Tender at Jadrolinija Tailored to Fit Favourite Bidder?

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The tender involved the acquisition of four catamarans.

The CEO of Jadrolinija David Sopta and board member Predrag Govorčin went to Singapore in November 2017 to visit a shipyard of the Norwegian company Damen, and afterward they decided to publish a public tender for the purchase of two catamarans worth 18.4 million euro. Damen’s catamarans were ultimately selected, and e-mails have now been published which show that the tender terms were adapted to fit Damen’s offer, reports Index.hr on July 11, 2018.

On 10 January 2018, Jadrolinija announced a tender for the purchase of four catamarans, and on 2 March it announced the results of the competition, selecting Damen to procure two catamarans worth 18.4 million euro, and the Dutch company Thecla Bodewes Shipyards to sell the third and fourth catamaran worth 14.7 million euro. The tender totalled 33.1 million euro, and Jadrolinija did not demand from catamaran producers any guarantees.

On 6 March, Jadrolinija went to inspect the third and the fourth catamaran which had already been purchased and at the time realised that the catamarans bought from Thecla did not meet the tender criteria. On 4 April, after the deadline for appeals had already expired, it decided to cancel that part of the tender, which is why Jadrolinija now faces the company’s possible lawsuit.

Additionally, Index.hr has emails showing that, in August 2017, Robert Šupraha, a director at Jadrolinija, and Ivan Šmid (also from Jadrolinija) exchanged e-mails about Damen’s catamaran prices and offer. Later, on 28 December 2017 (shortly after Jadrolinija CEO Sopta returned from Singapore, where he visited Damen), Antonio Marte from Damen sent an e-mail to Šupraha saying that the price of the ship was 8.85 million euro. He also wrote that there was an extra cost of 300,000 euro for the ship to be transported from Singapore to Europe. This means that the total cost of a ship from Damen stood at 9.15 million euro, which is almost identical to the price of 9.2 million euro for how much Jadrolinija ultimately bought the ships from Damen after the tender was completed.

One day after the Antonio Marte’s mail, Robert Šupraha sent an e-mail to Predrag Govorčina (who accompanied Sopta to Singapore). The email says: “Good morning, in connection with the catamaran tender coming up soon, and for us not to lose one of the major competitors, we contacted Antonio Marte several times yesterday. His email is below explaining how the price and transport costs to Rijeka have been calculated. During negotiations, Damen representative Antonio Marte agreed to a 100,000 euro price reduction, with a comment that the price of the transport is not defined and there is a possibility it could change depending on the market conditions. Since we need to put the highest expected price in the tender, I suggest we take this into account.”

A well-informed source says that the tender was tailored to Damen’s offer. The case has now reached Transport Minister Oleg Butković, who has ordered an investigation and asked for an explanation from CEO David Sopta and board members Predrag Govorčin and Ante Vranješ (who was reportedly the only board member not supporting the purchase of catamarans).

Index.hr has received a response from the Ministry of Transport stating that they had carried out an analysis of the catamaran procurement process, where “possible omissions have been noted.” “The analysis shows that the procurement decision was not made at a session of any of the company’s bodies, nor is it covered by a corporate document. Also, procurement funds have not been secured in terms of an official loan-taking decision. It has also been noted that the procurement documentation does not contain provisions to protect Jadrolinija as a potential buyer (e.g. guarantees and duration of the warranty, payment terms, ship equipment, etc.). It is evident from the documentation that bids selected for Groups 3 and 4 did not meet the tender conditions and should therefore not have been selected. The selection decisions should not have been made without a Supervisory Board approval. The rest of the questions, connected with receiving bids for the same catamarans which were later bought, as well as whether there is a possibility of a lawsuit for the annulment of the purchase of the third and fourth catamarans, should be answered by Jadrolinija,” said Ana Matijašević, a spokeswoman at the Ministry of the Sea, Transport and Infrastructure.

Index.hr has received from its source a letter from the ministry in which the omissions were described in more detail than in the official response. In the document, the ministry states that the procurement provision was very short and did not contain what it should have contained given the procurement value; Jadrolinija also did not specify requirements regarding guarantees, nor with regards to equipment which the ships must have. Selected bids for Groups 3 and 4 did not meet the conditions and should not have been selected.

The ministry states that Jadrolinija bought the third and fourth catamarans with two 5,000-litre tanks, which was not in line with Jadrolinija’s requirement for the ships to have the minimum capacity of 14,000 litres. The ships also had two engines, while four were required. The ministry states that the inspection of these two ships was done after Jadrolinija had already selected them, although that was supposed to have happened earlier. The Ministry of Transport demands that all members of Jadrolinija’s board of directors send a statement on the catamarans’ procurement procedure.

Index.hr also has another letter sent from the Ministry of Transport to the Jadrolinija’s board of directors. Minister Butković asks the board to answer the following questions: “Has Jadrolinija received a bid from the Damen company, which was later selected, before the opening of the tender for the purchase of catamarans? After it annulled the tender for the third and fourth catamaran, has it received a letter from any of the bidders showing that a claim for compensation for damages could be initiated? Please explain why the catamarans selected in Groups 3 and 4 did not meet the conditions set in the tender documentation and whose responsibility that was. Is it common for Jadrolinija’s public procurement process not to set conditions in terms of guarantees, and why there was no requirement for guarantees in this public procurement procedure, given the very significant procurement cost?”

Jadrolinija did not want to answer the question whether it was true that the tender was tailored to the previously inspected catamarans, which was allegedly done by Jadrolinija’s management during its visit to Singapore. Similarly, they did not answer whether Jadrolinija’s management had agreed on the price of the catamarans before the tender was published.

Instead of answering the specific questions, Jadrolinija has sent an answer claiming that everything was transparent. “For the first time, Jadrolinija’s management, in order to ensure the maximum transparency, launched an open international public procurement procedure for the rebuilding of the fleet. Previous Jadrolinija’s managements acquired such vessels in direct negotiations,” said Jadrolinija.

They point out that such ships have never been built in Croatian shipyards and that, for the purpose of executing legally correct procurement procedures, Jadrolinija’s management published a tender defining the collection of best bids on the market for four groups of ships, used and new catamarans.

“The public tender was launched in accordance with the defined Fleet Rebuilding Action Plan approved by the Supervisory Board and the minister. After the inspection of the ships by the Jadrolinija’s Technical Department, for two groups of used boats, the bids were rejected due to significant technical omissions. For the remaining two groups of new ships, negotiations continued and all legal interests of Jadrolinija have been protected while respecting all applicable legal regulations,” said the Jadrolinija’s management.

They further stated that “the correctness and legality of the procedure are confirmed by the fact that the Supervisory Board, as the owner’s representative, approved the purchase of the two catamarans, subject to the obtaining of the necessary approval by the Croatian government for loan taking.” They said that “the procedure at the ministry responsible for receiving the approval” is currently underway. They argue that this proves that the procedure was correct, adding that Jadrolinija’s fleet would soon be expanded with two catamarans of “enviable characteristics and maritime abilities.”

Translated from Index.hr (reported by Martina Pauček Šljivak).

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