Nuclear decommissioning contract scrapped over tender errors

The Nuclear Decommissioning Authority (NDA) is to cancel its contract with Cavendish Fluor Partnership (CFP) for the management and decommissioning of 12 redundant Magnox sites, which formed the UK’s first fleet of nuclear power stations.

The NDA ran a £6.1 billion tender process which resulted in a 14-year contract being awarded in September 2014 to CFP – a joint venture between the British firm Cavendish Nuclear, a subsidiary of Babcock International, and the US company Fluor.

“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,” said energy secretary Greg Clark in a statement.

The NDA board has concluded that it should exercise its right to terminate the contract on two years’ notice. The contract will be terminated in September 2019, after five years, rather than its full 14-year term.

"Terminating is no reflection on CFP as performance on the sites under its ownership has been strong,” said NDA chief executive David Peattie. “Making progress on the ground and keeping our sites safe and secure remain our collective priorities.”

Babcock International chief executive Archie Bethel added: "We have developed a good working relationship with the NDA and we look forward to working with them, not only to bring this contract to an orderly end in two and a half years' time but also on future projects, including the completion of the decommissioning of the Magnox power stations."

Clark also announced that NDA has settled outstanding litigation claims against it by contract bidders Energy Solutions and Bechtel. The NDA was found by the High Court in its judgement of 29 July 2016 to have wrongly decided the outcome of the procurement process.

As part of the settlements, NDA has withdrawn its appeal and has agreed settlement payments with Energy Solutions of £76.5 million and with Bechtel of $14.8 million (£11.7 mllion).

Clark revealed that there would be an independent inquiry into the conduct of the 2012 procurement process, to be led by the former chief executive of National Grid, Steve Holliday.

The UK’s largest union Unite welcomed the news of an independent inquiry and has called for the clean up work to be taken back into public control. “The big losers are the taxpayer and the workforce who faced cutbacks in their pensions because of the financial mess that this contract caused,” the union said in a statement.