Nuclear Decommissioning Authority completely failed in procurement and management of contract
The Nuclear Decommissioning Authority (NDA) completely failed in both the procurement and management of the contract to clean up the Magnox nuclear reactor and research sites—one of the highest value and most important contracts let by Government.
Not only did this disrupt an important component of vital nuclear decommissioning work, but it also cost the taxpayer upwards of £122 million.
The NDA ran an overly complex procurement process, resulting in it awarding the contract to the wrong bidder, and subsequently settling legal claims from a losing consortium to the tune of nearly £100 million.
NDA under-estimated scale of work needed
The NDA also drastically under-estimated the scale of the work needed to decommission the sites at the time it let the contract—another failure which ultimately led to the termination of the Magnox contract 9 years early.
The NDA will now have to spend even more effort and money to find a suitable way of managing these sites after the contract comes to an official end in September 2019.
If it is to be trusted with letting future contracts to clean up nuclear sites, it must have a proper understanding of the state of the sites before committing taxpayers’ money to a contract, and then it must also monitor progress closely.
Untold reputational damage to the NDA
These failures have caused untold reputational damage to the NDA and raise serious questions about its credibility as a strategic contracting authority.
But central government must also share the blame. Not only did HM Treasury and the Department approve the NDA’s approaches to procurement and contract management, but there are clear failings in the Department’s subsequent challenge and oversight of the NDA, through UK Government Investments.
Deputy Chair's comments
Comment from Sir Geoffrey Clifton-Brown MP, Committee Deputy Chair:
"The Nuclear Decommissioning Authority is entrusted with some of the most important work affecting health and safety matters in the nuclear industry but this sorry affair casts serious doubt on its ability to perform its role effectively.
From the design and execution of the procurement process onwards, the handling of the Magnox contract has been an appalling piece of mismanagement and financial waste.
It is wholly unacceptable that some details of what took place should remain so murky – not least the NDA’s inability to fully account for some £500 million of taxpayers’ money paid to its previous contractor.
We expect the NDA to be open with us about what it is doing to address this and other failings identified in our Report, such as shortcomings in the skills and expertise of its staff.
But central government is also culpable. Having signed off the NDA’s needlessly complicated procurement plan, it then failed in its duty to taxpayers as issues emerged and costs grew.
We accept a balance must be struck but oversight structures are there for a reason and, for a significant and critical period, UK Government Investments was simply too hands-off.
An independent inquiry examining the Magnox contract is under way and both the NDA and central government say they are acting on its interim recommendations.
Given the scale and implications of the failings set out in our Report, we are not prepared simply to take their word for it. In the coming months we expect to be shown concrete evidence of the progress being made."