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KiwiRail Chief Executive Jim Quinn said it had considered nine bids to build the wagons, including one from its own Hillside Workshops, before opting for China CNR Corporation (CNR).
"The bids were evaluated on a range of financial and non-financial considerations. Hillside emerged as the third best bid but unfortunately not close enough to the CNR bid to justify a local build."
[comment caption=Has KiwiRail made the right decision?]Mr Quinn said in a statement the Hillside Workshops bid was 25 percent more expensive than the CNR tender.
Evaluators also considered Hillside would not be able to create the capability required to produce the CFT (container flat deck wagons) wagons to meet the delivery time.
KiwiRail said in a statement the $29 million order was the first stage of a programme to replace 3000 wagons over the next 10 years.