Fluor, Babcock to lose $7.7bn UK nuclear contract

The UK government has been left red-faced after its Nuclear Decommissioning Authority (NDA) was forced to terminate a contract worth $7.7bn (£6.1bn) for the decommissioning of 12 retired Magnox nuclear power sites because it found a "significant mismatch" between the work tendered and what actually needs to be done.

It has now ordered an independent inquiry into the fiasco.

The NDA ran a £6.1bn tender process from April 2012 which resulted in a 14-year contract being awarded in September 2014 to the Cavendish Fluor Partnership – a joint venture between the British firm Cavendish Nuclear, a subsidiary of Babcock International, and the US company Fluor Inc.

Work started on 1 September 2014, but there then began a process to ensure that the scope of the contract assumed in the 2012 tender matched the actual status of the decommissioning to be done on each site, a process known as "consolidation".
This found that much more work was needed.

The contract had a two-year notice period, meaning it will now end in September 2019.

Babcock said the termination would lead to an annual "step down in revenue" of around £100m from 2020, which it said was less than 2% of the Group’s turnover.

In a statement, UK energy minister Greg Clark said: "It has become clear through this consolidation process that 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 scale of the additional work is such that the Board considers that it would amount to a material change to the specification on which bidders were invited in 2012 to tender."

Read more at Construction Manager.

Image: Bradwell nuclear power station, one of the retired Magnox sites, stopped generating in 2002 (Creative Commons)

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