High Court trial starts over UK decommissioning claim

20 November 2015

Energy Solutions EU (ES EU) and the UK's Nuclear Decommissioning Authority (NDA) met in court this week over the company's claim the government agency violated its own rules last year when it awarded a contract to manage the Magnox Ltd and Research Site Restoration Ltd nuclear sites.

The NDA concluded a two-year procurement process to appoint a new Parent Body Organisation (PBO) for the 12 sites and announced in March 2014 that it had selected the Cavendish Fluor Partnership (CFP) as the Preferred Bidder. One of the losing participants in the procurement, ES EU, subsequently submitted a claim for damages. ES EU was the minor partner in the Bechtel-led Reactor Sites Solutions consortium that took part in the competition for the contract. However, Bechtel is not taking part in the litigation. There were also three other business consortia, none of which have mounted any legal claims.

"Energy Solutions is demanding significant compensation in damages after documentation lodged with the High Court claim the NDA did not follow its own procedures, and should have knocked the winning bidder out of the competition while awarding Energy Solutions more points in the scoring that decided the award," a spokesperson for the company told World Nuclear News yesterday. "Energy Solutions lost by just one percentage point, based on the NDA's scoring system," they added.

"Energy Solutions consider that there were serious breaches of the procurement process by the NDA and are subsequently seeking significant payment for damages to recover the costs incurred and lost profits caused as a result of the decision by the NDA," the spokesperson said.

The High Court trial began on 16 November and is scheduled to last just over four weeks. The judge, who is hearing evidence from a range of NDA and ES EU witnesses, will deliver his judgment at a later date, which the NDA said is likely to be early 2016.

An NDA spokesperson said today that the key issue under scrutiny is the scoring of the tenders, and the conclusions reached by the NDA's team of expert evaluators. "Out of almost 3000 specific NDA requirements, only 36 detailed technical requirements are under challenge," they said.

The spokesperson noted that ES EU is not challenging any aspect of the two-year competition process that preceded the evaluation stage, and is not seeking to overturn the NDA's decision to select CFP as the preferred bidder.

"The NDA ran a thorough, comprehensive procurement in compliance with UK and EU procurement regulations, refutes ES EU's claims and is presenting its case in court," they said. "The competition was subject to review by the NDA's legal advisors and by government authorities, including the Major Projects Authority, which found that the NDA's processes met or surpassed all required criteria."

They added: "The case has potential implications for future large-scale procurements, raising the prospect of failed bidders seeking to challenge scoring decisions and secure substantial damages without an obligation to deliver on contract requirements. In the meantime, CFP is making good progress under the new contract and is on track to deliver around £1 billion of savings over the next 14 years."

The NDA noted that ES EU is currently owned by US private equity company Energy Capital Partners II LLC, but is in the process of being sold to W S Atkins.

Paul Childs, spokesman for Atkins on energy matters, told World Nuclear News that, "While Atkins will be acquiring the Energy Solutions EU Limited entity (one of the entities within the PP&T business), the remaining Energy Solutions business (that Atkins is not acquiring) will retain all rights and benefits, and be solely responsible for all obligations, liabilities and costs, relating to, and the conduct of, the Magnox claim. Atkins does not have an economic interest in, or any control over, the resolution of such claims."

CFP is a joint venture between the UK's Cavendish Nuclear, part of Babcock International, and US-based Fluor Corporation. Under the 14-year contract, it is expected to deliver the 12 sites to an agreed and defined point for each (either interim end state or into care and maintenance).

Babcock International said last year that the total contract value is expected to be around £4.2 billion ($7 billion). The NDA said that the contract will save UK taxpayers more than £1.5 billion, based on current estimates of work.

Between them, Magnox Limited and RSRL are responsible for 10 Magnox nuclear power plants, as well as the Harwell and Winfrith research centres. The sites are all owned by the NDA, which uses the PBO system to grant private companies the authority necessary to take charge of nuclear decommissioning. Successful contractors earn a fee that is a portion of the overall contract value, depending on performance.

Researched and written
by World Nuclear News