Economic Development Minister Percy Paris said the two bids did not meet the criteria for a long-term operation, adding that the government was aware this would be disappointing news for an area of the province struggling to revitalize its tourism industry.
Paris said he always thought it was optimistic to believe the ferry service could be back in operation this year, but the government sought proposals because it wanted to see whether it was feasible.
"We didn't want to play the Lord of all things and rule out the possibility of 2013 happening," Paris said. He declined to specify what was lacking in the bids.
The proposals were submitted in January by Quest Navigation Inc. of Eliot, Maine and Maritime Applied Physics Corp., a Baltimore-based engineering firm. They were evaluated by a committee that included government and private sector representatives.
Criteria listed in the government's request for proposals included financial capacity and stability, operational history and relevant experience, revenue projections and detailed startup plans, among other requirements.
Paris said the government would launch a new procurement process with the hopes of a 2014 start date and appoint a panel of tourism, community and business leaders to help boost the tourism sector in southwestern Nova Scotia.
However, he said the timelines under the new process would be more relaxed so that the government could talk to as many interested parties as possible.
"We don't want to inhibit those two operators from resubmitting another proposal," he said.
Mark Amundsen, president and CEO of Quest Navigation, issued a statement saying he remains confident the company's plan is the best option for the province.
Amundsen said he plans to meet with government officials to discuss the committee's evaluation.
"We remain confident that Quest Navigation has a strong and sustainable solution to provide year-round ferry service between Yarmouth and Portland, one that will create jobs on both sides of the border (and) reinvigorate tourism," he said.
Yarmouth Mayor Pam Mood said while she was disappointed, she understood the government's decision given that only two companies had submitted bids.
"I'm confident in the panel's efforts and the decisions that they made," Mood said. "If we are going to do this, then we absolutely have to do it right."
Mood said she believed the government understood the economic need to re-establish the ferry service.
Liberal Opposition Leader Stephen McNeil said while he was encouraged by the plan to proceed with a revamped procurement process, the government should have allowed for more time in the first place.
"By doing what the government has done — by mismanaging this RFP that was sent out — they've actually shrunk that window again," McNeil said. "They need to prepare for a tourism season long before the spring of 2014."
Bay Ferries Ltd. stopped running its high-speed ferry service between Yarmouth and Maine in December 2009 after the provincial government said it would no longer provide an annual $6 million subsidy. That ended a sea link between Yarmouth and the United States going back to the 1880s.
The government's decision to nix the subsidy prompted protests from residents and businesses in the region concerned about the blow it would deliver to tourism.
But hopes were raised last September after Premier Darrell Dexter said the government was willing to commit up to $21 million over seven years to revive the service. However, Dexter said the money would only come if a private operator could be found to run the ferry and Ottawa provided millions of dollars in upgrades for the Yarmouth terminal facility.
His announcement coincided with the release of a report by a panel that concluded about $35 million in public funds would be required along with a boost in passenger traffic to ensure a viable service.