The National Audit Office said today that it was concerned by price mark-ups in road contracts but impressed by progress made in the Roads Directorate since an audit report in 2011.

It said the directorate had streamlined the process by which road surface defects are identified and logged for consequent processing and prioritisation. There had also been improvement in the traffic management system and in the monitoring routine.

In addition, whereas contracts reviewed during the 2011 exercise showed that  contractors were allowed to forego skid resistance specifications,  no such allowance was found in the works reviewed in this follow-up audit.

On the other hand, however, NAO said it had identified a number of prevailing and emerging concerns which significantly undermined the Directorate’s efficiency and effectiveness while impinging on economic considerations.

The predominant emerging concern was over how the directorate opted to commission works through the emergency works provision allowed under the Framework Agreement (which governs the procurement of asphalting interventions).

While this provision required works to be carried out outside normal working hours, it also allowed for a fifty per cent mark-up on agreed prices.

In availing itself of this proviso, the directorate had intended to address consistent contestations by contractors on price levels as quoted in the Framework Agreement.  Road users also benefited from reduced inconvenience since works were carried out during night hours.

But the audit office said it was concerned about the fact that the mark-up permissible under this provision was significantly higher than the results of a report compiled by external consultants intended at determining fair and reasonable prices.

"NAO estimates that, in the case of the 44 contracts for works which were procured in this manner (since the implementation of the Framework Agreement) and reviewed by this Office, the difference between the rates as validated by the directorate's commissioned consultants and the higher mark-up permissible in the emergency works provision, approximates €400,000."

The audit office said that like in 2011, it had observed that in the majority of competitive tenders issued by the Directorate, individual tenders were still attracting a single bidder each.

"Such a state of affairs poses risks on possible economical benefits usually associated with a normal competitive tendering process from which the Directorate might stand to benefit. In addition, such a situation also raises concerns on the competitive behaviour of the bidders in question," it said.

"Furthermore, this Office also noted that performance guarantees were not solicited by the directorate from contractors engaged in emergency works, thereby presenting axiomatic risks to the directorate."

 This audit report may be accessed through the NAO website: www.nao.gov.mt.