Questions over tenders for Tobago ferry

Several businessmen are complaining that midway through its acquisition of a high-speed Tobago ferry, the Government has switched from inviting tenders for a boat to instead inviting tenders for brokers to acquire the vessel.

Further, businessmen are noting that while the Government intends to spend up to $250 million on the vessel, an auction was recently held where three such vessels were sold for a total price of $82 million, with each vessel costing on average roughly just one-tenth of the cost proposed by the Government. The saga came into focus after a  March 22, Whitehall post-Cabinet media briefing when Minister of Works and Transport Franklyn Khan announced the Government was seeking a broker to source a high-speed ferry which must be able to travel at 35 knots, carry up to 1,200 passengers and 250 cars and 25 trucks and be no older than five years. The Government was willing to spend $200M to $250M on the ferry, added Khan, saying the ferry would be sourced through a broker but the contract would go through the Central Tenders Board.

The first tender, to supply a particular vessel, was announced on May 26, 2002 in Newsday and Express: “Tender for the supply of a passenger/cargo roll-on, roll-off ferry on a 12 month time charter for the Ministry of Works and Transport. Close date; June 13, 2002. [Tenderers are required to pay a Tender Deposit of $3,000. The CTB does not bind itself to accept the lowest or any other tender.” Reports are that some 23 persons attended a tender briefing of whom two eventually made offers. But while the first tender insisted the tenderers’ prices should hold for at least 90 days, some three months later this tender was replaced by a second different tender - for brokerage services to find a vessel.

The second tender was announced on August 31, 2002 in Newsday and Express: “Acquisition of a roll-on, roll-off ferry: Expressions of interest from ship brokers: Expressions of interest are hereby invited from duly qualified ship brokers with specific experience and expertise in the charter and/or purchase of passenger vehicles to the Government towards the acquisition of a roll-on, roll-off ferry. Submission deadline: 19 September 2002.” Businessmen are complaining that the first tender was never formally rescinded before the second, replacement tender was announced. A check at the Central Tenders Board office showed that the daily press never carried any public formal revocation of the first tender before the second tender was announced.

On March 24, 2003,  Ritchie Brothers Auctioneers in Vancouver, British Columbia, Canada, auctioned three suitable vessels, this auction having been long and widely advertised beforehand on the com-    pany’s Internet website www.rbauction.com. A 122.5 metre PacifiCat Voyager aluminium fast ferry was sold for US$4.5 million. Her sister 122.5 metre PacifiCat Discovery vessel also fetched US$4.5 million, while a third sister ship, a 122.5 metre PacifiCat Explorer went for just US$4.0 million. The initial auction announcement stated: “Unreserved auction: Three near new 122 metre Catamaran Fast Ferries with carrying capacity of 1,000 passengers and 250 vehicles.” The website announcement explained three PacifiCat catamaran fast ferries would be sold to the highest bidder regardless of price with there being no minimum bids or reserve prices.”

A company brochure validated: “Richie Bros Auctioneers is the world’s largest industrial auctioneer conducting more than 140 auctions around the world in 2002 and selling approximately US$1.4 billion worth of assets. Listed on the New York Stock Exchange as RBA...our company has been bringing together buyers and sellers of used and unused assets in unreserved auctions for 40 years. “Designed by Philip Hercus of Incat Designs, Sydney, Australia, over 40 pecent of the world’s current fleet of fast catamaran car ferries are based on successful designs from Incat Designs. In 1999 the Government of British Columbia contracted John J McMullen Associates (JJMA), the largest independent naval architecture consulting firm in North America to conduct an assessment of the design and construction quality of the PacifiCat Explorer and her two sister ships...JJMA concluded that: “The vessels are fine ships and are of good quality throughout”.

Local businessmen were upset by the turn of events. The first businessman to speak to Sunday Newsday believed the CTB had already selected a broker. He criticised the use of a sole, selected broker to source the vessel, saying: “The CTB is holding a ‘closed tender’ not an open tender. This is nonsense because not every broker would know of all boats that are available. The CTB should take all offers to evaluate.”. He added that one reason that a particular broker may not know of all available boats was because a ship-owner might not want to widely publicise that he was selling one of his boats. He said: “The CTB is not doing justice to the country. It seems something else is going on.”

Another businessman said: “We offered a ferry for one-third the price and bigger than what they wanted to buy. If you are not going to give it to locals, how come you put it in the hands of one foreign broker? If you are spending quarter-billion dollars of TT’s money, shouldn’t it be given to several brokers?” He too believed that a broker had already been selected, and asked: “How come two weeks before Cabinet announced it would buy a ferry and get a broker, in local marine circles there was a broker boasting that he had all but signed the deal for a $35M boat? “Who chose that broker? The CTB are not experts. Franklyn Khan said the Government is not involved and that he is going to make it right, but who picked the one broker? Had the Ministry said it wanted foreign brokers we could have put them directly in touch with our foreign broker who has a 150-year history. Why have they left out local bidders who know our sea conditions?”

Claiming that a vessel had already been selected, the second businessman criticised: “The ship can only run in cold waters. In the engine room it is only high-tech computers running the ship — the maintenance is ‘unreal’! Many countries have banned these ships — high-speed catamarans — because they can create a huge wave that threatens fishermen.” The third businessman said the country had missed a golden opportunity in the Vancouver auction of three ferries, saying: “They were ideally-suited to TT’s ferry-run and conformed to the specs. Why didn’t the international broker inform the Ministry of Works and Transport of this sweetheart auction where they could have obtained three ideally-suited ferries for the price of one? Trinidad and Tobago needs at least two fast ferrries, including one in reserve because mechanical things can break down. This would also give you more flexibility. To maximise your revenue, you could even have a trip once a week up the Islands or from Margarita bringing Venezuelans to Tobago for the weekend to go back on Sunday.” He bemoaned: “The CTB increased the fee for the ferry tender documents from a previous $300, up to $3,000. This is effectively cutting off the small man.” He criticised the Government’s change from seeking a ship to seeking a sole broker, alleging: “It could facilitate ‘irregularity’”

He complained that no broker had informed the Ministry of the seasonal ebbs and flows of the ferry industry, saying: “It’s well-known that the best time to purchase ferries is in winter and early spring when the vessels have completed their summer charters. At this time of the year now, the best vessels get chartered first, and only the second-raters are left to be fought over by the late-comers and the uninformed.” He said that when tenders to supply a ferry were first invited under the previous UNC Government, some 23 companies, local and foreign, had attended the initial briefing. Two companies had bid, one offering a brand-new propeller-driven Greek ferry, the “Saos II” at an offer-cost of US$16.8M, and the other company offered a 12-year old Greek propeller-driven ferry, “The Pantocrator”. He remarked: “This tender was rescinded for reasons unknown.” He too believed that a broker had already been selected, based in Miami, USA.

The third businessman said: “The change was announced last year. Then a long silence took place. No one seemed to know what was happening. Then suddenly Frankie Khan bursts out onto a post-Cabinet meeting with this announcement, taking everyone by surprise.” “But now is the first time they are selecting a broker who will single-handedly select all the vessels to be considered and relay them to the Government. This puts too much power in the hands of one man. He could tell the Ministry anything he wants because the Ministry itself has no experts (ie consultants). “The whole process gives too much power to one man. An owner wanting to sell an old vessel can get the broker to ‘talk up’ the ship and they could ‘do a deal’. But irregularity is much harder if you have several brokers offering several vessels, where you get a range of vessels and a range of prices, and you have a team to sit down and select one.

“Under the UNC, tendering for the MF Panorama the Government had a local consultant, Mrs Ina Nicholson, and a foreign consultant, Shipdeco of Oslo, Norway. They shortlisted six shipyards until they selected the shipyard that then built the Panorama. A team left TT comprising people from different marine areas like The Port, ship inspectors, and marine engineers, went up to inspect the vessels and to shortlist them further to two or three. They were surveyed under the waterline by a marine engineer and a decision was made. “In the current instance there are several Trinidadian  local and abroad who are very knowledgeable in marine matters and who could supply very good vessels to ply the route from Trinidad to Tobago. In the Mediterrean there are several Caribbean sea captains who are familiar with fast ferries.” Meanwhile Khan has acknowledged that a broker had been chosen.