10 Dec (NucNet): Westinghouse Electric Company is reviewing a decision by South Africa’s Supreme Court of Appeal yesterday to remit a tender for the replacement of steam generators at the Koeberg nuclear station to state-owned nuclear operator Eskom for reconsideration.
Westinghouse had challenged a decision by Eskom last year to award Areva a contract worth five billion rand (ZAR) (€300m, $330m) for six new steam generators at the two-unit Koeberg station.
Westinghouse believed the decision not to award it the tender was “fundamentally flawed and should be reversed”. When the result of the tender was announced in September 2014 Eskom said it was “satisfied with the integrity of all processes”.
On 18 June 2015, Westinghouse filed a notice of appeal to the Supreme Court of Appeal following a decision by the High Court to reject its initial legal challenge. In its appeal, Westinghouse requested that Eskom’s decision to award the tender to Areva be reviewed, and set aside, and that the court award the tender to Westinghouse.
The Supreme Court of Appeal said yesterday it had upheld the appeal and awarded Westinghouse costs, including the costs of three counsel. But the court did not award the tender to Westinghouse, instead referring it back to Eskom for reconsideration.
The court said Areva has already begun work on the tender and Eskom needs this work to be completed by 2018 when Koeberg will be shut down and the generators replaced.
Westinghouse told NucNet it is reviewing the decision to remit the decision to Eskom. A court finding that Eskom’s board tender committee (BTC) unlawfully took into account so-called “strategic considerations” is, however, to be welcomed, Westinghouse said.
According to court documents seen by NucNet, the reasons for awarding the contract to Areva were said to be strategic considerations and the existence of a “float” – a buffer period of three months – in Areva’s bid, which Eskom concedes were not part of the specific tender criteria. Areva contended that these considerations were embedded in the tender criteria.
The documents show that on the last day of parallel negotiations with Areva and Westinghouse, both companies were told that in addition to the tender evaluation criteria, the final decision on the tender would take account of strategic considerations.
“What they [the strategic decisions] would be was not, however, disclosed,” court documents say. “When Westinghouse made inquiries as to the nature of these strategic considerations it was not told. Eskom executives were simply unable to respond to requests for clarification,” the documents say.
On 7 August 2014, the BTC recommended to Eskom’s executive procurement sub-committee (Excops) – one of the committees involved in the tender process – that the contract be awarded to Westinghouse. This recommendation was signed by all Excops members, but despite this, the BTC decided on 12 August 2014 to award the contract to Areva.
Westinghouse said its tender was ZAR 140m cheaper than Areva’s and its supplier and localisation contribution was worth about ZAR 157m more than Areva’s. The court documents say these figures are contested, but that the bids were evenly matched in other respects.
