The Public Accounts Committee will examine the Nuclear Decommissioning Authority: The Magnox Contract on Thursday 23 November 2017.
Scope of the inquiry
Between 2012 and 2014, the Nuclear Decommissioning Authority (NDA) ran a competition to find a company to decommission two nuclear research sites and 10 Magnox power stations. The contract, worth up to £6.2 billion, is one of the largest tendered by the Government.
The contract was awarded to Cavendish Fluor Partnership (CFP). However, in July 2016 the High Court found that the procurement process had wrongly awarded the contract to CFP. The NDA settled legal claims with another bidder for £97.3 million.
At the same time as defending these claims, the NDA engaged in a consolidation process with CFP to clarify expectations and scale of work. During this process the estimated cost of decommissioning rose from £3.8 billion to £6.0 billion. The NDA expected some of this additional cost, but did not foresee £500 million of it.
In March 2017, the Secretary of State for Business, Energy and Industrial Strategy announced that the NDA had decided to terminate their contract with CFP nine years early, citing a “significant mismatch” between work tendered for, and work that needed doing.
The contract between the NDA and CFP will end on 31 August 2019. The NDA is considering how to manage the Magnox sites after this date. Meanwhile, the National Audit Office estimates that overall the contract has cost the taxpayer over £122 million.
The Public Accounts Committee will hear from the Department for Business, Energy and Industrial Strategy, the Nuclear Decommissioning Authority and UK Government Investments on how the contract was mistendered, why costs rose so dramatically during consolidation, and how the Magnox sites will be managed from September 2019.