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

11 results

4 Recommendation Not Addressed

Twenty-Eighth Report - The Nuclear…

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

For the new delivery model to work, it will be vital that the Department exercises strong oversight of the Nuclear Decommissioning Authority and implements the findings of forthcoming reviews into the failure of the original Magnox contract and the role … Read more For the new delivery model to work, it will be vital that the Department exercises strong oversight of the Nuclear Decommissioning Authority and implements the findings of forthcoming reviews into the failure of the original Magnox contract and the role of the Authority. Under the previous delivery model of outsourcing the decommissioning of nuclear sites to a ‘parent body organisation’ from the private sector, the Department was a further step removed from exercising oversight of the decommissioning process than it is now. Indeed, the Department The Nuclear Decommissioning Authority’s management of the Magnox contract 7 acknowledges that this led to it missing some of the problems that arose with the Magnox sites and contract. The Department tells us that its relationship with the NDA has changed, with improved oversight of both the NDA’s strategy and progress with its major projects, a dedicated team in the Department looking at the NDA, and a representative of UK Government Investments on the NDA’s own board who reports to the Department’s accounting officer. But we remain concerned about the Department’s capacity to oversee the NDA effectively, and about the number of players from different parts of Government who are involved. Key to learning lessons from the past and establishing appropriate oversight and governance will be implementing the recommendations of the Holliday inquiry into the Magnox contract and the Department’s ‘Tailored Review’ of the role of the NDA. We welcome the Department’s commitment to completing and publishing these reports as a priority, but it is frustrating and concerning that it is taking so long for these important reviews to be published. Recommendations: On publication of the Holliday report and tailored review, the Department and the Nuclear Decommissioning Authority should set out publicly what has been learnt from them and how the reports are being used to inform the development of the new delivery and governance models. In res Show less

Government Response

The government response describes actions to improve contract management, procedures, training, and information sharing, but does not address the specific request to publicly set out learnings from the Holliday report and tailored review.

HM Treasury

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1 Conclusion Not Addressed

Twenty-Eighth Report - The Nuclear…

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

On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Business, Energy and the Industrial Strategy (The Department) and the Nuclear Decommissioning Authority (NDA) on the decommissioning of the UK’s Magnox … Read more

Government Response

The government response reiterates that the committee took evidence and published its report, without addressing any specific points from the committee's introductory paragraph.

HM Treasury

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10 Conclusion Not Addressed

Twenty-Eighth Report - The Nuclear…

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

The NDA told us about some notable achievements in relation to the decommissioning of the Magnox sites to date: for example, all 26 Magnox reactors have now been defueled, and all the fuel taken to Sellafield for safekeeping, thereby reducing … Read more

Government Response

The government response is an incomplete reproduction of the committee's own text and does not provide any governmental stance or additional information.

HM Treasury

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11 Conclusion Not Addressed

Twenty-Eighth Report - The Nuclear…

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

The NDA owns and occupies substantial amounts of land that could be returned to communities or exploited for commercial or socially beneficial use, and could provide employment in nearby communities. For example, at its Harwell site the NDA said it … Read more

Government Response

The government response restates the committee's observation about the NDA owning substantial amounts of land with potential for community or commercial use.

HM Treasury

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12 Conclusion Not Addressed

Twenty-Eighth Report - The Nuclear…

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

In our 2018 report on the Magnox contract we identified that lack of commercial capability—including getting rid of the post of Commercial Director—contributed to the organisation being unable to manage the original Magnox contract effectively.22 The NDA informed us about … Read more

Government Response

The government response restates the committee's finding about past lack of commercial capability and the NDA's subsequent improvements in strengthening its executive team.

HM Treasury

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13 Conclusion Not Addressed

Twenty-Eighth Report - The Nuclear…

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

The Department and the NDA pointed to the increasing importance of developing skills across the industry. The NDA is taking steps to increase training opportunities to further develop technical skills that are in short supply in the UK and which … Read more

Government Response

The government response is an incomplete reproduction of the committee's own text and does not provide any governmental comment or additional information.

HM Treasury

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14 Conclusion Not Addressed

Twenty-Eighth Report - The Nuclear…

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

The Department acknowledged the improvements which the NDA has made in developing its own skills and capability.25 The Department also told us that, to improve its capability to oversee the NDA’s activities, it had so far been able to retain … Read more

Government Response

The government response is an exact reproduction of the committee's text, providing no governmental comment or additional information.

HM Treasury

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15 Conclusion Not Addressed

Twenty-Eighth Report - The Nuclear…

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

In September 2019, the NDA’s Magnox contract with CFP ended following a two- year run off period, and the 12 sites transferred to the NDA under the management of its subsidiary, Magnox Ltd.27 Under the previous model, the NDA essentially … Read more

Government Response

The government response restates the committee's description of the Magnox contract ending in September 2019 and the subsequent transfer of sites to Magnox Ltd.

HM Treasury

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16 Conclusion Not Addressed

Twenty-Eighth Report - The Nuclear…

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

We asked the Department if it believed it now had sufficient oversight and governance arrangements in place to oversee what the NDA is doing. The Department admitted that under its previous governance regime it had missed some of the issues … Read more

Government Response

The government response restates the committee's account of the department's perspective on its current oversight and governance arrangements for the NDA, including past issues and reported transformations.

HM Treasury

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17 Conclusion Not Addressed

Twenty-Eighth Report - The Nuclear…

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

We asked the Department about the progress of the Holliday inquiry into the failure of the Magnox procurement and contract which was launched in 2018, and of the Department’s ‘Tailored Review’ of the role and governance of the NDA. The … Read more

Government Response

The government response is an incomplete reproduction of the committee's own text and does not provide any governmental stance or update on the commitments mentioned.

HM Treasury

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18 Conclusion Not Addressed

Twenty-Eighth Report - The Nuclear…

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

The public is not fully aware of the challenges of nuclear decommissioning and given past problems in the industry, the public image of the sector requires some improvement.33 28 Qq 89, 90 29 Qq 55 - 57 30 Q 69 … Read more

Government Response

The government response is an incomplete reproduction of the committee's own text and does not provide any governmental response to the observations made.

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