Join our webinar, 'Beyond the Bolt' with Jon Hansen 8th February 2019 at 3:15pm GMT
On Saturday the 29th December, news broke out in the UK that the government had awarded more than £102.9 million worth of contracts in case of a ‘No-deal’ Brexit to charter additional ferries for the transportation of goods to and from the UK.
The government had implemented this plan in an attempt to relieve some of the potential ‘severe congestion’ at Dover, to the nearby ports of Plymouth, Poole and Portsmouth. With a ‘no-deal’ Brexit likely leading to increased border checks and significant delays in the delivery of critical goods.
The three suppliers awarded the majority of contracts value were:
● £46.6m to French company, Brittany Ferries
● £42.5m to Danish shipping firm, DFDS
● £13.8m to British company, Seaborne Freight
Whilst at first glance it may seem sensible to assume that the government has awarded the contract to include three established firms. Two very large and widely known international firms in Brittany Ferries and DFDS and a logical British alternative. However, you would be wrong.
Seaborne Freight which was awarded the £13.8m contract to run a freight service between Ramsgate and Ostend ports has never actually run a ferry service before. In addition, the company doesn’t have any ships or prior trading history at all. Since the award of the contracts, it’s stated that they are undergoing a phase to locate suitable vessels, make arrangements with the ports, build entirely new infrastructure, hire and train crew staff. With the ‘promise’ of a launch of services before 29th March 2019.
Further to this, Seaborne Freight was formed two years ago and yet hasn’t purchased a single vessel or completed any notable milestone to setting up the service within those years. While they are attempting to undergo a ferry service in a location that has not been operated in since 2013 and the collapse of TransEuropa.
However, it’s important to note that without the award to Seaborne, the government would be in a position where it had appointed two firms to assist in the potentially critical case of a no-deal Brexit, both of would have been based in the EU.
Something that will anger procurement professionals universally is the fact that not only did the Department for Transport have “full knowledge that Seaborne is a new shipping provider” but that the tender process took place without a prior publication of a call for competition or following the strict OJEU process.
Whilst Seaborne’s bid was the only bid put forward for this ‘hidden’ tender. The Department of Transport has stated that a wide range of operators had been approached to be invited to the tender. However, no evidence has been shown to support this claim.
Why wasn’t the OJEU process followed?
The contract awards notice reveals that it was exempt because of “a situation of extreme urgency” with the UK’s upcoming EU departure date. However, remarkably they chose a firm which had little or no chance to launch a freight service before the date of 29th March, showing an obvious lack of due diligence on the part of the Department for Transport. Raising the question of how the tender could be exempt from the OJEU process due to time-scales and yet chose a supplier that can’t facilitate in the short-term deadline either.
Typically defence and security contracts also avoid the OJEU process by following a separate set of regulation (DSPCR) if “withholding of information is acceptable if it is contrary to the essential interested of security” and “is necessary for the protection of the essential interests of security which are connected with the production of, or trade in, arms, munitions and war material”. However, as this is clearly not the case with this tender, it’s a questionable decision at best.
Are they living in a ferrytale?
To make matters worse for the Department of Transport, Seaborne Freight that was awarded the £13.8m contract had in its original terms and conditions, advisement to check goods before “agreeing to pay for any meal/order”. An obvious pointer to them using terms and conditions intended for a takeaway fast food restaurant and displaying the lack of diligence completed on behalf of the Department for Transport.
However, the shocking truth of this tender is that even if their services are no longer needed (due to a deal being reached with the EU and the UK not going ahead with a no-deal Brexit), the three chosen firms are guaranteed to retain at least a significant portion of their award. Whilst if it wasn’t needed, the government would apparently seek to sell the extra capacity back to the market. However, this would be likely at a significant loss. As the additional costs in transporting the goods (and setting up the transportation of the goods) through these alternative ports would be inefficient in comparison to the goods being transferred to Dover.
What are your thoughts? Could the Department of Transport have done better or is this just a case of having to plan for a no-win scenario?
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