Kenneth Fletcher
WC Monitor
4/04/2014
Unsuccessful bidders are considering challenging the Nuclear Decommissioning Authority’s award of the new Magnox contract to the Cavendish Fluor partnership, including the Bechtel-EnergySolutions team and a team led by Amec. The NDA announced early this week the award of a new contract for management of the 10 Magnox reactor sites and two research reactor sites under a new parent-body organization. Any challenge to the Magnox award would need to go through the U.K. court system. Under U.K. procurement regulations, unsuccessful bidders have a 10 day period to request further information, which could potentially lead to a legal challenge.
EnergySolutions, the incumbent contractor for the Magnox portion, is still considering its options. “We and our teaming partner have not decided whether to protest the results of the re-bid process. Our failure to win the re-bid will have a significant negative impact on our results of operations,” the company said in an April 1 Securities and Exchange Commission filing. The Magnox work currently makes up a large portion of EnergySolutions’ revenue—the company expects to earn $1.2 billion in the contract year that ended this week, according to the SEC filing. EnergySolutions declined to comment this week. Bechtel said in a statement: “We’re disappointed by the announcement. We believe RSS would deliver the best value for money while maintaining mandatory standards of safety, security and environmental performance.”
Another Magnox bidder, UK Nuclear Restoration Ltd., comprised of AMEC, Atkins and Rolls Royce, is also looking into the possibility. “We will be using the 10 day standstill period to consider our options,” spokesman Harold Ashurst said in a written response. The third unsuccessful Magnox bidder, CAS Restoration Partnership, made up of CH2M Hill, AREVA and Serco, has not yet weighed in publicly: CH2M Hill declined to comment.
‘The NDA is Confident’ in Competition Process
For its part, the NDA has stood by its choice of Cavendish-Fluor. “The NDA is confident that the competition process was implemented rigorously, in line with UK and EU procurement regulations,” NDA spokesman Bill Hamilton said in a statement. “Our process was scrutinised in detail by external advisors over the two years of the competition, and recently received positive external validation by the independent Major Projects Authority, which forms part of the Cabinet Office of the UK Government. The NDA would continue with transition arrangements – legal processes and preparations for hand-over – until the results of a legal challenge become clear. It is too early to predict how this would work out in practice.”
£1 billion in Savings Expected From Cavendish-Fluor
The NDA said it expects £1 billion in savings from its selection of Cavendish-Fluor. “We have undergone a comprehensive and rigorous process aimed at securing the best possible parent body for these challenging sites. Cavendish Fluor Partnership bring a successful track record and extensive nuclear experience that will bring enormous benefits to the decommissioning and clean-up programme,” NDA CEO John Clarke said in a statement.
Union Questions Overall Strategy
But Gary Smith of the U.K. labor union GMB questioned the government’s overall strategy. “We look forward to meeting the new contractors. We know Fluor have strong tradition of training in the UK and we deal with Cavendish elsewhere on the nuclear estate. We remain of the view that the UK government has no coherent strategy for nuclear,” he said, adding that it is unclear how the U.K. industry “is going to benefit in the global market for skills in nuclear decommissioning and construction.”
The U.K. labor union Prospect noted that the importance of benefits to local communicates in the procurement. “These communities have done so much to support the industry over the past 50 years. We are pleased that the Cavendish Fluor Partnership have not shied away from that and included specific commitments on local investment in their winning bid,” Prospect National Secretary Gill Wood said in a statement.
