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Puerto Rico Fast Ferries challenges maritime transportation P3 contract

Puerto Rico Fast Ferries LLC, a company that has been providing supplemental services to the government’s Maritime Transportation Authority (MTA) for ferry connections between Puerto Rico, Vieques and Culebra, has filed a legal challenge against the recent 23-year public-private partnership concession granted to HMS Ferries Inc. to take over the operation.

In a 56-page legal recourse presented at the San Juan Court of Appeals, PRFF seeks a revision of the requirements of the proposals submitted for the contract as part of the selection process carried out by the government’s P3 Authority.

In its claim, the company states that the government erred when: It rejected PRFF’s proposal over alleged uncertainties over payments during the 20 years of the contract after an initial three-year transition period; It turned down the company for not complying with the bond payment required to participate in the bidding process; It “used an ambiguous, unintelligible and inconsistent” evaluation process and “by not concluding that PRFF’s proposal represented the best value for the MTA.”

The company claimed that HMS’s proposal is $47 million — in real dollars — more expensive than what PRFF put on the table.

Earlier this month, the P3 Authority announced it had chosen HMS Ferries for the concession, with PRFF coming in second. Through the agreement, HMS Ferries must manage the MTA’s fleet of ferries, oversee the maintenance of the terminals, facilities and vessels, the ticketing services, and operations at the MTA’s Isla Grande headquarters.

While HMS Ferries did not offer to add its own vessels to the rotation, as this media outlet confirmed, PRFF included two charter boats in its proposal to be able to fulfill the service levels required in the contract.

Among other claims, PRFF stated that the process to award the contract to HMS Ferries “was plagued with inconsistencies that showed favoritism in favor of HMS. While HMS allegedly submitted a fixed-cost proposal, PRFF presented a proposal that considered variable costs related to insurance, fuel prices and other operational overhead, such as repairs and maintenance.

“The P3 Authority did not consider the inherent reality of costs fluctuations and erroneously labeled this party’s proposal as deficient, blindly favoring HMS, which totally omitted those factors that couldn’t be looked over,” according to the legal claim.

“However the arbitrariness and subjective bad faith of the P3 Authority is that despite relying on said alleged failure to subtract points from the PRFF proposal, it carried out ‘negotiations’ with HMS, also agreeing to establish a variable cost structure to accommodate exactly the same elements that PRFF was honest with and incorporated into its proposal from the beginning,” the claim states.

PRFF also argued that the required $5 million bond to participate in the public-private partnership process, which the company’s President Rick Newman has said was “exceedingly burdensome” in prior interviews, was “discriminatory for putting local companies at a disadvantage” as no local financial institution will provide that credit guarantee.

Finally, the company argued that the P3 Authority’s review process showed incongruencies and deficiencies, such as a “lack of uniformity and logic when giving points to different factors” in the proposals.

PRFF is asking the San Juan Court of Appeals to revoke the P3 Authority’s administrative decision.

Author Details
Author Details
Business reporter with 30 years of experience writing for weekly and daily newspapers, as well as trade publications in Puerto Rico. My list of former employers includes Caribbean Business, The San Juan Star, and the Puerto Rico Daily Sun, among others. My areas of expertise include telecommunications, technology, retail, agriculture, tourism, banking and most other segments of Puerto Rico’s economy.

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