What this report is about

1 In 2005, the Nuclear Decommissioning Authority (NDA) was established as a non-departmental public body under the Energy Act 2004. Sponsored by the Department for Business, Energy & Industrial Strategy (the Department), the NDA is responsible for the operation, decommissioning and clean-up of 17 nuclear reactor and research sites in the UK.

2 Between 2012 and 2014, the NDA ran a competitive procurement exercise for services to decommission two nuclear research sites and 10 Magnox sites. The latter comprise power stations that were at, or nearing, the end of their operational life. With an estimated value of up to £6.2 billion, the 'Magnox contract' is among the largest by value put out to tender by HM Government.

3 In September 2014, the NDA awarded the 14-year Magnox contract to Cavendish Fluor Partnership (CFP). Energy Solutions, part of a consortium that bid for the contract but lost, lodged legal claims against the NDA. In July 2016, the High Court ruled that the NDA had wrongly decided the outcome of the procurement process. Following this ruling, Bechtel, the partner of Energy Solutions in the consortium, also launched proceedings against the NDA. In March 2017, the Secretary of State for Business, Energy & Industrial Strategy announced that the NDA had agreed settlements with Energy Solutions and Bechtel totalling £97.3 million. He also announced that the NDA had decided to terminate the contract with CFP nine years early due to a "significant mismatch" between the work specified in the tendered contract and the work that needs to be done. Figure 1 on pages 6 and 7 summarises the main events.

4 The government has launched an independent inquiry into these events. The inquiry is tasked with establishing the root causes of the defective procurement and identifying lessons. It is expected to report to the Secretary of State in early 2018.

5 This report is intended to support the Committee of Public Accounts' consideration of the events surrounding the Magnox contract. It sets out the key facts relating to:

• the procurement process, the award, consolidation and termination of the contract, and the NDA's settlement of legal claims (Parts One and Two);

• the governance and oversight arrangements (Part Three); and

• the costs to the taxpayer (Part Four).

This report does not assess the design of the contract, NDA's compliance with procurement regulations or the reasons behind the High Court judgment. Our approach is set out in Appendix One.