Ministers have launched an inquiry into the flawed £6bn procurement to decommission a dozen nuclear sites after it emerged that taxpayers would foot a £100m legal bill on the project and that the contract would be terminated early.
In 2014, the 14-year contract to clean up 10 redundant “magnox” nuclear power stations and two research sites was awarded to international consortium Cavendish Fluor Partnership, a joint venture between Babcock International and US company Fluor.
Business secretary Greg Clark today admitted that the public procurement had been “defective” as he announced the inquiry headed by Steve Holliday, former boss of National Grid.
Meanwhile, the Nuclear Decommissioning Authority (NDA) said it would settle legal disputes over the award of the contract at a cost of £100m to the taxpayer. The contract had been challenged by failed bidders Bechtel and Energy Solutions.
The NDA also said it was terminating the contract to handle the clean-up operation in 2019, some nine years earlier than planned. The government will now have to retender for the work.
Clark blamed a “significant” underestimate in the contract as tendered, compared to the scale of work that needs to be done at Sizewell, Hinkley and Dungeness, which have reached the end of their lives. “This was a defective procurement, with significant financial consequences. Those responsible should be held to account and it should never happen again,” he said.
The decision to bring the contract to an early end hit the share price of Babcock, which holds a 65 per cent stake in Cavendish Fluor. Babcock said it would lose out on £100m in revenuesannually from 2020/21. Its share price closed down 4.3 per cent yesterday.
Holliday’s inquiry, which will produce an interim report in October, will look at how mistakes were made and by who, how the litigation was handled and whether the governance arrangements at the NDA are sufficient.
“British taxpayers who stand to lose nearly £100m should be asking themselves not just whether they are willing to put up with such ineptitude but also whether the government actually has a well thought out and long term nuclear decommissioning strategy,” said Rebecca Long- Bailey MP, Labour’s shadow secretary of state for energy.
Separately, Westinghouse, the formerly British reactor designer now owned by Japan's Toshiba, may file for bankruptcy protection as soon as tomorrow.