April 9, 2014 / 2:11 PM / in 4 years

Losing bidders quiz UK over $12 bln nuclear decision-sources

LONDON, April 9 (Reuters) -

The bidders who lost out on Britain’s $12 billion contract to decommission nuclear sites have asked the government to explain the result as they decide whether to launch legal action, sources familiar with the matter said.

Last month, shares in engineering contractor Babcock jumped 7 percent in one day after the Nuclear Decommissioning Authority (NDA) awarded it and U.S. group Fluor preferred bidder status for what is one of the largest British government contracts ever put out to tender.

On the losing side was incumbent EnergySolutions which had teamed up with U.S. engineer Bechtel, a second consortium made up of Serco, Areva and CH2M Hill, and a third consisting of Amec, Atkins and Rolls-Royce .

The sources said at least two of the consortia had now sent letters to the government requesting clarification on how it had picked the winning bidder due to concerns over the scoring process. The third is reviewing its options.

“There’s a lot of dissatisfaction about the process,” one source said. Decisions over whether to launch legal action could come within the next week, a second source said.

The three consortia declined to comment. The NDA said such information was currently commercially confidential and that the competition process was in a period during which unsuccessful bidders could request further information to understand the basis of the decision.

“The competition process was run in strict accordance with UK and EU procurement regulations,” it added.

The sources said any launch of legal action could delay the formal awarding of the contract to Babcock and Fluor, or trigger a re-scoring of the bids which could overturn the decision. It could also force the reopening of the competition, they said.

The contract covers 12 of Britain’s 25 nuclear sites and should bring a saving of at least 1 billion pounds from the previous contract, handled by EnergySolutions for the past 14 years.

Numis analysts estimated that the deal would be worth more than 170 million pounds a year to Babcock, representing 4 percent of group revenue after adding sales from the soon to be acquired helicopter transport services firm Avincis.

Cavendish Fluor, the joint venture between Babcock-owned subsidiary Cavendish Nuclear and Fluor, will be formally awarded the contract - pending legal approval - on Sept. 1.

Britain has acted to outsource large swathes of its public sector services over the last 30 years, a practice which has been heavily criticised in recent months after contractors such as G4S and Serco were found to have overcharged the government on contracts.

In 2012, FirstGroup won a 13-year deal to manage the rail network linking London to Scotland, only for Virgin Trains to challenge the decision and eventually prompt an embarrasing government u-turn. ($1 = 0.5970 British Pounds) (Editing by Mark Heinrich)

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