Road Administration takes island air service procurement to court ({{contentCtrl.commentsTotal}})

Aircraft operated by Transaviabaltika between Tallinn and the major Western Estonian islands of Saaremaa and Hiiumaa.
Aircraft operated by Transaviabaltika between Tallinn and the major Western Estonian islands of Saaremaa and Hiiumaa. Source: Transaviabaltika

The Road Administration contested with Tallinn Administrative Court a decision of the Public Procurement Review Committee simultaneously declaring an offer by Nordica subsidiary Regional Jet compliant in the Tallinn-Kuressaare air service procurement, and canceling the decision declaring Lithuanian carrier Transaviabaltika the winner of the tender.

Meelis Telliskivi, director of Traffic Service at the Road Administration, previously told BNS that if the Public Procurement Review Committee's decision is challenged in court, it will not be possible to enter into a contract on the terms set out in the procurement's supporting documents, i.e. beginning June 1. In this case, the Road Administration plans to extend the public service contract with current carrier Transaviabaltika by up to two years.

Spokespeople for Tallinn Administrative Court told BNS that the Road Administration filed an appeal with the court on Monday.

The Public Transport Act stipulates that if a public service contract expires before the settlement of a request for review or an appeal, the procurer can renew the public service contract with the existing carrier on the same or new conditions until a new carrier is found.

With a directive issued in early April, Director General of the Road Administration Priit Sauk declared tenders submitted by Lithuania's Transaviabaltika and Estonia's Regional Jet compliant, and also deemed the latter's offer successful. The same directive, however, did not qualify Regional Jet, which is why Transaviabaltika's tender was declared successful, it appears from a decision of the Public Procurement Review Committee.

The Road Administration did not qualify Regional Jet, a joint venture of Estonia's Nordica and LOT Polish Airlines, because the company's own capital stood at a deficit of €2.4 million as of the end of 2017. Regional Jet challenged the Public Procurement Review Committee's decision, as the company had submitted Nordica's guarantee that, if necessary, the latter would provide the subsidiary funds in fulfilling the tender contract and on the basis of solidarity would be responsible for fulfilling the tender contract.

As according to the European Court of Justice (ECJ), EU law does not require that an individual wishing to enter into a contract with a contractor be able to fulfill the contract directly using their own resources, the law provides the enterprise with the right to rely on the resources of other undertakings if the bidder has access to the funds of those undertakings in fulfilling the tender contract in question. As Nordica's own capital stood at €27.2 million as of the balance sheet date of 2017, the Public Procurement Review Committee believed that this sufficed for the qualification of Regional Jet's offer.

Regional Jet offer more expensive than Transaviabaltika

As Regional Jet's offer was 41 percent more expensive than that of Transaviabaltika — at a cost of €8,534 and €6,023 exclusive of VAT, respectively, per journey — the former received more value points as the age of the offered aircraft was also assessed. Transaviabaltika planned to service the Kuressaare route with a 46-seat ATR42-300 type aircraft; Nordica and Regional Jet offered to service the route with a 70-seat ATR72-600.

According to the contract entered into three years ago, the size of the subsidy paid from the state budget on the Tallinn-Kuressaare-Tallinn route was €1,980 per departure.

Nordica spokesperson Toomas Uibo told BNS a week ago that although Regional Jet's offer was slightly more expensive than the expected cost of €19.3 million, the bid received more value points than that of its competition in the criteria concerning the age of the aircraft. "Overall, the point score was significantly higher than those of other bidders," he said.

Last July, the state began seeking a service provider for its air routes connecting Tallinn to Saaremaa and Hiiumaa, Estonia's two largest western islands, for a period of five years, as the current contract is set to expire May 31.

The procurement for air services on the Tallinn-Kärdla route was won by Transaviabaltika, which will likely continue serving the route with a 19-seat Jetstream 32 aircraft. The estimated subsidy for the Kärdla route is altogether €6.2 million; the exact volume will be determined upon the signing of the contract.

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Editor: Aili Vahtla

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