Chandler explains why outside company got $30m tender

p2006PeterChandler2By ERWIN CHLANDA

 

Minister for Infrastructure, Peter Chandler (pictured), has explained why a $29.6m Alice Springs hospital tender has been awarded by the NT Government to Sydney firm Lahey Constructions Pty Ltd instead of a local company.

 

He said later yesterday in a statement to questions from the Alice Springs News Online: “The tenders for the contract were evaluated by a panel in accordance with the assessment criteria and the NT procurement directions.

 

“As a result of this process Lahey were assessed as offering the best value for money outcome. The assessment criteria included price, local development, capacity, past performance and timeliness.

 

“Lahey does not have a presence in Alice Springs but it will be setting up a project office in Alice Springs for the contract.

 

“They have previously undertaken works in Alice Springs and sourced material and employed local subcontractors for that contract.

 

“The current contract requires Lahey  to develop an industry participation plan and Indigenous participation plan.

 

“These plans are aimed at creating opportunities for local development and engagement in the project,” Mr Chandler says.

 

“I state from the outset that Alice Springs firms have won Darwin contracts in the past and will most likely in the future.

 

“The public tender process ensured that all appropriately CAL registered companies could submit an offer.

 

“The tender assessment process determined that the best value for money outcome for the NT was to award the contract to Lahey.

 

“Whilst Lahey are the appointed managing contractor, they are required to engage subcontractors to undertake the actual construction works. Local subcontractors in Alice Springs will have an opportunity to tender for the subcontract packages.

 

“Lahey does not have outstanding performance issues from previous works,” Mr Chandler said.

 

Lahey did not respond to a request for comment from the Alice Springs News Online.

 

 

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12 Comments (starting with the most recent)

NB: If you want to reply to a previous comment, start your comment with this notation: @n where n is the number of the comment you want to reply to.
  1. Sean
    Posted May 27, 2015 at 4:41 pm

    Agreed “The Barkley ‘Magpie” yet the NT Electoral Committee is too gutless to do anything about it.

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  2. Davo of Alice
    Posted May 16, 2015 at 10:07 am

    Hey, you mob, are you overlooking the new Supreme Court building being built and owned by local Company Sitzlers, also the new Police HQ in the Greatorex Building, local company Asbuild.

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  3. Emma
    Posted May 16, 2015 at 7:47 am

    Everyone is looking after themselves and why shouldn’t the government get the best deal for the taxpayer.
    You want to see a fine example of supporting local go and watch the parcel hatch at the post office for a few minutes to see the support local campaign.

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  4. Fred the Philistine
    Posted May 14, 2015 at 7:14 pm

    I cannot see the problem. We have SA line markers and Victorian road re-sealers here because they are competitive. House building per square meter is twice the price as in other states. You need to sharpen you pencils. It is a competitive world.

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  5. LH
    Posted May 14, 2015 at 5:08 pm

    What, Chief Minister’s bestie didn’t get the contract? Well that’s a first.

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  6. Joel Olzomer
    Posted May 14, 2015 at 1:59 pm

    Peter, from a position of knowledge on the construction industry (being that I work in it), I can categorically say that your broad, sweeping statements in regards to construction mark-ups is completely and unequivocally incorrect.
    Your assumption that the locals were between a third and half more expensive is most likely very far from the truth.
    Perhaps in the 70s, 80s and even 90s, Alice Springs may have been seen as the town of milk and honey – however this is incredibly far from reality these days.
    Commercial building is incredibly competitive and margins are tight. Yes, Alice Springs (more broadly the NT) is a higher cost of living environment and naturally this results in higher input construction costs.
    Assuming that being based in Alice Springs is an advantage on such a large project is also incorrect. It is necessary to understand that Laheys are able to leverage lower input costs from their NSW based operations in a wide range of areas such as project management, regulatory management, office administration, financial control, office leasing … the list goes on.
    An Alice Springs company has the same requirements but pay for these in a higher cost environment.
    Residential construction is an area that may at times demonstrate prices higher than interstate – however this is a symptom of a nearly non-existent residential construction industry due to many, many years of very low levels of land release (this is an area where the Jo Bloggs may form the opinion of the “outrageous building costs”).
    The lack of a residential construction industry results in commercial builders taking on residential projects of which they do not specialise in (IE efficiency) to smooth out the highs and lows in the commercial / industrial sector which are exasperated by Government departments’ inability to output work in timely consistent manner.
    Much like the Australian ship building industry – Alice Springs construction companies are constantly having to de-tool then re-tool. In the instance of this hospital tender – it will create a de-tool scenario – resulting in higher costs next time – not lower.

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  7. Peter
    Posted May 14, 2015 at 11:25 am

    The NT has some of the highest construction costs in the country, houses, buildings, roads, home renovations – all at crazy high prices here in the Alice.
    The winning tender was probably 2/3 the price, half the cost wouldn’t surprise me and they are not even based here.
    Local companies have a huge head start being already located in the Alice but they are still asking much more that interstate competitors.
    Why should the Minister give a contract to overpriced, uncompetitive NT companies?
    This decision sends a message, and a timely one.

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  8. The Barkly Magpie
    Posted May 14, 2015 at 10:33 am

    I am sure Mr Chandler and his independent mates found 51 good reasons to award the contract to Laheys.

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  9. Observer
    Posted May 14, 2015 at 8:57 am

    There are many things wrong with the NT Procurement Process which has led local contractors to suffer a complete loss of faith in the system.
    Whilst that could be discussed all day, perhaps it is best to just find what is wrong with the Minister’s comments.
    • The assessment panel: In recent years there has been a degradation of any type of “independent” Procurement Review Board. Tenders are being assessed by a group of Government employees including the client who may preference a budget saving above local economic development.
    Further still, much of this work is completed in Darwin by people with little knowledge of Alice Springs. When a business case has been prepared by the project manager to recommend the tenderer – it has become common practice for people in Darwin procurement to substantially butcher these documents to such an extent that the successful contractor is changed (generally to ensure the cheapest, not the best value for money, tenderer is awarded)
    • The assessment criterion is made up of guidance notes and dot points that may be assessed against at the assessor’s discretion.
    There is no firm, quantifiable black and white policy document that clearly indicates how a local contractor can achieve or demonstrate a 10/10 score.
    In fact, achieving a score in excess of 8/10 is almost unheard of. Resulting in a large part of score simply being “unachievable.” These scores are then assessed against the only quantifiable part of the procurement policy – price. The result being, that more often than not, price wins – even when, such as in this case, price is only 30% of the “value for money formula” (Local development carried a 20% weighting).
    • A project office in Alice Springs will most likely mean transportable containers on site as per last time.
    • The Industry Participation Plans and Indigenous Participation plans are simply “box ticking” exercises that appear on most tenders – the NT Taxpayer will never know what expectations have been made and upheld.
    • A reference to Alice Springs winning a Darwin tender is irrelevant. Lahey is not an NT company – they are a NSW company.
    • I would argue that the NT Government was unable to adequately assess the past performance of Laheys – as “Contractor Performance Reports” have almost completely disappeared (this is not an official change – rather they simply are not done, this has been the case for about five years).
    • All profits for the Head Contract will be removed from Alice Springs and be returned to the company’s owner – in NSW. This is disastrous for the much needed private investment in our economy.
    • Can we please have confirmation that Laheys attended the mandatory site inspection on the 10th February?
    • This contract being awarded to an interstate company will put pressure on the entire industry as large construction firms will put a squeeze on contractors of smaller projects.
    In closing, NT based contractors have completely lost confidence in the procurement process. The situation has become so grave that many Government project managers have lost faith in the process also and have taken to recommending contractors contact industry groups and business groups to lobby the government about the procurement process.
    Well done – another complete failure of NT procurement with flow on costs to the long term viability of the Alice Springs economy almost too hard to quantify.
    The NT Government should be looking at all possible options to cancel this contract immediately, before the official contracts are signed.

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  10. Mark
    Posted May 14, 2015 at 8:26 am

    Alice needs some new players and the competition that will bring into the construction industry.
    Not a good look in the short term but perhaps better long term.
    Too few companies here who have grown used to scoring the contracts.
    Maybe they are quoting unreasonably.
    Come to think of it we need more competition across many sectors to lift service and check prices.

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  11. Steve Brown
    Posted May 14, 2015 at 7:47 am

    So is the Minister now claiming Lahye Constructions as a Darwin based company and on what basis?
    Would that be because it has an office there? Will there be monitoring / checking throughout the operational span of the contract to see that Lahye actually does use local Alice Springs based businesses for supply of goods and services?
    Personally I think that this decision reflects a failure on the part of the Minister’s department to properly define and implement a “Locals First” policy that truly reflects what is “Local” and I’m am talking “Territory Local”.
    This decision lets down the Territory, not just the Alice, by failing to gain the maximum benefit for the Territory from the tax payer’s dollar.
    While at the same time using our tax dollar to prop up opposition to home grown business!

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  12. John Luckman
    Posted May 14, 2015 at 6:02 am

    Sorry minister but you have been told a load of rubbish by your advisors.
    This contract is not about price as its an ongoing project managed contract.
    How much is Leahy allowed to charge the tax payer to set up what is required to for fill the contract where as if your advisors again had looked properly all the local companies that applied for this contract that tender for Darwin work have offices and staff located there.
    Again, minister, beware this will cost you and your colleagues government at the next election as it’s proved local means nothing, and as a liberal voter this decision has me turning and I can assure you I’m one of many throughout the Territory.

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