The Court of Appeal has cancelled a government contract of €3.7 million awarded for the cleaning of facilities falling under the Active Aging and Community Care Directorate.

The court found that the contracting body had failed to investigate why the winning bidder had submitted a tender that would cost the government substantially less than all the other bids it had received.

The contractual process should start afresh, the three judges ordered.

Chief Justice Mark Chetcuti and Mr Justices Giannino Caruana Demajo and Anthony Ellul delivered judgment after failed bidder X Clean Limited filed an appeal against a decision by the Public Contracts Review Board to reject its request for a review of the contract awarded to Dibaw Services Joint Venture.

The winning bid was far too low and the contracting authority had failed to investigate the reasons why, X Clean argued.

The contract was valued at about €3.66 million and was split into two lots. X Clean was one of nine bidders on Lot 1 and among eight bidders on Lot 2.

Dibaw was granted the contract after it placed a bid, covering both lots, of €3.016 million. This was €643,000 cheaper than the contract value. X Clean’s bid for both lots was of €3.27 million.

X Clean went to the review board objecting to being disqualified on the ground that its bid had failed to satisfy the best price-quality ratio criterion.

The winning bid was far too low and the contracting authority had failed to investigate the reasons why

Legal procurator Peter Paul Zammit, appearing for X Clean, argued that public procurement regulations obliges the evaluation committee to investigate suspiciously low offers.

Lawyer Christian Camilleri, representing Active Ageing and Community Care, countered that the evaluation committee had followed the correct procedure.

On the claim that the preferred bid was abnormally low, he noted that all tenderers used similar rates for workers’ wages, using figures stipulated in government circulars. The difference in the bids, he said, was in the administrative costs.

Dibaw’s lawyer, Alessandro Lia, described the case as a fishing expedition that was not backed by evidence.

The review board, then chaired by Ian Spiteri Bailey (who is now a judge), rejected the request for a review last March, forcing the company to take its appeal to the main courts.

In court, X Clean insisted that the price difference was not minimal and that the contracting authority should have questioned it.

The appeal court upheld this argument, ruling that the difference in pricing was substantial enough to oblige the contracting authority to question it by requesting the bidder to provide more information.

It annulled the decision of the review board and ordered that the evaluation of bids start from scratch.