The ABC has the intriguing news that Queensland’s ERM Power Retail has won an ACT Government electricity contract worth $16 million, beating out the ACT Government part owned ActewAGL:
Territory and Municipal Services Minister Shane Rattenbury says the decision was made by directorate representatives based on a tender process.
“I imagine ActewAGL are incredibly disappointed to lose this contract but it is a competitive process,” he said.
“The decision to award the contract to ERM, I’ve been briefed by the officials, they offered the best value for money for the Territory and that’s the basis on which they took their decision.”
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Hard to think of anything more fungible than mains-delivered electricity.
What an outrage!
An ACT Public Servant followed the procurement guidelines and went for the lowest cost option.
Hope he/she is packing his/her desk as we speak.
Oh no, the system works.
Sucked in ACTEWAGL, so what happens now, price of water and electricity set to rise to fill this $16m void?
PantsMan said :
Incorrect. They went with the ‘best value for money’ tender, not the ‘lowest cost’.
Antagonist said :
In government speak, best value generally means lowest cost.
ActewAGL must have screwed up royally to have lost this.
So it’s not just me who puts the boot into Actew.
Unfortunately we all lose on this deal.
Can someone explain to me how taxpayer money going to a QLD company is “the best value for money” option when it could be reinvested in local jobs via ActewAGL? Definitely sounds like a lowest cost selection to me, or as pointed out above ActewAGL must have seriously dropped the ball.
thebrownstreak69 said :
That is naive. ‘Best value for money’ is the exact terminology used to justify using a tender OTHER than ‘lowest cost’, although I do concede that ‘lowest cost’ does not always mean ‘best value for money’.
Antagonist said :
Having written many tenders for government work over the past 10 years, with both wins and losses under my belt, I can assure you that ‘best value’ almost always ‘lowest cost’. It is naive to think otherwise. Unless you can pull something very special or different out, price wins.
thebrownstreak69 said :
So you missed the heady days of the late 90′s when Howard came into office and tried to outsource the corporate functions (finance and payroll functions in particular) for just about every APS agency? Those were the good old days … when we invented the term ‘value for money’ to use when the ‘cheapest’ tender was not awarded the contract.
Chop71 said :
You dont need to lose greatly.. Just switch to ERM yourself……….
thumper109 said :
Have you considered these points.
Actew will no longer have $16 million in revenue > lower dividend to it’s shareholders >ACT government being one of them. Hence, Actew will try to raise the $16 million in revenue elsewhere, probably with increased fees to households and the ACT government, although making a saving on their $16million in power usage will have a smaller Actew dividend as income.
Hope the government savings make it worth while.
Chop71 said :
I don’t think ACTEW really is losing too much. They still own the poles and wires so they’ll get the network component all at a nice regulated return on assets.
davo101 said :
… and who do you think pays for that?
I wonder how much over the contract price it actually ends up costing the ACTGov with all the stuff that isnt covered under the contract?
davo101 said :
You really don’t know how things work do you.
It will be interesting to see who wins the “Light Rail Study” RFTs currently circulating. The ACT Government has a “Canberra Cringe” mentality with RFTs. Few companies in the Territory are successful when competing against those based in Melbourne and Sydney (and now Brisbane it seems).
Is there a connection between ERM Power retail and the QIC which owns the Canberra Centre? Are the “corporate cane toads” about to take over the Territory?
FoMoCo said :
The TranAct template would be a good guide.
dungfungus said :
May say something about the quality or competitiveness of companies in the ACT. Wouldn’t know as I haven’t dealt with them.
Pitchka said :
A study will be commissioned to investigate the quality of our water, and we will be told it tastes so good they need to put up the price.
bikhet said :
If you are using electricty in the ACT you are most probably dealing with Actew, one of the companies that lost out bigtime to an interstate competitor so you can make a judgement after all.