NBN switches to performance-based contracts

A new contract model initially signed with five contractors to roll the NBN out to 4 million premises will place greater emphasis on contractor performance.

The company formerly known as NBN Co and charged with rolling out the National Broadband Network (NBN) across Australia has restructured its contracting model, with the first cache of construction partners signed up consisting of Downer, Transfield, Visionstream, Fulton Hogan, and WBHO.

The total value of the contracts was not disclosed by NBN, with the contracts set to cover 4 million premises using one of fibre to the node (FttN), fibre to the basement (FttB), or fibre to the premises (FttP).

However, Visionstream revealed that its contract is expected to be worth greater than AU$270 million over five years. It also said that it expects additional works to be issued over the lifetime of the contract, and that it would be rolling out FttN and FttP to premises in New South Wales, Victoria, Queensland, and Tasmania.

NBN said the new contracts were a result of extensive industry consultation, and would provide greater flexibility, competition between partners, and pricing based on delivery.

"What this means is that the performance of our construction partners, the quality of their work, and their adherence to safe work practices will determine how much additional work they will receive," NBN CEO Bill Morrow said in a statement.

"We have worked closely with the industry to reduce the complexity of our contracts to make them easier to administer and to reward good work as we gear up to accelerate the rollout."

Last month, Morrow said the company is on course to pass 1 million premises serviceable and hit AU$150 million of revenue by the end of June. In its latest results, the company posted a AU$1.38 billion loss for the nine months ending March 31, 2015, bigger than the AU$1.145 billion loss in the previous year.

In this year's federal Budget, NBN had AU$2.6 billion of funding brought forward over the next two years, with no further funding allocated beyond 2016-17.

While NBN is looking to speed up its fibre-to-the-node rollout, it has said that it will only guarantee 12Mbps on FttN services while it is transitioning customers in each area from ADSL.

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