UK NDA will pay US$100m for ‘flawed’ tender

THE UK’s Nuclear Decommissioning Authority (NDA) is to pay almost £100m (US$126m) in compensation and costs to Energy Solutions and Bechtel over a “flawed” nuclear decommissioning contract tender.             

In 2014, Energy Solutions and Bechtel lost out on a 14-year contract to decommission legacy UK nuclear sites to the Cavendish Fluor Partnership (CFP), owned by Fluor and Babcock subsidiary Cavendish Nuclear. US firm Energy Solutions, however, sued the NDA, alleging that it had not evaluated the bids correctly. In July last year, the High Court found that the NDA had indeed, made errors in awarding the contract. Energy secretary Greg Clark has now announced that the NDA has withdrawn its appeal against the judgement.

“While these settlements were made without admission of liability on either side, it is clear that this 2012 tender process, which was for a value of up to £6.1bn, was flawed. The NDA has agreed settlement payments with Energy Solutions of £76.5m, plus £8.5m of costs, and with Bechtel of US$14.8m, plus costs of around £462,000 – approximately £12.5m in total,” said Clark in a ministerial statement. “These are very substantial costs and had the potential to rise much further if the case had proceeded to trial.”

In addition, Clark announced that the NDA has decided to terminate the contract awarded to CFP in 2014. The contract had been for 14 years of work at 12 Magnox sites and the Calder Hall reactor at Sellafield. However, this contract will now end in September 2019, after the NDA board decided to exercise its right to terminate the contract with two years’ notice, with the agreement of CFP. After it was awarded the decommissioning contract, CFP began work in September 2014 on the consolidation process, to ensure that the work specified in the contract matched the work that is required. The process revealed what Clark describes as a “significant mismatch”, leading to the decision to terminate the contract.

“It is important to emphasise that this termination is no reflection on the performance of Cavendish Nuclear or Fluor, and work on decommissioning at all the sites will continue with the management of CFP for a further two and a half years. During this period, the NDA will establish arrangements for a replacement contracting structure to be put in place when the current contract ends. This work will be led by the NDA’s new chief executive, David Peattie,” said Clark.

As a result of the mistakes made, Clark has launched an independent inquiry into the conduct of the 2012 procurement process and why the contract with CFP was so unstable. It will look into the conduct of the NDA and government departments involved, and make recommendations for improvements, further investigations or disciplinary proceedings.

“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,” said Clark.

None of the companies involved have commented on the matter.