Malta Chamber: Malita drama underlines need for procurement reform

The Malta Chamber has renewed its calls for sweeping reforms of Malta’s public procurement framework, in light of controversy concerning claims of political interference in the publicly-listed Malita Investments.

In a statement, the Chamber said such situations – “whether they effectively happened or not” - highlight the need for a “robust, transparent and accountable” system to remove any doubts surrounding the award of public contracts.

It argued that all public spending should be subject to clear rules, effective oversight and ethical standards to protect taxpayers’ money and ensure fair competition.

The Malta Chamber has been pushing the government to reform procurement systems since 2021, when it released a detailed report into the current system and its proposals to change it.

Malita Investments is 81 per cent government-owned but is publicly listed on the Malta Stock Exchange. Its former chair Marlene Mizzi this week accused Housing Minister Roderick Galdes of trying to interfere with the company and “hobnobbing with contractors” Malita engaged.

Galdes responded by saying he did not get involved in operational issues and only wanted to ensure Malita projects were finished on time. On the same day Mizzi made her allegations, news broke that Malita’s executive chairman Johan Farrugia had resigned.

The company’s board on Wednesday insisted its decisions were not politically influenced.

Malita, which finances major infrastructural projects, has run into major financial trouble this year, despite having registered millions in profits in previous years.

In its statement, the Malta Chamber stressed the importance of separating political decisions from administrative functions. Ministers, it said, should set policy direction, but competitive processes and contractor selection must be handled independently by the civil service.

“Public procurement represents a substantial share of total government spending and has a direct impact on economic competitiveness, public services and overall quality of life.

“If public procurement is not conducted transparently, efficiently and fairly, it undermines trust in institutions, distorts competition, discourages reputable operators and can result in significant waste or misuse of public funds,” the Chamber said.

Among the reforms the Chamber wants implemented:

• A clear governance framework that prohibits ministers from influencing contract awards
• A public procurement outlook published six months in advance
• Broader use of genuinely independent experts in drafting tenders
• A shift away from awarding tenders to the cheapest compliant bidder and instead integrating quality and performance metrics
• Tighter scrutiny of direct orders and contract variations
• A user-friendly public contracts register covering all tenders, including direct orders, with details on milestones, payments, disputes and modifications.