A consortium including British engineering group Amec, French nuclear giant Areva and Washington Group, a division of US contractor URS, has won the £6.75 billion competition to clean up Sellafield for the next five years.

The Nuclear Decommissioning Authority (NDA) today revealed that the Nuclear Management Partners consortium had beaten off stiff competition from three other bidders, including rival US and UK contractors, to be chosen as preferred bidder for the huge nuclear site clean-up contract.

Final contract negotiations will now take place with a view to awarding the contract in October 2008.

The NDA said that the contract is worth £1.3 billion a year, plus associated fees of approximately £50 million a year, subject to the level of performance improvements and efficiency achieved.

Prospect, the main union at Sellafield, yesterday welcomed the award of the contract, saying that Amec in particular had strong connections with the local community.

"This was something of a surprise but is nevertheless welcome. Amec and Areva have shown that they are keen to develop commercial opportunities at Sellafield which will be great news for the workforce in the local area," Mike Graham, Prospect national secretary for the North West, said.

Jean McSorley, a spokeswoman for Greenpeace, said that there were real concerns that Areva could push for new plutonium fuel production at the site and would increase the level of fuel reprocessing there. "This would just make the problem of how we deal with Britain's long-term nuclear waste even harder."

The contract is initially for five years but could be extended for a total of 17.

The NDA will continue to own the assets and liabilities at Sellafield but was required to put the contract out to the private sector in a bid to speed up the clean-up process and reduce costs.

The losing bidders included Fluor of the US, which had teamed up with Japanese group Toshiba, a consortium made up of Bechtel, Serco of the UK and Babcock & Wilcox of the US, and CH2M Hill, the US engineering contractor.

However, Nuclear Management Partners now finds itself in the throes of a dispute with Sellafield's 10,000-strong workforce.

After months of negotiations, the employees have rejected a 2 per cent pay settlement and will ballot on industrial action later this month. Workers are expected to vote for a strike, which would shut down the plant for up to a week.

Nuclear workers have received relatively generous awards in the past, but unions believe that the latest below-inflation offer is too little during a time in which the nuclear industry is undergoing considerable change.

They were calling for a 3.8 per cent increase — the same level as the retail prices index (RPI) in March. However, views have hardened since then as the Government has dug in its heels and RPI has risen above 4 per cent.

The NDA was criticised earlier this week for its current handling of contractors at Sellafield. Edward Leigh, chairman of the Public Accounts Committee, said the cost of work over the next five years was rising “steeply” and could increase “significantly”.

The committee said in a report that the Government was unable to provide a complete assurance that the cost of decommissioning new nuclear power stations would not fall back on future taxpayers.

The MPs recommended that, before giving the go-ahead to new nuclear power stations, the Department for Business should ensure that operators can meet future decommissioning costs.

The NDA said the estimated cost of decommissioning and clean-up of nuclear sites was £61 billion, adding that the often-quoted £73 billion figure came from adding £12 billion for the costs of operating the authority’s commercial facilities.

Times Recommends

• Food prices rise 8.3% on soaring fish and meat
• Car sales crash as economy hits skids
• House prices fall but Bank leaves rates on hold