Silcar scores $1.1b NBN construction tender

Silcar scores $1.1b NBN construction tender

Summary: The National Broadband Network Company (NBN Co) has signed a two-year agreement with Silcar to construct the network in Queensland, New South Wales and the ACT in a deal worth up to $1.1 billion, following months of controversy due to the suspension of its original construction tender in April.

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TOPICS: NBN, Broadband
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The National Broadband Network Company (NBN Co) has signed a two-year agreement with Silcar to construct the network in Queensland, New South Wales and the ACT in a deal worth up to $1.1 billion, following months of controversy due to the suspension of its original construction tender in April.

"I'm pleased to announced that after eight weeks of intense negotiations with highly respected construction company Silcar, we've reached agreement to be rolling out our fibre-optic cable across Queensland, New South Wales and the ACT," NBN Co's head of services Kevin Brown told journalists in Sydney this afternoon.

"This represents about 40 per cent of all of our construction activity across Australia for the next two years."

Brown said that he was "delighted" that the price reached was in line with NBN Co's corporate plan, but said that the negotiations were not just about price but also about quality, risk allocation and the balance of payment terms. He said that prices were reduced for installing a pit and digging a kilometre of duct.

He said that the deal also clarified the use of existing Telstra infrastructure, and the access to power poles. The deal assumes that the $11 billion deal with Telstra to lease pits and ducts will be signed, according to Brown, and said that he expected the Telstra agreement to be finalised in the coming weeks.

The joint Siemens-Thiess company was originally one of the 14 companies bidding for the full construction contract that was suspended at the beginning of April. Brown said that none of the other contractors would receive compensation for NBN Co's decision to halt the tender process, but said that NBN Co is in discussions with a further five construction companies that have agreed to participate in a "concentrated bidding process" for the rest of the roll-out in Australia. This is expected to be finalised in August.

The Silcar portion of the roll-out will cover around 130 fibre serving areas and approximately 400,000 of the one million premises expected to be passed by fibre over the next two years. Silcar will be tasked with construction down the streets, building pits and ducts and installing the fibre to premises. The company had already been involved in the construction at the NBN first release site in Armidale.

The decision to move to a two-year contract, as opposed to the full 10-year contract that was initially proposed, was to provide greater certainty to Silcar, Brown said. He would not speculate as to whether the contracts were in time to avoid liabilities should the Coalition win the next Federal election and halt the NBN roll-out.

Silcar CEO Peter Lamell said that his company has the skills and a 2500-strong workforce that is up to the task of the construction.

"This is something that we have been doing for many, many years," he said.

Thiess Services will partner with Silcar to employ subcontractors to meet labour demands, and Lamell said that he is confident that Silcar could work with the unions to ensure that wages do not blow out beyond expectations.

Design work for this portion of the roll-out is expected to begin in August, and construction will begin in November with a full deployment expected by mid 2012.

Topics: NBN, Broadband

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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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26 comments
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  • The two-year contract gives the Government flexibility as well as political cover. It means that in 2013, before the next Federal election, the Government has room to move to negotiate a new, long-term contract - if there are unacceptable cost increases over the next two years, they can negotiate a new, better agreement without it being such an albatross around their neck for the election campaign. Or if things are within reasonable grounds, they can negotiate a long term contract in the leadup to the election, and announce it as the fruits of a successfully managed rollout.

    And if that happens, don't for a second think you'll be able to get away from Senator Conroy, wherever you go. He'll be everywhere, boasting about the Government's infrastructure credentials and switching on new NBN sites all over the country! Getting in the Coalition's face about how he's the can-do man, and they are the party of No.

    Smart move.
    Gwyntaglaw
  • Good to see the NBN is progressing in a tidy fashion. This latest development however must be devastating for the anti-NBN crusaders to hear. Progress like this makes it all the more harder for the coalition baboons to destroy all the good work NBNco is doing should they win the next election.
    Hubert Cumberdale
  • Agree with you Gwyntaglaw,

    Silcar, take the money and run! Not much you can do in 2 years anyway. You can make a complete mess (not that you would) and nothing would change.

    Shame for the taxpayer though, but with all Labor projects, if your smart you gotta get money out of it in one hand, as you are loosing through the other as a taxpayer...
    Theguy-bbb4a
    • Was there an actual point you had there, Theguy? Silcar will be taking the money and... building a 21st century FTTP network. That's the thing about a contract - you don't fulfil the terms, you don't get paid. And the further two-year option on top is the dangling carrot to keep doing it right.

      It's good governance, it's accountable, and it's prudent. I can see why those things would enrage a full-time hater, but for the rest of us, it's very good news.
      Gwyntaglaw
  • The wireless portion would already have been done under the previous government and operating. People who would be using the wireless system do not have access to basic ADSL services at the moment. More ADSL2+ exchanges, some backhaul and 100m/bit cable in the big cities should be all the government should have done. Cost about $5 Billion. Big business would have paid to roll out fibre over the next ten years, now they don't have too Taxpayers are doing that!
    Foneguy-28998
    • Correct. OPEL would have delivered wireless and ADSL2+ broadband (and the associated fibre backhaul) to many regional/rural areas in 2009/10.... but when Cowboy took over 'management' he wanted something big and impressive (aka votes at the next election) ... result: regional/rural areas are collateral damage and get their connectivity 2-3 years late.
      FiberLover
      • Do you seriously think WiMax as they were suggesting would have cut it?

        Don't forget too, Telstra were fighting a fierce campaign to stop those rotten foreigners [sic] from Singapore, too...

        Also, you guys are quick to ridicule the NBN for inaction... But after just one year NBNCo had been created, top Executives such as Mike Quigley contracted, trial sites announced and rolled out. Test sites were operational in Tassie some 15 months after the government's announcement.

        OPEL was announced and did SFA for about 14 months (from memory)...and then were canned, yet you laud them?

        But I guess if Abbott wins the next election he can rekindle both Telstra's FTTN monopoly in urban areas and also OPEL... thus returning Australia's comms status quo to Sol's nirvana, circa 2005-2006...wow...!

        Save us Mr. Turnbull...use you powers for good instead of evil...LOL!
        Rizz-cd230
        • The OPEL project had designs done, and sites were about to be implemented when the new government canned it! I would now have at least 12mps internet rather than the 1mps connection I have that only works when the sun shines! The government have paid twice the money for the spectrum from Austar, than OPEL were paying for it! I live 200 meters from an Exchange that Telstra will not install ADSL into. Thanks Telstra for nothing!
          Foneguy-28998
          • From Grahame Lynch -

            "Meanwhile, Opel itself displayed spectacular public inactivity. This included a failure to appoint dedicated management, failure to obtain a carrier license, failure to provide any meaningful detail to its potential clients on service or price and a perpetual 'come back soon' posting on its web page!

            Then there were the confessions from an Optus manager just prior to the election that he could- n’t talk about Opel because it didn’t exist in any form other than a trademark..."

            Please I sympathise with your plight but to think OPEL was the knight in shining armour well...!
            Rizz-cd230
        • From what I see of WiMax it would have been fine (even if it would have been about the 6th network in the world, so some hiccups initially). Regardless there were SLAs, and if they weren't met Optus would have had to fix it.

          Telstra were being Telstra, they were staring down the the barrel of a competitor about to get a whole lot bigger. The real shame was the 100's of Optus DSLAMs that would have gone into Telstra exchanges all over the country, supported by Govt mandate ... a shakeup Telstra needed badly. The couple of thousand kms of fibre also would have helped introduce Optus mobile services and competition to many rural areas. (I think if they could do it again, Telstra would prefer the OPEL model to NBNCo and the forced split.)

          Forming a company from scratch isn't easy for sure, but they have bought industry experts and telco people as necessary... lots of taxpayers' money and eager vendors certainly oils wheels.

          As Foneguy says, Optus was close/finished detail design phase, with new technology (WiMax), plus trying to sort the issues of a roll out of DSLAMs into a lot of buildings owned by a hostile landlord.

          When/if the Libs win the next election Telstra will have been split... hopefully the retail drivers should have abated and they will play nice with whoever the Govt tells them to play nice with.... and the last mile delivered with the technology and performance that most users need.
          FiberLover
          • http://www.theaustralian.com.au/australian-it/decision-day-close-for-opel-project/story-e6frgalx-1111115937592

            A URL from 2008 from our favourite (The UNAustralian) with a small part dedicated to our topic...LOL -

            "Further doubts have been cast on the efficacy of the wireless broadband technology WiMAX, which Opel plans to use for its network.

            Last week in a major local blow to the technology, Queensland WiMAX provider Buzz shut up shop and its chief executive slammed WiMAX at a conference in Bangkok.

            Buzz chief Garth Freeman described WiMAX as a "disaster" and said its non-line-of-sight performance was non-existent beyond 2km from the base station, according to Communications Day newsletter.

            Mr Freeman said WiMAX's indoor performance decayed at just 400m and it had poor latency that made it unsuitable for many internet applications, including voice..."

            All water under the bridge now I suppose...! Although I do find it interesting that you deem hiccups ok for WiMax, but not the NBN?

            Cheers
            Rizz-cd230
          • Oh yes the OPEL debacle, I remember this, funny how the coalition wanted to just hand over almost 1 billion of taxpayers dollars for that POS... I wonder if a CBA was ever done lol. Good thing it was dumped can you imagine wasting all that money and having absolutely nothing to show for it just to get the same speeds we have right now. What a bunch of clowns, it sends shivers up my spine to think this shortsighted network almost got the green light.
            Hubert Cumberdale
          • Lol.... I remember seeing that back then.... Mr Freeman needed to brush up on his radio propagation theory (or the vendor oversold).... at 2GHz+ I am not at all surprised that its NON-line-of-sight performance was non-existent beyond 2km from the base station..... hills and forests and lots of buildings bugger up UHF (and up) signals something chronic.
            FiberLover
          • Oh... and I have never deemed "hiccups" are not acceptable for the NBN.... quite the opposite, those with experience expect time and cost overuns on such a large complex project... which many pointed out in previous posts here months ago, to much derision.

            What I have objected to is a Minister that has said there will not be any of these things, apparently made no provisions, and he is now being proven wrong so early in the project. It shows Cowboy's lack of experience in IT&T... however, Quigley should have known better.
            FiberLover
  • 400,000 for $1.1 billion. Given brownfield fibre footprint is 8 million+, that'll make it $20 billion+ on total fibre construction costs isn't it ?

    I thought the failed tender target was about $12 billion or so for the whole lot
    AndersonL-e0a14
    • Of course the answer to that is to just quote a different media report to get completely different numbers: http://delimiter.com.au/2011/06/01/nbn-co-inks-wireless-construction-deals/

      "Worth $380 million over the next two years, with the option to extend for a further two years with an additional value of $740 million, the deal will see Silcar and contracting partners roll out the NBN in NSW, Queensland and the ACT.
      It represents almost 40 percent of the national construction activity planned for the NBN over the next two years, and is slated to see about 390,000 premises receive services."

      Which using your maths would put the labour costs at $8billlion.
      anonymous
      • Hi DC,

        The total premises encompassed in this section of the roll-out is 400,000. The facts I have written are accurate.

        Regards,

        Josh Taylor
        Josh Taylor
        • How confusing. Is the contract for 400k premises over the first 2 years or for 400k over total $1.1b over 4 years? If it's the latter, how many premise are covered in the 2 year/$380m roll-out that NBN Co has committed to? The NBN Co press release does not contain that information so presumably it comes from elsewhere.
          anonymous
  • Hubert I see you are maintaining your low class insulting language when speaking of any person who does not agree with your opinion.

    All should wish Senator Conroy and the NBN Co well in their mammoth task of rolling out the NBN on time and on budget. I have, some time ago, told Senator Conroy that if he can deliver the NBN to Australians he will be remembered as Australia's greatest builder and would outrank the great R.F.X Connor whose vision for Australian infrastructure is legendary.

    Let every Australian now hope that the need for blackmail and threat on Australia's Telstra will now be a thing of the past as Telstra will be (with the sale of its Wholesale Division) on a level playing field with every other RSP. To ensure that the NBN project proceeds, if a change of Government should happen, Senator Conroy must put in place very large penalties if the NBN is cancelled.
    sydneyla
    • "Hubert I see you are maintaining your low class insulting language when speaking of any person who does not agree with your opinion."

      I did no such thing. Point out where in my post I insulted anyone here that disagreed with my opinion. No one has even responded to my post so you must be imagining things.

      As for the rest of your post if anyone should be remembered as Australia's greatest builder it should be Quigley not Conroy. This is the guy that is doing the hard work only to have Tony Rabbitt and his zoo crew chums run a smear campaign on him.
      Hubert Cumberdale