Editorial | Sunday, 31 January 2010

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Transparency and procurement procedure

It went unnoticed by most of the media, but it seems that the standard procedure for adjudicating public tenders has been significantly altered in an important detail since 2008.
It seems also that the alteration in question – which can be argued to have favoured some bidders at the expense of others – was not in any way publicised prior to its sudden enactment.
The upshot is that most companies that have submitted bids for public contracts in the past two years, were most likely unaware that the adjudication goalposts had only recently been shifted. In fact, these companies would only have found out about the situation upon being informed of the failure of their own bid – a situation made all the more unpalatable by the prohibitive charges required of bidders to file an appeal against their rejection. (In the case of one recent contract, these amounted to €35,000).
But it is the apparent secrecy that stands out most in this curious affair. If the issue surfaced at all, it was thanks to the fact that this newspaper had drawn attention to an apparent anomaly in two ongoing tendering processes: one for the design and construction of a submarine outfall at Barkat, off the coast of Xghajra; and the other for the reconstruction of a damaged breakwater in Marsaxlokk.
Both projects are co-funded by the European Union’s cohesion fund, and are together worth in excess of €20 million.
It transpires that the preferred bidders for both contracts are companies owned by construction magnate Charles Polidano (aka Ic-Caqnu): Polidano Group, and Polidano Brothers respectively. And yet, neither company has actually filed its audited accounts with the Malta Financial Services Authority (MFSA), as they are required to do by Maltese company law.
In the case of Polidano Group – which is the only one of five bidders to qualify for the (as yet unawarded) sewage outfall tender – the accounts have not been filed since 2006. Polidano Brothers, on the other hand, has not filed its accounts since January 2004.
MaltaToday reported this apparent anomaly two Sundays ago, and within a few days the Finance Ministry issued a statement to clarify that – contrary to public perception – filing one’s accounts is not actually a precondition to submit a bid for a public contract in the first place. “Nowhere is there any obligation for bidders to have their accounts filed with the Malta Financial Services Authority,” a ministry spokesman revealed.
This is, to say the least, a surprising declaration, which appears at a glance to conflict with all known procedures as they stood until at least 2008.
Ironically, this can be attested by the fact that a company owned by the same Polidano had previously been disqualified in its bid for yet another contract – this time concerning the building of a road in Wied il-Ghajn – precisely for failing to produce its audited accounts.
Various unsuccessful bidders for government contracts in past years will also confirm that their respective bids had been rejected for exactly the same reason.
Furthermore, for a company to be granted an operational licence in the first place, it is required by Maltese law to register its accounts with the financial services authority – regardless of the government’s public tender adjudication procedures. And yet, according to the finance ministry, a simple signed statement by a bank or an certified accountant is now considered sufficient as proof of sound financial standing when tendering for a public contract.
How strange, that the requirements to bid for a government contract are significantly less stringent than the legal requirements to be able to even operate as a company. And how bizarre, that a procedural change of such magnitude should be effected without any form of public notice.
Such a situation does not exactly encourage faith in the public tendering system at the best of times. Considering that the same system is currently under attack by the Opposition over allegations of corruption in the awarding of the Delimara power station contract to BWSC, the timing of the finance ministry’s revelation could hardly have been more inauspicious.
It is worth remembering that the present administration has variously committed itself to greater transparency and accountability in recent years. It is hard to reconcile this declaration of intent with what appears to be a secretive modus operandi, especially on issues that can only seriously undermine public faith in the government’s public tender adjudication process.
Changes such as these, which have significant pecuniary repercussions, are unlikely to occur by coincidence alone. If the current administration wishes to salvage its tarnished credentials as a purveyor of good governance, it will have to come up with a much better explanation than the finance ministry’s hollow statement last week.

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Transparency and procurement procedure

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