Wellington Sewage pipe blockage Photo: RNZ/ Rob Dixon
Wellington Water has known since June that some of its contractors are being investigated by the Commerce Commission.
The Commission confirmed on Tuesday it was investigating "parties that provide services to parties including Wellington Water" for potential unlawful conduct under the Commerce Act.
It did not say when any investigation began, or if it is related to the parties' work for Wellington Water.
Among the findings of two independent reports released this week was that the organisation was paying three times more for water repairs than in some other parts of the country.
Wellington Water told RNZ some of its contractors advised it nine months ago that they were being investigated.
"We were advised directly by certain contractors in June 2024 that the Commerce Commission had asked to speak with them," a spokesperson said.
"However, it would not have been appropriate for us to take any action given no findings had been made by the Commerce Commission about those panel members and we had not been contacted by the Commerce Commission about any investigations or wrongdoing."
At the time, Wellington Water had already begun work to look at reducing consultants and contractor spend and "opportunities for improvement", it said.
Prior to the Deloitte and AECOM reports, Wellington Water funnelled all its capital project work through a 'capex panel' made up of a select few companies, which then tasked sub-contractors with delivering different parts of each project.
It also had an 'alliance' with Fulton Hogan to carry out maintenance work, with a Fulton Hogan team sitting inside Wellington Water.
It is not clear whether the contractor or contractors being investigated by the Commerce Commission were any of those on the panel, or in the alliance.
The panel members at its establishment in 2019 were E. Carson & Sons, Brian Perry, G.P. Friel, Construction Contracts Limited (CCL), E.N. Ramsbottom, Juno Civil, Fulton Hogan, Dews Construction and HydroTech (which has since been taken over by TDG Environmental).
Publicly available Wellington Water documents showed Wellington Pipelines Ltd and HEB Construction had been added to the fold.
RNZ has requested comment from each company, aside from Dews Construction, which is no longer listed on the Companies Register.
Fulton Hogan said it was not under any investigation, while CCL, Juno Civil and E.N. Ramsbottom declined to comment, citing contractual obligations preventing them from doing so.
The reports into Wellington Water found the 'capex panel' model meant there was insufficient oversight, double handling of work, and extra contract management costs.
Photo: RNZ / REECE BAKER
Wellington Water said it had since changed the way it contracted work.
"We've now moved to a model where we have a direct contract and relationship with all key sub-contractors.
"This will give us better oversight of the work, reduce doubling handling, allows us to get the right contractor for the work needed, and saves on contract management costs."
It had also created a new performance framework for the alliance, "making sure the teams are well placed to focus solely on operations and maintenance of the network, and increasing efficiencies".
Fulton Hogan defends costs
The AECOM summary report found Wellington Water's unplanned maintenance costs per kilometre of pipe were three times that of four other councils it was compared with, between 2019 and 2022.
But it also said: "the operations and maintenance labour and plant rates were fair and reasonable compared to competitive industry charges, and AECOM noted that if anything, they appeared somewhat low."
A Fulton Hogan spokesperson pointed to that comment, and said the company's margin for its work was pre-agreed for the term of its contract with Wellington Water.
"As also noted in the summary report, higher maintenance expenditure may be reflective of the network condition, to which we would agree," they said.
Civil Contractors New Zealand chief executive Alan Pollard told Morning Report it was difficult to compare the cost of network repairs in Wellington to others around the country.
"The maintenance required on the Wellington network is substantially higher than anyone else," he said.
"So if you are looking at three times the cost, we are doing three times the work then we are anywhere else."
Pollard said he was not aware of the Commerce Commission investigation, but he was confident members properly managed any conflicts of interest.
The association gave its members information about how to comply with the Commerce Act, and it had a code of ethics members must abide by, he said.
