A €274 million contract handed to James Caterers and db Group through direct order was in breach of the law, Malta’s National Audit Office has declared. 

A 177-page report by the NAO uncovered some damning facts about the deal, which came into force on 14th November 2017 to provide 504 beds housed within four blocks that it was to construct and included the provision of catering and the construction of a kitchen. They were awarded in separate contracts.

“Irregularities were noted by the NAO in its review of this procurement process, most serious of which are those relating to the concept of additional investment, the legal basis of the negotiated procedure, the absence of authorisation and concerns on failure to secure value for money,” the report reads.

The deal, the report found, was never brought to Cabinet despite the massive overlay. Meanwhile, it found that the government is still paying substantially higher rates for each bed under the contract as it does when buying beds from the private sector.

Its report found that the government currently pays on average  €51.06 for beds from private homes. Under this deal, the government pays roughly €118.44 per bed.

“Conspicuously absent was any political authorisation endorsing the government’s commitment to a project of over €274,000,000 and entered into directly with the JCL and MHC Consortium. The agreement for the management of the additional blocks was not brought to the attention of Cabinet despite its materiality and the project’s national importance,” it continued.

In its analysis, the NAO could not determine why some of the contracts did not go through the negotiated procedure, noting that it could not understand the urgency to issue such massive direct orders.

Gravest among the NAOs concerns is that the basis cited as justification for authorising the negotiated procedure was in breach of legislative provisions, thereby possibly leading to the invalidity of the entire procedure.

“The authorisation was sought by the SVP, endorsed by the Ministry for the Family and Social Solidarity (MFSS) and granted by the Department of Contracts (DoC) on the basis that competition was absent for technical reasons and reasons of extreme urgency.”

“The NAO contends that there existed no technical reasons that precluded competition since the management of these blocks could have been undertaken by other operators.”

“Notwithstanding the reference to urgency, this was not justified as the blocks were to be under construction for at least 18 months, during which the SVP could procure these services through an open procedure,” it said.

This report may be accessed through the National Audit Office website www.nao.gov.mt or Facebook page www.facebook.com/NAOMalta.