Econmin says followed Finance Ministry's guidelines in ferry tender

Photo: Küllike Rooväli

The Estonian Ministry of Economic Affairs and Communications embarked on a negotiated tendering procedure without prior publication of a tender notice in the tender for the island ferry service contract for the next ten-year period on the recommendation of the Finance Ministry.

«The Ministry of Economic Affairs and Communications shifted to a negotiated tendering procedure without prior publication of a tender notice in accordance with guidelines by the Ministry of Finance – the Public Procurement Act namely says that it is a duty of the Ministry of Finance to advise procuring parties on the implementation of the Public Procurement Act. Hence their contrary stance is surprising,» Rasmus Ruuda, chief of the ministry's public relations department, told BNS.

«The Ministry of Economic Affairs and Communications has received from the Finance Ministry's public procurement and state aid department a draft on declaring the tendering procedure invalid, which says that they have an intention to declare the ferry tendering procedure invalid,» Ruuda said.

«Since the document arrived here only on Wednesday evening, the Ministry of Economic Affairs and Communications will analyze the arguments contained therein in the course of a few days. This is a normal process with procurements, where the sides present their arguments. It is important to stress that no decisions have been made and the ferry tender has not been suspended,» Ruuda added.

Under the Public Procurement Act, the precondition for conducting a negotiated tendering procedure without prior publication of a tender notice is that the offer or offers submitted during an open procedure or a restricted procedure are substantially different from the technical specifications of the object of the public contract specified in the contract documents.

In the procurement to determine the carrier on the Rohukula-Heltermaa and Kuivastu-Virtsu ferry routes the successful bidder was required to have four ferries and take on the commitment to offer the ferries to the state for sale after the end of the contract period. "In the offer of Vainamere Liinid OU there were no assurances and commitments to the effect that it would be possible for Vainamere Liinid OU to use three chartered ships for the provision of public service starting October 1, 2016. The tenderer only presented the top list of the subcharter agreement, from which it appeared that the right to charter the ships from October 1, 2016 depends on additional conditions which were not disclosed to the Ministry of Economic Affairs and Communications," Ruuda said.

"Nor did Vainamere Liinid provide an assurance as required in the conditions of the procurement of the existence of a fourth ship from October 1, 2016. Hence the object of the public contract whose conformity with the technical description the Ministry of Economic Affairs and Communications could have checked was effectively missing – the submitted offer provided no information to the Ministry of Economic Affairs and Communications on whether the ferries indicated in the offer can be actually used for the provision of service from October 1, 2016. Information was missing on whether even one of the ships indicated in the offer will be on the route starting October 1, 2016. This means that the offer was not consistent with the technical description contained in the conditions of the procurement," he added.

Also missing was another important object of the procurement – the right of the government to buy out the ferries meeting the technical description and used for provision of the service. For this the tenderer had to provide a written assurance of the owner of the chartered ships.

«In addition to the Ministry of Economic Affairs and Communications having no information about the complex ownership relations and many-tiered charter relations of the ships indicated in the offer, which the tenderer did not agree to explain to the Ministry of Economic Affairs and Communication, Vainamere Liinid OU declared in its offer that it won't agree to the requirement to provide transparent reporting about the subsidy used, set out in the draft public regular service contract that constituted an inseparable part of the conditions of the procurement – also that requirement was part of the technical description and refusal to provide transparent reporting also means that the offer by Vainamere Liinid OU in substantial part failed to meet the technical description,» Ruuda said.

The Estonian Finance Ministry finds that the Ministry of Economic Affairs and Communications may have violated the law by awarding the island ferry service contract for the next ten-year period by a negotiated tendering procedure and as a result it may be necessary to declare the outcome invalid.

According to the draft of the conclusions of the Finance Ministry's supervision proceedings over the ferry tender, it may be necessary to declare the public procurement tender invalid because the Ministry of Economic Affairs and Communications has violated the Public Procurement Act throughout the tendering procedure by conducting the tender by a negotiated tendering procedure without prior publication of a tender notice without having proper legal grounds for it and circumstances have been revealed which, considering their combined effect, do not allow to go on with the tendering procedure.

Under the Public Procurement Act, the contracting authority is entitled to organize a procurement procedure in the form of a negotiated procedure without prior publication of a contract notice if no tenders or no requests to participate in the procurement procedure were submitted during an open procedure or a restricted procedure or if all submitted tenders were substantially different from the technical specifications of the object of the public contract specified in the contract documents and the initial terms of the public procurement are not altered in essence.