Crown fibre to issue RFP on Christmas Eve

Computerworld looks at events leading up to the curiously-timed tender

Crown Fibre Holdings, the government agency set up to pick the government’s partners in the ultra fast broadband network, intends to issue a request for proposal for technology suppliers on December 24.

In tender documents posted on the CFH website late last month, it was stated that an RFP for layer one passive infrastructure – that is the ducting, cables and fibre – will be issued on Christmas Eve for a short-list of technology suppliers. This follows expressions of interest (EOI) requests being issued for layer one on November 22.

CFH intends to issue an EOI for layer 2 (that is the electronics which light the fibre) on December 3 and for OSS/BSS (the systems that deal with maintaining network inventory and dealing with customers, billing etc) the week beginning December 13.

The documents are being issued on behalf of the three respondents that have made it through to the first stage of the negotiations. These are Alpine Networks in Timaru, the central North Island Fibre Consortium, and Northpower in Whangarei. The umbrella organisation that all three responsdents belong to – the New Zealand Regional Fibre Group – says it requested CFH run an EOI and RFP process for technology suppliers in order that it could start building the network as soon as possible.

This is despite none of the three respondents being officially selected to form a Local Fibre Company in partnership with Crown Fibre at the time of the EOI for layer one being issued.

The documents are detailed and describe requirements for air blown fibre multi duct and tubes, cable and fibre units and other items such as underground inspection pits.

Computerworld understands that CFH are facilitating the EOI/RFP process in the belief that a collective approach to contracting technology suppliers, will result in a better price, than if Local Fibre Companies went to market individually.

In the documents CFH distances itself from the decision on which technology supplier to pick.

“CFH will guide and provide commercial and technical advice along with administrative support during the EOI process to ensure the alignment of the process with the UFB Objective. Although respondents should note there is a governance structure in place to ensure that the Issuing Parties (Alpine Networks, the fibre consortium and Northpower) maintain all decision-making powers in relation to this process. For the avoidance of doubt, CFH does not have the authority to make any decision on behalf of the Issuing Parties,” the documents state.

A procurement officer has been appointed by CFH to facilitate the EOI/RFP process, with an evaluation team made up of independent representatives, representatives from the Issuing Parties and the NZRG, has been formed. There is also a steering group that consists of representatives of the Issuing Parties, NZRG and CFH

Meanwhile, at the time of going to print other shortlisted candidates – among them Telecom and Vector – were waiting to find out if their bids will make it to the next stage in the negotiations. Should they be successful they would be invited to provide a representative on the evaluation team and the steering group.

Conflict of interest claims

The EOI and subsequent RFPs for layer one and layer two are the formal documentation that arose out of a letter dated 14 October, 2010 that Labour ICT spokesperson Clare Curran tabled in Parliament.

Curran’s contention was that CFH is participating directly in a process for selecting technology partners, and therefore a conflict of interest – or at least the perception of a conflict – has arisen because CFH board member Murray Milner consulted to technology vendor Huawei and presented at a Huawei conference on 17 September.

Huawei responded to additional questions by Computerworld about Milner’s contract within half an hour of them being emailed. Huawei spokesperson Mark Champion says that Milner was engaged by the company for consultancy work in April, May and June this year.

“We can confirm it was in relation to retail services, unconnected to the wholesale nature of the UFB project – the exact nature of the consultancy is commercially sensitive,” he says.

He would not say if Milner was paid to present at the September conference. Milner has referred all enquiries from Computerworld to CFH (see below).

The telecommunications industry is poised to discover which entities will be the successful partner in key areas of the country, most significantly Christchurch, Wellington and Auckland.

The way that CFH conducts the selection process is of critical importance, as every step is likely to be scrutinised by the losers, simply because so much is at stake.

CFH should therefore assume all parties will be consulting legal teams looking for case law that could overturn any unwelcome decision.

For example in June at a media briefing GM Government and Industry Relations Ralph Chivers explained that a legal challenge – by any party – was possible and he raised the Medlab case in Auckland.

“It’s a commercial tender process and because it’s being run by the government there are elements of commercial law and public law that apply. Either of which could provide an avenue for challenge by someone who wasn’t successful.”

Chivers was clear that Telecom was fully engaged in the current process. Tina Symmans, Telecom’s director of corporate relations,also stressed that the telco is “putting its best foot forward” but she noted that there is a long way to go before resolution.

“It’s not all over until the fat lady sings is what Ralph is really saying.”

Questions answered

Computerworld emailed the following questions to Crown Fibre Holdings about the RFP and EOI tenders.

The questions are partly related to the EOI and RFP process for selecting layer one and two technology suppliers. A process that came under scrutiny when Labour ICT spokesperson Clare Curran alleged possible conflict of interest for CFH board member Murray Milner who was employed by vender Huawei as a contractor earlier this year.

The Q and A is as follows:

Q: Why is CFH facilitating a contract for a technology vendor - that is Ericsson, Alcatel Lucent etc?

A: CFH is facilitating RFP processes for fibre, active equipment and IT systems for UFB in accordance with its role of managing the Government’s $1.5bn investment. These processes are important in order to achieve consistency of services and pricing on a national scale for the entire UFB project. CFH is not involved in choosing technology partners.

Q: In reply to questions about possible conflict of interest two weeks ago CFH Chair Simon Allen said that the CFH was not involved in selecting technology vendors, and yet it now appears to have some involvement in their selection.

Is the Board aware of this EOI (which is now posted on your website so I assume they do?), when did the Board become aware of this move to engage with technology vendors directly?

A: Please refer to the statement above in terms of CFH’s role. The board is aware of the EOI from a high level perspective.

Q: When was the procurement officer Francie Chung appointed, and is her role created to facilitate this EOI process? When was the CFH Board informed that this role would be created?

A: Francie’s role involves facilitating this process, yes.

Q: Did the three preferred bidders request CFH facilitate this process, or was it CFH’s idea?

A: Please see first answer.

Q: Will all subsequent preferred bidders be expected to use the same technology vendor as that chosen as a result of this EOI process?

A: LFC partners can select any equipment vendor which meets UFB build requirements, criteria and standards, elements of which were developed in widely publicised consultation with the industry.

Q: Why is the timetable slipping on announcements about further partnerships and whether the three preferred bidders are successful?

A: Announcements will be made in due course.

Q: How confident are you that the there will be CFH fibre in the ground by the end of the year as per the Prime Minister’s statement earlier this year?

A: This is the target.

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