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Mega direct order approved one week before contract signed

Government insists €274m deal brought 'extra' investment

An artist’s impression of the proposed extension to St Vincent de Paul.

An artist’s impression of the proposed extension to St Vincent de Paul.

Updated at 9.30pm with government reaction

A €58 million contract for catering services and a kitchen at St Vincent de Paul Residence was signed a week after the government approved a €274 million direct order to the successful bidder, the Times of Malta has learnt.

After a public call for tenders was issued in 2015, a consortium made up of James Caterers and Malta Healthcare, a subsidiary of the SeaBank db Group, was awarded a 10-year contract for the provision of meals at the old people’s residential facility and the building of a new kitchen.

The consortium overcame competition from another bidder by offering a “better” additional investment offer to the government in the form of an extension to the residence, at its own expense, as part of the deal, Times of Malta was told.

It has now emerged that after the tender was awarded, the consortium and the government entered into negotiations beyond its original scope and James Caterers and Malta Healthcare even “improved” their offer of the “extra” investment. In return, sources close to the deal said, the government agreed to issue a direct order of €274 million to pay the consortium for a raft of services planned to be offered at the new facility they offered to build as a ‘gift’ to the government. This, in turn, enabled the consortium to boost the value of the public tender by more than €200 million.

It was only then that the contract was signed, the sources pointed out.

According to information published in The Malta Government Gazette on July 20, the €274 million direct order “management of new hospital at St Vincent de Paul” was approved by the government on November 9, 2017. The Director of Contracts, Anthony Cachia, signed the original tender contract with the consortium, awarded seven months earlier, on November 14.

Industry sources commented that the way the tender was issued, the unspecified additional investment requested and the manner in which things developed later merited a thorough investigation by the authorities concerned.

Finance Minister Edward Scicluna said on Monday he did not know anything about the record direct order and only learned of it through The Sunday Times of Malta. The government, through Parliamentary Secretary Anthony Agius Decelis, on Tuesday “categorically denied” the issue of a direct order and said it was part of a “negotiated procedure”.

The government’s statement indicated that the negotiations did take place after the award of the original tender and that €274 million would be paid rather than €58 million, as the contract was originally valued.

The government insisted that “all procurement rules were followed” and that, this being a public-private partnership, negotiating an improved service with the tenderer was possible.

It noted that while it would still be responsible for medical care at the St Vincent de Paul 500-bed extension, James Caterers and Malta Healthcare would be paid for a number of years for the management of the wards, the provision of nurses, carers, cleaners, catering, laundry services and security, activities for residents and the maintenance of the blocks they would build.

Originally, the tender stated that the unspecified “additional investment” would become government property after 10 years from the award of the contract.

A planning application for the development, submitted by architect George Pullicino on behalf of St Vincent De Paul Residence’s CEO, Josianne Cassar, is still in the screening process.

Govenment insists that procedures were in order

The government insisted in a statement that the Parliamentary Secretariat had provided replies to the Times of Malta three months ago, and that had these been reported faithfully, it would have been clear that financial procedures were followed through a public tender and not a direct order.

The statement said that there had been a call for offers by the Department of Contracts for a public private partnership, which had also been published in the EU’s Official Journal. It said that both of the bidders had offered additional investment: one had proposed beds in a residential home in Qormi, and the other to build two blocks at St Vincent de Paul.

The latter offer was chosen and during negotiations, the number of beds being offered was doubled – thereby falling in line with the government’s electoral promise to cut the waiting list of elderly people seeking residential care.

It also noted that it had been regular practice, “even under the previous government” to buy bed places from the private sector – by direct order, while the previous governments had also extended residences with a "simple cabinet memo".

It also said that in spite of various challenges, the decision of the evaluation board was upheld.

Timeline

November 10, 2015: The Department of Contracts publishes a tender (CT2009/2015) for the setting up of a public private partnership for the provision of comprehensive catering services to the St Vincent de Paul long-term care facility and to demolish, build and equip a fully-furnished new kitchen complete with all the necessary equipment.

January 7, 2016: Opening of offers – two submissions received:CCE joint venture (Vassallo Group) – €47.3 million + additional investment and JCL & MCH consortium – €58 million + additional investment.

June 2016: St Vincent de Paul evaluation committee decides on technical criteria of tender, giving the highest number of points to JCL & MCH consortium on technical grounds.

June 3, 2016: CCE joint venture objects to the Public Contracts Review Board, forking out €58,000 to file its objection.

September 20, 2016: Public Contracts Review Board turns down objection by CCE joint venture. Appeal of decision filed in court.

February 14, 2017: Court of Appeal rejects appeal by CCE and states that evaluation process can continue.

April 2017: Evaluating continues and “additional investment” offers opened: CCE– €10.9 million in additional investment and JCL & MCH consortium – €29.2 million in additional investment.

April 4, 2017: The Department of Contracts awards contract to JCL & MCH consortium for €15,760 excluding VAT per day for a period of 10 years (€58 million) and at an additional investment of €29,280,000. New appeal will cost €58,000.

April 17, 2017: CCE does not file an appeal. Award to James Caterers and SeaBank db group subsidiary concluded.

May-November 2017: The government enters into negotiations with the selected consortium, which comes with an “improved offer”. Proposes to build a bigger extension than initially offered and in exchange be given the management of the facility for a number of years.

November 9, 2017: the government approves record direct order for €273,649,698 for JCL & MHC consortium. Value of tender contract increased by more than €200 million.

November 14, 2017: Contract for tender for meals and additional investment signed between Director of Contracts, Anthony Cachia, and JCL & MHC consortium.

January 9, 2018: The St Vincent de Paul CEO, Josianne Cassar, submits planning application for “proposed excavation of site for the preparation of old people’s home”. Application submitted by architect George Pullicino approved and excavation starts.

January 16, 2018: Josianne Cassar submits another application to the Planning Authority “to construct a 500-bed residential block to the long-term care facility. Pullicino signs application. No permit has been given yet and application is still in screening process.

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