Contract to dispose of material from 12 sites went ‘wrong on a fundamental level’ and led to multimillion pound payouts

This article is more than 2 years old

This article is more than 2 years old

The government agency responsible for mishandling a major nuclear cleanup contract – costing the state more than £122m – has been severely criticised by Whitehall’s spending watchdog.

A National Audit Office inquiry into a bungled £6.2bn contract to dispose of material from 12 different nuclear sites has questioned whether the Nuclear Decommissioning Authority (NDA) is capable of understanding procurement rules.



The head of the NDA has apologised for “past mistakes” after the contract collapsed, leading to multimillion pound payouts to firms cut out of deal.



The NAO report published on Wednesday also criticised the Department for Business, Energy and Industrial Strategy’s oversight of the contract.

MP Meg Hillier, chair of the public accounts committee, said: “The NDA was badly mistaken about the work it needed to do on its sites when it let this contract, and has had to cancel it nine years early. It now has to start again from scratch.

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“This was one of government’s biggest ever contracts and it has gone wrong on a fundamental level. Its failure raises serious questions about the NDA’s capability.”



Between 2012 and 2014, the NDA ran a competitive procurement exercise for 10 nuclear outlets and two research facilities resulting in the award of a 14-year contract for up to £6.2bn to Cavendish Fluor Partnership.



The deal collapsed after the high court found there was “a significant mismatch between the work specified … and the work that actually needs to be done”.



The NDA was forced to settle claims to the losing bidders in March of this year, when the government launched an inquiry into the contract.



Auditors found that the NDA: breached its obligation under public contracting regulations; settled legal claims with the rival bidders at a cost of £97.3m; and spent £13.8m on legal and external advisers, while in-house staff time cost £10.8m.



Civil servants from the business department and UK Government Investments were aware of the delays but did not raise concerns with ministers until last year, the report said.



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Responding to the report, NDA’s chief executive officer David Peattie said: “I would like to apologise for these past mistakes.

“Since taking over earlier this year, I have made a number of improvements to the way the NDA operates to provide greater focus, discipline, standardisation and simplification to our work.”



A department spokesperson said the business secretary, Greg Clark, would scrutinise the auditors’ findings.

“The secretary of state has been clear that the reasons for the failure of the Magnox procurement should be exposed and understood, which is why he commissioned the independent Magnox Inquiry earlier this year,” he said.

“The government will carefully scrutinise the NAO report.”