The report by the Public Accounts Committee (PAC) is critical of central government’s lack of oversight of one of its highest value and most important contracts.

The committee’s inquiry found the Nuclear Decommissioning Authority ran an overly complex procurement process, resulting in it awarding the contract to the wrong bidder, and subsequently settling legal claims from a losing consortium to the tune of nearly £100m.

It also drastically under-estimated the scale of the work needed to decommission the Magnox nuclear reactor and research sites at the time it let the contract, which ultimately led to the termination of the Magnox contract nine years early.

The inquiry described the procurement process as ‘overly complex and opaque’, with over 700 evaluation criteria against which bids were scored. It also blamed the government for a failure to keep the project under tight scrutiny.

PAC says the Nuclear Decommissioning Authority will now have to spend more money to find a suitable way of managing these sites after the contract ends officially in September 2019.

Sir Geoffrey Clifton-Brown, PAC deputy chair, said: ‘From the design and execution of the procurement process onwards, the handling of the Magnox contract has been an appalling piece of mismanagement and financial waste.

‘It is wholly unacceptable that some details of what took place should remain so murky – not least the Nuclear Decommissioning Authority’s inability to fully account for some £500m of taxpayers’ money paid to its previous contractor.

‘We expect the Nuclear Decommissioning Authority to be open with us about what it is doing to address this and other failings identified in our Report, such as shortcomings in the skills and expertise of its staff.

‘Central government is also culpable. Having signed off the Nuclear Decommissioning Authority’s needlessly complicated procurement plan, it then failed in its duty to taxpayers as issues emerged and costs grew.

‘Oversight structures are there for a reason and for a significant and critical period UK Government Investments was simply too hands-off.’

MPs said not only did the Treasury and the Department for Business, Energy & Industrial Strategy (BEIS) approve the Nuclear Decommissioning Authority’s approach to procurement and contract management, but there are clear failings in BEIS’ subsequent challenge and oversight of the Nuclear Decommissioning Authority, through UK Government Investments.

As a result, the chosen contractor ultimately submitted nearly 100 requests to change the contract, resulting in the costs of decommissioning increasing from £3.8bn in September 2014 to £6bn in March 2017.

An independent inquiry into the Magnox contract led by Steve Holliday, former chief executive of National Grid, was announced in March 2017, and is ongoing.

PAC report on The Nuclear Decommissioning Authority’s Magnox contract