Transfield finally coughs up

UPDATE Monday / Sept 9: Transfield Services says it has paid contractors working on the Ultrafast Broadband (UFB) rollout - whom Labour claims were owed up to $10 million.

"We paid all the outstanding payments to UFB contractors on midnight on Friday," Transfield group general manager, communications David Jamieson tells NBR ONLINE.

Mr Jamieson says a software glitch was a "minor contributing factor" in the Australian company's failure to pay contractors in New Zealand.

What was the major contributing factor?

He won't say.

How many contractors were involved?

He won't say.

Was Labour ICT spokeswoman Clare Curran in the right ballpark with her claim $5 million to $10 million was owed after weeks of missed payments, some dating back to July?

He won't say.

Is Transfield confident the issue won't happen again?

"We're working very hard to prevent any recurrrance of this issue," Mr Jamieson says.

He adds, "Obviously the subbies are pretty important to the work we do and we're very sorry for the inconvenience and dispruption caused." 

One subbie told NBR that some Transfield is letting some subcontractors go in Christchurch, saying it's cheaper to do the work inhouse.

Chorus won around 70% of the 10-year Ultrafast Broadband (UFB) rollout, backed by $1.35 billion from the taxpayer, and contracted around 10% of its work to Transfield, which in turn hired subcontractors.

Transfield also won 100% of the engineering work for two other UFB contract holders, Enable (responsible for the Christchurch rollout) and Wel Networks' Ultrafast Fibre (responsible for Hamilton, Tauranga, New Plymouth, Nelson and Rotorua).

Transfield treatment of subcontractors unacceptable - Chorus  boss

UPDATE / Friday Sept 6: Chorus says it has fully paid Transfield for all work undertaken and has no outstanding payments due - confirming it is not the broken link in the chain of events that has seen sub-contractors on the Ultrafast Broadband (UFB) rollout go unpaid. 

Labour ICT spokeswoman Clare Curran says $5 million to $10 million is owed.

Transfield blames a computer glitch, and says its NZ contractors will be paid within two business days. 

“We are dismayed that this situation has arisen, and in particular we find the treatment of the sub-contractor community to be unacceptable,” says Chorus CEO Mark Ratcliffe.

Sub-contractors are a critical part of that eco-system, the Chorus boss says. They have invested in equipment, people and training and taken risks and don’t deserve to be treated in this manner.”

However - publicly at least - Chorus has stopped short of threatening to terminate Transfield's contract.

But Mr Ratcliffe did tell NBR ONLINE that Transfield's contract is open-ended and performance-related. If it doesn't come through, Chorus "always has other options". The most important thing was to maintain subcontractors' confidence.

Transfield was involved in a "tough game with low margins," the Chorus boss told NBR, but he had no reason to think anything other than the stated computer glitch was behind the payment delays."At the moment, we take what they say at face value," he said.

The CEO stressed Transfield is only responsible for 10% of Chorus' leg of the UFB rollout, with the balance of the work contracted to Downer and Visionstream.

"We're not as exposed as some people," he said.

Chorus is responsible for around 70% of the total UFB rollout. Enable (Christchurch)  and Ultrafast Fibre (Tauranga, Hamilton) have contracted all of their UFB work to Transfield. Both tell NBR they are concerned about the situation and have been in contact with Transfield - but that the situation is not holding up work.

Adams to Transfield: pay UFB contractors as soon as possible

UPDATE / Sept 5: ICTMinister Amy Adams says she has made it clear to Transfield Services that she expects the company to pay its contractors as quickly as possible.

Ms Adams, who is in the US on a trip to promote NZ tech companies, said in a statement,  “It is my expectation that Transfield Services should be looking to make these payments without further delay.

“Transfield Services needs to explain exactly why this situation has developed, what it is doing to resolve it and give an assurance that it will not happen again."

Ms Adams has asked Crown Fibre Holdings, which oversees the ultra-fast broadband (UFB) project on the Government’s behalf, to work closely with Transfield Services until the situation is resolved.

“I am advised that the issue with Transfield Services only involves a limited number of contractors. It is disappointing that this situation has occurred, and I have made it clear to Transfield Services through Crown Fibre Holdings that this needs to be resolved as soon as possible."

At what point will Transfield risk losing its UFB contracts?

That's a question for Chorus and other local fibre companies, Ms Adams tells NBR. Chorus did not immediately return a request for comment.

Earlier today, Labour ICT spokeswoman Clare Curran said “Hundreds of workers laying out broadband fibre around Hamilton, Tauranga, New Plymouth, Nelson and Rotorua have not been paid for weeks. They have been told by Transfield Services, which contracts directly with broadband networks Chorus and Ultrafast Fibre, that they won’t be paid until October, Ms Curran says.

“These involve payments of at least $1 million and likely much more." The EPMU says around $800,000 is owned.

“I understand Chorus lawyers are pouring through their contractual arrangements with Transfield. They don’t want to see themselves mired in another messy public PR disaster," Ms Curran says.

Transfield is subcontracted to carry out around 10% of Chorus' share of the UFB rollout (around 70% of the project overall) and 100% of Ultrafast fibre's share of the $1.35 billion project. It is also the prime contractor for Enable's UFB rollout in Christchurch.

Ultrafast Fibre spokesman Brett Morris tells NBR ONLINE, "It is not our place to comment on specific numbers of contractors who have down tools. What I can say is at this stage our six year programme of work, is not experiencing any significant delays. We are actively engaged with all subcontractors involved in an effort to mitigate any problems which might arise."

Transfield, which last month announced a $A250 milllion loss, saw its ASX listed shares fall 2.11% to $A1.29 in late trading.

The company said in a statement that it would update unpaid contractors within 48 hours.

UFB contractors down tools - report

Sept 4: Transfield engineers working on the Ultrafast Broadband (UFB) rollout have downed tools, according to a One News report. 

The workers say they weren't paid; Transfield blamed a computer glitch.

Labour ICT spokeswoman Clare Curran says more than $1 million is owed to staff.

Chorus won the contract to build around 70% of the UFB  network. In turn, the Telecom spin-offf subcontracted most UFB work to three Australian companies: Downer, Transfield and Visionstream.

Transfield is responsible for around 10% of Chorus' UFB work, Chorus spokesman Ian Bonnar told NBR ONLINE.

Mr Bonnar said Chorus knew no more about the situation that what was on the brief One News report.

A source close to Transfield told NBR the engineers were keenly aware of the company's tightening financial situation.

On August 28, Transfield reported a $A250 million annual loss, against a year-ago profit of $A84.8 million.

In April, Chorus renegotiated its UFB contracts with Downer and Visionstream, and said it was in ongoing negotiations with Transfield.

Chorus has said the 10-year UFB rollout will cost around $300 million more than anticipated, and has been looking to spread risk and return with subcontractors.

Transfield is also a subcontractor to Ultrafast Fibre, the Wel Networks-owned company that won the UFB contracts for Hamilton, Tauranga, New Plymouth, Whanganui, Hawera and Tokoroa. 

Ultrafast Fibre spokesman Brett Morris tells NBR ONLINE, "We are concerned but, at this point, there has been no affect to our business."

Transfield is responsible for 100% of Ultrafast Fibre's UFB rollout. How many of its contractors have downed tools?

"It is not our place to comment on specific numbers of contractors who have down tools. What I can say is at this stage our 6 year programme of work, is not experiencing any significant delays. We are actively engaged with all subcontractors involved in an effort to mitigate any problems which might arise," Mr Morris says.

Managers at Transfield have been put under pressure not to talk to outsiders, the source told NBR. The company could not be immediately reached for comment.

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