The Nuclear Decommissioning Authority (NDA) awarded the 14-year deal to Cavendish Fluor Partnership (CFP) in September 2014, which involved the decommissioning of 12 redundant Magnox sites, including two research sites.
However, Energy Secretary Greg Clark has revealed today, 27 March, that the multi-billion contract is now being pulled as there is a "significant mismatch between the work that was specified in the contract as tendered in 2012 and awarded in 2014, and the work that actually needs to be done".
The Cavendish Fluor Partnership is a joint venture (JV) between British firm Cavendish Nuclear, a subsidiary of Babcock International, and the US company Fluor Inc.
In addition, the NDA has agreed to settle nearly £100m of outstanding litigation claims against it by Energy Solutions and Bechtel, in relation to the 2014 Magnox contract award. An inquiry is also to be held into the conduct of the 2012 procurement process and the reasons why the 2014 contract proved unsustainable.
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In a statement today, Babcock said: "Babcock today confirmed that the Cavendish Fluor Partnership (CFP), in which the Group has a 65% stake, has come to a mutual agreement with the UK's Nuclear Decommissioning Authority (NDA) to bring to an end the Magnox decommissioning contract at the end of August 2019, having operated the contract for a full five years.
"Following the detailed contract Consolidation phase, it has become apparent that the work that needs to be done at the 12 Magnox sites is now materially different in volume from that specified in the NDA's tender, and this puts the contract at risk of a legal challenge. Last year a High Court judge ruled against the NDA in respect of its award of the Magnox contract."
In a written ministerial statement, Mr Clark said: "Dealing safely with the UK's nuclear legacy is fundamental and non-negotiable. It is important to emphasise that this termination is no reflection on the performance of Cavendish Nuclear or Fluor, and work on decommissioning at all the sites will continue with the management of CFP for a further 2 and a half years.
"During this period, the NDA will establish arrangements for a replacement contracting structure to be put in place when the current contract ends."
NDA Chief Executive Officer, David Peattie, said: "Terminating is no reflection on CFP as performance on the sites under its ownership has been strong. Making progress on the ground and keeping our sites safe and secure remain our collective priorities. I would like to thank CFP for its ongoing commitment, as we transition to new arrangements."
Mr Clark concluded: "This was a defective procurement, with significant financial consequences, and I am determined that the reasons for it should be exposed and understood; that those responsible should properly be held to account; and that it should never happen again."
(LM/MH)
