Tender procedure changed after RCC email ‘to ensure transparency’
Matthew Vella
Richard Cachia Caruana, Malta’s permanent representative to the EU, had alerted the Office of the Prime Minister and ministers Austin Gatt and Tonio Fenech to irregularities in the Delimara tender process raised by a bidder, but was swiftly ignored by the Department of Contracts.
In a snapshot of the influence wielded by the former personal aide to Eddie Fenech Adami, the report by the National Audit Office into the Delimara tender notes how in July 2008, Israeli firm Bateman chose to go straight to Brussels to voice its grievance at being left out of negotiations by Enemalta.
When the Perm Rep alerted OPM of the allegations, the Department of Contracts decided to change the tendering process, from one based on individual negotiations to a ‘three-stage model’ – much against Enemalta’s wishes it transpires.
Since 2006, Enemalta had used the novel way of negotiating individually with each bidder – even though this was without the authorisation of the Department of Contracts.
Then in July 2008, a Bateman lobbyist met attachés from Cachia Caruana’s office in Brussels to deliver a “message of protest”, complaining that emission laws had been abruptly changed for diesel engines, favouring BWSC’s technology; and that there had been no Environment Impact Assessment prior to tendering, in conflict with EU law.
At this point, on 22 July Cachia Caruana alerted officials at the OPM, and Gatt’s and Fenech’s ministries, to take note of Bateman’s protestations before proceeding with any decision.
These concerns were forwarded to the Department of Contracts, which however were swiftly ignored in an email sent the next day.
The Contracts department told Enemalta “not to be influenced” by Bateman’s protestations, but crucially revealed in this correspondence that the tendering process had changed to a ‘three-stage model’: the traditional way of selecting winning bidders on the strength of price and technical specifications.
The Auditor General’s report notes that this was the first mention ever of the three-stage mode.
Enemalta’s negotiated procedure – an uncommon practice in the civil service – allowed the corporation to meet with all bidders, irrespective of the technology they were offering (gas or diesel) and select the best technology for the lowest cost of operation.
But as the Auditor General remarked on this procedure, “the risk exists that a recommended solution… might have favoured one over some other bidder.”
After the correspondence with Brussels, the Contracts department formally instructed Enemalta on 4 August 2008 to change its tendering process to “ensure more transparency.”
This was met with protest with Enemalta. In its first reaction, it demanded it continue with its negotiations. Then it grudgingly complied, asking bidders to re-submit their financial offers.
It is not established why the Contracts department did not cancel the negotiations first, before going ahead with a ‘hybrid’ procedure: “This could have avoided so much controversy and allegations with which this tender has been shrouded,” the Auditor General said.
Brussels ignored In his reaction to the change in tendering process, the Auditor General notes he was unable to understand the Contracts department’s decision “not to take any action on the communication” from Brussels.
However, it transpires from the same report that it was only at this late stage, after Cachia Caruana raised these concerns, that the three-package model was adopted.
“From what could be ascertained by this Office,” the Auditor General noted, “this was the first time the three package model, rather than the negotiated procedure, was specifically referred to,” referring to the email by the Contracts Department sent to Brussels.
The Auditor General described this change as “enigmatic” and “ill-timed” because by the time the bidders were told to re-submit their offers, Enemalta had already identified BWSC and Man Diesel as preferred bidders in their initial negotiations.
Tranter’s conflict One of the negative effects of the change in the tendering process however was that it allowed Enemalta’s adjudication committees to “allow excessive concessions to the selected bidder”, the Auditor General noted.
One of these conditions was paying a weekly €150,000 bonus if works on the extension were completed early.
This point is especially controversial, given that Enemalta’s chairman Alex Tranter enjoyed a business relationship with the building contractor carrying out the civil works for BWSC.
The Auditor General noted that Tranter, through his business relationship with Vassallo Builders Group, should have resigned his post when he declared his conflict of interest to the investments ministry.
“Prior to his declared conflict of interest [Tranter] had appointed the members on the evaluation and adjudicating committees responsible for the evaluation of tenders. Notwithstanding this, the Chairman failed to inform his Minister to approve or otherwise the appointment of these committees following his (Chairman’s) declared conflict of interest.
“Considering the circumstances of this case it is felt that it would have been more prudent and appropriate had the Enemalta Chairman resigned… This would surely have eliminated the extensive controversies which arose at a later stage.”
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