An investigation by the National Audit Office has confirmed taxpayers are being short changed by lack of competitiveness in road repair works, with only one contractor submitting a bid in 37 out of 43 contracts awarded.
The investigation focused on a sample of contracts awarded by the roads and infrastructure department within Transport Malta between August 2009 and January 2010.
Out of 35 major patching work projects awarded, 33 attracted only one bid. In another two contracts competition was limited to two bidders.
Similarly, half of the eight minor repair work contracts analysed by the audit office had only one bidder. Two contracts were contested by two bidders while the remaining two jobs saw three contractors submit their bids.
“Having the vast majority of tenders issued by the department contested by a sole bidder poses considerable risks of reduced competitiveness and exposes dubious bidding patterns,” the NAO said.
The concern was “strongly substantiated” by the bidding pattern of a particular unnamed contractor.
According to the NAO, this contractor was awarded six contracts. In all contracts but one, the contractor was the only bidder and the average winning bid value was always €62,908.
However, in the only contract where this contractor was competing with another bidder, the winning bid value dropped to €55,778, a fall of 11 per cent.
“In the circumstances, a change in the bidding price cannot be attributed to a possible change in operational costs,” the NAO said.
It did note, though, that the bidding pattern of another contractor did not change irrespective of whether the company was the sole bidder or not.
The NAO said reduced competitiveness in the tendering process led to lower quality standards and consistently higher bids at the expense of the department and the taxpayer.
The fact that a large number of tenders were issued in a relatively short period of time, the report added, was of concern. The NAO recommended that calls for tenders be issued sporadically in an attempt to encourage more competition and multiple bids.
Reviewing the conditions linked to road repair contracts, the NAO noted that although the department insisted that contractors have a valid insurance policy, it left the level of indemnity to the bidders’ discretion.
“Knowing that the contractor has a valid insurance policy, but not being aware of the level of indemnity it covers, is not sufficient for the authority to reassure itself that the contracting party is sufficiently covered in the eventuality of an accident,” the NAO said, adding this was an unacceptable practice.
It also found that statements certifying the bidders’ compliance with employment conditions were not always included in the relevant project files.
The NAO said the department should ensure that basic employment conditions are adhered to by all contractors it dealt with and discourage malpractice by not awarding contracts to bidders who are not prepared to or do not produce the required and relevant certification.
The report was tabled in Parliament this week and dealt with repair works of arterial and distributor roads, which are the responsibility of the central government.
ksansone@timesofmalta.com