The United Kingdom on Monday announced the early termination of the 2014 contract for management and decommissioning of its 12 Magnox nuclear sites, and a more than $120 million settlement with two companies that partnered on an unsuccessful bid for the work.
An independent inquiry is also planned into the procurement process that led to the awarding of a faulty contract and its eventual termination, according to a statement to Parliament from Greg Clark, secretary of state for business, energy, and industrial strategy.
“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,” he said.
That wasn’t sufficient for GMB, the U.K. union that represents nuclear workers. The organization on Tuesday called for the complete dissolution of the NDA, a nondepartmental public body, in favor of a governmental Nuclear Development Agency. “We need to cut out the middle men, have this work done in-house to cut costs and to save the taxpayer money,” GMB Scottish Secretary Gary Smith said in a prepared statement.
The Nuclear Decommissioning Authority in April 2012 began a bidding process that more than two years later produced a £6.1 billion, 14-year contract to the Cavendish Fluor Partnership. The contract covered the remaining life cycle, including defueling and decommissioning, of the decades-old Magnox fleet of 10 nuclear power plants and two research facilities, all of which are now closed.
The deal was to run through 2028, but will instead expire in September 2019. The problem was not the contractor, a partnership of U.K.-based Cavendish Nuclear and U.S.-based Fluor, but rather that much more work must be done to decommission the plants than is covered in the contract, Clark said. For example, the amount of asbestos to be removed from the facilities is much greater than previously thought, NDA spokesman Bill Hamilton said Monday.
The updated workload represents a “material change” to the scope of the project on which four corporate teams bid, Clark said. The size of the change is greater than allowed under U.K. procurement laws, and trying to wrap it into the current contract would invite additional lawsuits from other bidders, according to both NDA and contractor officials. “That’s the legal minefield we’d be entering if we went down that path,” Hamilton told RadWaste Monitor.
“Although we are disappointed that the contract will end early, we are committed to completing the mission priorities safely and with excellence,” Fluor said in a prepared statement. “CFP will work with the NDA to develop and implement a transition plan, and, through the duration of the contract, Fluor will remain focused on delivering the superior solutions we are recognized for across the industry.”
The NDA was led during the contract procurement by CEO John Clarke and Chairman Stephen Henwood. Both stepped down early this year.
NDA Chief Executive Officer David Peattie, who has been on the job only since March 1, will head the effort to develop a new procurement process that will result in a new provider taking over the Magnox project in 2019, Clark said. The cost for the work will certainly increase, but the amount of that price spike is not yet known, Hamilton said.
The NDA has also agreed to pay settlements of £85 million ($106.8 million) to EnergySolutions and £12.5 million ($15.7 million) to Bechtel, two U.S. nuclear cleanup specialists that had partnered on the Magnox bid as Reactor Site Solutions.
EnergySolutions had preceded Cavendish Fluor as the management contractor for the Magnox sites. It sued after the 2014 contract award, claiming unfair scoring by NDA in the evaluation of the bids. The British High Court agreed in July 2016, finding that NDA had “manipulated” and “fudged” the procurement process in order to prevent Cavendish Fluor from being disqualified, the Financial Times reported.
Bechtel filed a separate lawsuit based on irregularities in the procurement process that came to light during the trial.
The Nuclear Decommissioning Authority appealed the High Court decision, but has dropped the appeal alongside its settlement payments. Clark said the settlement involves no admission of wrongdoing, but said NDA’s legal fees might have grown significantly if it had continued the legal fight.
“We’re pleased that the matter is settled and sought to recover only our costs incurred during the procurement. We look forward to working with the NDA in the future on their vitally important work for the UK,” Bechtel said in a statement.
Former U.K. National Grid CEO Steve Holliday will head the inquiry that will investigate the entirety of this contract process, from inception to termination. Key questions to be addressed, Clark said, including the course of events that produced the contract award flaws highlighted by the High Court; NDA’s actions throughout the process; and whether the governance structure and relationship between NDA and government agencies played a role in the situation.
