A third attempt to award a tender for a €115 million ferry service between Malta and Gozo was killed in its tracks on Tuesday after the Public Contracts Review Board ordered its cancellation.  

The board upheld arguments put forward by Virtu Ferries Limited, which runs the catamaran service to Sicily, that the request for proposals (RFP) contained a number of illegalities that merited its cancellation. 

It ordered that the RFP be re-issued after taking into consideration all the arguments made before it specifically on the formulation of technical specifications and conditions.

It also directed Transport Malta to seek professional advice about setting a 15-year term on the concession, since the maximum duration of such concessions should not be more than 12 years.

The board further recommended that the enquiries be made with the relevant EU authorities to ensure that conditions laid down in the new RFP document do not breach any of the provisions relating to the ‘Maritime Cabotage Regulations’, which was another argument put forward by Virtu Ferries.

Last month, the company described the RFP as “ill-conceived and fraught with a great number of patent, manifest and serious illegalities” and argued that “any reasonable board…should order its outright cancellation.”

Complaints were also filed by Supreme Travel Ltd and Marsamxetto Steamferry Services, which is owned by Captain Morgan Leisure Ltd and The Mercantile and Coaling Co. Bianchi and Co. Ltd.

Third attempt to award tender

This was the government’s third attempt at awarding the multi-million-euro contract for a new ferry service between Malta and Gozo. The previous two calls for tenders were cancelled by the Transport Ministry following lengthy legal proceedings.

But whereas the previous two tenders were for the provision of a fast-ferry service between Valletta and Mġarr – which is what Labour had promised in its electoral manifesto – the latest version, issued last month, dropped the term ‘fast’ and included a hop-on, hop-off service from at least five locations.

These include Marsaxlokk, Ta’ Xbiex, St Paul’s Bay, Valletta, St Julian’s and Gozo.

Concerns about ferry stops and exclusivity

The board said that since the ferry service was going to include these landing areas, the service was not going to be one which offered transport services between islands, as required in EU maritime regulation, but a ferry service within the mainland island. 

“This Board is highly concerned as to whether the service being proposed in the RFP will breach the ‘Maritime Cabotage Regulations’. In this respect, this board opines that prior to the issuance of the RFP, the authority should have investigated with the relevant and competent authorities whether the service being proposed conforms to these regulations,” the board said in its decision. 

The board also expressed concerns about Transport Malta's plans to award the tender on an exclusive basis, saying this was based on too many assumptions mainly due to the fact that technical specifications were “too vague and subject to various interpretations”. This, it said, created the possibility of lack of transparency and lack of equal treatment.

It said that similar concessions could not stretch for longer than 12 years and even this duration had to be justified. 

State aid arguments dismissed

The board however threw out arguments that Transport Malta was breaching EU state aid rules by providing landing areas costing an estimated €5 million each to the ferry operator. The landing areas had a lifespan of 50 years, much longer than the duration of the concession, the board said.  

Chaired by Anthony Cassar, with Lawrence Ancilleri and Carmel Esposito as members, the board therefore ordered the cancellation of the RFR and ordered Transport Malta to issue a fresh one with the suggested corrections. 

Transport Malta ‘welcomes’ decision

The unfavourable decision sends Transport Malta back to the drawing board for a fourth time, with its third attempt at issuing the tender having faltered.

Despite the unfavourable development, the transport regulator reacted to Tuesday's decision by saying that the review board had confirmed that the ferry contract was a commercial concession and not a public service obligation. 

It said it will be committing itself to ensure that the concession if not longer than 12 years, as recommended by the board as well as to add more detailed technical specifications. 

Previous aborted fast-ferry tenders

A first attempt at fulfilling Labour’s fast-ferry electoral pledge was made in 2017 when the Transport Ministry asked interested parties to offer a service in conjunction with state-owned ferry company Gozo Channel.

The evaluation committee recommended that Virtu Ferries – which has operated a fast-ferry service between Malta and Sicily for decades – should be awarded the contract.

Virtu Ferries started talks with Gozo Channel but the Transport Ministry cancelled the request for proposals in January 2018 and issued a slightly modified call.

Following changes to the composition of the evaluation committee, the Gozo Ministry announced that Islands Ferry Network – a joint venture registered just three days before between Magro Brothers and Fortina Investments Ltd, operators of Captain Morgan – had been selected to partner Gozo Channel.

Gozo Channel signed a contract with this company in April 2018.

Virtu Ferries challenged the decision, and after a two-year legal battle, the €20 million contract was nullified.

Gozo Channel was ordered to re-evaluate the bids with a new evaluation board. This was not carried out and instead Transport Malta cancelled the tender for a second time.

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