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Huge nuclear contract scrapped over tender errors

Energy Secretary Greg Clark Credit: PA

A botched tendering process has forced the National Decommissioning Authority to terminate a multi-billion pound nuclear contract nine years before it was due to end.

Energy secretary Greg Clark , announced today that he was launching an inquiry into the mistakes that led to the £6.1bn contract to decommission 12 Magnox sites, along with a reactor at Sellafield, being scrapped.

Cavendish Fluor Partnership (CFP) won the tender in 2014. CFP, a joint venture between Babcock International and American firm Fluor. Today’s news caused Babcock’s shares to drop on the Stock Market.

Mr Clark’s statement indicated that the decision was not a reflection on the companies involved, but on a botched tendering process.

It has become clear to the NDA through this consolidation process that there is a significant mismatch between the work that was specified in the contract as tendered in 2012 and awarded in 2014, and the work that actually needs to be done. The scale of the additional work is such that the NDA board considers that it would amount to a material change to the specification on which bidders were invited in 2012 to tender.

– Greg Clark, energy secretary

As a result, the contract will be terminated in 2019.

Now the NDA has agreed financial settlements - believed to be in the region of £100m - with two other unsuccessful bidders for the tender.

Mr Clark said: "Taxpayers must be able to be confident that public bodies are operating effectively and securing value for money. Where this has not been achieved such bodies should be subject to rigorous scrutiny."

He announced an inquiry into the tendering process and the subsequent contract, which will be led by Steve Holliday, the former chief executive of the national grid.

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.

– Greg Clark