NBN Co scraps construction tenders

Updated: Back to the drawing board for national network rollout

NBN Co this week confirmed it had scrapped bids from a shortlist of construction companies vying to roll out the National Broadband Network (NBN) across Australia.

smh.com.au this morning reported the NBN wholesaler had written to 14 construction firms informing them the tender process for construction beyond the second set of mainland release sites had been “suspended” indefinitely over concerns the prices offered had been unacceptable.

The shortlist, which included Telstra, Transfield and Silcar, was whittled down from an initial list of 45 bidders.

The contracts are reportedly worth some $12 billion.

“We have said all along that we are building an NBN, but not at any price,” NBN Co head of corporate services, Kevin Brown, said in a statement. Brown told ABC this week that the figures offered were "double digit" above expectations.

“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.”

Instead, Brown said the company would look to an “alternative route” that focused more heavily on the $9 billion financial heads of agreement with Telstra by sketching a national footprint for construction.

It would also look to rely more on its recent supply chain arrangements, which included more than $2 billion of equipment contracts signed in the past few months in anticipation of a wider rollout.

"Today we are commencing discussions with an alternative different party about how to get the job done," Brown told ABC.

Comment was being sought by those involved in the initial tender process.

NBN Co expects to roll out the $36 billion network to 6000 premises a day under volume construction, though when and where this will occur beyond the second mainland release sites remains uncertain.

The heads of agreement is yet to be approved by the telco’s shareholders or the competition watchdog.

A shareholder vote scheduled for 1 July was pushed back earlier last month, leading to potential delays in the rollout of the 14 NBN second released sites on the mainland.

Construction at the five first mainland release sites have also been plagued with issues, with reports of those construction companies involved losing substantial amounts of money on the contract. All five sites are expected to go live at the end of the month.

The shortlist:

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)

With AAP

Follow James Hutchinson on Twitter: @j_hutch

Follow Computerworld Australia on Twitter: @ComputerworldAU

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