Nuclear clean-up deal to be scrapped as costs rise
ACONTRACT to clean up 12 Magnox nuclear sites – including Trawsfynydd and Wylfa in north Wales – will be scrapped early due to the rising costs of the multi-billion pound project.
The Nuclear Decommissioning Authority (NDA) ran a £6.1bn tender process from April 2012 which resulted in a 14-year contract being awarded in September 2014 to the Cavendish Fluor Partnership (CFP).
But that is now to be halted in August 2019 by mutual agreement and a probe launched into the handling of the procurement process.
This happened after it became clear there is a “significant mismatch” between the work that was specified in the £6.1bn contract and the work that actually needs to be done.
Sources said that the workforce at Wylfa, which stopped operating in 2015, and Trawsfynydd, where generation ended in 1993, should not be impacted by any changes.
Any new contract could actually increase the scale of work and potentially the workforce needed at the site.
The Unite union wants the cleanup taken back into public control.
Energy Secretary Greg Clark said: “The scale of the additional work is such that the NDA Board considers that it would amount to a material change to the specification on which bidders were invited in 2012 to tender.
“In the light of this, the NDA Board, headed by a new chair and chief executive, has concluded that it should exercise its right to terminate the contract on two years’ notice.
“The contract will be terminated in September 2019, after five years rather than its full term of 14 years. This termination is made with the agreement of CFP.
“Dealing safely with the UK’s nuclear legacy is fundamental and non-negotiable.
“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.”
The Energy Secretary added: “In addition I can announce today that the NDA has settled outstanding litigation claims against it by Energy Solutions and Bechtel, in relation to the 2014 Magnox contract award.
“The NDA was found by the High Court in its judgment of 29 July 2016 to have wrongly decided the outcome of the procurement process.”
The NDA has agreed settlement payments with Energy Solutions of £76.5m plus £8.5m of costs, and with Bechtel of $14.8m, plus costs of around £462,000 – approximately £12.5m in total.
Mr Clark also said he is establishing an independent inquiry into the conduct of the 2012 procurement process and the reasons why the 2014 contract proved unsustainable.
In a statement Babcock, which has a 65% stake in CFP, said: “Following the detailed contract Consolidation phase, it has become apparent that the work that needs to be done at the 12 Magnox sites is now materially different in volume from that specified in the NDA’s tender, and this puts the contract at risk of a legal challenge.”
Shadow energy secretary Rebecca Long-Bailey said: “By cancelling just two years into a 14-year contract, the Government has shown dramatic levels of incompetence in the procurement process of this deal.
“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.”