One NBN contractor against the rules: Libs

Shadow Communications Minister Malcolm Turnbull has warned that appointing a single contractor for network construction on the National Broadband Network (NBN) may go against rules for public sector tendering.

"NBN Co may be considering appointing a "prime contractor" to construct the bulk of the civil engineering portion of the project. If the government and NBN Co do pursue such a strategy, they should do so in a way that adheres to the letter and spirit of existing rules and procedures for public sector tenders and procurement — all potential contractors should be invited to bid for the role in an open and transparent process," Turnbull said in a statement.

This morning NBN Co announced that it was halting the tender process on the construction work for its network, stating that none of the final five bidders had put forward a proposal that was in line with the price that NBN Co was expecting. The company said it was in the process of looking at working with another contractor outside of the final five.

Turnbull said that the failure of businesses to meet the expected costs of the project shows that the economics and the business case of the NBN may be unrealistic and unachievable.

"From the beginning of this vast and risky project, the Coalition and telecommunication industry participants have warned that construction costs were likely to blow out beyond the government's estimates. The government has also repeatedly been warned NBN Co would find itself in contention with the booming mining and energy industries for scarce engineering and construction resources," he said. "So it has come to pass."

Turnbull said today's revelation showed the need for the Public Works Committee to examine the $37.5 billion project, something the government has long opposed.