The new hospital - facts and background

The new hospital was conceived from the friendship of Louis Galea, then minister of health, and Fr Charles G. Vella, director of the San Raffaele Hospital in Milan.

Fr Vella introduced Don Verzè, the charismatic head of the Milan hospital, to Malta, who laid down his vision about the giving of hospital services in Malta. The new concept was based on modern professional management that has been proven in other countries.

This would have resulted in a hospital run by professional managers and not by the medical class, a hospital of around 450 beds that would have served the country, a hospital that would have incorporated a top class research facility on a local scourge - diabetes.

This was an attractive, enticing vision. However, when, as Minister of Finance, I was brought into the loop, I was not much enthused. They were talking about a total expense of Lm51 million, which would have made a dent in the medium-term financial plans we had prepared.

No proselytising by Don Verzè himself would convert me, but, once a Cabinet decision was taken, I assumed, with the others, collegial responsibility for the project.

A foundation

Louis Galea set up the Foundation for Medical Services (FMS), which assumed the responsibility of the client in the hospital's construction. An operating contract was supposed to be given to the San Raffaele organisation to run the hospital.

FMS appointed San Raffaele to design the hospital. Architect Richard England was assigned to draw the plans.

The way the FMS went around the basic function of design was to give us big headaches in the future. It was the overspecification at this stage that resulted in the spiralling cost of this project as all the wish lists of all possible users seem to have been designed into the project.

The construction tender

The tender for the construction of the hospital was issued in May 1994. An adjudication committee was appointed by then Prime Minister Eddie Fenech Adami and this was made up of a team of respected and trustworthy people who had the necessary expertise. These were:

Tony Galdes, ex-Governor of the Central Bank, who chaired the committee; John Bonnici, Accountant General; Judge Giannino Caruana Demajo; Vincent Cassar, Director General - Works Division; Frederick Mifsud Bonnici, a chartered accountant; Armando Ardesi, an electrical engineer; Amadeo D'Apolito, a mechanical engineer; Carlo Mereghetti, a civil engineer; and Vincenzo Mariscotti.

The committee held 44 meetings between October 1, 1994, and February 18, 1995, when they presented their recommendation to award the tender to Skanska which, although not the cheapest, was in their opinion the best suited.

This decision was passed on to the Contracts Committee which, after deliberating for two weeks, disagreed and proposed the cheapest contractor. As contemplated by the regulations, in the case of such an impasse, the matter was passed on to me, as Minister of Finance, for a decision.

I called many meetings between the Evaluation Committee and the Contracts Committee to bring an understanding between them, to no avail. In a memo to Cabinet, dated May 19, 1995, I presented the positions of both the Evaluation Committee and the Contracts Committee. The Cabinet met on the May 22, 1995, and its conclusion read:

"After due deliberation, the Cabinet decided to accept the recommendation of the Evaluation Committee and agreed that the Minister of Finance should give the directive in writing accordingly. It was also agreed that the letter of intent, allowing some room for negotiation over the price, should be issued as a matter of priority in favour of the consortium between Skanska of Sweden, Blokrete Limited and Devlands Limited, while the related documents should in due course be made public."

All the documents relating to this tender, including my memorandum to the Cabinet and the cabinet minute containing the deliberations and conclusion of Cabinet were made public and laid on the table of the House of Representatives on April 29, 1996.

The opposition, as in all other cases over the past 20 years, took a different view and, with total disregard to the facts, castigated me incessantly for not awarding the tender to the lowest bidder. (It must be said that when in the case of the equipment contract Government decided to go with the recommendation of the Contracts Committee, they again took the opposite view and said that we should not have decided in favour of the lowest bidder- but that is the schizophrenia of the opposition.)

They are regurgitating this criticism to this day.

The direct order

The big jolt to the cost of the hospital was given by Alfred Sant in his short spate as Prime Minister, when he signed off a doubling of the size of the hospital. I have seen no record that any analysis or cost projections were made.

The 'modern' Prime Minister Sant gave instructions to increase the hospital to 800-1,000 beds. I wonder whether he realised that this also meant a near doubling of all support, technical and mechanical services.

He had no conflict between any Evaluation Committee and any Contracts Committee in awarding this massive multi-million contract for the extension, as it was given out as a direct order. Would this be the godmother of all scandals?

The worst part of this, however, was that, in so doing, Dr Sant destroyed the new concept of hospital management and threw back the new project on the old rails of medical mismanagement that we have at St Luke's. I have always asked myself whether this was, in fact, the payback of one of the pre-electoral deals struck by Dr Sant in 1996.

It is disgusting that we see Dr Sant and his cohorts shed crocodile tears today about the capital cost of the new hospital and its eventual running cost when he should be standing in front of this behemoth striking his breast and chanting mea culpa at the top of his voice.

Restart

After the 1998 election I was instructed by then Prime Minister Dr Fenech Adami to take a role in the new hospital project. Together with Minister Deguara, who was then appointed Minister of Health, we met the FMS board several times to try to roll back the over specification that was so apparent.

We commissioned various studies and revisions, but the structures were too advanced to make any drastic changes possible. The construction was halted and Skanska, who were still on the project, were called in and asked to present a new cost proposal based on the new designs ordered by Dr Sant.

After months of deliberations, Skanska came back with a budgeted figure of Lm93 million for construction only. Dr Louis Deguara and I with the approval of Cabinet signed a new contract with Skanska in which we bound them with this budgeted cost.

As time rolled on, we had various meetings in which Skanska tried to disengage themselves from this commitment. I always refused and kept insisting that this figure was the result of their expert deliberation and was therefore final. I held firm even when Skanska were threatening to abandon the project.

After my resignation following the political manoeuvres against me based on the false Zahra report (which was ardently believed and so eagerly used by those who wanted to grasp full control of the party and the government), the new Finance Ministry succumbed to Skanska and granted them the demands which I had been refusing for many months before.

The commitment to the budgeted figure was lifted and Skanska were allowed to overrun the Lm93 million target, which they themselves had established, on which we had decided to continue with the project.

The Finance Ministry could have sought my advice during these negotiations as the one with a deep knowledge about this situation, but as at that time I was out, they did not. It is their (and the country's) loss because if they had sought advice, we would surely have saved the country many millions.

The equipment tender

One cannot mention the new hospital without mentioning the Zahra report. That infamous report, which was commissioned by Simed to force Government to reverse the decision to award the equipment tender to them instead of INSO, even if they were around €7 million more expensive, and even when they were granted all the possibilities given to them by the appeals board to review their offer.

Here again, although the Labour Party and those who collaborate with them try to give the impression that this was a decision taken hastily by me, the facts are completely different.

FMS was the entity that evaluated and decided on the contract. They originally had decided on a bidder, Hospitalia, who was the second cheapest. The contracts committee did not accept this recommendation as the Hospitalia offer contained conditions outside the tender parameters. The decision of the Contracts Committee was eventually upheld by the appeals board, which was appointed to decide on this award.

The contracts committee advised FMS to review the technical report on the cheapest tenderer (INSO) as it showed inconsistencies (among which was the fact that some of the documentation was in Italian and was not understood by the British technical team).

After this review, the technical experts affirmed the technical compliance of the cheapest tender and there was concurrence that the tender be awarded to INSO. Simed objected and took the case to the Appeals Board. On October 28, 2003, the Appeals Board decided to suspend the award to INSO until a review exercise was conducted with Simed.

The review

FMS took immediate action to implement the Appeals Board recommendation and appointed an advisory Board to scrutinise this phase of the adjudication of the tender. This advisory board consisted of Judge Victor Caruana Colombo as chairman and including Albert Attard, a high level civil servant, architect Paul Camilleri, Emanuel Attard and Emanuel Micallef.

The advisory board appointed Grant Thornton Consulting Ltd as its financial expert, Muscat Azzopardi & Associates as the legal experts, and Secta as the technical experts.

After deliberating for nearly two months, the advisory board sent its recommendation to the FMS board with the conclusion that:

"The Advisory Board submits to the FMS Board that Simed's response does not provide a clear and unequivocal clarification regarding all the items and areas highlighted by the technical, financial and legal advisors commissioned by the Adjudicating Board and does not seem to obtain the extent of substantial responsiveness expected in terms of Clause 27.4 of the Tender Documents."

FMS immediately passed on this conclusion to the Contracts Committee with the appeal that the Contracts Committee should act fast to resolve this matter as:

"The FMS board wishes to put on record that further lengthy delays in the award of the Tender in question will continue to fuel additional and substantial costs to the Mater Dei Hospital Project."

The Contracts Committee acted without delay and advised me, as then Minister of Finance to award the tender to INSO.

I acted on this advice. All the documents mentioned are in the public domain.

Even when, in this case, there was across-the-board concurrence on the award of the tender to INSO, the schizophrenic Labour Party still had to murk the issues and slander me and others involved. On this part of the story I will write extensively some other time.

The betrayal

Simed did not accept this situation and, through its legal advisors, continued their pressures through the media, through lobbying with ministers and through the appointment of an unlicensed investigator, who finally concocted the report they wanted.

A few weeks after the award, a programme was aired by Lou Bondi about this tender. Little did I know that at the time Joseph Zahra, a Bondi+ collaborator, had a contract with Simed that could have netted him Lm750,000.

When the new Prime Minister Lawrence Gonzi took over, Simed and their advisors seized their chance and submitted the uncorroborated and false report to him. This report was believed, was kept hidden from me and was thought that it would be the basis of an investigation against me.

Before the investigation could start, the Prime Minister wanted me out of his Cabinet (it was also an opportunity for those who wanted to take over full control of the party and the government, and who saw me as a threat to their designs). Within a few days of my resignation the Prime Minster handed this report to the Police Commissioner.

But the truth came out as the author of the report admitted to having invented and fabricated his insinuations. The tables were turned on those who perpetuated this infamous betrayal as Mr Zahra was condemned to two years in prison. My question is: was he acting alone?

I have been waiting for three years for an apology from those who dirtied their hands in this affair. This matter is by far not past history and not closed.

A lost chance of reform

The money has been spent. We have a hospital with high specifications - large air-conditioned corridors, a cathedral-like chapel, five-star doctor's quarters, myriad operating theatres and enough beds that would accommodate the consultants' diaries.

Yet, there is one big failure. The vision of a new way of running the Malta hospital has been lost.

jd@dbms.com.mt