Chorus keeps relationship with Visionstream as it signs contracts worth $450m

Tuesday, 14 May 2019

Chorus said the tender process was 'highly competitive' but also that it had chosen partners that were 'not just the cheapest option'.

The E tū union has criticised broadband company Chorus for signing new contracts worth $450 million over nearly three years that extend it relationship with Australian contracting company Visionstream.

Visionstream is regarded as one of the strongest proponents of the controversial subcontracting model in telecommunications.

Chorus will reduce the number of contracting firms that make repairs to its copper and fibre networks and that lay ultrafast broadband in new areas from three to two, dropping contractor Broadspectrum, and retaining Visionstream and Downer.

Under the new contracts, Visionstream will cover Auckland and all areas north of Auckland, while Downer will be responsible for work in the rest of New Zealand.

**READ MORE

Chorus has signed contracts worth $450m, retaining contractors Visionstream and Downer, but dropping Broadspectrum.

* Chorus boss hasn't considered apology

* Chorus promises improvement after failing to prevent exploitation

* NZ boss of Chorus contractor Visionstream to leave company

* Allegations of bribery and 'improper behaviour' investigated**

The deal comes a month after Chorus admitted it had failed to prevent the exploitation of migrants in its supply chain and an acknowledgment that more than 100 firms involved in connecting homes to ultrafast broadband might have breached labour laws triggering action from the Labour Inspectorate.

A report Chorus commissioned from professional services firm MartinJenkins concluded Chorus had failed to sufficiently oversee the subcontracting model of its two prime contractors responsible for that work – Visionstream and fellow Australian company UCG.

The report said their practices were 'not sophisticated enough' to protect those workers further down the contracting chain from exploitation.

Chorus is understood to have concluded that Visionstream had since improved its systems.

But E tū union organiser Joe Gallagher said he was disappointed by the agreement Chorus had entered into, describing it as 'unbelievable'.

'We are extremely disappointed that Visionstream has had its network maintenance contracts reconfirmed in Auckland and Northland', given the Labour Inspectorate investigations, he said.

'This can only be seen as Chorus' way of telling the Government to mind its own business.'

Downer – which he described as a good company – would take on extra work under the deal, but at the expense of Broadspectrum, he said.

'It affects about 450 workers who will now be without a job. That is going to mean major upheaval. People will have to reapply for jobs and we will be working with Downer and Broadspectrum to facilitate that process,' he said.

Former deputy States Service Commissioner Doug Martin, who oversaw the MartinJenkins report, found that evidence was presented to Chorus' board three years ago that 'with hindsight' should have alerted it to the risks of migrants exploitation in its supply chain.

Those indications included customers telling the company that UFB installers were complaining about pay, and complaining themselves that the technicians were 'overworked and rushed' and were delivering poor quality work.

But faced with higher-than-expected demand for UFB connections, Chorus appeared to overlook early indications that working conditions for subcontractors were poor, he concluded.

Chorus chief executive Kate Mackenzie appeared to play down the criticisms of the board when the report was released and said it was time to look to the future.

The company said it would adopt 20 measures recommended in the report designed to prevent exploitation, and accepted a principle that all subcontractors working for the company should be able to earn 'a decent wage for a fair day's work'.

But MacKenzie said she did not expect those changes would increase the cost of the remainder of the UFB roll-out to Chorus.

One subcontractor working on Chorus' UFB network said on the day the report came out that he and his peers were still struggling financially and being treated unfairly.

Chorus network manager Andrew Carroll said the new contracts with Visionstream and Downer followed 'a highly-competitive tender process that focused on identifying the right partners to deliver the right mix of speed, quality and price'.

'Given their importance to our business, it is essential that our service companies have enough volume and scope of work to provide sustainable services and have the ability to invest in people and infrastructure. As such, we have chosen partners who we are confident will deliver the right overall results, not just the cheapest option,' he said.