The Public Contracts Review Board (PCRB) has rejected a challenge to a Transport Malta decision to grant a “secret” three-year extension on a public service concession without first issuing a public call, in contravention of EU rules.

The challenge, filed by Supreme Travel against Transport Malta, involved the irregular augmentation of an exclusive government contract to provide scheduled passenger ferry services between Sliema, Valletta and Cottonera to Marsamxetto Steamferry Services, a joint venture between the Fortina Group’s Zammit Tabonas and the Bianchi Group.

In its decision, the PCRB did not address the merits of the challenge, but declared that the case was inadmissible as, according to its interpretation of the law, the objection should have been filed within six months from the signing of the new contract.

The Board, conducted by substitute chairman Charles Cassar, said that while the contract extending the public concession was signed in March 2020, the application requesting the ineffectiveness (cancellation) of the contract was only filed in February 2021 – almost a year later.

Thus, according to the PCRB, the six-month period allowed by the law for such a challenge had already passed when the challenge was filed, nullifying the challenge.

The PCRB rejected Supreme Travel’s arguments that it had been impossible to file a challenge earlier because the concession was kept “secret” by both Transport Malta and the government.

The Shift revealed in March that the undisclosed concession extension had been agreed, though no public announcement had been made by any of the players involved, including Transport Malta.

This followed parliamentary questions on the subject from Nationalist MP Mario Galea, which were answered by Transport Minister Ian Borg, who confirmed the pact extension award, though he offered scant detail.

Supreme Travel filed its contestation immediately afterwards.

While Supreme Travel argued that it acted as soon as information about the irregularity was uncovered, the government-appointed PCRB rejected the claim on the basis that such eventualities are not mentioned in the rules.

“The concession contracts regulations do not mention any circumstances where the six-month period could be extended,” the PCRB insisted.

The Board’s decision can now be contested in front of the Appeals Court, if Supreme Travel insist on their challenge.

A lucrative extension kept secret

In 2012, following a public call for tenders, Marsamxetto Steamferry Services Ltd won the eight-year contract to provide the ferry service between the three harbour towns.

According to EU public procurement rules, at the end of the eight-year period, the government was obliged to issue a new call and re-open the concession for competition.

However, this did not happen.

Instead, the government, through Transport Malta, entered into direct negotiations with Marsamxetto and signed a three-year extension. This was justified as being in compensation for “damages” claimed by the concessionaire against Transport Malta.

According to correspondence seen by The Shift, Marsamxetto made its original demand for damages to James Piscopo, then Chairman of Transport Malta. The company was seeking a 15-year extension to its contract because, it claimed, the government had breached its contractual obligations, including the building of adequate quays for Marsamxetto’s ferries.

Instead of contesting the claims in court, as is standard procedure in such cases, Transport Malta negotiated a whittled-down version of the company’s claims and signed the disputed three-year extension, which is set to start only after the ongoing pandemic is over.

This means that the issue of a new tender and the re-opening of the concession to competition has been postponed by a number of years, which are still to be determined, to the sole benefit of Marsamxetto.

The final agreement was signed by Transport Malta Chairman Joseph Bugeja, who took over from Piscopo after his resignation.

A few weeks ago, The Shift reported that James Piscopo is now an advisor to the Fortina Group, one of the shareholders of Marsamxetto among other transport and tourism investments.

During his stint at the helm of Transport Malta, Piscopo was also a shareholder in companies together with members of the Zammit Tabona family.