NBN Co inks construction agreement with Silcar

Construction process for NBN appears back on track after tenders were abruptly suspended in April.
NBN Co head of corporate services, Kevin Brown

NBN Co head of corporate services, Kevin Brown

NBN Co has agreed on a construction deal with Silcar in preparation of a major fibre deployment for the National Broadband Network (NBN)

Silcar is a joint venture between electronics vendor, Siemens, and construction services company, Thiess.

The deal is worth $380 million over two years with an option for a two-year extension valued at $740 million, worth upwards of $1.1 billion in total. It was eight weeks of “intense negotiations” in the making and both parties will flesh out the details by June 17.

Silcar will play a part in fibre rollouts in Queensland, New South Wales and the ACT, covering about40 per cent of all construction activities for the next two years. Nine of the 9 second release sites are included in the project.

In April, NBN Co suspended all construction tenders with 14 companies due to dispute over terms and pricing. The company has acknowledged the tender process at the time, which involved a panel arrangement, was flawed.

“We have been involved in a long and difficult tender process with construction companies,” NBN Co head of corporate services, Kevin Brown, said at a press event.

“The process was suspended two months ago when it became clear we would not be able to deliver the construction of the network within the price range of our corporate plan.”

The contract with aligns with NBN Co’s corporate plan Silcar and puts construction schedules back on track.

“Even better, I can advise we are already in discussions with five contractors for construction companies who have agreed to participate in a concentrated bidding process,” Brown said.

NBN Co will assume the risk of infrastructure providers while Silcar has agreed to assume the risk of construction.

According to Brown, this is an “optimal balance” between terms of construction and the price.

NBN Co has released over 100 tenders to date with a total potential value of $7 billion.