05 November 2003

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Calls for more transparency in awarding of public tenders issued

By Matthew Vella
Opposition health spokesperson Michael Farrugia yesterday claimed there had been no sort of mistake within contract procedures after an appeals board annulled the decision of the director general of contracts to award a Lm25 million contract to Italian company INSO SpA for the supply of medical equipment to Mater Dei Hospital in Tal-Qroqq.
The Italian company, along with German company Hospitalia International GmBH and Dutch company Simed International BV, had tendered for the supply and installation of medical equipment, medical furniture and the provision of related services for the Mater Dei Hospital.
Farrugia yesterday called for more transparency in the procedures concerning public contracts after the appeals board revealed the re-evaluation of the INSO tender had been illegal since around three per cent of the contract specifications had been changed from its initial offer, which had been considered not suitable for the tender.
"Irrespective of opinions expressed against awarding the contract to INSO, by both the FMS and SECTA the contracts committee re-evaluated the INSO contract when it was already considered that it did not fulfil contract specifications. In full knowledge of these dissenting opinions, the process went through," Michael Farrugia said.
The Labour spokesperson stopped short from alleging any form of corruption within the tender process, saying that it was not evident that money had changed hands throughout the process. He said that despite this, the way matters unfolded showed a lack of will to clear those suspicions that had been claimed throughout the tender process:
"It is clear that someone could have stopped this dubious chain of events. This is not a question of competence on the part of the contracts committee, because they knew what was going on and yet they did not stop, or there was no one to stop them. Following the decision by the appeals board, political responsibility has to be carried."
In February, INSO submitted a tender valued at EUR64.8 million, Hospitalia a tender of EUR73.5 million, Simed one of EUR74.8 million, while a tender by Sagexport was valued at EUR87 million and Siemens made an offer valued at EUR90 million.
The Foundation for Medical Services (FMS) appointed an adjudicating board to recommend a bidder as well as British consultancy firm SECTA to deal with the technical side of the process. FMS’s accounting firm Grant Thornton dealt with the financial aspects of the contract.
According to SECTA, the INSO tender had conflicting information between technical specifications and catalogues, with no details of manufacturer, model or item of equipment presented. SECTA had said the whole professional presentation of the tender was extremely poor and many of the items offered were of dubious quality.
In May 2002, FMS recommended that the director of contracts award the contract to Hospitalia but in December, the director of contracts announced his intention to award the contract to INSO after a re-evaluation exercise had been launched into the INSO bid. Both Simed International and Hospitalia appealed the decision. In its appeal, Simed noted that in INSO’s offer, Secta found that after its first full evaluation only 53.72 percent of the equipment was compliant with the tender. Simed claimed that an "illegal and very unprofessional re-evaluation exercise," was carried out so that INSO would be able to change its specifications, but nevertheless following a second Secta report, only 82.96 percent of the offer was considered acceptable.
The re-evaluation took place after the tender was closed and on the insistence of the director general of contracts, and according to Simed both actions were highly irregular. Simed said Secta’s final report in October 2002 confirmed that several radical changes were effected to models and manufacturers during the second evaluation, 2.97 percent to models and 3.91 percent to manufacturers as well as a 0.94 percent addition of accessories and that INSO still had 218 items not evaluated nor considered acceptable.
The board’s decision has now allowed Simed International to be awarded the contract if it satisfies certain conditions of the tender documents. The appeals board annulled the decision to award the tender to INSO as well as disqualifying Hospitalia because the conditional nature of the offer submitted by Hospitalia and their failure to submit an offer for consumables disqualified their tender from proceeding further.
The board has recommended that the director general of contracts obtain in writing from Simed clear clarification regarding all items and areas highlighted by the technical, financial and legal advisers commissioned by the adjudication board.

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Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
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