The PTA’s Radio Systems Replacement project will no longer proceed with the current HUGL Consortium.
Trade restrictions imposed by the US Government on Huawei Australia have created a force majeure event under the contract, which the parties have been unable to overcome.
However, a Radio Systems Replacement project, which involves converting the radio communications system for Perth’s urban rail network from analogue to digital, will be delivered through a new arrangement.
The Public Transport Authority started the procurement process for the Radio Systems Replacement project in May 2017 and awarded the contract to the HUGL Consortium (Huawei Australia and UGL) in July 2018.
The HUGL Consortium had provided earlier assurances to the State Government that it could deliver the project in light of trade restrictions imposed by the US. Government, but further restrictions imposed in August 2019 had greater impact.
The PTA and the HUGL Consortium have worked hard together to try to overcome this force majeure event.
However, the State Government has decided that if the current relationship with the HUGL Consortium is maintained the measures required to try to overcome the force majeure event would result in unacceptable uncertainty around the total cost of the project, final completion time and no guarantee that the proposed solution would be effective. This decision will also ensure the State complies with US trade restrictions.
The PTA and Huawei Australia have therefore mutually agreed to not continue the current arrangement.
This decision has been taken before taking into account any additional disruption that may result from the COVID-19 issue.
The PTA is now working with the HUGL Consortium towards the orderly transition to new arrangements to allow delivery of the project without breaching US trade restrictions. This could include a range of outcomes, from withdrawal of Huawei Australia from the contract to termination.
This transition work will include exploring what subcontract arrangements can be preserved in the new project.
While some delay in completion of the project is now inevitable, the State Government and the Australian Communications and Media Authority (ACMA) have continued to liaise on the availability of the spectrum licences.
The original requirement for the PTA to vacate the analogue radio spectrum by May 2020 has since been extended to beyond 2021.
As stated by Transport Minister Rita Saffioti:
“The PTA will continue its plans to deliver a new digital radio system for our expanding public transport system.
“It is extremely unfortunate that the State Government’s project – which is limited to a radio network for train drivers and transit guards – has been caught up in the ongoing trade dispute between the US and China.
“In all the circumstances, the PTA has recommended a fresh approach for the Radio Systems Replacement project.
“We’ll continue to work towards the delivery of a high quality radio system at the best possible price for taxpayers.”