Member log in

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.

The Sydney-based Transfield has not returned NBR's calls.
 

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.

ckeall@nbr.co.nz

More by Chris Keall

Comments and questions
25

My experience with Transfield involved multiple offices sending me inexperienced inside plant technicians to do outside plant broadband work, then having their managers getting angry and defensive when I asked them to send their inexperienced, untrained crews home.

I wonder if anything has changed in five years?

Nope. It hasn't.

similar occurrences all over the country some unskilled people hired to do this ufb, skilled and seasoned people are getting shafted especially in copper its not right.

It takes 3 months plus to get DFAS and 6 weeks to get UFB tails in Dunedin. UFB is still a crock.

Thanks for the detailed and concise report. So much better than the train crash on National radio this morning.

Sounds like Transfield is going the way of Mainzeal?

Unpaid contractors is almost always a symptom of core funding issues that are already out of control.

Hard hats on, take your tools home subbies.

I wonder if the word 'owned' here should be owed instead?

The lawyers are "pouring through contracts"? Could get messy.

Not just UFB not getting paid by Transfield, maybe more going on with that company than a 'computer glitch'

All i can say is we still havent been paid from transfield..gggrrrrrr!!!!!!!!gd enough to do work gd enough to GET PAID!!!!

Why should the government be demanding these subcontractors (unsecured creditors) should be getting paid immediately? Did they make the same demands when Mainzeal or any of the other major contracting companies went out of business owing their subcontractors millions? ALL subcontractors should be treated equally and preferably fairly. Perhaps the banks should stand behind the subcontractors in the payment queue since they prop the head contractor up while failing to allow the subcontractors to get further into debt.

Chorus screws all of these contractors mercilessly on price to the extent that locally owned companies like Cabletalk and GDC went to the wall. The Australians pass this pressure on to the subcontractors. Everyone's cash flow is precarious and their margins non-existent. The guys who actually do the work suffer most of all.

Presumably Chorus is ultimately answerable to the government for this monumental stuff up. "We did such a great job putting up such a low price proposal that everyone's gone bust and we can't finish the job."

Totally agree with you.
With such a substantial loss, Transfield has no other choice but to keep on delaying payments.
High time the NZ Government steps in before all hell break loose and more desperate "domino effects start to snowball".

The Construction Contracts Act was introduced in NZ to protect subcontractors from rapacious main contractors.

Let me guess, the UFB contract will have been written by lawyers to limit risk to Chorus and will have no value in bringing Transfield to order.

apprentice here, thought i would learn a trade but i feel let down by Chorus as this situation can only happen from the top its the allocation of funds in a fair and sustainable manner we are being drip fed, all companies are guilty of creating self destructive business models and contracts to secure work but its come at a cost, any business minded person will analyze this situation and see the way the revenue is generated, any moral person will see the obvious detachment with the duty of care and good faith concepts between client to contractor, why do we need so many middle men when chorus can function much more efficiently as the sole employer, it would get a finger on the pulse, have a more viable and dedicated team of techs in both NGA and copper, contractors(the subbies) can run safely at better rates and keep the sustainability and skill in this country, why have 3 aussie companies fight over scraps?, its a arms length sham and it will get worse before it gets better, keep an eye on all the companies its like cloak and dagger with these people, im right there in the front line and im being shot form all directions even my own side, great work chorus for looking after your own and leaving us out in the cold, sorry for the sarcasm im just frusted.

You make a great point. Chorus would do better to hire their own guys and/or manage subcontractors themselves. Makes perfect sense in a small market like nz but chorus no doubt think they're really smart to outsource because that's what big companies do.
We mustn't forget that chorus is really the same old telecom managers with a flash new logo and new business cards.

yeah i know, its sad when a business chooses a model that lacks morality and the human factor, many say the phrase " thats business" as a way of justifying there actions but sadly we are human and the detached business mentality does create a platform for profit but also a byproduct of poverty for anyone directly and vicariously effected, the CEO of Chorus is knowledgeable does he have the power and heart to just say hey lets change how we operate and be a company synonymous with the kiwi way which to me is doing it right, valuing individuals and creating sustainability, these concepts are a reality if they so choose it, I wont accept the world is dog eat dog it can be dog helping dog, the rules of the jungle should stay i the jungle, just my thoughts on this matter.

then we need new blood leading our industry, the old managers have had there time and proven to be efficient at feathering ones nest, with great power comes great responsibility, we need the responsibility part to be taken seriously, anyone that says the phrase "that's business" as a justification for there actions clearly has no concept of these 3 words, integrity, honor and respect these values if adhered to prevent a business mind from deviating to underhanded tactics, i think a new law should be introduced that restricts the conduct of a company to uphold these values in any model used, instant change with sustainability built it......just my thoughts.

We are consultants that work for a SOE in Wellington. Transfield are a contractors for this SOE. From time to time, we are commissioned to perform consultancy work for the SOE, but are paid by Transfield.

Transfield are CONSISTENTLY late in paying us even though they have been paid by the SOE. On average payments take around 2 to 3 months.

Lots of ticket clippers in this chain of govt. lolly scramble ...

... not a lot of a tickets though eh?

Check out the company website, did it, does it live up to its stated values ...yeah right

There goes the brand.
Transfieldservices.com states
OUR VALUES
Integrity - Do what’s right
we care for each other’s well-being and safety
we take personal responsibility and are accountable
we are open, straight-forward and honest, and
we treat everyone fairly, with respect and build trusted relationships.
Spot the difference...........

Computer glitch, What a load of rubbish. I have being waiting 6 mths to get paid by transfield. As have many other roading contactors. It has got so bad that many contractors are refusing to work with them.
Transfield are trading insolvent. It is not a computer issue as they have been picking and choosing who they will and who they will not pay.

to many people in positions of power and responsibility that are in it for the wrong reasons and conducting themselves poorly out of the public eye, keep it in NZ, look after your staff and they look after you, business exists for profit but profit is made by people therefore people should be valued, the world has some scary people in high positions making poor decisions, we need laws to cover contractors they are vulnerable and have next to no rights which has been exploited/abused like an Achilles heel

the transfield situation is alot worst than we all care to think about, they are obviously well behind in all areas - UFB, roading etc, all we can do is contact their principals and voice our concerns. the transfield MO is pretty sick, their staff cannot give you an answer, or do not pick up the phone or blatantly lie
the computer glitch - another serious amount of corporate cow manure!