Lendlease Building Pty Ltd (Lendlease) was engaged by Defence as head contractor on the $189 million AIR 6000 Phase 8 MH-60R Seahawk Romeo Facilities Project provided facilities to support the acquisition into service of the MH-60R Seahawk Romeo helicopters at the Nowra naval station.

Lendlease subsequently engaged subcontractors including Canberra company Hewatt Pty Ltd (Hewatt) to perform civil, drainage and pavement works.

Hewatt’s went into administration in 2014, leaving local contractors out of pocket, which they have been fighting for for the past four years.

Lendlease said prior to Hewatt’s administration, it paid the company all funds that were due and payable for works it had completed on the project.

“We also offered to contract directly with Hewatt’s subcontractors following its administration to maintain their employment on the project,” a spokesperson said.

Read more: Business Ombudsman recommends local subbies be paid for Albatross job

                     Defence says it has ‘no responsibility’ for out of pocket subcontractors

“Lendlease has complied with all contractual obligations and has no outstanding payments owing to Hewatt.

“Hewatt and its administrators are responsible for any outstanding payments owed to their subcontractors.”

Lendlease says it understands the importance of small business to the industry.

This comes just days after the Department of Defence said Lendlease was responsible for the outstanding $5 million owed to local subcontractors for the Albatross project.

A spokesperson said Defence had “no responsibility”, and “it’s contractual arrangement was with Lendlease and that contract defined Defence’s obligations and responsibilities.”

“Defence is not party to the contractual arrangements between subcontractors and the sub-subcontractors and suppliers,” the spokespersopn said.

“This includes payment terms, validity or otherwise of statutory declarations, and knowledge of the extent to which the obligations of either party, under those arrangements, have or have not been fulfilled.”

Small Business Ombudsman, Kate Carnell has recommend the federal government/defence reimburse millions of dollars owed to local subcontractors who worked on the project.

Ms Carnell’s office conducted an inquiry into the collapse of Hewatt’s which went into voluntary administration during the multi-million dollar defence project.

“We found the contractor, Hewatt’s was already having financial problems when it signed the contract with Lendlease and ultimately the prime contractors, Defence,” she said.

“In this case, the contractor was in financial trouble prior to signing the project contract and was possibly trading insolvent at the time.

“Our recommendation is we believe the subcontractors should be paid and there should have been procedures in place to stop contacts being signed when a company was already in financial difficulties.”

She said the NSW Government recently agreed to pay subcontractors who experienced a similar situation while working on the Pacific Highway on the North Coast, setting a precedent the federal government should follow.