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Two years after canceling a contentious $206 million contract to upgrade Metronet’s communications network, the West Australian (WA) government will pay Huawei and engineering firm UGL $6.6 million.
On Tuesday, Transport Minister Rita Saffioti said in parliament that the government had also signed a $327 million contract with Nokia and Networks Australia, which is $121 million more than the Huawei arrangement.
Saffioti said, “After significant negotiation, both parties agreed that Huawei could not fulfil its contractual obligations and the contract was terminated in September 2020.”
“The Public Transport Authority (PTA) has recently reached a termination settlement of $6.6 million with the Huawei–UGL consortium.”
The government’s management of the deal, which the public eventually had to pay for, has generated charges of incompetence from the opposition.
Huawei was pulled from the contract by the PTA because trade restrictions imposed by the US on the corporation triggered a force majeure event under the contract, allowing both sides to walk away with minimum losses.
The agreement was to build 80 mobile towers in a cooperation with UGL along Perth’s railway corridors to modernize Metronet’s aging analogue communications system, with work expected to be finished by the end of last year.
The network would be used to communicate between train drivers and Metronet’s headquarters, but it could also be used to support body-worn cameras, CCTV, and real-time asset tracking.
After Australia’s 5G network excluded Huawei technology due to security concerns, the WA contract came under even more scrutiny.
The corporation was accused of covertly accessing mobile networks around the world through backdoors designed for use by law enforcement agencies.
A UK parliamentary inquiry later revealed evidence of Huawei and the Chinese Communist Party (CCP) colluding. Huawei denied being influenced by the CCP.
According to Saffioti, it was “extremely unfortunate” that the project was caught up in a China-US trade dispute.
She said, “We still need to procure a new digital radio network for our rail system, particularly as it is required to enable the rollout of the train control and signalling project, with that project currently under procurement.”
“The high-capacity signalling program of works will replace the existing Transperth rail network signalling system with one that allows for increased service frequencies to meet the rail demand that is forecast under long-term transport planning.”
‘Shrouded procurement’
Shadow Minister for Government Accountability and Procurement Tjorn Sibma accused Saffioti of “incompetence” in handling the Huawei contract.
Sibma said, “Minister Saffioti was warned about potential problems the Huawei-UGL consortium might face in delivering the contract by the opposition, the then coalition and industry experts. Those prescient warnings were ignored and the obvious problems were denied, until reality bit.
According to the shadow minister, WA taxpayers were ultimately on the hook for a bungled procurement procedure.
“The procurement was shrouded in an exceptional level of secrecy which has become a hallmark of the McGowan Government. It was never formally announced, it apparently never went to cabinet, but access to the relevant documents was denied on the basis of cabinet confidentiality.”
Meanwhile, Nokia and Telstra–Ericsson began a private tender procedure in September 2020, with Nokia emerging as the winner.
According to Saffioti, the new system would be put into service in phases starting in 2025.
The $121 million increase in pricing for work under the Nokia contract was attributed by a Saffioti spokeswoman to decreased competition in the worldwide market for such expertise, as well as price and material escalations.
Saffioti said, “The project requires specialist technical expertise, with the market of suitable technology providers restricted over the past few years, as a result there is less competition and little downward pressure on prices.”
“Additional factors that have impacted the overall cost of the contract include extending the duration of the contract, and price and material escalations over time.”
Jaw de Guzman is the content producer for Comms Room, a knowledge platform and website aimed at assisting the communications industry and its professionals.
