Huawei dumped from Western Australian train radio contract due to US trade restrictions

Despite earlier assurances that it would be able to deliver on its contract, both parties have agreed to end the deal.
Written by Chris Duckett, Contributor
Image: Asha Barbaschow/ZDNet

The contract between Huawei Australia and UGL (HUGL Consortium) and the government of Western Australian to provide the state with a digital radio system for its trains has been mutually abandoned by both parties, Minister for Transport; Planning Rita Saffioti said on Friday.

Under the Radio Systems Replacement deal, Huawei was responsible for the design, installation, and commissioning of a digital radio solution along Perth's 180km rail network, and was set to use an LTE network across the spectrum holdings of the WA Public Transport Authority (PTA).

Huawei and UGL were set to maintain the network for an initial five years, with a further five-year option.

However, the machinations of the trade war between the United States and China have ended the contract.

"Trade restrictions imposed by the US Government on Huawei Australia have created a force majeure event under the contract, which the parties have been unable to overcome," the WA government said.

In May last year, assurances were given that the project would continue, but restrictions imposed in August put paid to that idea.

"The state government has decided that if the current relationship with the HUGL Consortium is maintained the measures required to try to overcome the force majeure event would result in unacceptable uncertainty around the total cost of the project, final completion time, and no guarantee that the proposed solution would be effective. This decision will also ensure the state complies with US trade restrictions," it said.

"The PTA and Huawei Australia have therefore mutually agreed to not continue the current arrangement."

WA is now working with the HUGL Consortium to transition the contract and move the switch-off of its analogue radio spectrum from May to "beyond 2021". "The PTA will continue its plans to deliver a new digital radio system for our expanding public transport system," Saffioti said.

"It is extremely unfortunate that the state government's project -- which is limited to a radio network for train drivers and transit guards -- has been caught up in the ongoing trade dispute between the US and China.

"Given the trade dispute, and the current economic and health crisis facing the world, the PTA has recommended a fresh approach for the radio replacement project."

In June 2018, Saffioti said federal government agencies had advised they were not fazed by the prospect of Huawei winning the contract.

Saffioti said the state government had contacted federal agencies to "quadruple check" if there were any security concerns.

"We have been in constant dialogue with the federal government," she said at the time. "We're making sure the federal government is entirely comfortable with the process.

"We can only take the advice that we're given from those agencies."

In the months that followed however, the federal government banned Huawei from 5G deployments in Australia, replicating the ban imposed on the Chinese giant for supplying equipment to NBN in 2012.

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