NBN Co suspends construction tender

By Brett Winterford on Apr 1, 2011 8:35 AM
Filed under Telco/ISP

More pressure to form agreement with Telstra.

NBN Co has indefinitely suspended all construction contracts for second release sites and accused the construction industry of attempting to fleece the taxpayer over the build of the national broadband network.

In an explosive press statement released this morning, NBN Co said that the 14 construction companies (see list below) chosen during an RFP process to complete the build had not offered pricing comparable to private sector rollouts.

“We have thoroughly benchmarked our project against similar engineering and civil works projects in Australia and overseas and we will not proceed on the basis of prices we are currently being offered,” said NBN Co’s head of corporate services, Kevin Brown.

“NBN Co is confident it can secure better value for money by going a different route. We have left the option open to continue negotiations at a later stage.

“NBN Co is disappointed that the request for proposals (RFP) has not achieved an acceptable outcome, and we thank the companies who have been involved in the process so far.”

The construction companies had argued that the high prices reflected the lack of resources and skills available due to both the mining boom and re-construction efforts in Queensland.

Brown said he didn’t buy their argument.

“NBN Co does not regard current pricing reflects capacity constraints in the industry,” he said.

The decision puts greater pressure on NBN Co to form a definitive agreement with Telstra to lease its passive infrastructure – pressure Telstra is likely to exert at the negotiating table.

Construction companies on NBN Co panel:

Communications & Fibre, a division of Cut and Fill Pty Ltd
Connect X Joint Venture (Abigroup Telco & Energy a division of Abigroup Contractors Pty Limited and UGL Infrastructure Pty Ltd)
ETSA Utilities
Jemena Asset Management
John Holland Pty Ltd and Conneq Infrastructure Services (Australia) Pty Ltd Joint Venture
McConnell Dowell Constructors (Aust) Pty. Ltd.
Monadelphous and Instalaciones Inabensa Pty Ltd Joint Venture
Powercor Network Services
Silcar Pty Limited
Syntheo Joint Venture (Service Stream Holdings Pty Ltd and Bovis Lend Lease Pty Limited)
Telstra Corporation Limited
Transfield Services (Australia) Pty Ltd
Visionstream Australia Pty LTD
Downer Kordia Tenix Joint Venture (Downer Edi Engineering Pty Ltd, Tenix Australia Pty Ltd and Kordia Solutions Pty Limited)

32 comments in this discussion

"myself in own post wrote: Well it has everything to do with what you are saying, or are you saying you never said that? No, I'm saying your statement has nothing to do with what I'm ..."

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Comments: 32

Rossyduck Apr 1, 2011 9:09 AM	Must be a sick April fools joke. NBN Co don't give a toss about spending our tax $$'s - it is in their interests to make the network as expensive as possible to get a better price when trying to sell it at 20c/$ Take a look at their archaic designs - the reek of one thing - money is no object. On the other hand - would not put it past this current government to start a large PMG2 as a government Department. What else will they do with the soon to be out of work Telstra staff.
longsword Apr 1, 2011 10:10 AM	Sadly @Rossyduck whilst I don't think it's an April fools day joke your right about them not giving a hoot about spending out money like a drunken sailor. This government has a pathetic reocrd on this issue, al la BER, Pink bats etc. Now they say the budget is going to be tough to bring us back to surplus when everyone knows its not needed when we compare our debet with US/UK/Ireland etc.
deepthroat Apr 1, 2011 10:40 AM	What a crock. NBN co never had any intentions of doing business with the bidders on the list. I heard Kevin Brown on the radio this morning suggesting he had another party waiting in the wings ready to provide a solution. How does that work? If tender negotiations were current how could NBN be in a position to whip out a warmed up third party at such short notice? Follow the money Brett - somewhere somehow there will be a connection - you can bet on it.
longsword Apr 1, 2011 11:28 AM	@deepthroat makes you wonder whos doing the installs at the trial sites then doesn't it and who certain pollies are buying shares in ATM
Ace Apr 1, 2011 12:27 PM	You guys are a hoot! You're not happy when the Govt is spending money on infratructure, and you're not happy when they don't!
Rossyduck Apr 1, 2011 1:09 PM	It looks like it is not an April fools joke !. what an absolute fiasco - government has been told the NBN Co designs are too expensive and impracticle and only after they have wasted $$millions and $$millions of infrastrucutre builders money (or just picked their brains and made sure they throw their weight behnd the new legislation with carrots dangling in front of them) do they call a halt to it. Wonder what the international reputation of Australia as an investment destination is now ? The only ones we have not heard a cheep from are the unions and you would expect with this and the Telstra jobs debacle about to hit us they would have been vociferous. Suspect greedy donkey syndrome - they have been offered carrots. And in the next gripping episode of this sordid soap opera will they also leap for the carrot to find themselves over the cliff edge along with the infrastructure builders/ independents/ Greenfiedls operators/ Optus etc ?
meski Apr 1, 2011 1:11 PM	Sounds a lot like Abbott and Costello^H Turnbull, don't they, Ace? And their NBN policy is like "Who's on first?"
deepthroat Apr 1, 2011 1:51 PM	@Ace - I'm only unhappy when they are wasting it.
deepthroat Apr 1, 2011 1:53 PM	Longsword, it wont be the pollies - it will be the layer below that have their snouts in the trough.
ITnovice Apr 1, 2011 3:39 PM	If NBN Co had no intentions of being careful with tax payers money than why are they taking this action? They know they are being ripped of by contractors who see them as an easy target because of their links to the government. Their prices might get cheaper if they give the contract to a company that does not then go and get some sub-contractor to do the work - as is often the case. Time to cut out the middle men and over-chargers.
anonymous Apr 1, 2011 6:48 PM	NBN Co is being criticised for being careful how it spends it's money? Most of the above posts sound like a classic bunch of losers and whingers. No, let's be fair. Perhaps it sounds more like a classic bunch of political, shareholder and/or corporate rivals.
the_crane67 Apr 1, 2011 9:33 PM	I don't believe the biddig contractors are trying to rip off NBNCo. They all the want the work and it would be commercial suicide trying to over inflate the rates knowing that there are 14 other companies bidding. The last major comms rollout was in 1997 with the optus and Foxtel rollout so how did they get comparative rates? From having knowledge of the tendering process, NBNCo has revised the tender parameters a few times. They have asked for discounted rates if they offered the winning bidders "super-regions", i.e. metro Sydney or Melbourne. My belief is that when they created their working budget that they have stuffed up and are now shifting the focus onto them. It has cost the bidders a lot of money to tender. The NBNCo could've made it easier and chaeper by revealing the rates thatthey want to pay and see who will accept them. A rates card will be easier to manage and is a better way of managing contractors and the quality. let's wait and see.
advocate Apr 3, 2011 11:16 AM	anonymous wrote: No, let's be fair. Perhaps it sounds more like a classic bunch of political, shareholder and/or corporate rivals. No let's be really fair, you have no idea but it's worth the cheap shot then exit left. Bye.
singo79 Apr 3, 2011 10:25 PM	@advocate - No, it is clear you have no idea and good riddance to you. Anonymous & ITnovice hit the nail right on the head. A majority of the people posting here are clearly whingers or have some sort of political/financial interest. Why on earth is NBN Co. being criticised for being responsible with taxpayers dollars? After all that is what we expect with private enterprise isn't it? We expect private enterprise to be better placed to build/run a business as they are more financially responsible. So when a private company, which just so happens to be owned by the Government, decides to be financially responsible you all want to take a negative attitude towards it. There hardly appears to be an independent voice here, apart from ITnovice and anonymous. You all would be complaining if NBN Co. went out and spent money like it was going out of fashion and if the project went over budget by millions or billions of dollars. Yet when they are acting responsibly and decide it's time to look afield for a better price you all jump on them for not spending the ludicrous prices they were obviously quoted. NBN nay-sayers is all that you are! Come up with something a bit better then fiscal responsibility to attack the NBN for next time!
gmanning1 Apr 4, 2011 5:13 AM	Isn't this a 10 yr program? Wouldn't it be cheaper to employ their own employees and equipment to do the work???
advocate Apr 4, 2011 9:36 AM	singo79 wrote: A majority of the people posting here are clearly whingers or have some sort of political/financial interest. Oh another one, you know this how? the statistical and true test of gut feel? - and why is pro NBN comment not motivated by political or financial interest? So when a private company, which just so happens to be owned by the Government, decides to be financially responsible you all want to take a negative attitude towards it. So 12 months is wasted evaluating the national build tender which has a cost in itself, which delays the construction, which delays the finish date, which delays the revenue the NBN Co starts getting - and that's financially responsible? If the tender was finished six month ago you and others would be braying how responsible they were in being ahead of schedule and under budget and all the spin from Conroy would come out about that. There hardly appears to be an independent voice here, apart from ITnovice and anonymous. So what defines a 'independent voice' then, you? - you know this about a poster how? - I know good old gut feel eh? Yet when they are acting responsibly and decide it's time to look afield for a better price you all jump on them for not spending the ludicrous prices they were obviously quoted. So you know the outcome of the re tender process, and it's cheaper is it? let's wait for the results assuming they tell us, I bet they don't, they will just say it's cheaper. NBN nay-sayers is all that you are! Yeah yeah , you left out FUDster (make sure the first three characters are in caps in case readers don't get it !), all the standard repetitive boring clichés that are trotted out in the absence of any facts by the pro NBN brigade. Come up with something a bit better then fiscal responsibility to attack the NBN for next time! Best example of blatant hypocrisy I have seen for a while. Edited by advocate: 4/4/2011 09:39:33 AM Edited by advocate: 4/4/2011 09:42:52 AM
advocate Apr 4, 2011 9:37 AM	gmanning1 wrote: Isn't this a 10 yr program? Wouldn't it be cheaper to employ their own employees and equipment to do the work??? It might be a two year program if the Coalition win in 2013.
Ace Apr 4, 2011 12:32 PM	Uh, @advocate, clearly the 12 months was not wasted. It seems you are saying that RFTs are a waste of time, and maybe government should just award tenders to the first person to show interest? Fortunately their are people with a great deal more common sense than yourself involved in this process. The RFT process would only have finished 6 months ago if that is when the deadline was. Obviously it wasn't. I would agree that it is difficult to find anyone 'independent', so it's just a case of opinion about who is more right than wrong - which at this point is rather subjective at best. There are always some that can be dismissed due to rather obvious political and/or emotional rhetoric. Like the first poster in this thread. It is certainly an interesting point the tenderers make about staff shortages. If NBN had extapolated numbers using other commercial project costs, they would have had to have been careful about adding other extenuating circumstances the NBN project would bring about. The project is big enough to make a significant dent in resources that may well already be in short supply. However, one would hope that staff shortages would lead to more time being required rather than higher prices. Now @advocate, your contribution in this thread started with "No let's be really fair, you have no idea but it's worth the cheap shot then exit left. Bye.", and didn't get much better. Then you complain about "...absence of any facts by the pro NBN brigade...", but fail to offer any yourself. Or at least an thoughtful opinion/viewpoint that might make one ponder for a moment. If the coalition win in 2013 and decide the curtail the NBN rollout, it will be interesting to see what the general public make of this. Will they actually achieve anything by halting it at that point? Will they save any money? Opposing the NBN didn't work very well for them in the last election. Will opposing it at the next election help at all? I suspect the answer to these questions is somewhere in the region of 'no'.
HubertCumberdale Apr 4, 2011 1:45 PM	singo79 wrote: @advocate - No, it is clear you have no idea and good riddance to you. Anonymous & ITnovice hit the nail right on the head. A majority of the people posting here are clearly whingers or have some sort of political/financial interest. Not just whingers & those that have political/financial interests but also paid online response team employees. These ones are paid specially to make negative comments about the NBN, fuel the whingers and give an overall impression that the majority of Australians dont want the NBN. If this was a company like for example Sony doing this on web forums we would call it viral marketing but since it is purely politically motivated we call it propaganda.
advocate Apr 5, 2011 12:11 PM	Ace wrote: Uh, @advocate, clearly the 12 months was not wasted. Really, so the tender process has to start all over again which will delay the construction and you come up with the spin it was not wasted? It seems you are saying that RFTs are a waste of time, No I didn't say that, I said the last 12 months of the evaluation process was a waste of time that cannot be made up, you start the build late you end late, you forgo revenue streams because of delayed rollout - it's that simple. There are always some that can be dismissed due to rather obvious political and/or emotional rhetoric. Like the first poster in this thread. Yes but political or commercial motive is not always so blatant or easy to spot. If the coalition win in 2013 and decide the curtail the NBN rollout, it will be interesting to see what the general public make of this. Well 'what the general public make of this' would be obvious, they don't want the NBN in its current form, they voted the Coalition in! . Will they actually achieve anything by halting it at that point? Will they save any money? Yes. Opposing the NBN didn't work very well for them in the last election. You mean neither of the two parties had a mandate to Govern in their own right, if you call that not working for them very well then go for it, I see it as a 50-50 voter split on NBN no and NBN yes. Will opposing it at the next election help at all? Yes, the NBN is just starting to smell a bit, by 2013 it will really be on the nose.
advocate Apr 5, 2011 12:14 PM	HubertCumberdale wrote: Not just whingers & those that have political/financial interests but also paid online response team employees. These ones are paid specially to make negative comments about the NBN, fuel the whingers and give an overall impression that the majority of Australians dont want the NBN. .... and pro-NBN comment cannot be categorised by the above why?
HubertCumberdale Apr 5, 2011 3:05 PM	myself in own post wrote: .... and pro-NBN comment cannot be categorised by the above why? In theory they could be. But do you really think it would be necessary in this instance for the current government to employ people to do this when the majority want it? No, of course not, you only need to rely on this tactic when you are either on the opposition and/or things aren't quite going your way.
Ace Apr 5, 2011 3:27 PM	@advocate, there are about 25 policies that come before broadband access in peoples decision to vote for a particular party. It just isn't a motivator for most voters. There was very definitely no "50-50 voter split on NBN no and NBN yes" at any point. The last election was tipped in favour of Labor due to their NBN policy. But that tip was due to a couple of independents. My conversations with people uninvolved in IT is that yes, they've heard of the NBN and that yes, it seems like a good thing. I don't believe Abbott and Turnbull are selling their FUD correctly. In fact, I'm getting the distinct impression that TB is looking for a way to back out of the argument without losing too much face. Abbott never will because he 1) doesn't know what an NBN is, and 2) he doesn't care - as long as he thinks he can score some political mileage from it, he'll keep going for it. You keep saying the evaluation process was a waste of time @advocate, but offer no reason why. Please enlighten us. You also seem very sure that a Liberal government would save money by stopping the NBN project in 2013, but don't appear to have any clue how. How?
Ezy2Confuze Apr 5, 2011 5:19 PM	Interesting that we don't see Nextgen or Leighton on the list, considering most of the roll out photos I've seen have the nice Nextgen Networks logo prominently displayed somewhere in the photos.
advocate Apr 6, 2011 9:11 AM	Ace wrote: The last election was tipped in favour of Labor due to their NBN policy. But that tip was due to a couple of independents. Yes I know but that's nothing to do with the way people voted, Labor got in after the national vote by horse trading with the Independents better than the Coalition did, as a percentage of the National vote the Independents would not even register. Everytime legislation is passed they still have to horse trade with the Greens and the Independents to get them to vote with them, my guess is the electorate will get sick of this minority representation dictating policy and will boot Labor out the next time around. My conversations with people uninvolved in IT is that yes, they've heard of the NBN and that yes, it seems like a good thing. Good let's build it then, you have convinced me. lol I don't believe Abbott and Turnbull are selling their FUD correctly. Really? I think Turnbull is scoring some good hits especially his recent Commsday address, quite the opposite of FUD. You keep saying the evaluation process was a waste of time @advocate, but offer no reason why. I did over and over, read my posts again, take off the pro-NBN special filtered glasses, and read not just what you want to see. How? Stopping a wasteful not required rolls royce with caviar FTTH solution $43 billion rollout in 2013 is NOT saving money? - err yeah ok. Edited by advocate: 6/4/2011 09:13:12 AM
advocate Apr 6, 2011 2:51 PM	HubertCumberdale wrote: But do you really think it would be necessary in this instance for the current government to employ people to do this when the majority want it? No, except you just saying the majority want it doesn't actually mean the majority want it.
HubertCumberdale Apr 6, 2011 3:56 PM	myself in own post wrote: No, except you just saying the majority want it doesn't actually mean the majority want it. Has nothing to do with what I'm saying... surely you are not suggesting that the majority of Australians dont want it?
Ace Apr 6, 2011 4:18 PM	I am not sure if you are offering no argument on purpose, or if in fact you're a little simple @advocate. With regard to your comments @advocate 1) That is how a demoracy works. And as I mentioned, the NBN had next to no role in the national vote. You may be sore about selecting the losing team, but everyone picks a loser from time to time in national votes. If you vote Labor in the next election, you may lose again. That's democracy for you. 2) Suprisingly, you completely miss the point. Again. The point being of course that the average person may have heard of the NBN but it doesn't affect their lives so much as that they would vote one way or another because of it. 3) Great, go out to your local shopping mall and find out what people made of Turnbulls Commsday speech. I believe the answer will be something along the lines of "What-day?". 4) Nope, can't find anything other than a bit of generalised ranting. The only clue you give to what you're talking about appears to be that NBNCo should have given a contract to someone no matter how ridiculous their pricing was - time is more important than money. I tried to confirm this is what you meant, but you didn't seem to agree. 5) So, I understand that you think the opposition would simply leave the NBN infrastructure built to date lying in the ground, and put the billion or two spent so far down as 'policy adjustment', and not connect residences to new infrastructure? And people would be happy with that? Maybe it's just me, but That seems like a massive waste of a) money and b) opportunity. Edited by Ace: 6/4/2011 04:21:27 PM
anonymous Apr 6, 2011 5:31 PM	@Ace, maybe we shouldn't be wasting our time in trying to instil some facts and common sense into the debate with certain people. After all, we are not being paid for writing long and mostly irrelevant screeds full of hubristic hyperbole. ;-)
advocate Apr 6, 2011 5:59 PM	@anonymous That coming from you of all posters on here is absolutely hilarious.
advocate Apr 6, 2011 6:05 PM	HubertCumberdale wrote: Has nothing to do with what I'm saying... Well it has everything to do with what you are saying, or are you saying you never said that? surely you are not suggesting that the majority of Australians dont want it? I can quite easily say that just as easy as you can say they do want it - in other words throwaway statements and a null argument all around.
HubertCumberdale Apr 6, 2011 6:27 PM	myself in own post wrote: Well it has everything to do with what you are saying, or are you saying you never said that? No, I'm saying your statement has nothing to do with what I'm saying. Not mine. I can quite easily say that just as easy as you can say they do want it - in other words throwaway statements and a null argument all around. Not really.