Resealing contract let

Blacktop Construction has won the contract for resealing Southland District roads.

Councillors agreed to award the approximately $5.5 million contract to Blacktop at their Activities Performance Audit Committee meeting last week. The contract covers about 1.1 million square metres of resealing of urban and rural roads. It was originally two contract areas - Western and Eastern, but the tenders closed on the same day to allow tenderers the opportunity to submit a joint tender for both, roading manager Michael Voss said.

"This is probably one of the largest resealing contracts in New Zealand this year," Mr Voss said.

Two companies put in tenders for the two areas, and another put in a tender for one of the areas. The tenderers were asked to submit two prices - one fixed price and the other with a cost fluctuation option.

"The volatility of prices for bitumen is difficult for Council to forecast so having a standard rate gives us some certainty. At the moment we are seeing sharper prices for bitumen coming in, but we don't know how long that will last," he said.

Bitumen is a product from the oil industry and as such suffers from similar volatility as to its pricing; but is also significantly price sensitive to construction growth, particularly in Asia/China.

Blacktop, which is based in the North Island, carried out the 2010/2011 resealing contract for Council and when it was initially appointed, Council came under scrutiny for awarding the contract to a company located outside of the region.

Blacktop's performance in last year's contract was very good and a similar outcome is expected from this contract.