Appeal board annuls Lm25m contract decision

A board of appeal has annulled the decision of the director general of contracts to award a Lm25 million contract to Italian company INSO SpA for the supply of medical equipment to Mater Dei Hospital in Tal-Qroqq.

The board has also opened the door for Dutch company Simed International to be awarded the contract if it satisfies certain conditions of the tender documents, according to a copy of the board's unpublished report seen by The Times.

The decision of the board, chaired by Alfred Triganza, has been communicated to the director general of contracts, Joseph V. Spiteri.

Sources said the decision had far-reaching political implications, including on the way contracts are awarded.

In its conclusions, the board of appeal not only annulled the decision to award the tender to INSO, but also disqualified German company Hospitalia International, which was originally recommended for the tender by the Foundation for Medical Services.

The appeal board's report says that the conditional nature of the offer submitted by Hospitalia and their failure to submit an offer for consumables disqualified their tender from proceeding further.

The board has also recommended that the director general of contracts seek and obtain in writing from Simed, in accordance with the provisions of the tender documents, clear and unequivocal clarification regarding all items and areas highlighted by the technical, financial and legal advisers commissioned by the adjudication board.

Another recommendation is that the tender may be awarded if this clarification exercise results in Simed's offer obtaining the extent of substantial responsiveness expected in terms of clause 27.4 of the tender documents.

"This exercise should be carried out in strict compliance with the provisions of Clause 26.1 of the tender documents and within a time scale which fully safeguards the public interest," the board said.

The board said it had reached its conclusions after hearing oral evidence given under oath by several witnesses and by the legal advisers representing the three parties, and after having examined the official documents procured as a result of the oral evidence given under oath and made accessible to the three interested parties.

During sessions held since the last hearing in September, the board said it had deliberated at length on the oral and written submissions of the parties concerned.

It is understood that the three major companies involved in the proceedings, INSO, Hospitalia and Simed, have been informed of the decision.

Sources also said that the Italian, Dutch and German governments, through their senior diplomats in Malta, were closely monitoring developments.

The board of appeal had been hearing evidence in public about this sensitive and controversial case for several months and has deliberated over its findings for the past few weeks.

The three companies' respective lawyers made their final oral representations before the board in September.

The proceedings are thought to have seriously affected the pace of work on the new hospital as the contractors were still waiting for the specifications of the medical equipment.

The story goes back to February of last year when five companies submitted their tenders: INSO had submitted a tender valued at €64.8 million, Hospitalia a tender of €73.5 million, Simed one of €74.8 million, while a tender by Sagexport was valued at €87 million and Siemens made an offer valued at €90 million.

The Foundation for Medical Services had appointed an adjudicating board to recommend a bidder. The board had then appointed British consultancy firm SECTA to deal with the technical side of the process.

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

In May of last year, the FMS had recommended that the director of contracts award the contract to Hospitalia. But in December, the director of contracts had announced his intention to award the contract to INSO. Both Simed International and Hospitalia appealed the decision.

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.

"On numerous occasions we found information that conflicted between the technical specification and catalogues. We also noted that items were signed as conforming to specification when no details of manufacturer, model or item of equipment was issued. The whole professional presentation of the tender was extremely poor and many of the items offered were of dubious quality," SECTA noted in its report.