FMS statement

The Foundation for Medical Services (FMS) issued the following statement on Thursday:

Following lengthy negotiations which started in December 1998, the FMS, on February 23, 2000, entered into a 'design and build' contract with Skanska-Malta Joint Venture (SMJV) for the continuation of the construction of the hospital. FMS also appointed Howarth-CLS/E.C. Harris as their cost controllers on the project.

To date, FMS has been making payments to the contractor in accordance with certificates of payment issued by the cost controllers and authorised by the client's representative in accordance with the relevant conditions of contract.

After initial indications that the actual project costs were set to escalate beyond the contract 'target value', the contractor opined that they were not obliged to abide by these target cost values. Following legal advice and not to compromise its contractual position and at the same time to proceed with the project, FMS subsequently made interim payments to the contractor on a 'without prejudice' basis. Discussions on this issue between FMS and the contractor (SMJV) were initiated immediately.

FMS have maintained that the contractor should be reimbursed costs in accordance with relevant conditions of the contract, subject to these complying with the target cost values which form part of the same contract, together with authorised variations there-to. To date, payments to the contractor have not yet exceeded the total contract 'target value', but requests for payment will shortly exceed it.

In an attempt to resolve the contractual impasse, Government and high-level officials from Skanska (the foreign joint venture partner of the contractor), agreed to nominate their respective negotiating teams to try to reach an amicable solution.

Government's negotiating team, headed by Parliamentary Secretary Tonio Fenech, includes Ministry of Finance consultants, a Ministry of Health representative and representatives of FMS. Architect Paul Camilleri, John Wilson and Jackie Camilleri were appointed on the Government negotiating team.

As such, these negotiations are the culmination of FMS's efforts and determination to justify all expenses incurred in accordance with the contract and in particular with the contract 'target value'.

In 2002, both the performance and workings of the FMS and the Mater Dei Hospital project were scrutinised by the Parliamentary Accounts Committee (PAC). Following this scrutiny, the PAC did not feel the need to further review either FMS's activities or the hospital project.

Mr Camilleri, partner in the architectural and engineering consultancy firm Paul Camilleri & Associates, who has substantial and direct experience of large construction projects in Belgium, Libya, Saudi Arabia and Malta, was appointed to serve on the FMS board in October 2000, and as from April 2003, appointed vice-president, for which he is paid an honorarium. Together with the other board members and the FMS CEO, Mr Camilleri was instrumental in drawing Government's attention to the issues leading to the present situation.

Mr Wilson, a British quantity surveyor, is a full-time employee of FMS and has been FMS's clients' representative on the project since January 2002. He has a track record of experience on large construction projects in the UK and the Middle East.

Ms Camilleri is a warranted accountant with significant experience in large construction projects and hospital operations. She was originally employed by the FMS as a financial controller in 1998 but moved to the UK in 1999 where she worked for the NHS as a Directorate Accountant at Stoke Mandeville Hospital.

In 2003 she was engaged by the FMS on a consultancy basis on a fixed-term contract specifically to carry out a 'gap' analysis report between the contractual target values and the projected final costs of the project as estimated by SMJV.