United Kingdom nuclear decommissioning debacle costs government £100m

Babcock explained that the mismatch between what was requested in the contract and the work that needed to be done put the contract at risk of legal action

United Kingdom nuclear decommissioning debacle costs government £100m

Today's news caused Babcock's shares to drop on the Stock Market.

The NDA revealed on Monday that it has shelled out £97.5 million to settle litigation claims by two American firms - Bechtel and Energy Solutions - over the deal.

The government has been forced to pay almost £100m in a settlement with two U.S. energy companies for mishandling the way it awarded a £6.1bn nuclear decommissioning deal.

In a written ministerial statement to the House of Commons today, Energy Secretary Greg Clark said there is a big difference between the contract with CFP and the work that is required.

It will pay £76.5m plus £8.5m costs to Energy Solutions plus $14.8m and costs of £462,000 to Bechtel, amounting to £12.5m.

Shares in Britain's Babcock International, which has a 65% stake in the venture that won the contract, fell 4% as it said the termination would blow an £800m hole in its £20bn order book.

In July past year, the High Court ruled against the Nuclear Decommissioning Agency's decision to hand the contract to Cavendish-fluor over rivals Energy Solutions and Bechtel, and Clark said an appeal had now been ruled out.

Earlier on Monday, it emerged that Westminster would compensate America's Bechtel and Energy Solutions with almost £100.0m for a flawed nuclear cleanup contract which was terminated after only five years. Babcock said that the early termination of the contract was by mutual agreement.

Energy Secretary Greg Clark also ordered an independent inquiry led by former National Grid boss Steve Holliday after a "flawed" tendering process for the £6bn deal.

During this period, the NDA will establish arrangements for "a replacement contracting structure" to be put in place when the current contract ends.

"Terminating is no reflection on CFP as performance on the sites under its ownership has been strong". Taxpayers must be able to be confident that public bodies are operating effectively and securing value for money. "We have developed a good working relationship with the NDA and we look forward to working with them, not only to bring this contract to an orderly end in two and a half years' time but also on future projects, including the completion of the decommissioning of the Magnox power stations". Where this has not been achieved such bodies should be subject to rigorous scrutiny.

There will be an independent inquiry into how the tender process was run and why the contract awarded proved unsustainable. "Those responsible should be held to account and it should never happen again", Clark said.

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