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‘No wrongdoing’ in Wasteserv contract

The Auditor General complained that a six-month, €1 million contract by Wasteserv was turned into a €29 million four-year deal without the Finance Ministry’s approval.Photo: Matthew Mirabelli

The Auditor General complained that a six-month, €1 million contract by Wasteserv was turned into a €29 million four-year deal without the Finance Ministry’s approval.Photo: Matthew Mirabelli

There was no wrongdoing in the €29 million Wasteserv contract flagged by the Auditor General, according to the Resources Ministry, which provided The Times with a detailed explanation.

In his annual report, the Auditor General this week complained that a six-month contract by Wasteserv worth €1 million was turned into a €29 million four-year deal without the Finance Ministry’s approval.

The Resources Ministry said this gave the wrong impression that the variation was due to corruption or overspending when the two contracts were different and could not be compared.

The contract was awarded after a call for tenders in 2008 to JF Services, a security company that also provides human resources solutions.

At the time, Wasteserv was opening plants that required an unspecified number of workers.

As a “creative” solution, the company wanted to outsource its human resources to maintain flexibility without bloating the civil service and creating “another Dockyard”.

“We didn’t know how much recycling the public would do, so it was difficult to calculate how many workers we needed,” a ministry spokesman said, adding most Wasteserv workers remained on JF’s books instead of the civil service.

The original estimate was €1,111,529, including the contractor’s commission (5.8 per cent) and salaries for 101 workers for six months, including overtime and social security contributions.

“All remuneration was tied to comparable public service grades so we ensured there were no precarious conditions imposed on employees.”

The Finance Ministry approved the request for tender but told Wasteserv to extend the six-month period to receive more favourable offers and said the procurement of such services should not constitute recruitment of personnel.

The contract was signed in June 2010 at double the value, approximately €2,375,000, to cover one year instead of six months.

But an issue of interpretation in the way the tender was written exposed Wasteserv to claims by the bidder that the amount covered only the commission. This is because wages were in line with civil service pay grades, so the only competitive element of the tender was the commission.

To correct this and account for a larger demand of workers, Wasteserv negotiated with JF Security, which agreed to lower commission of €1,600,000 but had the contract extended to four years and the maximum personnel set to 350 people. This was signed in November 2011. When the salaries were added to the commission, the figure added up to €29 million, but this could not be compared to the original €1 million, the ministry argued.

“Wasteserv had all the stages of this tender and contract processed through the Department of Contracts, which falls within the portfolio of the Ministry of Finance,” the spokesman said, responding to the AG’s only criticism, that ministry approval should have been sought directly.

The Resources Ministry accepted the error as part of the agency’s “learning curve”.

The ministry also said this was not a case of overspending because the Finance Ministry allocated its sums for each project well before the tenders were issued and all the money required had already been approved.

Labour spokesman Leo Brincat yesterday reiterated his call for the resignation of Resources Minister George Pullicino, saying his explanation did not convince the Auditor General.

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