Electric rail shortlist extension under fire

The Government's tender process for supplying electric trains for Auckland is being criticised by a company that was originally shortlisted for the work. File photo / Bay of Plenty Times

The Government's tender process for supplying electric trains for Auckland is being criticised by a company that was originally shortlisted for the work, but has since pulled the plug.

Three other firms in the expanded shortlist of 10 companies have also withdrawn.

In July Bombardier Transportation Australia was one of four companies selected to compete for the KiwiRail contract - worth up to an estimated $500 million - to provide 38 three-car trains.

But KiwiRail, citing a desire to secure the "best possible whole-of-life outcome", extended the shortlist to 10 in September.

In a letter from Bombardier to KiwiRail - obtained by the Herald - managing director Dan Osborne lambasted the process and withdrew altogether.

"We are very disappointed with KiwiRail's decision to extend the shortlist of bidders," the letter, dated September 21, said.

"Preparing a response to a tender for a project of this magnitude places significant demands on resources and funds, which can only be justified if Bombardier has full confidence in the tender process. Your [decision] raises questions on the level of confidence that Bombardier can have in the tender process."

KiwiRail chief executive Jim Quinn said three other companies had also pulled out, but would not say who they were and questioned whether it was over the tender process.

"That's a decision they've got to make, but the tender process itself wasn't the issue. We're being quite responsible in making sure we're taking into account the feedback around the market."

The tender is expected to be awarded next year, and the first trains are expected to be on the ground and operational from 2013.

There are no New Zealand bids, though the company that wins the contract can use local industries to fulfil the contract.

Labour's Dunedin South MP Clare Curran hoped the winning bid would use Dunedin-based industries, creating local jobs and injecting money into the community.

She said the decision to extend the original shortlist was "questionable".

"There were four shortlisted and then six more were added. Why?

"Is it about local skills and the capacity to create jobs or is it about going for the lowest cost and doing a chummy deal behind the scenes?"

One of the bidders that benefited from the extended shortlist is LORIC Import & Export Corporation, a subsidiary of China CNR Corporation which has been linked to Sammy Wong, husband of former cabinet minister Pansy Wong. But Mr Quinn said Mr Wong had nothing to do with KiwiRail or the tender process for the Auckland electric trains.

The Wongs were the subject of a report into the use of their taxpayer-funded travel perk, which found they had to repay $474 for a trip to China in 2008. But Labour has called the report a whitewash and is expected to ask the Auditor-General to investigate.

Further allegations have emerged and Mrs Wong has defended her husband, including for attending a ceremony for a biotechnology centre in China in June 2005 during a taxpayer-funded trip.

He was there at the invitation of a friend, Mrs Wong said.