Aramoana contract 'not at fault’

Press, 2 July 1979, Page 14

Aramoana contract 'not at fault’

PA Wellington That the contract for refitting the Aramoana was “open-ended” should not be construed as a fault, said the general manager of Railways (Mr T. M. Hayward). “Until the ship had been opened up the full extent of her deterioration could not be gauged and a fixed price determined,” he said. Mr Hayward was replying to criticism by the Auditor-General (Mr A. C. Shades) about unauthorised spending by the Railways on the inter-is-land ferry. Mr Hayward said that all tenderers were asked to quote a rate for labour so that the comparative cost of necessary work could be established.

“It is normal practice for contracts such as this to permit charges for undiscovered work. It would be impractical to do otherwise, and prospective contractors would not tender a fixed price for such v’ork,” he said.

The Aramoana entered service in 1962, and underwent full surveys in 1967 and 1972. “These surveys did not indicate that corrosion in the ballast tanks would be as severe as was found during the survey at Singapore in 1977,” Mr Hayward said. The corrosion was caused by the breakdown of the cement wash coating on the steel of the

ballast tanks, which could not have been anticipated and allowed for in the contract price, he said. “An allowance of 15 per cent was made in the tender of Sembawang Shipyards for ‘extra’ work. In the event, ’extra’ work of greater cost had to be done.” Mr Hayward said that the survey of a ship was a normal working expenses item. The survey at Singapore was undertaken as a separate project to the refit. It was not envisaged that the cost of the survey would be included in the cost of the refit.

However, the shipyards offered to include the cost of the survey in the total sum. to be financed on deferred credit terms. This was accepted in accordance with the normal practice of obtaining

credit on big items of overseas expenditure Mr Hayward said that undertaking the survey in such a way provided a substantial financial advantage to the department and the Government. He also said that the contract with the shipyards included a one-year guarantee on the work done.

The shipyard did not submit a 'statement of ciatm until the end of the contract period. Additional financial authority could not be sought until the statement of claim had been received. “The Treasury could not. be told the exact total cost of the project any earlier, because negotiations with Sembawang Shipyards were not concluded until December 11, 1978,” Mr Hayward said.