Prior to restructuring, Atomic Energy of Canada Limited (AECL) consisted of two divisions: the Nuclear Laboratories and the CANDU Reactor Division. The primary responsibility of the CANDU Reactor Division was the design, sale and service of AECL’s CANDU reactor technology.
The Nuclear Laboratories, comprising mainly the Chalk River Laboratories in Chalk River, Ontario, and the Whiteshell Laboratories in Pinawa, Manitoba, were responsible for nuclear science and technology, decommissioning and waste management, and clean energy technologies, as well as the production of medical isotopes.
In November, 2007, the Government of Canada announced a review of AECL to determine whether its structure best equipped it, its employees and ultimately the Canadian nuclear industry to participate fully in the global nuclear market.
The review was completed in 2009. It concluded that AECL should be restructured and that:
- The business model for AECL must be changed to allow Canada to fully participate and compete in the global nuclear market; and
- The Chalk River Laboratories would benefit from strong partnership to drive innovation and renewal, and due consideration should be given to alternative management models, such as a government-owned, contractor-operated approach in which ownership of the existing facilities would rest with the Government, with the operation of those facilities contracted to one or more third parties.
Based on these conclusions, the Government announced in May 2009 its intentions to restructure AECL to better equip the company to compete and, in doing so, to put in place the conditions for the nuclear industry to succeed. A two-stage process was launched to pursue that objective, while looking to minimize taxpayers’ financial exposure.
As the first step, the Government invited investors to submit proposals for AECL’s CANDU Reactor Division. Proposals were assessed based on how well they met the Government’s nuclear policy objectives to:
- ensure safe, reliable and economic options to address Canada’s energy and environmental needs;
- control costs to the Government while maximizing the return on the Government’s investment in nuclear energy; and
- position Canada’s nuclear industry and its workforce to seize domestic and global opportunities.
In October 2011, the Government sold the assets of AECL’s former CANDU Reactor Division to Candu Energy Inc., a wholly owned subsidiary of SNC-Lavalin Group Inc. The transaction met the stated objectives.
In February 2012, the Government publicly launched the second phase of the restructuring of AECL, focused on the Nuclear Laboratories. A Request for Expression of Interest on the future of the Laboratories was issued to determine stakeholder willingness to share in financial risks, managing, partnering and contracting. The Government received 46 responses from various stakeholders, including private sector organizations, academics, local governments and industry associations.
In February, the Government announced that it would restructure the Nuclear Laboratories to:
- focus the mandate of the Laboratories on delivering Canada’s obligations for decommissioning and waste management; science and technology (S&T) services to meet core federal responsibilities; and S&T services to third-party customers on a commercial basis; and
- strengthen accountability and bring private sector rigour and efficiencies to the management of all facilities and services.
To do so, the Government announced that it would engage in a competitive, collaborative procurement process for the management and operation of AECL’s Nuclear Laboratories. The Government sought to implement a government-owned, contractor-operated (GoCo) model, as is done in other jurisdictions, such as the United States and the United Kingdom.
In follow-up to the February announcement, the Government organized an Industry Day on June 20, 2013, followed by a Request for Information, to present industry with an overview of the procurement strategy for the restructuring of the Nuclear Laboratories and to seek feedback. Site visits were also organized at the Chalk River and Whiteshell Laboratories to allow industry representatives to see first-hand the sites and scope of work.
In March, the Government announced the issuance of a Request for Response Evaluation (RFRE), in which prospective suppliers were evaluated to assess whether they met technical, financial, integrity and national security requirements.
The RFRE was designed with multiple “intake dates" to allow interested bidders to qualify at various stages from April 2014 to January 2015. All applications were thoroughly reviewed to determine if technical, financial, integrity and national security requirements were met.
This process led to the pre-qualification of four suppliers who were given the opportunity to engage in detailed consultations with the Government over several months, which enabled them to better understand the complexities of the procurement, and to ultimately submit a bid in response to a Request for Proposal.
On November 3, as part of its preparation to transition to a GoCo management model, AECL operationalized CNL as a new wholly owned subsidiary now responsible for the Laboratories’ operations and employees.
Once a private-sector contractor is selected, the shares of CNL will be transferred to the contractor. CNL will be the enduring entity that will maintain, through the transition to the private sector, the knowledge and expertise, management systems, workforce and regulatory authorizations and obligations.
In January, the Government issued a Request for Proposal (RFP) to the four companies pre-qualified to bid for the contract to manage CNL.
Because the actual RFP contained confidential and sensitive information, only the four Qualified Respondents — who met the necessary criteria — were eligible to have access to the RFP.
This competitive procurement process followed government best practices in engagement, oversight and due diligence, including the use of third-party expert nuclear, financial and legal advisors. The entire procurement process was monitored by a Fairness Monitor, who will provide an independent report confirming the fairness, openness and transparency of the process. All bidders were verified to ensure their compliance with Public Works and Government Service Canada's Integrity Framework.
The process resulted in the selection of the Canadian National Energy Alliance (CNEA) as the preferred bidder on June 26. Once the contract has been finalized, CNEA will become responsible for the management and operation of CNL.
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