Ministers stand by Tenix contract

By KEVIN TAYLOR, political reporter

The Government is standing by the award of a $500 million contract for new Navy ships to Australian shipbuilder Tenix, despite a $55 million lawsuit from an unsuccessful tenderer.

Dutch shipbuilder Schelde Marinebouw B. V. filed papers in the High Court at Wellington on Friday, claiming the ministry wrongly awarded Tenix the contract and the tender process was "fatally flawed".

Schelde was unsuccessful in tendering for the $500 million seven-ship Project Protector contract.

The papers name the ministry as first defendant and Tenix the second. It seeks $50 million in damages and $5 million in costs.

The biggest vessel in the contract is an 8000-tonne multi-role ship for moving Army personnel and gear and doing disaster relief work.

But Schelde said that although it had no beef with Tenix, its design was "another Charles Upham" and fell short of Navy requirements. The HMNZS Charles Upham, now sold, was an ex-merchant ship bought in 1994 for sealift work that proved woefully unsuitable.

Schelde said its design, the Rotterdam class Landing Platform Dock (LPD), was superior to Tenix's roll-on, roll-off (ro-ro) ship. LPDs feature a floodable well, allowing landing craft to sail in and out.

"Aside from carrying a landing craft, its roll-on, roll-off design provides little additional capability, notwithstanding its likely price tag of up to $250 million," Schelde said.

The company also questioned the safety of the proposed ship-to-shore transfer system and whether the ministry could lawfully have chosen the Tenix ship, which will be built by Tenix subcontractor Merwde, another Dutch shipyard.

A spokeswoman for Defence Minister Mark Burton yesterday stood by the tender process.

She said the Crown Law Office was assessing the claim but that would not stop a ceremony on Thursday to formalise the signing of the contract with Tenix.

Mr Burton and Finance Minister Michael Cullen will host the ceremony, which will also include Tenix officials.

Prime Minister Helen Clark said yesterday that it was inappropriate to comment as the matter was before the court, but she was unaware of any concern within the Government at the way the tender was handled.

The ministers who signed the contract did so after ministry negotiations supported by professional legal advice.

"It's now an operational matter for the Secretary of Defence to oversee, including any legal matters that may arise."

Wellington lawyer Michael Stephens, acting for Schelde, refused to comment yesterday. The Herald was barred from searching the papers filed with the High Court.

The other Project Protector vessels are two helicopter-capable 85m offshore patrol vessels and four 55m inshore patrol ships.

Tenix expects $200 million of work to be spread among more than 100 New Zealand companies over the next three years.

Shipbuilder sues

Dutch shipbuilder Schelde Marinebouw B. V. is suing the Defence Ministry and Australian shipbuilder Tenix for $55m after losing the tender for $500m of Navy ships.

Schelde says the ministry chose the wrong design for the multi-role vessel - worth up to $250m.

Its design was an LPD (landing ship dock) which includes a floodable internal well that lets landing craft sail in and out. Tenix's design is a ro-ro (roll-on, roll-off) vessel.

The Government is standing by the decision to award Tenix the contract.