Decmil resolves NZ dispute

Decmil Group has settled a dispute with New Zealand’s prisons department in relation to a previous $NZ185 million contract that was terminated.

The agreement involved the construction of three 126-room modular prisons – two at Rolleston on the South Island and one at Tongariro in the north – as part of the government’s Rapid Deployment of Prisons project.

Decmil was awarded an initial $NZ60 million contract in December 2017, which was expanded to $NZ185 million six months later, making it one of the WA company’s largest contracts.

In February 2020, Decmil announced the agreement with the Department of Corrections had been terminated while claiming it hadn’t been paid for works completed in the four months prior.

Decmil also alleged the department was not acting consistently with the agreed project process.

The company, then led by chief executive Scott Criddle, said attempts to reset the contract terms – as a result of there being multiple variations and delivery challenges – had stopped, with the department informing Decmil that it was no longer prepared to continue the process.

It resulted in Decmil shutting down its NZ operations in April last year, one month after disclosing a $50 million write-down on the prisons contract.

That was followed by a statutory net loss after tax of $140 million reported in FY20.

Today, Decmil said it had concluded its dispute with the NZ government, noting there would be no impact to its full-year results or balance sheet.

“This settlement puts to bed one of the very difficult legacy disputes of Decmil,” chief executive Dickie Dique (appointed in May 2020) said.

“It also allows the management and board to be able to focus on the business – winning work and executing our work profitably and sustainably.”

No further comment was provided by Decmil or the department.

Meanwhile, Decmil is preparing to begin work on a suite of new projects, having recently revealed d more than $570 million in new and potential contracts.

That includes a possible agreement to build the new Causeway Bridge across the Swan River, with Decmil shortlisted for the works in April.

The business expects to generate more than $500 million in revenue in FY22.

Its shares were down 1.3 per cent today at 12:31pm AEST to trade at 38 cents.