[LINK] Most Jingoistic NBN beatup yet

[Paul Bolger]

Foreign companies grab 82c in every dollar of NBN contracts
BY: ANNABEL HEPWORTH AND MITCHELL BINGEMANN From: The Australian May
23, 2012 12:00AM

FOREIGN-CONTROLLED companies have been awarded 82c in every dollar's
worth of contracts struck for Labor's National Broadband Network,
sparking warnings that local industry is being bypassed in Australia's
biggest infrastructure project.

The government-owned NBN Co has revealed that of $9 billion worth of
contracts it has signed, Australian-controlled companies have been
awarded $1.6 billion - or 18c in each dollar.

The figures have angered local industry, while opposition
communications spokesman Malcolm Turnbull said "the nature of the NBN
is obviously very anti-competitive and that tends to discriminate
against local suppliers".

"Also, the feedback we are getting is that the culture of the NBN is
very unsympathetic to the local industry and you can see they are
throwing their weight around like the big monopoly they have been
established as," Mr Turnbull said.

OPENetworks managing director Michael Sparksman - who has been
installing fibre networks in Australia for the past nine years - said
it was a fallacy that NBN Co needed to hand the bulk of its
manufacturing and services tenders to overseas companies.

"I'm very concerned with the amount that the NBN Co is spending with
foreign companies when there are capable Australian-owned and
operating companies that could do the work," Mr Sparksman said.

"In some cases we're talking about plastic boxes for God's sake. Why
is it that American and overseas companies have been awarded the
lion's share of contracts when there are companies here that can also
do the work?"

NBN Co revealed in questions on notice: "Australian-controlled
companies have been awarded $1.6bn contract value out of $9bn total
contract value awarded to date, or 18 per cent. It should also be
noted that the value of Australian content in all contracts to date is
$4.3bn."

NBN Co spokeswoman Rhonda Griffin last night argued that the
Australian content figure gave a "more accurate measure of the
economic importance of the contracts since overseas-controlled
companies are also spending money in Australia, investing in new
equipment, employing Australians and making a contribution to the
economy".

She said that NBN Co was working with industry to support local
involvement in the $36bn project and that "as we move from more
equipment-based contracts to service-based contracts like those with
construction companies, we anticipate the proportion of local content
to increase further".

The phrase "Australian content" refers to equipment and services
provided in Australia by Australian workers, irrespective of whether
this is done by overseas-controlled or Australian-controlled
companies.

NBN Co requires the winners of contracts worth more than $20 million
to guarantee local sourcing arrangements by developing Australian
Industry Participation plans identifying local small-to-medium
enterprises.

"Furthermore certain contracts include specific requirements for local
manufacture of certain equipment such as fibre optic cable after a
certain transition period from overseas supply," NBN Co says.

NBN Co says it is not requiring Australian Industry Participation
plans for construction or installation contracts as these are
inherently 100 per cent local, or for the supply of equipment such as
satellites as these have "unique" global sources.

In the questions on notice, NBN Co says that about half of current
contract values are for local content and this is "particularly
noteworthy given the heavy weighting in our initial procurement needs
for components and equipment".

"The proportion of local content is likely to increase significantly
as more service contracts are awarded, such as the construction
contracts, which by their nature are locally sourced," it says

The 18c figure is even lower than the 23c in the dollar revealed by
The Australian in October, at which point about $7.4bn worth of
contracts had been struck.

At the time, NBN Co said that about half of its contracts were
Australian content, but declined to provide a breakdown of contracts
awarded.