14 Competitive procurement to appoint commercial partners to manage nuclear sites is central to the NDA's strategy. The NDA's fundamental failures in the Magnox contract procurement raise serious questions about its understanding of procurement regulations; its ability to manage large, complex procurements; and why, despite a number of internal and external assurance reviews, audits, and legal advice, the errors detected by the High Court judgment were not identified earlier.
15 In addition to the failed procurement, the NDA faced serious problems after it awarded the contract to CFP. It is clear that the NDA had a poor understanding of what was happening on its estate: six sites were behind schedule at the time the NDA let the contract, and the NDA's assumptions about the work needed on the sites have proven to be inaccurate. The NDA's commercial strategy of using a target-cost contract, predicated on having a good understanding of the scope of work, now appears wholly inappropriate. It is time for the NDA to re-evaluate its commercial strategy and its capability to execute it, supported by expertise in government.
16 As the NDA's sponsoring body, the Department must make an informed judgement about the extent and structure of the oversight it maintains over the NDA. The extensive challenges the NDA faced - from procurement through to the early termination of the Magnox contract - raise urgent questions about the Department's oversight of one of the largest contracts ever let by government. For example, the Department knew the proposed changes to the contract would have significant cost implications, but it did not make itself sufficiently aware of the scale of those costs for nearly two years. In light of these issues, the Department must consider whether its governance and oversight arrangements surrounding the NDA are sufficiently clear and effective in providing the scrutiny and assurance it requires to meet the standards expected in managing public money.