News | Sunday, 31 January 2010

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Insider reveals change in policy at Contracts Dept.

The Department of Contracts relaxed a policy that previously disqualified tenderers whose accounts were not filed with the financial services authority (MFSA), to make them eligible to tender for government and EU-funded contracts.
An insider to the adjudicating process has revealed with MaltaToday that complaints received by firms with overdue annual returns, had forced the hand of the contracts department into relenting on its strict policy.

“The goalposts were changed to allow companies that were not filing their returns, to tender, this time by adopting a new criterion for financial eligibility,” the insider said, who chose to stay anonymous to protect his identity.
The source – privy to particular contract decisions that preceded the policy change – was reacting to MaltaToday’s story last week, after the finance ministry declared that companies that do not file their annual returns, as requested by law, are still eligible to tender for government contracts.
The declaration came in the wake of news that the company Polidano Group, which has not filed its accounts for public scrutiny since 2006, was being recommended for a €7 million EU-funded contract for constructing a submarine outfall at Ta’ Barkat, in Xghajra.
Another Polidano company was also in the running for a €12 million contract for the civil refurbishment works for the Marsaxlokk Breakwater, but Polidano Brothers has not filed its accounts with the MFSA since 2004.
According to the tender adverts, bidders had to supply evidence of financial standing, in the form of a financial statement for the years 2006, 2007 and 2008, verified by a certified accountant.
“Nowhere is there any obligation for bidders to have their accounts filed with the Malta Financial Services Authority,” the finance ministry spokesperson said.
Indeed, both Maltese and European law allow for one or more criteria to determine whether tenderers are of “financial and economic standing”. These range from rigorous checks: balance sheets published at the MFSA or bank statements; down to a simple statement of the firm’s overall turnover or “any other document which the contracting authority considers appropriate.”
The insider to the government’s procurement process said: “Whereas previously the department was of the opinion that companies that tendered should have their annual accounts in line with the MFSA, the disqualification of one too many firms – some of them preferred companies – from tendering, led to a relaxation of the policy. It is still legal, but then shouldn’t companies comply with their obligations at law and file annual returns?”
The relaxation in policy has effectively allowed firms that do not comply with legal obligations to file their annual returns, to keep tendering for public contracts.
Last week, a Polidano representative stated that the accounts submitted for the submarine outfall at Ta’ Barkat “were signed and certified by a certified public accountant and thus in full conformity with the tender requirements.”
The finance ministry also confirmed that no appeal was received by the contracts department to object any recommendation. “If any bidder was convinced that arbitrary decisions were taken he should have availed himself of the legal remedies provided for in the Public Contracts Regulations,” the spokesperson said.
But legal counsels to tenderers in the contracts said the €35,000 fee they were required to pay to appeal, was “too prohibitive when considering the possibility that the appeal might not be successful.”

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