31 December 2003

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Simed claims abuse and irregularities in awarding of tender

- claims INSO offer is the most expensive

By Julian Manduca
The tender for the supply of medical equipment for Mater Dei Hospital was awarded to the bidder that was the most expensive, Dutch company Simed claimed yesterday through its legal adviser Dr Joe Fenech.
In a reversal of fortunes, the contract was first awarded to the Italian led company INSO SpA, but was then reversed by an appeals tribunal and was expected to be awarded to Dutch company Simed. On Friday the Foundation of Medical Services decided to stick with INSO and the Director of Contracts as well as the government stood by that decision.
Fenech told The Malta Financial and Business Times that he was very surprised by the latest turnaround. "I believe it is a wrong decision," Fenech said.
"INSO’s bid was in fact disqualified, contrary to what is now being claimed, and the reasons for disqualification are ones that justifiably disqualify a tender. The reasons for disqualification were clearly stated and there should have been no arguments about them."
Addressing a press conference yesterday evening Fenech said that,according to the Board of Appeal, the Foundation for Medical Services should have started a clarification process with Simed, but that never took place. Fenech called on the government to investigate the decision to award the contract to INSO and said there were several irregularities which were highlighted in Simed’s submissions to the Board of Appeal. Fenech explained why INSO’s bid should have been disqualified and said it did not comply with the tender specifications in a number of important areas.
Another company that had appealed the original decision, the German Hospitalia GmbH was disqualified because it had made its bid conditional to specifications which were not acceptable according to the tender.
When the tender offers closed INSO Spa had submitted a tender valued at Lm64.8 million, Hospitalia for Lm73.5 million, Simed for Lm74.8 million; Sagexport for Lm87 million and Siemens for Lm90 million.
In its appeal, Simed had claimed that while INSO’s proposal was cheaper, it did not comply with the tender specifications. According to Simed, the technical experts appointed by the Department of Contracts, Secta had to renegotiate with INSO and following changes to the tender offer INSO’s bid was more expensive than all the others.
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 has 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.
According to the technical report prepared by SECTA, the INSO tender was difficult to evaluate due to the number of instances of lack of technical information.

"On numerous occasions we found information that conflicted between the technical specification and catalogues. We also noted that items were signed as conforming to specification when no details of manufacturer, model or item of equipment was issued. The whole professional presentation of the tender was extremely poor and many of the items offered were of dubious quality," SECTA noted in its report.
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. "Only the client – in this case the Foundation for Medical Services – can ask for clarifications," Simed said.
In the final instance, according to Simed: "Secta’s final report, October 2002 confirms 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."
According to Simed, "following the second review by Secta, INSO Spa still had 218 items not evaluated nor considered acceptable."
Simed are claiming that INSO failed to quote prices for a variety of medical equipment and that "the INSO total cost to form the contract price, if calculated according to the criteria of evaluation, amounts to Lm 97,951,710 (Tender Base Cost + Post Warranty 5 Year Service and Maintenance Contract + Mandatory Spare Parts for 5 Years) and this price does not include the amounts indicated as unpriced in second Secta report, Final Report, October 2002 price of the Gamma Camera and the Stereotactic Breast Biopsy unit and Biopsy attachment."
Simed also claim that No local after sales services as contemplated and stated in Clause 28.4.b of the document instruction to Tenderers Section II as was required in the Tender document.
In its latest decision, the Department of Contracts, decided that the contract should be awarded to INSO because: it was not in the public interest for the process to drag on; that Hospitalia’s bid was disqualified; that the offer of Simed was inferior to that of INSO; that INSO’s offer was Euro 10 million cheaper; that INSO’s offer was not disqualified and that according to technical experts Secta, the offer made by INSO was of an acceptable level.
The Department was assisted by an advisory Board under the chairmanship of Judge Victor Caruana Colombo and the assistance of legal experts, Muscat Azzopardi and Associates and financial experts Grant Thornton Consulting Ltd.
The decision to annul the award to INSO, worth some Lm25 million, was taken by an appeals board chaired by Alfred Triganza, but that decision has now been reversed.
While efforts made by this newspaper to obtain clarifications on its decision from the Contracts Department proved fruitless, the government has accepted its decision.
No government spokespersons were available for comment yesterday and Simed told the media that they too could not get any clarification from the government. All that was obtained was a letter from the contracts department – the director of contracts is abroad – stating that the award had gone to someone else.
Also addressing the press was Ferry Dubbers, the area manager for Simed. When asked if he believed the government had influenced the decision Dubbers said: "What do you expect?"
A member of the public who said he had a vested interest in the issue said that what interested the man in the streets was the price. He said the government will claim the tender has gone to the cheapest bidder, but this was not the case. He said that it was embarrassing for the people of Malta to have to accept this decision, and called for an investigation into the financial aspects of the tender process.
Asked whether Simed could do anything to at this point, Dr Fenech explained that as things stood there was precious little that could be done. He ruled out a case for damages, saying that would be very expensive.

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