Auditor: Labor in the clear over FTTN tender process

The Commonwealth Auditor-General has responded to accusations by Opposition communications spokesperson Bruce Billson that the tender process for the national fibre-to-the-node (FTTN) network has so far been unfair and anti-competitive.

The Commonwealth Auditor-General has responded to accusations by Opposition communications spokesperson Bruce Billson that the tender process for the national fibre-to-the-node (FTTN) network has so far been unfair and anti-competitive.

Auditor-General for Australia, Ian McPhee, issued a reply to a letter sent by Billson earlier this month &mdash calling for an urgent probe into the tender &mdash stating that the Federal government has no case to answer at this stage of the process.

"To date, and recognising that it is early in the [national broadband network] procurement process, nothing has come to our attention to suggest that the arrangements put in place do not provide the basis for the RFP (request for proposals) process to accord with the Commonwealth Procurement Guidelines," said McPhee in the response.

Billson wrote to the Auditor-General on 6 May, requesting an "urgent, full and thorough investigation" into the RFP arrangements for tender of the national FTTN network, saying he had been compelled to do so in light of "serious stakeholder concerns".

In his initial correspondence with the ANAO, Billson voiced particular concerns over the possibility of the government accepting non-compliant bids for the network. The Auditor responded: "Amendments to the RFP would be required for non-compliant bids to be accepted. The ANAO notes that the RFP provides the flexibility to make such amendments, should the government choose to do so."

Although the Auditor's response to Billson's letter has led to no action or further questions being raised around the government's activity in relation to the bid, Billson today claimed that his letter had gone some way to pressuring Communications Minister, Senator Stephen Conroy into extending the deadline for bids.

"Clearly our approach to the Auditor-General has occasioned some action already," he said.

Today's report comes after some stakeholders and industry observers have expressed their doubts recently that the network will be built for the government's assigned funding of AU$4.7 billion.

David Kennedy, research director at analyst firm Ovum, said today he had been "sceptical" about the AU$4.7 billion figure for some time, responding to Telstra CEO Sol Trujillo's claim that the total cost of building the network could end up as high as US$14 billion.

"In one of life's little ironies, the new Labor government originally costed its proposal on the basis of Telstra estimates made back in 2005 ... but there is a 'long tail' of towns and settlements that will be very expensive to provide with fixed broadband, and it certainly amounts to more than 2 per cent of the population. The proposed level of investment and the project's objectives don't seem to add up," said Kennedy in a research note.

The analyst also echoed the Auditor-General's calls for an ongoing flexibility to the tender process, and claimed that fixed infrastructure "isn't necessarily the best solution everywhere".

"The government's tender process can accommodate these issues, provided that the 98 per cent FTTN target doesn't become an end in itself. A little pride may need to be swallowed, but the desired result is still achievable with a flexible approach," he said.