CONTRACT FOR THE PROCUREMENT OF SERVICES FOR THE BERGEN- KIRKENES COASTAL ROUTE FOR THE PERIOD 1 JANUARY 2012 TO 31 DECEMBER 2019 l Introduction Based on open competitive bidding performed for the procurement of maritime transport services for the Bergen-Kirkenes route, on the basis of a tender submitted on 8 November 2010, a contract was signed with Hurtigruten ASA. The following documents form part of the contract: a) the contract (this document) b) any amendments, clarifications or addenda by the contracting authority before expiry of the tender deadline c) the tender specification, including annexes d) minutes and other written material from explanatory discussions, or negotiations where permitted and which have been approved by both parties e) the licensee's tender In the event of any discrepancy between the documents, they apply in the above-mentioned order. 2 Definitions The "contracting authority" is the Ministry of Transport and Communications The "supplier" is Hurtigruten ASA The "tender specification" is the tender specification published on Doffin on 30 June 2010 with subsequent clarifications. The "normal tariff" "Port-to-port passengers" is the tariff for fares for port-to-port passengers that applied on 1 October 2004, adjusted in line with the Retail Price Index. are passengers who purchase tickets for travelling on a chosen route in accordance with the normal tariff, with any supplement for cabins and/or meals at their option. Prices for supplementary services must correspond to published prices for the selected standard of cabin and meal. The overall price must in such cases equal the sum of the ticket price and individual prices of the selected supplementary services.
"Other passengers" are those who are not "port-to-port passengers", i.e. who purchase travel products for specific routes, defined by the supplier, and which include at least one overnight cabin stay and at least one meal on board, where the supplier has published a combined price for the items included and which cannot be broken down into the individual published prices for the same items, including that the passengers will not be entitled to defined discounts on the travel component of the product. Other passengers also include those purchasing a travel product, defined by the supplier, with at least the above-mentioned supplementary services at a combined price, specified per day but where the passengers themselves select the route where these conditions apply. 2 3 Contract term/licence This contract is valid for a period of eight years from 1 January 2012, expiring on 31 December 2019. The term of the contract is contingent on the Norwegian parliament's annual allocation to cover the state's remuneration (see 5 - l). The Ministry is entitled to extend the contract by up to 1 year. Any extension must be notified in writing to the supplier no later than 1 year before expiry of the contract term in accordance with the first para. The contracting authority undertakes not to sign contracts with other parties for the procurement of similar services on the Bergen-Kirkenes route during the contract term, as long as the coastal route is in ordinary operation. In accordance with the tender specification, the supplier is awarded a licence for maritime transport for the Bergen-Kirkenes route, valid for the contract term. In the case of an extension, the duration of the licence will be correspondingly extended. During the contract term, the supplier shall fulfil the requirements for holding a licence. Any revocation of the licence under 29 of the Professional Carriage Act renders the contract void. 4 The supplier's obligations 4-1 Route production requirements l. The daily, year round and consistent sailings between Bergen and Kirkenes and vice versa shall be performed, with calls at 32 intermediate defined ports of call on the northbound and southbound sailings with the exception of Vadsø, where calls are only required on the northbound sailing. 2. On the Bergen-Kirkenes and Kirkenes-Bergen routes with intermediate stops, ordinary carriage of port-to-port passengers shall be provided, with calls northbound and southbound. For the Tromsø-Kirkenes and Kirkenes-Tromsø routes, freight transport shall also be provided.
3. Omission of up to 10 days of operation in agreed production per ship per annum due to planned maintenance and unforeseen operational disruption linked to the agreed production (off-hire) is considered to be proper fulfilment and shall not entail a deduction in the agreed remuneration in accordance with 9-2. The same applies to up to 2 days of operation in addition per ship per annum due to a vessel being used for cultural activities and similar. Unused allowances for production non-performances may not be carried forward from one year to the next. 4. Schedules must at all times be approved by the contracting authority; see 28 of the Professional Carriage Regulation. Schedules and fares shall be published; see 28 and 29 of the Professional Carriage Regulation. In the event of cancellations and operational disruptions, the supplier shall appropriately provide affected parties with necessary information as early as possible. 4-2 Capacity and vessel requirements, employees' rights etc. l. Vessels used on the coastal route shall as a minimum have passenger capacity for 320 passengers, berth capacity in cabins for 120 passengers, and freight capacity for 150 euro pallets (in a cargo hold with a normal load height). The vessel must have passenger facilities which include refreshment facilities for passengers. 2. Back-up vessels may only be used when a main vessel (see annex G of the tender specification) is not operational. Any back-up vessel must fulfil at least 80% of the capacity requirements. Over and above the capacity requirements, back-up vessels must fulfil the vessel requirements. 3. Vessels used must have valid certificates for the trade areas in question, and must be classified by a specified classification society; see the tender specification, item 4.4 Vessels. 4. Vessels must have a valid Safety Management Certificate, and be operated by a shipping company with a valid certificate of approval for safety management; see the tender specification 4.4.2 and 3.2. 5. The vessels must satisfy the accessibility requirements; see item 4.4.6 of the tender specification. 6. There is a requirement for P&I insurance and hull insurance; see 4.4.3 of the tender specification. 7. A flag state declaration is required for vessels with non-norwegian flags; see item 4.4.7 of the tender specification. 8. The crew must have competence and safety training in accordance with the Norwegian Maritime Directorate's rules for the trade area and the requirements defined in the tender specification; see items 4.5 and 4.7 of the tender specification. 9. The supplier undertakes to ensure that the employees directly working to fulfil the contract have pay and working conditions that are not less favourable than ensues from applicable national tariff agreements or which are otherwise normal for the location and profession in question. A corresponding obligation also applies to subcontractors. 3
4 4-3 Fare and discount requirements Maximum fares for port-to-port passengers must be approved by the contracting authority. An approved tariff is taken to be the normal fares tariff that applied on the Bergen-Kirkenes coastal route on 1 October 2004, adjusted in line with the Retail Price Index. Subsequent fare changes to the normal tariff must be approved by the Ministry. The supplier has full freedom to accept lower fares. Fare changes to the normal tariff within recent adjustments in the Retail Price Index may be taken to be approved. Similarly, acceptance may be anticipated for increasing fares on a seasonal basis (seasonal surcharge) by up to 10% relative to the normal fares level for the current year. For other passengers, the shipping companies have full freedom to set fares. The same applies to cabin and meal prices and freight transport. For port-to-port passengers, discount schemes shall be offered, calculated as percentages of the normal fares tariff (including any seasonal surcharge) as follows: - Children between 4 and 15 years of age are entitled to 50%. Children under 4 travel free if they do not occupy their own berth. - Seniors' discount of 50% is granted to persons aged 67 and above, and the same discount to blind and disabled persons. The same discount is granted to spouses/cohabitants travelling together and registered partners, regardless of age. - Companion discount: Companions travel free when the person whom he/she is accompanying is able to produce a companion card issued by their local authority. - People on military service are granted a 50% discount for journeys undertaken during their period of service. The discount does not apply to officers or to journeys made to attend the initial service. The above-mentioned discount schemes may not be combined, except that the companion discount applies even if a person with a companion certificate is entitled to a discount on their own account. 4-4 Accounting and other reporting requirements l. The supplier shall supply statistics and accounting reports in accordance with forms laid down by the contracting authority; see item 4.9 in the tender specification. 2. If the supplier operates other activities outside of this contract: a) separate accounts and production statistics shall be submitted in accordance with the tender specification, chap. 4.9. b) a management report shall be submitted in accordance with the requirements in the tender specification, chap. 4.9. c) an audit verification shall be submitted in accordance with specifications laid down by the contracting authority.
5 3. Reporting shall be made in accordance with deadlines determined by the contracting authority following consultation with the supplier. 4. Before commencement, the supplier shall produce a description of the systems for ensuring that the requirements in items 1 and 2 are fulfilled. The Ministry shall approve this documentation. In the absence of such approval, the Ministry may require commencement to be deferred until adequate documentation can be produced. 5. The supplier shall provide the contracting authority on demand with any relevant information of an accounting or operational nature for verifying the execution of the contract. The same applies if this is demanded by the Office of the Auditor General or the ESA. 6. The contracting authority may initiate a tax audit or other control measures at its discretion at the supplier's premises and on vessels. 7. The supplier undertakes on his own initiative to inform the contracting authority of material changes in organisation, management and ownership. 4-5 Requirement for provision of security The supplier shall provide combined security for his fulfilment of this contract. The security shall cover any remedies for breach and recovery costs associated with the contract. The security shall constitute 15% of the annual public procurement at any time. The security is to be provided as an unconditional guarantee from a bank or insurance company, or placed in an escrow account. The security or deposit shall be for the benefit of the contracting authority, and shall not be terminated during six months after expiry of the contract unless otherwise agreed by the contracting authority. 5 The contracting authority's obligations 5-1 The contracting authority's remuneration The contracting authority shall pay for the service for each individual year as follows: For 2012: NOK 700 million For 2013: NOK 683 million For 2014: NOK 666 million For 2015: NOK 649 million For 2016: NOK 631 million For 2017: NOK 614 million For 2018: NOK 597 million For 2019: NOK 580 million For the entire contract period, NOK 5120 million. For the optional year of 2020, remuneration is NOK 640 million. The figures stated are in 2011 prices.
6 The agreed compensation for the individual years is made subject to the Norwegian parliament making available the necessary amounts through the annual budget decisions; see 3. Agreed remuneration excludes value-added tax. 5-2 Price adjustments Agreed remuneration stated in 2011 prices shall be price-adjusted in accordance with Statistics Norway's cost index for domestic sea transport - sub-index for ferries. Forward calculations shall be based on average changes in the index for the last 12 months up to 5 February of the year prior to the adjustment date. Accordingly, the price adjustment for 2012 will be based on changes measured in the period 2010 to 2011 etc. If the above-mentioned cost index is not available, Statistics Norway's Retail Price Index will be used. 5-3 Payment of the remuneration The remuneration shall be disbursed monthly, with a due date of the 1st day of the month. 6 Changes in production during the contract term During the contract term, both parties may request negotiations concerning changes in production. The change must not be considered to be significant and may entail an increase or reduction in production, changes in quality and capacity requirements and the addition or suppression of individual port calls. The change may apply to the remainder of the contract term or for a shorter period. Remuneration shall be adjusted in accordance with cost and revenues ensuing from the change. The allocation of costs and revenues shall be based on accounting separation; see 4-4, items 1 and 2. 7 Renegotiations l. In the event of amendments to acts, regulations or statutory orders which the parties could not have reasonably foreseen on signing the contract and which entail material extra costs or savings for the contract for the public procurement of the service, each of the parties may demand negotiations concerning extraordinary adjustment of the remuneration from the contracting authority, a change to production or other measures. In such cases, the counterparty is entitled to all necessary documentation. Accounting separation shall form the basis of any renegotiation of the contract; see 4-4. It is considered to be of material significance for the party when this constitutes more than 5% of the annual agreed remuneration for the year in question. When calculating significance in relation to the threshold, an aggregated calculation shall be performed of all above-mentioned factors. 2. If the applicable agreement with the state concerning the Business Sector's NOx Fund, as applied on the tender date of 8 November 2010, is amended during the contract term, the remuneration to the supplier shall be corrected for the effect of this on the public procurement.
7 The same applies to amendments implemented in relation to the net wage scheme as applicable on the tender date. Similarly the remuneration to the supplier shall be corrected for the effect of any introduction of new CO2 duties, whether on fuel or relating to emissions. Changes linked to the matters mentioned here and which entail a reduction in the supplier's costs shall correspondingly entail a reduction in the state's remuneration. Entitlement to necessary documentation and a requirement for accounting separation apply correspondingly; see item 1. Changes in the state's remuneration in this paragraph apply when the effect for the individual party comprises more than 5% of the annually agreed remuneration for the year in question. When calculating significance in relation to the threshold, an aggregated calculation shall be performed of all above-mentioned factors. In the event of exceeding the threshold referred to, the entire effect is compensated for. 8 Force majeure Force majeure occurs when one of the parties is prevented from fulfilling the contract due to factors outside of his control, such as war, terrorism, extraordinary weather conditions, statutory injunctions and prohibitions, general strikes and lock-outs. Extraordinary weather conditions means weather conditions where the sea and/or wind are of such a nature that the master of the vessel does not find it prudent for reasons of safety to continue sailing and/or make calls at specific ports. The contracting authority may require that documentation is produced concerning wave heights and wind for relevant waters during the applicable period from the Norwegian Meteorological Institute. The list is not to be considered exhaustive but must be taken as a guideline for what may be considered to be force majeure. Impediments which the parties should have taken into consideration in signing the contract or could reasonably be expected to avoid or overcome the consequences of, are however not considered to be force majeure. If one of the parties fails to fulfil the contract due to force majeure, the party is exempt from liability to pay compensation and liquidated damages. In such cases, the other party is however relieved of his obligations under the contract which correspond to the non-performance of the other party's services. This does not however apply when this is due to extraordinary weather conditions. Any cancelled production ensuing from force majeure shall not be considered as a non-conformity in the production under 4-1, item 3. 9 Breach by the supplier 9-1 Breach A breach occurs if the service is not performed in compliance with the requirements set out in the contract; see 4. 9-2 Non-performance in production In the event of non-performance in production, including omitting a port call, remuneration for the vessel(s) is withheld for the period during which the non-performance persists. Each omitted port call corresponds to 1/6 day.
8 In addition, liquidated damages are applied corresponding to the agreed remuneration per vessel for the period during which the non-performance persists. If non-performance in production is due to documentable technical factors or unforeseen yard stays for vessels which are not comprised by 4-1 item. 3, there is no entitlement to liquidated damages. If a non-performance in production is due to gross negligence or is intentional, including the supplier removing a vessel from service or deploying it for another activity, the contracting authority may additionally claim compensation for direct losses due to non-performance in production. The contracting authority must document the direct loss for which compensation is claimed. In lieu of a claim for compensation, the contracting authority may require forfeit of the saving or earnings which the supplier achieved through such an arrangement. In such cases, the contracting authority is entitled to examine all information necessary for calculating the supplier's savings and earnings. 9-3 Other breaches If the supplier fails to fulfil other obligations under the contract the contracting authority may require the circumstances to be remedied within a defined deadline. The contracting authority shall set down the requirement for remedy in writing. The contracting authority may stipulate that the supplier shall pay daily liquidated damages of 0.05 per mill of the remuneration for the year in question until the circumstances have been remedied. The liquidated damages accrue from the defined deadline and may only be applied if the claim has been notified in writing. 9-4 Termination The contracting authority is entitled to demand cancellation of the contract in the event of material breach. Material breach is taken to mean repeated breaches of obligations, including failure to follow up repeated demands for remedy. If the supplier becomes bankrupt or is demonstrably or by his own admission insolvent, the contracting authority may require termination of the contract unless it is established without undue delay that the contract will be completed in conformity with its terms and conditions. In the event of termination of the contract, awarded licences lapse. In the event a licence is revoked, the contract is considered to be terminated. 10 Breaches by the contracting authority In the event of overdue payment of the agreed remuneration, the contracting authority shall pay interest in accordance with Act No. 100 of 17 December 1976 relating to interest on overdue payments etc. The contracting authority is entitled to offset monetary claims against the supplier due to the supplier's breach under this contract.
9 The supplier is entitled to demand termination of the contract if the contracting authority is in material breach of its obligations. It is considered a material breach when the contracting authority repeatedly and following written notice from the supplier fails to fulfil its obligations. The supplier shall set out a demand for termination in writing and fulfil his obligations for at least one month after setting out the claim. In the event of termination, the contracting authority shall pay the supplier compensation for lost earnings which he would have made for the remaining part of the contract if it had endured. 11 Disputes Disputes between the parties relating to this contract should be attempted to be resolved by mutual agreement. If a dispute is unable to be resolved amicably, either of the parties may bring legal proceedings. The legal venue of all proceedings arising from this contract is the Oslo District Court. Oslo, 13 April 2011 For the State For Hurtigruten ASA