NBN makes contractors fight for six-month packets of work

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NBN makes contractors fight for six-month packets of work

Builds KPIs into new rollout contracts.

The national network builder has reworked its historically troubled approach to contractor partners by building in performance metrics which will force providers to prove their worth every six months.

NBN today signed rejigged contracts with five delivery partners - Downer, Transfield, Visionstream, Fulton Hogan and WBHO - for the next five years.

Unlike its previous approach - in which the company awarded large contracts for a geographical area without any performance requirements or competition - NBN has now introduced KPIs into its agreements.

The structure of the previous contracts contributed to a long-fraught relationship between NBN and its contractors over everything from skills shortages, dodgy work and a downgrade in premises passed.

It's the second time in recent years NBN has attempted to renegotiate contracts to address complications with its service provider partnerships.

Last year the company offered contractors extra fees to address so-called service class zero premises - those that had been passed with fibre but which couldn't order an active service.

The new contracts - worth up to $2 billion combined - cover 4 million premises across Australia within the fixed-line footprint to roll out the Coalition's multi-technology mix of network technologies, including fibre-to-the-node and fibre-to-the-basement.

The deals do not include the HFC network. An NBN spokesperson said an announcement would be made on HFC contracts soon.

NBN will allocate work in six month parcels, meaning at the end of each six-month stint contractor partners will need to prove their worth in order to keep receiving work.

The company will apply speed, quality and safety performance metrics to each contractor at the end of the period to determine whether they have performed satisfactorily.

If not, the next six-monthly parcel of work will then become available to other NBN partners on the new contracts in the particular geographic region.

The last of the existing NBN contracts will expire mid next year. The new contracts commence from July 1 this year.

Transfield today said it expected its deal to reach $140 million in the first year.

The company has two existing contracts with NBN, a two-year $300 million deal to design the local/ distribution network and build the fibre optic network; and a two-year $66 million deal to build pre-connections outside houses.

Downer said its new contract could reap it up to $100 million in the first year.

It has rolled out fibre to the premise across most of the Australian states for the past two years, and will continue to deliver the NBN to around 59,000 premises until its existing contracts expire at the end of this year.

Under its new deal, Downer will help build out the fibre-to-the-node, fibre-to-the-premise and fibre-to-the-basement networks across 144,000 premises in Queensland, NSW and WA in the first year.

Visionstream has two existing contracts with NBN worth around $400 million, one which ends this year and another that will expire mid-2016.

The company said its new deal will likely exceed $270 million in the first year. It has been tasked with constructing fibre-to-the-node and fibre-to-the-premises across Queensland, New South Wales, Victoria and Tasmania.

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