UK Inquiry Tracker

The Nuclear Decommissioning Authority’s management of the Magnox contract

Public Accounts Committee Closed Inquiry

Opened: 18 Sep 2020 Closed: 25 Mar 2021 Parliament page

In 2017 the NAO reported on the Nuclear Decommissioning Authority’s (NDA) failed 14-year, £6.2bn contract to decommission 12 Magnox nuclear energy sites, following a 2016 High Court ruling that the contract had been wrongly awarded. In March 2017, the NDA decided, based on legal advice, to terminate the 14 year … Read more In 2017 the NAO reported on the Nuclear Decommissioning Authority’s (NDA) failed 14-year, £6.2bn contract to decommission 12 Magnox nuclear energy sites, following a 2016 High Court ruling that the contract had been wrongly awarded. In March 2017, the NDA decided, based on legal advice, to terminate the 14 year contract it had awarded to the Cavendish Fluor Partnership (CFP) nine years early due to a “significant mismatch” between the work specified in the tendered contract and the work that needed to be done. The failed procurement had cost the taxpayer more than £122 million by the time it was announced that it was to be terminated, with the NDA being sued by one of the other bidders for the failed procurement, and forced to agree legal settlements totalling £97.3 million. In August 2017, the NDA agreed a renegotiated contract with CFP. This covered the five-year period from the start of the Magnox contract in September 2014 to the end of the notice period on 31 August 2019. Now a new NAO report follows up on how the NDA has managed this new contract to decommission the Magnox nuclear sites. It shows the NDA successfully negotiated a revised contract with CFP, avoided further litigation and succeeded in maintaining a working relationship with its supplier that led to the completion of £2.72 billion of decommissioning work before the contract ended in August 2019, reducing the degree of hazard on the Magnox sites. However, the NDA were in a weak bargaining position and in renegotiating the contract, agreed to pay a premium of £20 million to negotiate its early exit from the contract and incentivise a smooth handover of sites without further legal challenge. The NDA now estimates that the cost of putting Magnox sites into a safe state has increased, and billions of pounds of uncertainty remains around the final cost, with current estimates ranging from £6.9 billion to £8.7 billion. The Committee will follow up its 2018 report on the letting of the Magnox contract, which was highly critical of the NDA’s understanding of the state of its nuclear sites and the commercial capability of the NDA’s executive team, with questions to senior officials from the Department for BEIS and the NDA. If you have evidence on these issues, please submit it here by Monday 28 September 2020. Show less

2 Recommendations

16 Conclusions

1 Report

1 Oral session

3 Letters

1 Event

Activity timeline 7 events

26 Oct
2021

Correspondence

Correspondence from David Peattie, Group Chief Executive Officer, NDA, re PAC outstanding recommendations responses, dated 11 October 2021

10 Sep
2021

Correspondence

Correspondence from Sarah Munby, Permanent Secretary, Department for Business, Energy & Industrial Strategy, re Government response to the …

19 May
2021

Correspondence

Correspondence from Sarah Healey, Permanent Secretary, Department for Digital, Culture, Media and Sport, re Update on the implementation of…

25 Mar
2021

Report published

Treasury minutes: Government response to the Committee of Public Accounts on the Twenty eighth report from Session 2019-21

27 Nov
2020

Report published

Twenty-Eighth Report - The Nuclear Decommissioning Authority’s management of the Magnox contract

5 Oct
2020

Oral evidence

NDA’s management of the Magnox contract

5 Oct
2020

Formal meeting (oral evidence session) · The Boothroyd Room, Portcullis House

NDA’s management of the Magnox contract

Oral evidence sessions 1 session

5 Oct 2020

View on parliament.uk

NDA’s management of the Magnox contract

David Peattie · Nuclear Decommissioning Authority Kate Ellis · Nuclear Decommissioning Authority Sarah Munby · Department for Business, Energy and Industrial Strategy

Reports 1 report · click to expand

Title	HC No.	Published	Items	Response
Twenty-Eighth Report - The Nuclear Decommissioning Authority’s m…	HC 653	27 Nov 2020	18	Responded

Recommendations & Conclusions

18 results

2 Conclusion

Twenty-Eighth Report - The Nuclear…

The uncertainty affecting the Magnox sites reflects a wider uncertainty about the costs and timetable...

The uncertainty affecting the Magnox sites reflects a wider uncertainty about the costs and timetable of decommissioning the whole civil nuclear estate. According to the NDA’s most recent estimates it will cost the UK taxpayer £132 billion to decommission the … Read more The uncertainty affecting the Magnox sites reflects a wider uncertainty about the costs and timetable of decommissioning the whole civil nuclear estate. According to the NDA’s most recent estimates it will cost the UK taxpayer £132 billion to decommission the UK’s civil nuclear sites and the NDA estimates that the work will not be completed for another 120 years. The largest proportion of this cost is to clean up and decommission the NDA’s largest site at Sellafield, but the cost to decommission the NDA’s Magnox sites is also substantial, as is the liability associated with decommissioning the next family of nuclear power stations, known as the Advanced Gas-Cooled Reactors (AGRs). The money held in the Nuclear Liabilities Fund, which exists to fund the decommissioning of the AGRs specifically, was increased from £9.5 billion by an additional £5.07 billion this year to reflect the latest estimate of the work required. The NDA is consulting publicly about its strategy for cleaning up its nuclear sites. It may be possible to reduce the time it will take to fully decommission the sites of former nuclear power stations from around 85 years to more like 40–45 years. This could significantly reduce the long-term cost of decommissioning the sites as 40% of the overall decommissioning cost can be spent in maintaining, operating and safeguarding the sites while decommissioning activity is taking place. There is also an opportunity to save taxpayers’ money by accelerating the programme to create a deep storage facility, known as the Geological Disposal Facility, to store highly radioactive waste that is currently held 6 The Nuclear Decommissioning Authority’s management of the Magnox contract at interim facilities at Sellafield and the sites of former power stations elsewhere in the UK. The NDA and the Department are consulting the relevant regulators and interested communities to identify a suitable site for such a facility, but were not able to indicate a timeframe in which Show less

Government Response

2: PAC conclusion: The uncertainty affecting the Magnox sites reflects a wider uncertainty about the costs and timetable of decommissioning the whole civil nuclear estate. 2a: PAC recommendation: Taking into … Read more

HM Treasury

The Nuclear Decommissioning Authority’s management of the Magnox contract

Activity timeline 7 events

Oral evidence sessions 1 session

Reports 1 report · click to expand

Recommendations & Conclusions

The uncertainty affecting the Magnox sites reflects a wider uncertainty about the costs and timetable...

A shortage of the right skills within the Nuclear Decommissioning Authority and across the nuclear...

For the new delivery model to work, it will be vital that the Department exercises...

The Nuclear Decommissioning Authority is not doing enough to exploit its various assets, either for...

Public accountability is hindered by a lack of transparency about the scale and nature of...

On the basis of a report by the Comptroller and Auditor General, we took evidence...

An informed understanding of the sites is important to develop reliable estimates of the potential...

There is also an opportunity to save taxpayers’ money by accelerating the programme to create...

While the cost of decommissioning represents a substantial liability for the UK taxpayer, the NDA...

The NDA told us about some notable achievements in relation to the decommissioning of the...

The NDA owns and occupies substantial amounts of land that could be returned to communities...

In our 2018 report on the Magnox contract we identified that lack of commercial capability—including...

The Department and the NDA pointed to the increasing importance of developing skills across the...

The Department acknowledged the improvements which the NDA has made in developing its own skills...

In September 2019, the NDA’s Magnox contract with CFP ended following a two- year run...

We asked the Department if it believed it now had sufficient oversight and governance arrangements...

We asked the Department about the progress of the Holliday inquiry into the failure of...

The public is not fully aware of the challenges of nuclear decommissioning and given past...

Correspondence 3 letters