Updated 3.43pm - Added PN statement

The consortium awarded a €274 million government direct order at St Vincent de Paul residence demolished the industrial kitchen there before it had even signed the contract to tear it down and rebuild it, The Sunday Times of Malta can reveal.

The move was described as “another scandal in the series” by a senior government source close to the consortium, made up of James Caterers and Malta Health Care (a subsidiary of db Group).

The consortium is already mired in controversy over the manner in which the €274 million contract was handled, which according to lawyers was in breach of EU regulations.

“The consortium knocked down the whole kitchen without the knowledge of the Department of Contracts, even though there was no contract signed with the government yet,” the source told The Sunday Times of Malta.

“This situation was very embarrassing for the department, as it basically forced their hand in the negotiations they were conducting on the whole tender for catering services.”

Instead of halting the process and issuing a new call for tenders, the department decided to close negotiations with the consortium rapidly and sign the contract, so that the works already undertaken could carry on, the source said.

The Sunday Times of Malta has confirmed that the contract between the government and the JCL and MHC Consortium was signed on November 14, 2017 – after the kitchen at SVDP had already been reduced to rubble.

The consortium must have been given a green light from “someone” in government in order to move into public property with heavy machinery and start demolishing its kitchen, the source said. However, this newspaper has so far not been able to establish who gave the go-ahead.

Winning consortium should only have been allowed to start works two weeks after contract was signed

Both the Department of Contracts and the Parliamentary Secretary for Active Aging, under which St Vincent de Paul falls, were asked a number of questions on the matter but failed to reply.

The Director of Contracts, Anthony Cachia, who signed the contract, did not comment when asked for the date when the kitchen started being demolished.

“Contents of your e-mail have been noted,” was Mr Cachia’s only reply to the questions, which were copied to Finance Minister Edward Scicluna, who is politically responsible for public procurement.

READ: Finance Minister gets to know of €274m direct order through newspaper

Though The Sunday Times of Malta insisted that it required answers, still no reply was forthcoming.

It drew a similar blank when it asked Parliamentary Secretary Agius Decelis to confirm that the kitchen had been demolished before the contract was signed.

According to the tender document for the building of a new kitchen and the provision of catering services, the winning consortium should only have been allowed to start works two weeks after the signing of the contract.

The government has so far refused to publish the contents of the contract, citing “commercial sensitivity”.

The demolition of the old kitchen and the building of a new one formed the basis of a call for tenders published in 2015. It stipulated that bidders were to demolish and construct a new kitchen and to supply St Vincent de Paul with resident and staff meals for 10 years.

The call for tenders put the value of the works and services at €60 million.

The new kitchen was inaugurated by Parliamentary Secretary Agius Decelis at the end of last June.

However, in an unorthodox clause in the call for tenders, the government also asked bidders for a “gift” to be offered in the form of unspecified “additional investment” related to the facility.

The JCL and MCH Consortium submitted a higher offer related to catering but beat the competition by offering an additional investment of €29 million in the form of the construction of two new residential blocks at SVDP housing 252 new beds.

At this point, the contract started to morph into a much bigger one.

According to the government, the consortium decided to make an “improved offer” to the government by upping its “gift” to four new blocks housing 504 new beds.

In return, the government offered the consortium a €274 million contract instead of the original €60 million for kitchen and catering services: to manage the new blocks – the consortium’s own “gift” – for a still unspecified number of years. While the government is insisting the rules have been observed, the arrangement has met with calls for an investigation.

A direct order notice in the official Government Gazette announcing the €274 million contract was last week described as a “mistake” by Parliamentary Secretary Agius Decelis.

However, the Department of Information, which is responsible for the Gazette, denied it had made any mistakes.

The government, which refers to this newspaper’s report on the direct order as an “invention”, has now accepted the idea of submitting the whole contract to the Public Accounts Committee and the Office of the Auditor General for scrutiny.

'Ask de Marco for details' - PL

The PN’s calls for an investigation prompted a reaction from the Labour Party, which on Sunday said that if PN leader Adrian Delia wanted details about the contract, he could just ask his MP Mario de Marco.

Dr de Marco, a lawyer by profession, represented the winning consortium in appeals proceedings concerning the €274 million deal.

The PL also added that former PN minister George Pullicino was the lead architect behind the project and that bidders had met with PN leadership some weeks ago to discuss the deal.

“The PN is trying to imply that a private consortium received preferential treatment from the government, when the people who designed and defended this project are within its fold,” the Labour Party said.

'Confusion and contradictions' - PN

In its own reaction, the PN highlighted how the PL was reacting to calls for clarity and transparency by being "negative" - a word it often used to criticise the Opposition. 

"The Opposition is not after business owners or contractors," it said. "The government's replies on this issue have been full of confusing and contradictory statements about whether this was a direct order or not. 

"Given all this mess, we are asking the auditor general to investigate the contract."