Select Committee on Defence Seventh Special Report

ANNEX A: Building A91 and Radioactive Liquid Effluent Treatment Plant—Brief Project History

55. Following competition, the MOD awarded a contract to Babcock Woodhall-Duckham Limited in the late 1970s for the construction of Building A91 and the Radioactive Liquid Effluent Treatment Plant (RALETP). Then scheduled to become operational in 1991, the RALETP was intended to process aqueous wastes arising from activities carried out in various buildings at AWE Aldermaston.

56. During non-radioactive commissioning of the plant in 1990, leakage due to corrosion was discovered in stainless steel pipework and filter vessels. As a consequence, active commissioning had to be halted. A taskforce was set up in 1991 to examine the corrosion problem. Following extensive investigations the taskforce concluded that the corrosion of the stainless steel was due to a combination of high levels of chloride in the liquid effluent and contamination of the system by bacteria known to corrode stainless steel.

57. Tenders were then invited for project definition of corrosion rectification in the RALETP. The successful tenderer was NNC Limited, to whom the MOD awarded a contract in October 1993. In April of the same year, management and operation of AWE had been contractorised following competition, with a seven-year contract being awarded to Hunting BRAE Limited (HBL) under Government Owned Contractor Operated (GOCO) arrangements. Under the term contract, the RALETP rectification contract with NNC Limited was novated to HBL.

58. Despite the (purported) completion of pre-commissioning in September 1998, corrosion was again identified in January 1999. Active commissioning was, once again, brought to a halt. There being no reasonable prospect of rectifying the technical problems within any practicable timescale, the MOD recognized that there was no future for the facility. Formal written rejection of the works was notified to HBL on 29 March 2000. (By that time, and following competition, the award of a new AWE management and operation contract to a new consortium, AWE Management Limited, had been announced. This became effective on 1 April 2000.)

59. Legal advice was that MOD had a sufficiently robust case to pursue a claim against HBL for the re-imbursement of the costs of refurbishment, consequential damages and expenses incurred. A settlement was reached in April 2003, under which the MOD received £12M from HBL.

60. Following the evaluation of a number of options, it was determined that there was no viable use for building A91. Both it and the RALETP have therefore been written off as a constructive loss amounting to £147M.

61. A post project evaluation was conducted in 2004/05. The lessons from this were promulgated in a Learning from Experience seminar at Abbey Wood on 31 January 2006.

62. A timeline of key project events is shown below.
1978Following a report which highlighted inadequate waste management facilities at AWE, public undertaking given to replace inadequate facilities and overhaul safety procedures.
1980Process for defining requirements of new facility begins.
1985Building construction begins.
1986Further Treasury approval sought following cost increases and project slippage.
1990White commissioning begins (testing process using ordinary water).
Mar 1991Corrosion found.
Oct 1991Report confirmed the extent of the corrosion.
Dec 1991Decision taken to repair A91 and not to pursue alternative options.
1993Plan for rectification of problems agreed.
Apr 1993AWE contractorised and contract novated to HBL.
Oct 1993Contract placed for rectification of A91.
Jan 1999Further corrosion found.
Mar 2000MOD formally rejects RALETP.
Apr 2000AWE ML takes over GOCO contract from HBL.
2001Treasury Solicitor submits formal claim on HBL on MOD's behalf.
Mar 2003Value of RALETP written down in 02/03 accounts to amount likely to be recovered in settlement.
Apr 2003Commercial settlement reached between MOD and HBL.
Dec 2003Advance notification of write off submitted to CDP.
Feb 2004Building written down to zero in 03/04 accounts to reflect that the conversion of the building is unlikely to be cost effective.
May 2005Post project evaluation for project produced.
Oct 2005Case submitted to CDP for formal write-off within his delegated authority.
Jan 2006Learning from Experience seminar at Abbey Wood.
Jan 2006HCDC interest stimulated through scrutiny of MOD Annual report and Accounts.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2006
Prepared 22 June 2006