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

8 Recommendations

10 Conclusions

1 Report

1 Oral session

3 Letters

1 Event

Activity timeline 6 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

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

7 results

2 Recommendation Accepted

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

The government agrees to reduce decommissioning time, noting ongoing efforts and a summer 2021 target for strategy definition. It also commits to prioritising a geological disposal facility, stating a process is underway with an expected operational date by the 2040s, and is exploring near-surface disposal options.

HM Treasury

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3 Recommendation Accepted

Twenty-Eighth Report - The Nuclear…

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

A shortage of the right skills within the Nuclear Decommissioning Authority and across the nuclear industry remains a significant barrier to progress. In our 2018 report on the failure of the Magnox contract we were highly critical of the lack … Read more

Government Response

The government agrees with the recommendation and sets a target implementation date of Summer 2021. It commits the Department and NDA to work with the Nuclear Skills Strategy Group (NSSG) to review and potentially update the existing Nuclear Skills Strategic Plan, to meet the demand for skills over the next 5-10 years.

HM Treasury

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5 Recommendation Accepted

Twenty-Eighth Report - The Nuclear…

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

The Nuclear Decommissioning Authority is not doing enough to exploit its various assets, either for the benefit of local communities or the UK economy as a whole. The UK was the first country to establish a civil nuclear power generation … Read more The Nuclear Decommissioning Authority is not doing enough to exploit its various assets, either for the benefit of local communities or the UK economy as a whole. The UK was the first country to establish a civil nuclear power generation industry and is still a world leader in nuclear decommissioning. It can point to some notable achievements in relation to the decommissioning of the Magnox sites alone, such as the successful defueling of all the Magnox reactors which has reduced the level of radioactivity on the sites by 95%, and the largest clean-up of asbestos waste to have been undertaken in Europe at Chapelcross. Furthermore, the NDA has provided advice and exported skills to other countries, including Japan in relation to the clean-up of Fukushima and the Ukraine in relation to Chernobyl. The NDA receives around £800 million a year in income from its commercial activities. Given the expertise and technologies which the NDA and the UK nuclear industry have developed over the years, there are further opportunities, in fields such as Artificial Intelligence and robotics, with export potential which could benefit the UK economy and provide jobs for people in local communities. The NDA also owns and occupies substantial amounts of land. It is encouraging to hear that around 50 acres of land at Harwell has been released and is currently home to a manufacturing centre for coronavirus vaccine. The NDA’s wider estate contains land which could be exploited for commercial and socially beneficial use and could provide much needed employment in nearby communities. Recommendation: The NDA should develop a strategy for maximising the economic benefits of developing and, where appropriate, exporting its knowledge and assets to alleviate the burden on the taxpayer. These include the skills and experience of the UK nuclear industry, the decommissioning technologies it has 8 The Nuclear Decommissioning Authority’s management of the Magnox contract developed, and the land and oth Show less

Government Response

The government accepts the recommendation for the NDA to develop a strategy for maximizing economic benefits from its knowledge and assets, setting a Winter 2021 target and committing to annual reporting on progress.

HM Treasury

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6 Recommendation Accepted

Twenty-Eighth Report - The Nuclear…

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

Public accountability is hindered by a lack of transparency about the scale and nature of the challenge of decommissioning and the performance of the NDA. Nuclear decommissioning will cost current and future generations of taxpayers’ substantial sums of money and … Read more

Government Response

The government agrees and commits to NDA making specific efforts in its Spring 2021 Business Plan to explain decommissioning work site-by-site with transparent dates and expenditure. Furthermore, the NDA will update its economic impact assessments during 2021 and report back to the committee.

HM Treasury

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7 Recommendation Accepted

Twenty-Eighth Report - The Nuclear…

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

An informed understanding of the sites is important to develop reliable estimates of the potential costs and duration of decommissioning each site and to support decision- making about the most efficient ways to decommission them and the order in which … Read more

Government Response

The government accepts the recommendation to reduce decommissioning time and cost, with a Summer 2021 target for new strategy definition. It outlines the NDA's ongoing efforts like the 'One NDA' approach and commits to future reporting in annual business plans.

HM Treasury

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8 Recommendation Accepted

Twenty-Eighth Report - The Nuclear…

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

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 at interim facilities at Sellafield and … Read more

Government Response

The government accepts the recommendation, stating that progressing the geological disposal facility is a priority, with a process underway and an expected operational date by the 2040s. It is also exploring near-surface disposal options for less hazardous waste.

HM Treasury

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9 Recommendation Accepted

Twenty-Eighth Report - The Nuclear…

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

While the cost of decommissioning represents a substantial liability for the UK taxpayer, the NDA was keen to point out that it also raises substantial income—around £800m a year—through commercial opportunities including the export of advice, skills and technologies to … Read more

Government Response

The government accepts the recommendation to maximize economic benefits from NDA assets, setting a Winter 2021 target. It states NDA's forthcoming strategy will address international opportunities and collaboration, with progress to be reported annually.

HM Treasury

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Government Response AI assessment · 18 of 8 classified

Accepted 7

Not Addressed 11

Total 8 recs + 10 conclusions

Correspondence 3 letters

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

Parliament page

10 Sep 2021 Correspondence from Sarah Munby, Permanent Secretary, Department for Business, Energy & Industrial Strategy, re Government response to the Magnox Inquiry and the BEIS Departmental Review into the NDA, dated 20 July 2021

Parliament page

19 May 2021 Correspondence from Sarah Healey, Permanent Secretary, Department for Digital, Culture, Media and Sport, re Update on the implementation of Public Accounts Committee recommendations, 4 May 2021

Parliament page