Just over a week ago Kiwirail made a quiet announcement. Without any fanfare it had surprisingly extended the number of bidders from 4 to 10 for the $500m of Govt money to build trains for Auckland’s electrified system.
Now that might not have caught attention, except that an independent group of people led by an Aucklander Danise McEvoy had several months before been charged with deciding on who the short-listed bidders would be based on a rigorous process. They had announced a group of four in July.
Yet inexplicably on 3 September, Kiwirail changed the goalposts and when the RFP was announced six more companies were included (several of which I understand had been excluded first time round). The big question is why? And who will gain? I suspect the original four won’t.
In his media release Kiwirail CEO Jim Quinn said the number had been increased because:
“in extending the number to receive the documentation from an initial shortlist of four, we have reflected on the critical importance of securing the best possible whole of life outcome taking account of quality and cost.”
Whatever that means! Despite him claiming otherwise, it’s my understanding that the six new companies did not meet KiwiRail’s original qualifying criteria.
I also understand that at least once of the four companies on the original short list are considering their options given the change in the bidding process. (Update: that view has since been reinforced strongly)
And you’ve got to admit it looks pretty damn odd. Even dodgy. And just who decided to include the six new bidders?
They are:
- CSR Zhuzhou Electric Locomotive Co Ltd The Chinese company was founded in 1936. In 1958, ZELC successfully developed and manufactured the first main line electric locomotive in China. In 1978, it switched to electric locomotives. It calls itself the main development and manufacturing base of electric locomotives in China.
- CSR Nanjing Puzhen Ltd. It build this high speed train in time for China’s Olympics.
- UGL Rail Services Limited – the largest end-to-end rail technology solutions provider/integrator in the Asia Pacific region, and Australia’s largest supplier of outsourced asset management and lifecycle engineering services. Its clients include RailCorp in New South Wales, Yarra Trams in Victoria, MTR Corporation in Hong Kong, Queensland Rail (QR) and Pacific National (PN).
- a consortium of Japan’s Sumitomo Corporation and Nippon Sharyo Ltd,
- China’s LORIC Import & Export Corporation Limited and
- Downer EDI Rail Pty Ltd (which has been producing passenger vehicles for use throughout Australia since the mid-1800s).
Thankfully there’s a blogger in Auckland called Jon C who writes a blog called Aucklandtrains and pays pretty close attention to this stuff. He points to increasing speculation about China chasing infrastructure work in New Zealand, especially after transport minister Steven Joyce and prime minister John Key both visited China recently. The NZ Herald has written about this. So has the ODT. You’d think it would be a bigger story. Not sure why the media haven’t hopped into it more.
Last Thursday, my colleague Darren Hughes asked why:
“At the eleventh hour, KiwiRail decided to increase the short-list of prospective tenderers for a $500 million contract to build Auckland’s electric trains doubling the number of interested parties and lessening the chances of a successful Kiwi bid.
“Steven Joyce’s latest move as Transport Minister has been described by the industry as ‘mind boggling’ especially when figures released today show manufacturing is at a 10 year low.*
“This bizarre move raises questions about the integrity of the tender process, the priorities of this government and the transparent nature of the Minister’s dealings.
You’ve got to ask yourself why the govt (and I bet it wasn’t just Kiwirail) made the decision to include four more players in the Auckland train bid. Isn’t that intereferring in a tender process?
Given this development, just what chance does a substantial NZ build have? Is there a preferred bidder? Is it going to be a largely overseas build? What about Kiwi jobs?
I reckon the government needs to be pretty careful here. The media may not be watching closely (yet) but there’s a bunch of Labour MPs, industry reps and Chambers of Commerce who are, who care about Kiwi jobs and the sustainability of Kiwirail’s mechanical division and our rail engineering capability in this country. Because it’s not just Kiwirail jobs at stake. There’s a wider engineering industry. They’re Kiwi jobs.
And it’s NZ’s reputation in being able to run a credible tender process.