A United Kingdom House of Commons committee on Wednesday lashed the government’s Nuclear Decommissioning Authority for its handling of a multibillion-pound contract for nuclear-reactor decommissioning that is being canceled early following an expensive legal challenge.
An excessively complicated contract process led to selection of the “wrong supplier,” Cavendish Fluor Partnership, and then to a nearly £100 million payout to two losing bidders and a nine-year curtailment of the contract, the Public Accounts Committee said. “Not only did this disrupt an important component of vital nuclear decommissioning work, but it also cost the taxpayer upwards of £122 million,” according to its report.
The Nuclear Decommissioning Authority, the nondepartmental agency tasked with cleanup of retired U.K. nuclear sites, in 2014 awarded a 14-year contract covering £3.8 billion of work in decommissioning 10 retired Magnox reactor plants and two research facilities.
Things went downhill from there. After a two-and-a-half-year “consolidation” process, in which it evaluated the work it would actually have to perform upon taking over the work, Cavendish Fluor Partnership determined it would cost £6 billion to fulfill its decommissioning commitments.
Losing U.S. bidders EnergySolutions and Bechtel, which had teamed as Reactor Site Solutions, sued separately and received £97.5 million after the British High Court in 2016 determined NDA had “fudged” the procurement process to keep Cavendish Fluor in contention.
The procurement featured more than 700 criteria, which and some of Cavendish Fluor’s scores had to be changed to prevent its elimination, lawmakers said.
“The High Court found that evaluators knew that without changing those scores, Cavendish Fluor Partnership (CFP) would have been excluded from the competition, but had manipulated the evaluation to avoid that outcome,” the Public Accounts report says. “This resulted in the NDA awarding the contract to the wrong supplier and subsequently losing a court case brought against it by one of the losing bidders, EnergySolutions.”
The Nuclear Decommissioning Authority has acknowledged the procurement process was unnecessarily complex, the report says.
The committee said the agency could not provide a clear explanation for £500 million of the £2.2 billion cost spike for the Cavendish Fluor contract. Specifically, NDA does not know whether it misunderstood the state of the facilities or whether the prior contract holder, EnergySolutions, had underperformed or even received payment for work not done.
The Nuclear Decommissioning Authority is looking into the matter, and is legally authorized to reclaim some money from the prior contractor for any work that was funded but not finished. EnergySolutions, a Salt Lake City-based nuclear services specialist, this week did not respond to a request for comment on the matter.
In the wake of the High Court ruling, the NDA said in March 2017 it would suspend the contract in September 2019 rather than the original 2028 date. An independent inquiry of the contract was initiated last year, with findings expected in early 2018.
The House of Commons did not limit its criticism to NDA. The United Kingdom’s central government, including the Treasury, “must also share the blame” for insufficient oversight of the agency’s procurement and contract management processes, the report says.
The panel issued a list of recommendations for NDA and its oversight bodies in government. These include: The NDA should provide a report within three months on whether it overpaid the prior contractor and its approach to recouping that money; within six months of the inquiry report, NDA should demonstrate its approach to establishing and sustaining valid information on the states of its facilities; and NDA and the government within that time frame should also report on steps taken to carry out the recommendations from the inquiry.
“We will study the Committee’s recommendations and those to come from the Holliday Inquiry, and have already taken significant steps to address the issues arising from the Magnox competition and contract,” the NDA said in a statement Wednesday. “We are committed to learning from the mistakes made, implement any necessary improvements and continue to focus on the important work of cleaning up the UK’s nuclear legacy.”
The agency did not respond by deadline to additional questions on the report.
