Director general of contracts breached tender document

A long and heated hearing of the appeal proceedings on the Lm25 million medical equipment contract for the new hospital yesterday revealed that the director general of contracts, Joseph V. Spiteri, breached a condition of the tender document.

Article 26.1 of the tender document states that during the evaluation of the tender, the client may, at his discretion, ask the bidder for a clarification of his tender.

The tender document says that the request for clarification and the response shall be in writing and that no change in the prices or substance of the tender shall be sought, offered or permitted.

During his testimony, Mr Spiteri said that he had called representatives of INSO, the winning bidder, asking them to attend a meeting so that clarifications could be made. He said he had told INSO officials that their offer was the cheapest but that there were a good number of items that required clarification.

Mr Spiteri said, however, that the proceedings related to the clarification exercise carried out between INSO, the technical advisers SECTA and the department of contracts had been made in writing.

The lawyers of bidders SIMED and Hospitalia insisted that Article 26.1 had been breached since Mr Spiteri informed INSO verbally that he was requesting clarification when this had to be done in writing.

In a lengthy and highly charged session lasting several hours, the lawyers also insisted that they wanted a copy of the correspondence exchanged between INSO, SECTA and the department of contracts during the "clarification exercise", carried out last summer. They argued that the documents would help them establish what had actually taken place during the exercise and whether substantial changes were allowed to be made by INSO to improve their bid.

The board of appeal, chaired by Alfred Triganza, ruled that certain correspondence exchanged during the clarification exercise should be given to the other two bidders. The documents are expected to be passed on to Hospitalia and Simed later today.

The next session is expected to be held on Friday during which INSO's Italian officials are expected to testify on what took place during the clarification phase.

In February last year, five contractors had submitted tenders for the Tal-Qroqq hospital medical equipment contract. INSO's tender was valued at €64.8 million, the German firm Hospitalia's at €73.5 million, the Dutch firm Simed International's at €74.8 million, Sagexport's at €87 million and Siemens' at €90 million.

Simed says it had also given cheaper alternatives to its bid.

The Foundation for Medical Services had appointed an adjudication board to recommend a bidder, and the board had appointed British consultancy firm SECTA to tackle the technical side of the process.

The financial aspects of the bids were evaluated by Grant Thornton, the foundation's regular accounting firm.

In May of last year, the FMS had made a recommendation to the director of contracts that the contract should be awarded to Hospitalia. But in December the director of contracts announced his intention to award it to INSO. Both Simed and Hospitalia appealed against this decision.

During yesterday's session, Mr Spiteri said the committee within the department of contracts appointed to evaluate the foundation's recommendation had focused on the INSO bid because that was the cheapest.

Questioned by Simed's lawyers, Mr Spiteri confirmed that the committee did not go into the details of the Simed and Hospitalia bids once they were considering the cheapest offer. He said that the decision to award the contract to INSO was not based on default by the other two bidders but on the merits of the INSO bid as clarified during the exercise. No clarification exercise was held with Simed or Hospitalia.

A technical report by SECTA had established that INSO were only 53 per cent compliant with the tender. Following the clarification exercise the compliance increased to around 90 per cent.

Yesterday's session was dominated by the arguments raised by Dr Joe Fenech and Dr Raphael Fenech Adami on behalf of Simed and Dr J. J. Vella and Dr Anton Grech representing Hospitalia, justifying their request to have copies of the documents pertaining to the clarification exercise.

"Is it credible that we are not allowed to see the changes? We want to know what changes were effected in order to establish whether the changes made were cosmetic or substantial," they argued.

During the session it transpired that Hospitalia and Simed were only given part of the second report prepared by SECTA during the clarification exercise. Appendix A and Appendix B of these documents were not distributed.

Dr Vella insisted that these were a fundamental part of the document: "We were given the impression that we had been given the documents in full. This is shocking for us. It is incredible how this whole hearing has been characterised by not letting us see documents relevant to the case."

On his part Mr Spiteri insisted that Appendix B was basically made up of INSO's bid and that it could contain information that was commercially sensitive.

Mr Triganza ruled that only Appendix A should be distributed to the lawyers of the other two bidders.

Dr Fenech asked Mr Spiteri to reveal why he had decided to ask for a clarification from INSO.

INSO's bid, replied Mr Spiteri, was several million euros cheaper. "We were aware that there was a big percentage of their items on which SECTA had said they lacked information, so it was in the government's interest to seek a technical clarification of their bid."

According to the technical report prepared by SECTA, the INSO tender was difficult to evaluate due to the number of instances of lack of technical information.