Locals claim NBN contracts skip Australia

Locals claim NBN contracts skip Australia

Summary: NBN Co has been accused of ignoring Australian manufacturers by selecting overseas bidders for its grounds-systems satellite-service tender.

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NBN Co has been accused of ignoring Australian manufacturers by selecting overseas bidders for its grounds-systems satellite-service tender.

Earlier this week, the company announced that Space Systems/Loral had secured a $620 million contract to develop two Ka-Band satellites for NBN Co for its satellite service, which is due to be launched in 2015. At the time, NBN Co CEO Mike Quigley said that two further tenders around ground systems and launching the satellites will be announced soon, for a total of $1.4 billion.

It is believed that the two final bidders for the ground-systems component of the service are US satellite vendors Hughes and Viasat, with NBN Co now in final negotiations with the two companies.

But local systems vendor EM Solutions — which manufactures Ka-Band satellite-radio transmitters and receivers — believes that NBN Co overlooked local manufacturers by bundling up the ground-systems tender to provide a whole service that no local vendor could provide alone.

EM Solutions managing director Dr Rowan Gilmore said that his company had expressed interest in providing the RF systems, but was not eligible to bid for the whole tender.

"They've made them such a big tender that only a multinational or a foreign company can bid, essentially," he said.

"What NBN wants is, essentially, they want to outsource the whole thing. They don't want to buy bits and pieces of equipment; they want to buy the whole thing from one supplier."

NBN Co also ran into controversy when it announced its satellite-development contract. Local satellite vendor NewSat claimed that it was overlooked for the tender. However, Communications Minister Stephen Conroy said that there were only five companies that could undertake what NBN Co requires, and all are based in Europe or the United States.

Gilmore admits that the ground-systems tender as a whole could not be met by a local company; parts of it could have been, as it isn't just the ground terminal, but also the network-management system software, logistics and antennas.

"What [NBN Co CEO Mike Quigley] neglects to say is that there is a number of companies in Australia that could be part of their supply chain," he said.

"Our concern is these companies will come in, import all their stuff and not worry about Australian manufacturers in sourcing their equipment."

In a time when the government is focused on promoting Australia's manufacturing industry, Gilmore said that it was a bit hypocritical for NBN Co to go overseas for the tender.

NBN Co declined to confirm what vendors were the final bidders, but said that whatever company wins the tender will be encouraged to maximise local content.

"All participants are required to submit an Australian Industry Participation Plan. So Australian companies and Australian workers will be beneficiaries of the awarding of the Ground Segment contract," NBN Co said in a statement.

Indeed, EM found out that it had been left out of the tender because it was approached by one of the shortlisted companies, which wanted to engage it as a subcontractor.

Topics: NBN, Broadband, Emerging Tech

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Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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11 comments
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  • The satellite's systems cost comes in at $650M to provide coverage for 3 percent of the population. I wonder if the service will be limited to those without fibre. I can see others may want to subscribe to satellite NBN services while waiting for fibretech to show with your NTU in hand.
    Knowledge Expert
  • Its a bit of a no win situation here. If they allow Australian companies to subcontract, the overall price and complexity goes up, if they aim for effiency they get hit for not supporting Australian businesses.
    mwil19-a34f7
    • I agree mwil19.

      It's more of the same old damned if you do/don't!
      Beta-9f71a
    • Price and complexity does NOT go up with Australian company supply It goes down. No one is asking NBN to "Buy Australian" just give them a tender that they can respond to fairly. Australian companies are very competitive on price and also very good at their nich capability - that is why they are able to sell all over the world. Yet for some reason they are not good enough for the NBN. That reason is procurement process designed by former multinational executives for the companies they used to work for.
      oze-35229
      • Just like the Collins class submarine or the Wedgetail project? What about Myki in Vic? Sorry but sometimes outsourcing the whole thing makes sense, from what I've read, it doesn't look like any single Aussie vendor could do the whole job so complexity would go up.
        mwil19-a34f7
  • Why not contact those companies and show how your products could be usefull in an NBN bid? Would a bid showing a larger local product use be more attractive?

    The problem is... you/we want the NBN to be run as a business, and to get the best value, right up until the time some local possibilities might be overlooked.

    I can see the headlines now... NBN price blowout (caused by greater complexity from local manufacturing requirement)!
    Paul Krueger
    • This statement is blatantly untrue. Australian companies frequently offer excellent value for money and lower prices. In addition blowouts occur due to complexity from large scale projects. unbundling into smaller (local) supply is in fact simpler and less complex. Go ask the UK Government about how large multi-nationals have messed up their service delivery and why they are now actively unbundling to local suppliers.
      oze-35229
  • For a start, I am the Director of Marketing and Sales for EM Solutions so my view is going to be slanted in favour of our Company's position. In spite of the many challenges associated with exchange rates, we have managed to successfully export our Satellite Comms Ka-Band Microwave R.F. sub-systems to many military and Tier 1 commercial clients around the world (U.S., Canada, France, U.K, Israel) for the past 4 or 5 years. We have also managed to partner with large foreign owned Satcom system integrators here to deliver our Satcom sub-systems to the Australian Defence Force. It is not a question therefore of our products costing more (which they clearly wouldn't) but a strategic policy question regarding Government owned entities not actively supporting local companies who not only manufacture here, but are leading the world in regard to specialist I.P. development in product innovation and emerging technology sectors. Given the opportunity, we are confident we could propose solutions which exceed technical and commercial expectations, but the opportunity wasn't made available to us when the tenders were issued. Nor is there any current imperative for the NBN to even 'encourage' bidders to include Australian content for the high-tech ground equipment. We hope to convince the successful ground equipment terminal bidders that we have something to offer them, but it will be through our own efforts and our our own merit - no thanks it seems to anyone in the Federal Government or the NBN interested in supporting Australian industry development per se.
    jamiesmith2303
    • well said Jamie - Australian companies offer great value for money and SME stands for subject matter expert. The former multi-national executives at NBN are locked into a past paradigm. they are drones not leaders.

      What amazes me is that we are supposed to be building a world leading infrsatructure and showcasing our capability to the world. Why on earth ignore Australian leaders in their field? All we will end up with is a few sparkies and plumbers getting some extra work during the network roll-out. Just nuts.
      oze-35229
    • Shouldn't you be talking to the tender winners then?

      Look at it from this perspective:
      If I want to buy a car, do I put a tender out for a body, engine, drivetrain and interior and then slap it together in my spare time?

      Hell no!

      I buy an entire car. Complete. From one supplier with one warranty.

      I don't want to call Holden one day when it breaks and argue with them about whether it's their engine or the Hyundai computer I bought to run it! I want to call Holden and say "Hey buddy, you made and guaranteed this entire car. Fix it!"

      Your product may well be exceptional - and as a component manufacturer, you should be demonstrating your products to the companies that make entire packages. The US military, who have extensive ties to NASA are in a completely different position to the NBN. They have time and expertise to build a kit Satellite. NBNCo don't.
      Neither does your company, apparently - and you'd be more inclined to expect your company to build an entire bird from parts than NBNCo - No?

      So in the end, it's a matter not of being biased, but of Australian companies unfortunately not having a complete product to sell.
      myne-819b4
  • Correct!

    We should be talking to the people whom the NBN engage to deliver the entire program of satcom Ground Equipment - who do have the clout and resources to manage and support the entire solution ( a la your buying a car analogy).

    In fact we do just this with one of our long-standing global Defence Prime system integrators for the satcom ground equipment used by the Australian Defence Force.

    In the normal course of our business we do speak to as many targetted prospective clients as we can afford to (both in terms of the time and money required to travel around the world to attend conferences and meet with these key organisations).

    In a perfect world, there would be a free on-line portal called 'the satcom marketplace', which allowed buyers and suppliers a view to all the high-tech satcom programs underway. That way, purchasers could review all the organisations who had great products, innovative IP and could integrate their solutions and they could choose who would potentially be the best supplier.

    Suppliers in turn could see who had (funded) purchasing programs underway and make efficient use of their time by only marketing to those who had work and budgets for the supplier's equipment.

    In the absence of such an on-line marketplace, organisations like ours do our best to uncover opportunities like the NBN's satcom ground equipment (terminal) program but when we specifically ask and don't get told what is happening or who the NBN are speaking to about delivering the program, it becomes a difficult and time consuming exercise for an SME to know who to speak to.

    When the NBN's program requirements are issued to prospective tenderers and we can't get a copy to see if our components would be suitable (let alone world-class) it is difficult for us to second guess the nature and extent of the opportunity.

    By the time the tenderers submit their response, they've already gone to a lot of trouble to design a solution using their existing suppliers and there's no incentive to re-work it if, by chance, they discover after the event that there's an Australian company who could deliver the components required, so it all goes nowhere for us.

    The Australian Defence Force actively pursues policies to encourage and sustain Australian Industry development - not just in terms of manufacturing, but in terms of I.P. development and product innovaiton for export.

    No-one in Australian industry is looking for a free ride, just an opportunity to participate at the right time in our own country's programs. A little encouragement by companies like the NBN to get the multi-national suppliers to involve Australian industry would at the very least give us a chance to demonstrate our capability in a timely fashion so we could be chosen to participate on our own merit.
    jamiesmith2303