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Metro's maintenance subsidiary Sunstone Resources will have to publicly bid for work after the Andrews government ended a relationship where the company did not have to tender for lucrative contracts.
Last month Fairfax Media reported that Sunstone, the labour hire company had been awarded contracts by its owner, Metro, without going to tender, on an expanding range of projects such as track repairs and graffiti removal.
The arrangement meant companies previously contracted to maintain Melbourne's rail network had no chance to bid for work.
Metro formed Sunstone, with the co-operation of Public Transport Victoria, which granted Metro an exemption from a clause in its government contract prohibiting the creation of a subsidiary.
The Rail, Tram and Bus Union and other unions have been critical of Sunstone Resources and called on Labor to close the business down.
Public Transport Minister Jacinta Allan said following a review by KPMG, Sunstone would not be awarded contracts without a tender.
The review, which is commercial in confidence, found there was no evidence the Sunstone arrangement provides value for money for taxpayers.
"As a result, no new work will be provided and the current arrangements will cease." Allan said.
The Rail, Tram and Bus Union has been a major critic of Sunstone.
"Metro should never have been allowed to give millions of dollars of taxpayer-funded work to a wholly owned subsidiary without a competitive tender process," said state secretary Luba Grigorovitch.
"The government needs to ensure this never happens again and PTV chief executive Mark Wild needs to explain why he allowed this to happen."
"If Mark Wild cannot substantiate how this was permitted, the RTBU would be inclined to call on his resignation."
Sunstone managing director Phillip Walker said the initial two-year period where Sunstone Resources had an exclusive arrangement for Metro work had now ceased.
This article first appeared on www.theage.com.au
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