UK high court rules against NDA over clean-up contract

3 August 2016

The UK Nuclear Decommissioning Authority (NDA) “manipulated” and “fudged” a tender process for a GBP7bn ($9.3bn) NPP clean-up contract, the High Court ruled on 29 July. The judgment raises fresh questions over how government bodies award contracts and casts doubt on the UK’s nuclear industry a day after the government’s surprise decision to launch a review of the Hinkley Point project, The Financial Times said.

The NDA said it was considering its legal options after the ruling found that it had wrongly awarded one of the government’s largest contracts to Babcock, the UK engineering company, and Texas-based Fluor. The claim was filed in 2014 by Energy Solutions, the US-based company that lost the contract after managing the nuclear sites for 14 years.

Energy Solutions bid for the contract in a consortium with Bechtel but took legal action against the NDA alone. It said it would press for “significant payment … for the damages caused by NDA’s incorrect decision”, and previously indicated that it would seek up to GBP200m in damages to recoup the bid costs as well as the projected loss in profits over the life of the new 14-year deal.

Justice Peter Fraser found that, if NDA’s own evaluation rules been correctly applied, Babcock and Fluor would have been disqualified from the tender process, adding that the authority made “many manifest errors” in reviewing the Energy Solutions’ bid.

The court found that NDA had “manipulated” the valuation process in order to avoid disqualifying the Babcock-Fluor bid. “In my judgment the NDA sought to avoid the consequence of disqualification by fudging the evaluation,” Justice Fraser wrote in his ruling. He found that the NDA “fell short” in meeting its obligations of “transparency and equal judgment”.

NDA argued that it had conducted the tender correctly and it would have been “disproportionate” to exclude a bid for failures it considered “trivial” or which had “no real impact”. In an attempt to have the charges thrown out of court, NDA disclosed that witnesses for Energy Solutions were to receive substantial bonus payments in the event of a court win. However, the judge said the bonus payments did not affect the findings.

The contract involves the clean-up of 12 of the UK’s 25 nuclear sites, including the Sizewell, Hinkley and Dungeness “Magnox” NPPs built in the 1960s which have reached the end of their lives.



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