NBN signs new performance-based contracts

NBN Co has agreed on a performance-based contracting model with the Australian construction industry in a bid to increase the quality and speed of the rollout of its fixed-line network.

The first of the new contracts were signed with construction partners Downer, Transfield, Visionstream, Fulton Hogan and WBHO.

Together, the new contracts will cover around 4 million homes and businesses that are scheduled to be connected with fibre to the node, fibre to the building or fibre to the premises. Contracts with additional suppliers are also being negotiated and nearing conclusion.

The new contract terms represent a marked departure from the old commercial model which guaranteed large volumes of work to suppliers in specified states and regions regardless of performance but also placed on them a high administrative burden and no competition for that work. Instead, the new contracts offer flexible volume commitments, competition between delivery partners and pricing based on outcomes rather than inputs.

NBN CEO Bill Morrow said: “What this means is that the performance of our construction partners, the quality of their work and their adherence to safe work practices will determine how much additional work they will receive.

“We have worked closely with the industry to reduce the complexity of our contracts to make them easier to administer and to reward good work as we gear up to accelerate the rollout.”