AMEC, AREVA, contract cancellation cost, cost of nuclear cleanup, cost of nuclear energy, cumbria, DECC, Department of Energy, Ed Davey, England, House of Commons, Irish Sea, media leaks, NMP, Nuclear cleanup, nuclear energy, Nuclear Management Partners, nuclear waste, nuclear waste management, Planning, public contracts, Secretary of State, Sellafield, Sellafield Ltd, Sellafield site, UK, URS
[Those outside of the UK should take note of this case as the companies operate internationally. The Nuclear Management Partners (NMP) consortium was URS-AREVA-AMEC.]
UK House of Commons, 13 January 2015, after 11.30 am:
Tom Greatrex: “Can the Secretary of State clarify why this announcement was extensively trailed in the press last night and this morning, rather than being made in the first instance before the House today?”
Ed Davey: “The hon. Gentleman asked why the announcement was trailed in the press. I am afraid that it was not, and I am pleased that it was not, but there was some sort of leak. I do not know where that came from.“
Ed Davey: “The UK’s Vision for Tackling Climate Change, 11 July 2012”
Chatham House, CC BY 2.0, via wikimedia-flickr (His vision is creating more nuclear waste by building new nuclear reactors).
Well, where DID the leak come from? Ed Davey is Secretary of State for Energy and Climate Change, which means that he heads the Department of Energy and Climate Change, and they commented in the media on the 12th, before the announcement. If they didn’t want it known ahead of time, wouldn’t they have denied knowing anything?
Here is news from the previous evening, before a formal announcement was made! Notice the time.
“NMP set to lose contract to clean up Sellafield nuclear waste
Government expected to announce termination of £9bn contract awarded to private consortium Nuclear Management Partners
Monday 12 January 2015 17.39 GMT”
An excerpt from the article:
“A Department of Energy spokesperson said: “Ed Davey [the energy secretary] has been very clear that he’s wanted to see more effective progress in decommissioning the biggest and most complex nuclear site in Europe, providing the best outcome for the taxpayer.
“The NDA and government have been working with industry experts on alternative options.” http://www.theguardian.com/environment/2015/jan/12/nmp-lose-contract-clean-up-sellafield-nuclear-waste. The Daily Mail Reported the same on the 12th via the “Press Assocation”. Both the Guardian and Daily Mail are shareholders of the Press Association: http://en.wikipedia.org/wiki/Press_Association
In the early morning the BBC also announced:
“Sellafield firm set to lose clean-up contract
13 January 2015 Last updated at 07:42 GMT
The government is expected to announce that a private consortium is losing a £9 billion pound contract the clean up the nuclear waste site at Sellafield.” http://www.bbc.com/news/business-30792169
“Central Lobby is situated in the middle of the Palace of Westminster and was designed by Charles Barry to form the crossroads of the building. Everything to the south of it is part of the House of Lords, and everything to the north is part of the House of Commons. Central Lobby is octagonal and features mosaics of St. George, St. David, St. Andrew and St. Patrick.”© Parliament, OPL, CC-BY-NC-ND 2.0, Flckr
UK House of Commons,
sometime after 11.30 in the morning:
“13 Jan 2015 : Column 726
Tom Greatrex: I thank the Secretary of State for his answer. He will appreciate that this an issue of very serious concern for the 10,000 dedicated, professional and highly valued workers employed at Sellafield and for all of us who, as taxpayers, have just seen a £20 billion public procurement decision partly reversed. I want to ask him a few specific questions on the details of his decision and his statement.
In 2013, just 15 months ago, the right hon. Member for Sevenoaks (Michael Fallon), then a Minister in the Secretary of State’s Department, allowed the Nuclear Decommissioning Authority to continue into a five-year contract extension for Nuclear Management Partners. This was despite a National Audit Office report from November 2012 that concluded that the contract led to “poor project design and delivery by Sellafield Limited and weaknesses in the” Nuclear Decommissioning “Authority’s oversight.”
Why was that advice ignored, and why is this decision now being made today? Is it because, in reality, the situation was getting worse and not better?
The Secretary of State has suggested that in 2013, at the review point, the Government accepted the problems with the NMP contract but did not have an alternative solution prepared. What is the point of a review point if one is unable to consider other options? Will he illuminate for the House what termination fees apply to the cancellation of this contract and whether those fees could have been recovered at any stage? What assessment has his Department made of the risk of legal action from NMP to recover further funds?
Last year, it was revealed under a freedom of information request that in September 2013 KPMG completed a 277-page internal review of the contract for the NDA that was highly critical. To quote the Public Accounts Committee, it found that “there was a mis-alignment between the objectives of NMP and the…Authority’s commitment to deliver value for money for the taxpayer, and…potential conflicts of interest associated with contracting by Sellafield Limited with NMP’s affiliate companies.”
Will the Secretary of State confirm how much was spent on that advice from KPMG by the NDA, which reports to him—advice that was then ignored and, it seems, is now being adopted?
In February last year, the PAC reported that even after the contract was extended with NMP, it
“has not provided the clear leadership, strong management and improved capabilities needed to deliver the performance required at the site.”
Fifteen months on from having overseen that contract extension, why have the Government come to the conclusion that it was the wrong decision? Will the right hon. Gentleman describe the immediate arrangements for the 10,000 people employed at Sellafield, and tell us what impact today’s decision will have on the running of other sites? Will this create the need for a review of the Nuclear Decommissioning Authority’s other operations, where similar contracts that might give poor value for the taxpayer could still be in place?
13 Jan 2015 : Column 727
Can the Secretary of State clarify why this announcement was extensively trailed in the press last night and this morning, rather than being made in the first instance before the House today? Is it not the case that what we have seen today is a frantic U- turn, an abandonment of the extension of a contract and the reversal of a decision that should probably never have been taken in the first place? Does the Secretary of State not appreciate that such casual disregard for the evidence and conclusions of the National Audit Office and the Public Accounts Committee has resulted in wasted time and public money and may risk a loss of confidence in the important decommissioning work at Sellafield? Does he acknowledge that insufficient care and due regard were taken by the Ministers in his Department who have ultimate responsibility for these matters? Does this not eloquently make the case against part-time, part-time energy Ministers and is it not now time that the Secretary of State got a grip, stopped playing stupid inter-coalition games and got his dysfunctional and misfiring Department into shape?”
“Mr Davey: The hon. Gentleman asked why the announcement was trailed in the press. I am afraid that it was not, and I am pleased that it was not, but there was some sort of leak. I do not know where that came from. He then suggested that this was a frantic U-turn, which is complete rubbish. We have been working on the issue carefully and diligently for some time. The NDA set up a review of the model, which I think was required. It made recommendations to officials who looked at them and made recommendations to Ministers and we have been looking at them for some time. Indeed, I asked questions when I got the initial recommendations to ensure that during the transition any risks were properly mitigated and I was not prepared to take the decision until I saw a proper risk mitigation plan for the transfer.”
“Nick Smith (Blaenau Gwent) (Lab): The Secretary of State says that the termination fee following his decision was low, so how much was it in cash terms? Again, what was the cost of the important KPMG report?
13 Jan 2015 : Column 733
Mr Davey: On the final point, I have said that I will write to the hon. Member for Rutherglen and Hamilton West (Tom Greatrex); I do not have that figure with me. On the cash figure, I will write to the hon. Gentleman with the precise amount. I gave it in percentage terms—it is 1% of the annual fee—but I believe that it is less than £500,000 in cash terms. I put on the record that I will need to clarify that in writing…”
“13 Jan 2015 : Column 703
House of Commons
Tuesday 13 January 2015
The House met at half-past Eleven o’clock”
© Parliamentary Copyright, OPL, http://www.publications.parliament.uk/pa/cm201415/cmhansrd/cm150113/debtext/150113-0001.htm (Emphasis our own)
£500,000 equals approximately $761,215 US. Also, as alluded to above, it seems that the consortium gave its parent companies contracts. AMEC and AREVA were given contracts. We haven’t seen reference to one given to URS, but have not searched.
More parliamentary photos can be found here: https://www.flickr.com/photos/uk_parliament/2700311119/in/photostream/