The government agreed to alter the parameters of a mega public tender connected to St Vincent De Paul Residence on the same day that the contract was signed.

James Barbara of James Caterers, who form the consortium.

As a result, a private consortium made up of James Caterers and a subsidiary of the db Group will rake in at least €274 million of taxpayer’s money over the next 15 years, when the original value of the tender they won was of under €60 million for 10 years.

The deal, which procurement experts dub as “illegal” as it does not follow established EU public procurement rules, is currently under the scrutiny of the National Audit Office. However, it has started to be implemented with the government’s blessing.

The fact that substantial changes were made to the original contract on the same day of its signing, emerges from partial access to the contract granted to Times of Malta by the Information and Data Protection Commissioner following a case filed by the Times of Malta.

The Family Affairs Ministry, headed by Minister Michael Falzon, twice refused to publish the contract citing personal and commercial clauses. The same minister also refused a similar request made by the Opposition in Parliament.

However, Data Protection Commissioner Saviour Cachia overturned the ministry’s refusal and ordered it to make a redacted version of the contract available to Times of Malta.

What has been established so far?

The contract between the government and the private consortium, originally for the building of a new kitchen and the supply of meals to residents and staff at SVDP for 10 years, was signed on November 14, 2017.

However, according to the documents, Director of Contracts Anthony Cachia did not only sign that contract, worth €60 million, but also a number of ‘addendums’ and a management services agreement which, according to the government, became part and parcel of the same contract. These additions increased the value of the public procurement exercise nearly fivefold.

Apart from the catering services and building of the new kitchen, which were the original call of the tender, the government accepted that the consortium was to build, as a ‘gift’, four new blocks on public land adjacent to the current old people’s long-term residence.

Silvio Debono of the db Group

According to the original contract, James Caterers and the db Group subsidiary were only to build two new blocks, holding some 250 beds, for the government as a ‘gift’ for winning the catering contract.

They also accepted to make a €1.5 million cash payment every year for 10 years for the refurbishment of the old people’s homes.

The ‘gift’, according to the call for tenders, was to be free of charge to taxpayers. It was only on this basis that the contract was awarded to James Caterers and db subsidiary by a government-appointed evaluation committee, beating the competition of another consortium which offered a less costly ‘gift’.

What happened between the award and the signing of the contract?

Although the contract documents seen by Times of Malta do not go into the details of what happened between the award and the singing of the deal, the contracts signed at the end of the process completely change the scope of the original tender.

The ‘gift’ was to be free of charge to taxpayers

Apart from the €60 million catering and kitchen contract, which included the ‘free’ €30 million ‘gift’, (the four new blocks on public land), the government agreed to amend the original agreements.

This means that instead of the two extra blocks proposed by the bidder, the government and the private consortium agreed to forego the €1.5 million a year of cash payments and provide four new blocks with a capacity of 500 beds.

According to the contract, these are also to be “free of charge for the government”.

However, in a complete departure from the original scope of the tender, a new Management Services Agreement was inserted as part of the contract. This grants the consortium the management of their own ‘gift’, the new 500-bed residence, for 15 years.

The contract given to Times of Malta redacted the date when this management services agreement was originally signed and all the payments which the government was to make to the consortium.

This redaction is being contested by this newspaper and a decision of the Data Protection Commissioner is being sought.

What happened before the signing of the contract?

On 9 November 2017, just three days before the signing of the final contract, a notice in The Government Gazette announced that the Finance Ministry had approved a record direct order – worth €274 million – for “management services of new hospital residence” to the James Caterers and Seabank db Group subsidiary. No tender was ever issued for the management of this ‘new’ 500-bed residence.

Through this direct order, it appears that the €30 million ‘gift’ on which the consortium ‘won’ the original €60 million tender was turned into a goldmine worth €274 million of taxpayer payments over 15 years.

Is this allowed?

Parliamentary Secretary Anthony Agius Decelis, who oversaw the process.

While the government, particularly Parliamentary Secretary Tony Agius Decelis who oversaw the process, argues that all was done above board, the EU law on concession contracts, dictated by legal notice S.L 174.10, is very clear.

Establishing parameters in which such concessions could be modified, the law states that any increase in the value of such a contract “shall not exceed 50 per cent of the value of the original concession”.

It also states that the new concession “shall not provide for modifications or options that would alter the overall nature of the concession.”

Through the changes made on the same day of the signing of the contract, the €60 million concession was turned to a €274 million concession – an increase of 456 per cent.

ivan.camilleri@timesofmalta.com