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11/10/2017
Failed Magnox Contract 'Cost Taxpayers £122m' - NAO
Failures surrounding the award of a contract to decommission 12 UK nuclear sites has cost taxpayers £122 million, according to the National Audit Office (NAO).
A new report by the NAO has raised "serious questions" over the Nuclear Decommissioning Authority's (NDA) understanding of procurement regulations, after a contract to clean up two nuclear research sites and 10 Magnox sites was cut short following legal challenges by firms.
Between 2012 and 2014, the NDA ran a competitive procurement to secure a contractor for its £6.2 billion 'Magnox' contract, one of the largest ever deals put out for tender by HM Government.
The 14-year contract was awarded to Cavendish Fluor Partnership (CFP), a consortium led by Babcock International.
However, the NDA was forced to scrap the deal in March 2017 following a legal challenge by Energy Solutions, after the High Court found the organisation had wrongly decided the outcome of the process.
The High Court found that, had the NDA applied its evaluation criteria correctly, CFP would have been excluded from the competition. The NDA agreed to settle legal claims with Energy Solutions and its consortium partner at the time of the bid, Bechtel, at a cost of £97.3m. In addition, it spent £13.8m on its own legal case and £10.8m on in-house staff time.
As a result, Energy Secretary Greg Clark announced in March this year that CFP's contract would end in August 2019, instead of running until 2028 as planned.
In addition, a "significant" mismatch was found between the work specified in the tendered contract and the work that needs to be carried out.
Amyas Morse, Head of the NAO, said: "The NDA's fundamental failures in the Magnox contract procurement raise serious questions about its understanding of procurement regulations; its ability to manage large, complex procurements; and why the errors detected by the High Court judgement were not identified earlier.
"In light of these issues, the Department must consider whether its governance and oversight arrangements surrounding the NDA are sufficiently clear and effective in providing the scrutiny and assurance it requires to meet the standards expected in managing public money."
A government inquiry into the Magnox contract, led by former National Grid chief executive Steve Holliday, was set up in March and is on-going.
(LM/MH)
A new report by the NAO has raised "serious questions" over the Nuclear Decommissioning Authority's (NDA) understanding of procurement regulations, after a contract to clean up two nuclear research sites and 10 Magnox sites was cut short following legal challenges by firms.
Between 2012 and 2014, the NDA ran a competitive procurement to secure a contractor for its £6.2 billion 'Magnox' contract, one of the largest ever deals put out for tender by HM Government.
The 14-year contract was awarded to Cavendish Fluor Partnership (CFP), a consortium led by Babcock International.
However, the NDA was forced to scrap the deal in March 2017 following a legal challenge by Energy Solutions, after the High Court found the organisation had wrongly decided the outcome of the process.
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The High Court found that, had the NDA applied its evaluation criteria correctly, CFP would have been excluded from the competition. The NDA agreed to settle legal claims with Energy Solutions and its consortium partner at the time of the bid, Bechtel, at a cost of £97.3m. In addition, it spent £13.8m on its own legal case and £10.8m on in-house staff time.
As a result, Energy Secretary Greg Clark announced in March this year that CFP's contract would end in August 2019, instead of running until 2028 as planned.
In addition, a "significant" mismatch was found between the work specified in the tendered contract and the work that needs to be carried out.
Amyas Morse, Head of the NAO, said: "The NDA's fundamental failures in the Magnox contract procurement raise serious questions about its understanding of procurement regulations; its ability to manage large, complex procurements; and why the errors detected by the High Court judgement were not identified earlier.
"In light of these issues, the Department must consider whether its governance and oversight arrangements surrounding the NDA are sufficiently clear and effective in providing the scrutiny and assurance it requires to meet the standards expected in managing public money."
A government inquiry into the Magnox contract, led by former National Grid chief executive Steve Holliday, was set up in March and is on-going.
(LM/MH)
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