The National Audit Office (NAO) has reported wide variations in cost estimates and actual spending on projects by Wasteserv Malta between 2006 and 2012.
The report, entitled ‘An Analysis of Wasteserv Malta Limited’s Procurement: A Case Study Perspective’ was tabled in Parliament this evening by the Speaker.
The NAO said the contracted value of the five case studies selected was €34.32 million. In addition to the five case studies, NAO reviewed the appeals lodged by third parties.
"An essential component in ascertaining value for money is a realistic initial project estimate. In the cases reviewed, NAO noted that there were significant divergences from WSM’s initial estimation of costs to actual contracted amounts. Shortcomings in this regard imply that WSM did not have a reliable benchmark against which to gauge the financial viability of offers received," the audit office said.
It said differences between WSM estimates and contracted amounts, ranging from 42 per cent over-estimation to 15 per cent under-estimation, attributable to two possible factors - poor estimate compilation, with insufficient attention directed towards the sourcing of essential market intelligence, and vast changes to project scope and/or design.
Variations between contracted amounts and final project costs were most pronounced in two case studies: the construction of a leisure area at the Marsascala Family Park and improvements at Sant’ Antnin Waste Treatment Plant. In these two cases, the recorded variations amounted to some €600,000 (53 per cent over the contracted amount) and €6,000,000 (23 per cent over the contracted amount), respectively.
Various audit concerns emerged with respect to the other case studies. The Gozo Waste Treatment and Transfer Facility project at Tal-Kus was being reviewed by Wasteserv, with the possibility of major changes in project scope and design, NAO sai. At this early stage, the cumulative value of variations was indicated as 23 per cent of the contract value.
The main audit concern of the contract for the supply and maintenance of play equipment at the Marsascala Family Park was Wasteserv's resorting to a negotiated contract, and the fact that this process involved only one contractor.
The concern arose from the justification presented, since the nature of the procurement did not warrant the claimed urgency. With reference to the period contracts for the removal and export of filter cake and boiler dust, NAO questioned the need for such contracts rather than a longer term tender.
Out of the 15 appeals lodged against WSM during the period 2011-2012, 10 of these objections were upheld. In NAO’s opinion, this situation left much to be desired, particularly so when one considered the process of review that such procurement was subjected to.
It transpired that the award decisions were overturned for a variety of reasons. Most notable were instances where the contract was awarded to a non-compliant bidder, the award of a contact despite ambiguity in tender instructions, a lack of adherence to the stipulated evaluation criteria, and a case where an appellant had to lodge three appeals with respect to the same contract.
The Report may be accessed through the NAO website - www.nao.gov.mt