarded a £6 billion 14-year contract in 2014 to decommission a dozen Magnox nuclear power sites. But yesterday Tory Energy Secretary Greg Clark admitted that there had been a “significant mismatch” between work specified when it went out to tender in 2012 and the work that actually needed to be done. He also announced an independent inquiry into the “flawed” tendering process. Unite union said that because of failings in the original bidding process operated by the government’s Nuclear Decommissioning Authority (NDA), the taxpayer will have to fund compensation of more than £100 million to two other firms who tried unsuccessfully for the contract, Energy Solutions and Bechtel, after they took the NDA to the High Court. Energy Solutions will get £76.5m plus £8.5m costs, Bechtel is set to receive £12.5m.
Morning Star 28th March 2017 read more »
Trade union Prospect’s general secretary, Mike Clancy, called the situation “extraordinary” given “the scale and importance of the Magnox contract to the UK nuclear industry.” The union said that this should be a “wake-up call” for the Government to review how work like this is conducted. “The byzantine complexity of the contractual relationships involved do not provide either transparency or confidence,” it said in a statement. “Prospect will continue to push for the Government to invest and develop the skills and capacity for the UK nuclear industry to thrive, but considers that a review of the work and purpose of the Nuclear Decommissioning Authority would be timely.”
Independent 27th March 2017 read more »
Unite 27th March 2017 read more »
BABCOCK International saw a fall of 39½p to 877p after the support services group terminated a major Government contract to decommission and manage 12 nuclear sites. Babcock said its annual revenue would be reduced by £100million for eight years from 2021 after a Nuclear Decommissioning Authority deal to end the 14-year contract nine years early at the end of August 2019. Babcock said: “The work that needs to be done at the 12 Magnox sites is materially different from the tender.”
Express 28th March 2017 read more »
The Nuclear Decommissioning Authority (NDA) has decided to terminate its contract with Cavendish Fluor Partnership (CFP) for the management and decommissioning of 12 redundant Magnox sites, including two research sites. In a written ministerial statement to the House of Commons today, Energy Secretary Greg Clark said there is a big difference between the contract with CFP and the work that is required. Clark also announced that the NDA had settled outstanding litigation claims against it by Energy Solutions and Bechtel.
World Nuclear News 27th March 2017 read more »
Reassurances for Hinkley A workers caught up in botched nuclear power station deal.
Somerset County Gazette 28th March 2017 read more »
Wylfa and Trawsfynydd nuclear deal scrapped as cost of clean-up greater than anticipated.
Daily Post 27th March 2017 read more »