A major cruise line strong-armed Miami-Dade County officials into killing the winning bid for a new terminal at PortMiami that would have saved $19 million in development costs so that the company could pick its own design and construction firms.
The terminal’s prospective tenant — Norwegian Cruise Lines — deep-sixed the county’s selection process for a firm to design and build the project after complaining that Miami-Dade bureaucrats put more emphasis on low pricing than the proposed building’s aesthetics, according to documents obtained by Florida Bulldog.
On Nov. 22, Miami-Dade Mayor Carlos Gimenez signed off on a memo by Internal Services Director Tara Smith rejecting all bids for the terminal project, including the winning proposal by Dragados USA to build it for $81 million — $19 million less than the county’s estimated budget. The funds to build the project are generated by fees PortMiami collects from cruise line companies. Smith noted “NCL’s dissatisfaction with the conceptual designs of the top two-ranked firms” and that “continuation of the existing process seems futile.”
Instead, Miami-Dade is now allowing Norwegian to pick the firms that will design and build the terminal through a selection process closed to the public and that is not subject to county procurement rules. Gimenez spokesman Michael Hernandez declined comment, referring inquiries to PortMiami staff.
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In a phone interview, PortMiami Deputy Director Kevin Lynskey said if the county had stuck to its guns and demanded Norwegian accept Dragados’ proposal, the company likely would not move into the new terminal. “That would have been bad for everybody,” Lynskey said. “We would have had one less cruise terminal at the port and we would have had to turn away two ships that will be bringing 5,000 passengers each.”
The deputy director acknowledged letting Norwegian handle the selection process as a private request for proposals means it will not go through the usual public scrutiny for county construction projects.
“It is not designed around public participation and does not demonstrate as much transparency as if the county was directing it,” Lynskey said. “However, every document in this deal with NCL is going to be part of the public record. And the seaport can still elect not to go forward with this project at all.”
The rejection of the Norwegian terminal proposals offers a rare glimpse into how the interests of the cruise line industry dictate real estate development at PortMiami, which served 5.1 million travelers in 2016. Three years ago, Gimenez and county commissioners quickly abandoned a plan to build a Major League Soccer stadium on Dodge Island — where the seaport is located — after an alliance led by a former executive of Royal Caribbean Cruises mounted a well-coordinated opposition campaign against the plan.
In July 2016, the county commission approved a deal with Royal Caribbean to build a $247 million new terminal to accommodate the company’s mega-ocean liners that can carry up to 6,000 passengers each. Miami-Dade also allowed the firm to handle the selection process privately. A key difference is Royal Caribbean is fully financing the construction and will pay the county $7.5 million in annual rent.
Now, Norwegian has succeeded in getting to choose its preferred design and firm for its new, county-funded terminal. In May, county commissioners approved a memorandum of understanding between Miami-Dade and Norwegian to build a terminal at an estimated cost of $100 million with a completion date of 2020. Operations from the existing terminals B and C would be combined in the new building and provide space for two 5,000-passenger ships at once.
In exchange, Norwegian will commit to berthing at least 52 ships of 3,000 passengers or more at the new terminal annually and sign a new agreement for the company’s cruise operations at Terminal J that increases a previous requirement for 30 ships per year to 45. Norwegian’s smaller lines Oceania Cruises and Regent Seven Seas Cruises have preferential berthing rights at Terminal J.
According to county documents, the new agreement is expected to generate $1.6 million in gross revenues during fiscal year 2018 and increase by 3 percent for each subsequent year the deal is in place.
The county received five proposals for the new terminal on July 10, but one firm withdrew its bid and another was disqualified prior to oral presentations before a selection committee on Nov. 3. The committee — made up of three PortMiami officials, two Norwegian executives and two bureaucrats from the county’s aviation and water and sewer departments — first evaluated the proposals submitted by Dragados, The Haskell Company and Munilla Construction Management based on each firm’s design approach, construction approach and ability to complete the project on time and on budget.
Munilla scored 661 points, followed by Dragados at 631 points and Haskell at 597 points. Norwegian’s executive vice-president Howard Sherman and senior vice-president Luigi Rezeto each gave Munilla 98 points, the highest number given to one firm by any of the committee members.
However, when the committee opened the price bids, Munilla came in at $114.9 million, significantly more than the county’s estimated budget of $100 million. As a result, Dragados pulled ahead to first place with its $81 million bid. Haskell was ranked second with its $84 million offer, while Munilla slipped to third place. Executives for the three firms did not respond to multiple Florida Bulldog attempts for comment.
Ten days later, Norwegian lawyer Patricia Baloyra made her move to short-circuit the selection process before negotiations could begin with Dragados. In a Nov. 13 letter to Julie Whiteside, a procurement coordinator in the Miami-Dade Internal Services Department, Baloyra blasted a selection committee’s scoring of proposals submitted by the three firms that made the final cut.
“NCL is beyond disappointed with how the county has handled the solicitation,” Baloyra wrote. “The county made a number of representations to NCL, which it ultimately did not honor. As a result, a majority of the design proposals are completely unacceptable.”
She complained that county officials reneged on promises to allow Norwegian to be involved in the creation of the selection and design criteria; that the selection would not be a low bid win; and that the committee would be comprised of five people so as to give more weight to the scoring by the company’s two representatives.
“Not surprisingly, the resulting top-two ranked design proposals completely fail to meet NCL’s commercial expectations,” Baloyra wrote. “NCL was essentially blindfolded and muzzled, and has now been confronted with being forced to accept plans for a boxy warehouse.”
She noted that Norwegian’s competitors at PortMiami are “benefitting from much more desirable upgrades at their terminals.”
“The county repeatedly reassured NCL that the project would not embarrass NCL or damage the NCL brand,” Baloyra wrote. “The top-two ranked designs would do just that.”
Baloyra told Florida Bulldog that she did not have permission from her client to comment further. Norwegian spokeswoman Vanessa Picariello did not respond to an email and two phone messages seeking comment.
On Nov. 20, Assistant County Attorney Hugo Benitez sent an opinion to Internal Services Director Smith that she could reject all the proposals. Benitez said any future request for proposals that involve Norwegian in developing selection and design criteria and deemphasizing price should be included as part of a binding contract.
Shortly thereafter, PortMiami and Norwegian reached an agreement to allow the company to take over the selecting of the project’s architect, engineer and general contractor, Lynskey said. He noted state law allows seaports to conduct business directly with cruise lines and cargo companies and that PortMiami would still oversee the terminal’s construction. In addition, Norwegian will be responsible for paying any costs that surpass the seaport’s $100 million budget, Lynskey said.
“Anything above that NCL can elect to pay the money upon completion or they may institute a capital recovery charge as part of a passenger’s fee,” he said. “We ended up being very happy with this arrangement.”
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