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Question time: Public procurement

How can the direct orders system be modified to avoid controversy?

Anthony Agius Decelis, Parliamentary Secretary for Persons with Disability and Active Ageing

It is an undisputed fact that Malta is currently experiencing its best financial results in history. What had seemed to be an insolvable deficit problem, has now been transformed into a sustainable surplus. Leading a country is quite similar to how parents manage their families: working daily to earn an income and using money wisely to purchase goods and services. And that is exactly what the Labour government has been consistently doing.

It is within this context that public procurement should be discussed. From a situation of reckless spending by the previous administration, to the competence of this government to administer public finances carefully and diligently.   Various methods of public procurement are established by law. Which system to use is determined by factors such as value, urgency, supply and technical requirements of purchase. One can always try to shed doubts on every system in place and some can rightly argue that more improvements are needed but I believe that thresholds and safeguards present at each level of the public procurement process do lead to decisions which reflect integrity.

One can always try to shed doubts on every system in place

I assume that the Times of Malta has asked this question today to entertain its untrue story about an invented direct order in the extension of St Vincent de Paul Residence. Answering here gives me another opportunity to state facts.

In November 2015, the Department of Contracts issued a public tender, both locally and Europe-wide, requesting a public-private partnership for comprehensive services at St Vincent de Paul Residence (SVPR). It was made clear that we were after a new kitchen and catering provision, together with additional investment of a compatible nature to SVPR requirements. Anyone who was not in agreement with the terms and conditions could have lodged a pre-contractual concern, free of charge. Two bidders had applied, with different types of additional investment. One offered beds in a disability residence in Qormi (which is, in fact, hosting Dar Bjorn) while the other proposed an extension to SVPR. The latter, JCL and MHC Consortium, was awarded the public tender by the Department of Contracts.

The other bidder, as was his right, appealed the decision twice. The Public Contracts Review Board and the Court of Appeal both rejected the appellant claims.

As stipulated in regulations, the Department of Contracts approved the initiation of discussions between SVPR authorities and the confirmed consortium, which eventually led to an increase from the originally-proposed two new blocks with 252 beds and €1.5 million yearly cash investment in SVPR for 10 years, to four new blocks with 504 beds which will be government  property after three years from construction to completion. Negotiations then took place for management service, whereby SVPR obtained a six per cent reduction on the current price per bed. I repeat, at no stage of the process was there any direct order. This system has been used over and over again with absolutely no controversies. For instance, in 2012, the health sector alone, through Central Procurement and Supplies Unit, spent over €21 million by negotiated procedure, including for medicine procurement.

I do not recall anyone scandalising himself at the way elderly homes were contracted under the previous administration. In January 2013, the former government approved a contract extension with Zammit Clapp Home through a negotiated procedure of over €11 million and also approved the maximising of space within Mellieħa Home through a direct order. Even worse, it was by a ‘simple’ Cabinet memo that the previous government had directly decided to extend the Żejtun Home, with a long-term management agreement also in place.

My appeal is therefore to leave partisan politics and fake news out of elderly care. This project followed all procedures and will improve quality of life of mothers and fathers who have dedicated their lives to their families and now deserve to receive the love of their society.

Mario de Marco, Opposition Spokesman for Finance

Public procurement is heavily regulated by local and European Union legislation. These rules are meant to ensure transparency, good value for money for the taxpayer and a fair level playing field for all bidders. The rules differentiate between different types of tenders. For instance, tenders which exceed certain value thresholds need to be published not only in Malta but must be advertised also in what is called the European Journal. The procurement rules even define the publication period of tenders.

What at first glance might appear as a setback against Maltese goods and services providers is in reality anything but. Our companies can and do compete for tenders published by other European Union states.

It is sometimes argued that the procurement rules and regulations limit the ability of government to act swiftly when so required, for instance in the case of an emergency. These rules also limit a government’s ability to negotiate the best deal possible as is the norm in the private sector. Let us consider these points.

Sometimes we have to react to developing situations or to opportunities quickly. The government sometimes has to procure services fast, circumventing normal purchasing rules. In these emergencies, governments are allowed to issue a direct order. Having said that, direct orders are not unregulated. There are procedures that dictate the who, how and when of direct orders.

That which somehow was not permissible in previous legislations somehow became accepted practise today

These rules introduce a measure of control including the four-eyed principle to ensure that no one within government has sole discretion when it comes to spending public monies. It also allows the government elbow room to negotiate for the best possible deals. All this of course, within established limits.

Are these rules stringent enough? I think that in the main they are. However, having rules, even the best of rules, is not always enough. If those who live by those rules opt to ignore the very spirit of the law, they will seek ways of bypassing even the most comprehensive rule book. This is what is happening in Malta.

We should be proud of our legislative framework. It took positive elements of British, European and other elements and forged them into a practical and functioning system that by and large served us well for decades. However, certain safeguards necessary for these rules and regulations to function properly have now been diluted. We have seen the independence of State authorities diluted with political appointments across the board. We have seen government replacing top civil servants with political yes-men. Sensitive positions like the Commissioner of Police and chief executives of authorities meant to control the government are now seen as an extension of the political arm of the government.

In this scenario, rules and regulations matter little. Those in power, a power that has been extended well beyond the Cabinet table into practically all the boardrooms of government entities, have taken away measures meant to counter balance against having too much power vested in the hands of government officials. This, in fact, is the root of the evil that we face today in many areas and not just public procurement.

Former European Human Rights Court judge Giovanni Bonello wrote we have a Constitution written by gentlemen for gentlemen. What happens when that Constitution is left in the hands of someone whose intentions are not so gentlemanly? We now know what happens. Banks that should never have been licensed are given a licence. Public service recruitment skyrockets, direct orders become the rule rather than the exception. And the list goes on and on. What was not permissible in previous legislations somehow became accepted practice today. In many cases, this did not happen because rules were changed. It happened because the people who apply those rules were changed.

If you would like to put any questions to the two main parties in Parliament send an e-mail marked Question Time to editor@timesofmalta.com.

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