The Nuclear Free Local Authorities (NFLA) has written today to the Energy Minister Greg Clark asking why his announced inquiry into the failings of the Nuclear Decommissioning Authority (NDA) in having to pay as much as £100 million of public money for a flawed contract process – over cleaning-up Magnox nuclear reactors – is being done behind closed doors. It is also asking when the inquiry will be completed and whether it will be fully discussed in Parliament and further afield.
On the 27th March 2017 Greg Clark informed Parliament that the NDA had decided, with government approval, to settle outstanding litigation claims against it by Energy Solutions and Bechtel, in relation to the 2014 Magnox clean-up contract award. (1)
The NDA was found by the High Court in its judgment of 29th July 2016 to have wrongly decided the outcome of the procurement process. As part of the settlements, NDA had decided to withdraw its appeal against the judgment. While these settlements were made without admission of liability on either side, it is clear that the 2012 tender process has proved to be flawed. The NDA has agreed settlement payments with Energy Solutions of £76.5 million, plus £8.5 million of costs, and with Bechtel of $14.8 million, plus costs of around £462,000 – approximately £12.5 million in total.
In addition, the statement noted that the NDA had also decided to terminate its contract with Cavendish Fluor Partnership (CFP) for the management and decommissioning of 12 redundant Magnox sites a full nine years early. This is due to the NDA seeing ‘a significant mismatch’ between the work that was specified in the original contract as tendered in 2 012 and awarded in 2014, and the work that actually needs to be done. As such the NDA has decided to terminate the contract after 5 years rather than its full term of 14 years.
Mr Clark acknowledged that ‘these are very substantial costs’ and he announced an independent Inquiry into the conduct of the 2012 procurement process an d the reasons why the 2014 contract proved unsustainable. Though they are separate issues the Government believe they need to be examined thoroughly by an authoritative and independent expert. Mr Clark appointed Steve Holliday, the former Chief Executive of National Grid to lead the Inquiry. He noted the Inquiry will take a ‘cradle to grave’ approach beginning with the NDA’s procurement and ending with the contract termination. The Inquiry would also see a review into the conduct of the NDA and of government departments and make any recommendations it sees fit – including what further investigations or proceedings, for example possible disciplinary proceedings, may be required as a result of its findings.
While the NFLA welcome this announcement it is frustrated that the inquiry is being held in private an d comments from local government nuclear policy organisations like NFLA has not been asked for to date. The letter from the NFLA also asks the Government when Mr Holliday is due to report on his findings and what opportunities there are, beyond even a Parliamentary debate, to call for changes in the operation of the NDA following this expensive and unnecessary debacle.
The NDA are holding a Stakeholder Summit in Cumbria in mid-September as part of its strategy to promote openness and transparency. It would be useful for the Holliday inquiry to seek the views of groups like the NFLA to the operation of the NDA be fore this summit takes place. Apart from the very expensive failing in its contract tendering process, there are other areas where improvement should be sought in the operation of the NDA, and a public consultation process could have teased that out better.
NFLA Steering Committee Vice-Chair Councillor David Blackburn said:
“I have written to Energy Minister Greg Clark today as NFLA feels it is important that Steve Holliday should seek wider views on the operation of the NDA from those groups that interact with it on a regular basis. This example of around £100 million of public money being effectively lost due to real failings in the NDA is just one area where the NFLA feel real and substantial change should take place. Much of the NDA’s operations come from a ‘we know best’ approach, rather than genuinely taking on board the comments of its stakeholders and making real and practical cultural change in its operation. I look forward to hearing the findings of the Holliday inquiry but I call for a wider analysis of stakeholder comments.”
Ends – for more information please contact Sean Morris, NFLA Secretary, on 00 44 (0)161 234 3244.
Notes for editors:
(1) UK Government Media Release, 27th March 2017 https://www.gov.uk/government/speeches/nda-settlement-contract-termination-and-inquiry