The Financial Times recently reported the July ruling of a High Court judge that the Nuclear Decommissioning Authority (Department of Energy and Climate Change) acted unlawfully in the way it awarded Babcock* and Fluor (USA) a £7bn contract to dismantle the country’s 12 Magnox nuclear power stations. The case had been brought by Energy Solutions, the US-based company which lost the contract after managing the nuclear sites for 14 years.
Media clampdown? The first page of the largest search engine reveals only one relevant entry and that just reported the opening of that case last November – but only on a specialist nuclear industry site,
As the FT reflection that a government subsidiary’s unlawful action will cast ‘further doubt’ on the nuclear industry’s future goes largely unpublicised, headlined in newspapers and on BBC radio 4 this morning, is news of an article in the Telegraph by Vincent de Rivaz, EDF Energy chief executive urging agreement for the £18bn Hinkley Point nuclear plant to go ahead.
Despite the lack of publicity, questions are being asked by commercial competitors about the government’s procurement procedures when awarding multi-billion pound contracts.
Further lawsuits are threatened by a range of companies who bid for the contract, after the court found that the NDA had “manipulated” the valuation process in order to avoid disqualifying Babcock-Fluor.
“In my judgment the NDA sought to avoid the consequence of disqualification by fudging the evaluation,” Justice Peter Fraser wrote in his ruling. He found that the NDA “fell short” in meeting its obligations of “transparency and equal judgment”.
Nuclear Matters, the industry’s website, reports that the NDA has announced the retirement of its Chief Executive John Clarke – who also awarded Babcock the 2012 Dounreay contract, commenting: “The move has come as something of a surprise and there is speculation that it is linked with last Friday’s High Court ruling that the NDA has wrongly awarded the Magnox contract”.
The FT comments that these findings have raised concerns about the future of the Nuclear Decommissioning Authority, which was already under scrutiny after it scrapped the outsourced management contract to run Britain’s biggest nuclear waste site — Sellafield in Cumbria. It adds that the future of the UK’s nuclear industry is in question at a time when the government is reviewing the Hinkley Point contract. Doug Parr, policy director at Greenpeace, points out that the prices of offshore wind, solar and new grid technologies like storage are coming down so fast they could be deployed at levels undreamed of when the Government decided to go for nuclear in 2008.
Too much power?
*Babcock International Group plc is a British multinational corporation The company has civil contracts but its main business is with the UK Ministry of Defence. In September 2009, Babcock – which has a ‘Tier1’ position in the military nuclear market – acquired the UK Atomic Energy Authority‘s commercial arm, UKAEA Ltd, a deal which provided Babcock with its first position in the civil nuclear market. In 2012 it was awarded a £1.6bn contract by the Nuclear Decommissioning Authority for the management and decommissioning of the Dounreay nuclear site in Scotland. In November 2014, Babcock was named as the British Government’s preferred buyer of the land repair and maintenance business of the Defence Support Group, an executive agency and trading fund of the Ministry of Defence.