Inquiry after firms awarded compensation from government

Written By: Ian Hernon
Published: April 7, 2017 Last modified: April 14, 2017

Two firms who lost out on decommissioning 12 nuclear sites will get £97.5m compensation from the taxpayer.

A subsidiary of the infrastructure giant Babcock won the £6.1bn contract to clean up the sites in 2014, but last year, the High Court ruled that the Nuclear Decommissioning Authority (NDA) had wrongly decided the outcome of the procurement process. The NDA has now agreed the settlements, which include costs, with Energy Solutions and Bechtel.

The contract, awarded to 65%-Babcock-owned Cavendish Fluor Group, is also being handed back early because, Babcock said, it “is now materially different in volume to that which was initially specified”. The 14-year contract will now end in Sept 2019 after just five years, denting Babcock’s annual revenue by £100m in 2020-21.

There will be an independent inquiry into how the tender process was run and why the contract awarded proved unsustainable. In a written ministerial statement, Business Secretary Greg Clark said: “This was a defective procurement, with significant financial consequences, and I am determined that the reasons for it should be exposed and understood; that those responsible should properly be held to account; and that it should never happen again.”

He added that the inquiry will “review 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”. The inquiry will be headed by Steve Holliday, the former chief executive of National Grid.

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 tax payers 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.

“This is of course the second big Government contract cancelled in the space of six months after the Concentrix tax credits scandal earlier this year. With Concentrix, a similar pattern of Government behaviour emerged, they failed to recognise key failures in service provision and were forced to cancel the contract.”

About Ian Hernon

Ian Hernon is Deputy Editor of Tribune