Auditor-General weighs up whether to open an investigation into Government's light rail

Wednesday, 15 January 2020

The government auditor is weighing up investigating the Auckland light rail project after concerns were raised about the project's procurement process.

The Office of the Auditor-General confirmed to Stuff that it received a correspondence raising concerns about the procurement process for the project, which is expected to cost anywhere between $6 and $10 billion.

Paul Evans, chief executive of the Association of Consulting Engineers New Zealand (ACENZ) said that firms had spent millions bidding for work on the project, money that was wasted when the government decided to change its mind on light rail.

If the Auditor-General's office does decide the issue warrants further attention, it could launch an inquiry.

The Minister of Transport's office referred inquires from Stuff to the Ministry of Transport, which said that, 'The Ministry is confident that it is running a fair process and supports the OAG's (Office of the Auditor-General) work looking into the Auckland Light Rail project.'

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The process has infuriated the engineering sector, although individual companies are reluctant to speak out for fear of 'burning bridges' and missing out on work, Stuff understands.

Evans initially raised his concerns in a letter to Transport Minister Phil Twyford last year. Evans told Stuff in an interview on Wednesday that firms had wasted millions bidding for the project.

'The cost for organisations to put together a bid for that is massive.

'Depending on the scale of projects, we're talking high six figures and seven figures just to meet all the criteria of the bid,' he said.

Renders of NZ Infra's bid for Auckland light rail.

Firms that bid for light rail contracts felt they'd had the 'rug pulled out from under them,' when the Government changed tack, he said.

'Across the sector many millions of dollars were put into bidding for the project, it's come at a cost to New Zealand Inc and our productivity,' he said.

If the Auditor-General does investigate, it is likely inquires will focus on whether the process for bidding for work on the project was fair and transparent. National transport spokesman Chris Bishop urged the Auditor-General to open an inquiry.

'The process has been utterly shambolic, particularly around procurement,' he said.

The light rail project - which the Government still hasn't made a final decision on - has been the subject of intense scrutiny and criticism.

Labour campaigned during the 2017 election on a policy of building light rail between Auckland Airport and Britomart, and another line to Auckland's west, aiming to have the first section to Mt Roskill up and running by 2021.

Initially the project was being built by the NZTA, but the project stalled early in 2018 after an unsolicited bid to build and operate the the scheme was made by a NZ Infra, a consortium made up of the NZ Super Fund and CDPQ, the second largest Canadian pension fund.

A series of leaks, including a damning letter from the former interim chair of the NZTA board, Nick Rogers, rubbished the bid as 'vague' and 'little more than an idea set out on six pages of power point presentation'.

Those leaks are currently under investigation by Mike Heron QC, after NZTA launched an inquiry last year. The inquiry was meant to report back in December.

Transport Minister Phil Twyford wanted to get light rail built between Britomart and Mt. Roskill by 2021, but it's looking unlikely that work will even begin by that time.

The Government pressed on nevertheless, and gave NZ Infra the opportunity to further develop their bid. NZTA also pressed on with their own work.

These two parallel processes frustrated firms bidding for work, as they had previously operated under the basis that NZTA was running the whole process.

NZTA's current chair, Sir Brian Roche has since admitted the agency 'dropped the ball' in the way it managed this process.

After NZTA's failure, the Government brought in the Ministry of Transport to evaluate NZTA and NZ Infra, and present advice to the Government in February this year.

Cabinet is then expected decide on its preferred option.

The process with the Ministry of Transport raised some eyebrows. The 'requirements document' setting out what the Government wanted from the proposal was not made public, leaving businesses and transport advocacy groups in the dark about the project.

The Auditor-General is an Officer of Parliament, making it one of the most independent organisations in the state sector. It's job is to audit public transactions to make sure they're fair and proper.

If the issue is one of potential interest, the Office will 'carry out some preliminary work to understand the nature and scope of the work'. This will help the Office decide whether to launch an inquiry. The light rail investigation is currently at this stage.

The Office of the Auditor-General couldn't confirm when a decision to launch an inquiry would be made, saying that would depend on the complexity of the work.