The Ministry of Public Works, Housing, and Mobility continues with the execution of the Island Ring project between Santiago del Teide and El Tanque after the Superior Court of Justice of the Canary Islands (TSJC) annulled the award to the Temporary Joint Venture UTE FCC Construcción, Syocsa-Inarsa, and El Silbo. The regional government is analysing the implications of the ruling and the decisions to be taken.
Both the President of the Canary Islands, Fernando Clavijo, as well as mayors and entrepreneurs express their concern about the risk of work being halted, with completion just over a year away. “It makes no sense,” stated Clavijo, a view shared by José Miguel Rodríguez Fraga, the mayor of Adeje, who believes that “it would only worsen the problem we already have” in terms of mobility.
In a ruling issued on the 14th of last month, the First Section of the Administrative Litigation Chamber of the Superior Court of Justice of the Canary Islands ruled in favour of the Joint Venture Obrascon Huarte Lain, SA-Sociedad Anónima-Trabajos y Obras-Excavaciones Bahillo, SL-Asfaltos Bahillo, SL, accepting their appeal against the decision to exclude their bid from the tender for which they had already been awarded and to ultimately assign it to the FCC JV.
OHSfhe. Consequently, the autonomous government is analysing the extent of the ruling’s implications and the decisions to be made.
This poses a real risk for public funds following the ruling by the Administrative Litigation Chamber. “The work is well advanced, and we will have to see how this ruling is carried out,” reflected Clavijo before raising some of the uncertainties, questioning “whether it has any consequences for the current awardees or whether indemnities will be derived for the contractor who rightfully won, as we pointed out at the time and which the TSJC has now agreed with.” From his perspective, “it’s a problem because, in the end, the Canary Islands lose one way or another.”
Fernando Clavijo hopes that it will not be necessary to halt the execution of the works to provide Tenerife with this new road, including the Erjos Tunnel. At the same time, he remained cautious and advocated waiting for the legal services to pronounce, “but what is done wrong, in the end, ends badly,” he concluded.
The Roots of the Conflict
The incident took place during the extension of the 2015-2019 term. On the 4th of June of the final year, with the CC government in office after the elections (26th of May 2019), the Minister of Public Works, Pablo Rodríguez (also currently in office), awarded the construction of the Island Ring closure between Santiago del Teide and El Tanque to the UTE of OHL. This bid had the highest score from the Contracting Board (95.5). The FCC JV, the second highest scoring (92) among the six competitors, challenged this decision on the 26th of June before the Administrative Tribunal of Public Contracts of the Autonomous Community, which ruled in its favour on the 26th of September. These were the early months of the government formed by PSOE, Nueva Canarias, Sí Podemos, and Agrupación Socialista Gomera. Sebastián Franquis, their Minister of Public Works, Transport, and Housing, had to cancel the award to the UTE of OHL (30th of September 2019) and awarded it to the FCC JV on the 18th of October of the same year.
“The work is well advanced, and we will have to see how this ruling is carried out.”
President of the Government of the Canary Islands, Fernando Clavijo, yesterday stated that the so-called Flower Pact “wanted to change everything and ended up with a botched job and inappropriately.” He announced that the Ministry of Public Works is working with the legal services of the regional administration to assess the possible consequences of the Canary Islands Superior Court of Justice’s decision for the regional government and ultimately for all Canarians.
Consequently, Clavijo highlighted the real risk for public funds following the Administrative Litigation Chamber’s ruling. “The work is well advanced, and we will have to see how this ruling is carried out,” he pondered before pointing out some of the uncertainties that arise, such as “whether there are any consequences for the current awardees or if there will be compensations to the contractor who legally won, which was what we stated at the time and which the TSJC has now justified.” From his perspective, “it’s a problem because, ultimately, Canary Islands lose out either way.”
Uncertainty
The completion of the Island Ring road is one of the most anticipated and demanded projects in the region and on the island. The decision of the TSJC to annul the awarding of the works raises uncertainty in the area. Mayor of Adeje, José Miguel Rodríguez Fraga, did not hesitate to point out that “it is bad news,” as with the mobility problems, roads, and traffic issue, we cannot afford any setbacks like this because ultimately, it is the citizens who pay for them.” The cost will be borne either through potential compensations resulting from the judgment’s application or through a delay in its completion if work is halted.
This is one of the most concerning aspects. “I hope that this decision does not lead to the halt of the work, as that would only worsen the problem we have.” The mayor of Adeje acknowledged that “we have an administrative system and regulations that are well thought out to ensure processes, but that sometimes make it very difficult to advance projects or endlessly delay them. Hopefully, this will not be the case.”
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From a business perspective, the analysis of the situation created does not differ from the political sphere. Javier Cabrera, President of the Circle of Entrepreneurs and Professionals of Southern Tenerife (CEST), expressed a certain disillusionment at what can be described as “a new blow through the courts.” Given the current circumstances in the southern region with the delays in the completion of projects aimed at improving mobility – such as the two-year delay in the Las Chafiras junction and the remaining third lane from San Isidro to Adeje without progress in its awarding, in addition to the review of the false tunnel on the motorway between Playa de Las Américas and Fañabé, among others – Cabrera concludes: “Public works in Tenerife are a tragedy.”
“We now have to wait and see if this ruling will impact the pace of a fundamental project.”
“We now have to wait and see if this ruling will impact the pace of a fundamental project.”
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The president of the business collective in the southern region of the island questions the public management, in general, concerning road infrastructure: “The lack of results from the council and its lack of interest in promoting the necessary works for Tenerife are compounded by judicial setbacks, stemming from procedural and decision-making issues that, as it is evident, are not competent.” The President of the Circle of Entrepreneurs focused on the economic aspect of the consequences of implementing the TSJC ruling. “Now, we must wait and see if this ruling will impact the progress of a fundamental project for Tenerife and if it will not have serious economic repercussions for the locals.”
The joint venture of OHL was disqualified from the tender for the project called Update of the construction project: new project for the El Tanque-Santiago del Teide section (closure of the island ring road of Tenerife) “for failing to meet the labor and salary requirements stipulated in the Collective Agreement for Construction in the province of Tenerife.” The TSJC determined that “such non-compliance has not been proven.” Furthermore, the Court ended up “confirming the provisions of the order of the Minister of Public Works and Transport (…) through which the feasibility of the UTE-OHL offer was declared and the work was awarded to them”.
Now, a period opens during which the legal services of the Autonomous Community will determine the future of the island road infrastructure project. The ruling of the Superior Court of Justice of the Canary Islands could have economic consequences for the administration, the extent of which is yet to be defined.
The joint venture Obrascon Huarte Lain, SA-Works and Excavations Bahillo, SL-Asphalt Bahillo, SL won the bid for this project with a proposal of €213,491,998 compared to the base bidding budget of €365,756,887. A highly competitive offer that the Court also did not find proven. The Court specified that the OHL joint venture’s bid did not violate labor regulations, where only a deficit of €13,200 in terms of structure supervisor costs was identified, an insignificant amount compared to the labor costs of the proposal, €14,277,522, two million above the amount set in the agreement (€12,276,789).
On November 25, 2019, the work awarded to the joint venture of FCC began at €240,370,796, although its cost today has risen to €263.5 million due to price adjustments. The completion of the project is expected by mid-2025. It involves an 11.3-kilometer road between El Tanque and Santiago del Teide, including the 5.1-kilometer Erjos Tunnel. The Canarian government is working to ensure that the entire route has four lanes; currently, there are only four lanes in the tunnel.
