2.11 The NDA received legal advice in November 2014 to the effect that if significant changes to the contract after it was awarded could not be justified under procurement rules, then the contract would be at risk of legal challenge on the grounds of material variation. In June 2016, NDA executives reached an informal agreement with CFP to enable it to conclude consolidation and resolve the dispute over the outstanding change controls. Between May and August 2016, the NDA sought further legal advice on this approach to concluding consolidation. The NDA became aware that this proposed approach to concluding consolidation would make it much harder to defend any legal challenge. The NDA continued to receive legal advice in the autumn of 2016 which progressively indicated that the proposed changes to the contract put it at risk of legal challenge. However, this risk of a challenge on the grounds of material variation to the contract was not included in the NDA's risk register for the consolidation phase of the contract at any point.
2.12 On 17 January 2017, the NDA Board received definitive legal advice that the risk of challenge on the grounds of material variation to the contract was significant. This was because there was a risk that the NDA would not be able to demonstrate that the change fell within permitted exceptions under the public contracting regulations to justify the large variation in the cost and scope of the contract from when it was awarded in 2014. The NDA's Board decided to terminate its contract with CFP on 22 March 2017, subject to approval by ministers at the Department and HM Treasury.
2.13 On 27 March 2017, the Secretary of State announced the NDA's decision to terminate the contract with the agreement of CFP ("for convenience", as opposed to reasons of underperformance). On 29 September 2017, the NDA with approval from the Secretary of State, served a notice of contract termination to CFP effective from 1 September 2017 allowing for a 24 month notice period, ending on 31 August 2019. As part of the agreement to terminate, the NDA and CFP have agreed the work that CFP will be expected to complete on the sites, what fee CFP will earn up to the end of the contract, and the agreed state in which CFP will leave the sites at the end of the contract.
2.14 The NDA is currently considering options for managing the Magnox sites after September 2019. These include competing a new PBO contract, or as with its Sellafield site, bringing the site licence company into the NDA's direct control.