Contractor talks break down

NEGOTIATIONS between NBN Co and ETSA Utilities on a multimillion-dollar construction contract in South Australia and the Northern Territory have broken down amid claims of overcharging.

By InvestSMART · 8 Sep 2011

By InvestSMART ·
8 Sep 2011

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NEGOTIATIONS between NBN Co and ETSA Utilities on a multimillion-dollar construction contract in South Australia and the Northern Territory have broken down amid claims of overcharging.

ETSA was NBN Co's construction partner at the Willunga fibre-optic cable test site, a relationship which helped other test-site construction partners win larger contracts.

However, ETSA's bid for a two-year contract to manage construction and install cables in the central states was seen to be too expensive, an NBN Co spokesman said.

"We were unable to reach agreement with ETSA but we remain in negotiations with other construction firms for SA and NT, and we hope to reach a conclusion in coming weeks," he said.

An ETSA spokesman would not confirm that pricing had caused problems. He said simply that the two parties had agreed to end negotiations.

"We got very close but we could not finalise an agreement," he said. "We have a very good relationship, and as an electricity infrastructure provider in South Australia, we anticipate we will probably be doing some further work with [NBN Co] in the future."

NBN Co awarded a $133 million contract earlier this week to Transfield for construction work in Victoria and a $174 million contract to Syntheo, a joint venture between Lend Lease and Service Stream, for similar work in Western Australia.

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Frequently Asked Questions about this Article…

What caused negotiations between NBN Co and ETSA Utilities to break down for the SA and NT construction contract?

The article reports that talks broke down amid claims of overcharging. NBN Co said ETSA's bid for the two-year contract to manage construction and install cables in South Australia and the Northern Territory was seen as too expensive. ETSA would not confirm pricing was the issue, saying only that the parties agreed to end negotiations after failing to finalise an agreement.

What role did ETSA Utilities have with NBN Co before the failed contract talks?

ETSA was NBN Co's construction partner at the Willunga fibre‑optic cable test site. The article notes that this test‑site partnership helped other test‑site construction partners win larger contracts.

Has NBN Co awarded other major construction contracts recently?

Yes. The article says NBN Co awarded a $133 million contract to Transfield for construction work in Victoria and a $174 million contract to Syntheo for similar work in Western Australia.

Who is Syntheo and which companies are behind that $174 million contract?

Syntheo is a joint venture between Lend Lease and Service Stream. The article states Syntheo won a $174 million contract from NBN Co for construction work in Western Australia.

What did ETSA Utilities say about future work with NBN Co after negotiations ended?

An ETSA spokesman said the parties got very close but could not finalise an agreement. He added that ETSA has a very good relationship with NBN Co and anticipates it will probably be doing some further work with NBN Co in the future.

Will NBN Co look for other construction firms to cover South Australia and the Northern Territory?

According to an NBN Co spokesman quoted in the article, the company remains in negotiations with other construction firms for South Australia and the Northern Territory and hopes to reach a conclusion in the coming weeks.

How might these contract developments affect the companies mentioned, like Transfield, ETSA, Lend Lease or Service Stream?

The article itself does not provide information on market or financial impacts for these companies. It reports the breakdown of talks with ETSA and the separate contract awards to Transfield and Syntheo (Lend Lease/Service Stream JV) but does not discuss stock performance or detailed financial consequences.

What were the exact contract values and regions involved in the recent NBN Co awards mentioned in the article?

The article states NBN Co awarded a $133 million contract to Transfield for construction work in Victoria and a $174 million contract to Syntheo for construction work in Western Australia.