Tuesday 28 March 2017
UK taxpayers face £100m bill over flawed nuclear deal
The UK Government has been forced to pay £100 million of taxpayers’ money to two US engineering firms after mishandling a nuclear decommissioning contract.
Business and Energy Secretary Greg Clark has also ordered an inquiry, led by former National Grid boss Steve Holliday, after a “flawed” tendering process for the £6.1 billion deal.
The government’s Nuclear Decommissioning Authority (NDA) ran a tender process from April 2012, which resulted in a 14-year contract being awarded in September 2014 to the Cavendish Flour Partnership (CFP) – a joint venture between British firm Cavendish Nuclear, subsidiary of Babcock International and US firm Fluor.
The deal to decommission 12 redundant Magnox nuclear power sites, including two research sites, will be terminated nine years early.
They include Berkeley, Bradwell, Dungeness A, Harwell, Hinkley Point A, Oldbury, Sizewell A and Winfrith in England, Trawsfynydd and Wylfa in Wales and Chapelcross and Hunterston A in Scotland.
The news comes after a High Court ruled the NDA “manipulated” and “fudged” the tender process to clean up the sites.
In a written statement, Mr Clark said it had become clear there was a “significant mismatch” between the work that was specified in the contract and the work that actually needs to be done.
He added the NDA has settled outstanding litigation claims filed by US firms Energy Solutions and Bechtel. It will pay £85 million, including costs to Energy Solutions, plus £12.5 million including costs to Bechtel.
The inquiry will investigate the procurement process from its inception through contract award, the management of the contract by NDA to the point at which it decided to terminate the contract and the litigation that followed after the contract award.
Mr Clark 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.
"Taxpayers must be able to be confident that public bodies are operating effectively and securing value for money. Where this has not been achieved such bodies should be subject to rigorous scrutiny."
