The government has approved a record direct order – worth a massive €274 million – to James Caterers and a subsidiary of the Seabank Group for the management of a new extension to the St Vincent de Paul residential home for the elderly, The Sunday Times of Malta can reveal.
The extension is still to be built and has not yet been given a development permit.
The government, particularly the Ministry for the Family, Children’s Rights and Social Security, has repeatedly refused to reply to persistent questions by The Sunday Times of Malta on the subject since last May.
However, sources at the residential facility confirmed that the mega direct order had indeed been awarded.
“Last November, the government decided that James Caterers and Malta Healthcare – a subsidiary of the SeaBank DB Group – are to be given, without any competition, this multi-million direct order to the tune of €273.6 million,” a source confirmed. “The government is now preparing to justify this direct order, which beats all records of direct orders, by linking it to a Private Public Partnership for the extension of St Vincent de Paul in the form of a new 500-bed facility.”
The new extension is to be built under a PPP by the same consortium, James Caterers and Malta Healthcare.
But the source suggested the government’s strategy was just a ploy because the PPP contract for the extension is not connected to the direct order for the management of the facility: the PPP tender document did not mention that such an arrangement would be possible.
Finance Ministry sources, who usually deal with direct orders, confirmed that the James Caterers-Malta Healthcare direct award involving €274 million in taxpayer money is “a record in Malta’s history”.
However, the sources could not confirm whether it had been signed by Finance Minister Edward Scicluna or his Permanent Secretary Alfred Camilleri.
Healthcare industry sources told The Sunday Times of Malta that a direct order of such massive proportions would surely not fall within the parameters of any written government policy and expressed “serious doubts” as to whether it conformed to EU public procurement rules.
“The government always comes under scrutiny when it dishes out direct orders of a few millions,” a source said. “You can just imagine what will happen in a direct order of such dimensions.”
The PPP tender was issued by the government in 2015. It was originally for the procurement of catering facilities at St Vincent de Paul for a 10-year period and the construction of a new kitchen.
However, the tender document, which had a total value of €58 million, also included an unusual clause: the government asked for an unspecified “additional investment” by the bidders, over and above their delivery of the catering and kitchen.
The additional investment, which insiders called ‘a gift’ to the government for the assignment of the lucrative contract, was, also uncharacteristically, given the bulk of the weighting in the final evaluation process of the bids.
The tender stated that the unspecified “additional investment” would only become government property at the end of the 10-year contract period, which could be revised by another five. The tender document did not state what would happen during the contract period.
Another consortium, CCE joint venture – owned by the Vassallo Group – submitted the cheapest offer for catering provision and the new kitchen.
However, the contract was awarded to the James Caterers-Malta Healthcare consortium on the basis that they offered the best ‘gift’ to the government as their ‘additional investment’. They were awarded the most points in the evaluation exercise.
The ‘gift’ consisted of the construction of a 500-bed extension on the grounds of St Vincent De Paul, which is a fully owned government property. This was costed at €30 million – more than half the value of the original contract for catering facilities and kitchen, €58 million.
The government is now preparing to justify this direct order, which beats all records of direct orders, by linking it to a Private Public Partnership
Asked repeatedly for a copy of the contract for the PPP, signed in November 2017, the government has vehemently refused, citing “commercial reasons”.
The Family Ministry, run by Michael Falzon, also turned down a Freedom of Information request by The Sunday Times of Malta, for the same reasons, despite the huge taxpayer outlay involved.
The government is also refusing to reply to any questions on the PPP and on the arrangements made with the winning consortium.
Asked specifically to state who would be managing the ‘additional investment gift’ and offering the necessary services for the new 500-bed hospital once completed, the government failed to reply.
It is only now that The Sunday Times of Malta has discovered that the government has arranged for the separate direct order to be awarded to the PPP tender winners, giving them the management of the ‘gift’ facility they will be building.
“That is surely striking gold for the consortium,” one industry source said.
In the meantime, despite the fact that no planning permit has yet been issued in response to an application submitted by former PN minister George Pullicino on behalf of the consortium, excavation work is in full swing. The PA has granted the green light for preparatory works to go ahead.
The PN has so far failed to comment on the controversial tender, which several people in the industry see as highly controversial.
Following a formal request by the Nationalist Party, the ITS deal is now under the scrutiny of the NAO.
Asked for its position on the St Vincent de Paul tender, which from the original provision of meals has been turned into an extension of the facility, the PN did not reply.
On the other hand, the Democratic Party has already called for a full investigation of the tender and the way it was evaluated and awarded.
According to the PD, the government should publish the whole contract and the NAO should start investigating.
Questions sent to Family Minister Michael Falzon and Parliamentary Secretary Anthony Aguis Decelis on May 23 which have not yet been replied to:
• When is it expected that the new extension at St Vincent De Paul will be ready for use? Do you have a target date? What is it?
• Who will own the new facilities and provide the necessary care and ancillary services until the end of the 10-year contract – the government or the consortium?
• Until the date when the facil-ities will become government property according to the contract (CT 2009/2015), will the government or any of its agencies be paying any fees to the consortium for the new facilities? If so, what are they?
• Who will provide catering services to the additional 500 patients hosted at the new facilities? At what price?
• Can you send us a copy of the contract signed on November 14, 2017?
Who is the JCL and MHC consortium?
JCL stands for James Caterers Limited which is fully owned by JCL Holdings Ltd. The latter is wholly owned by James Barbara from Tarxien. Mr Barbara is one of the two directors on the board of directors together with CEO Joshua Zammit – the former CEO of the government’s Malta Industrial Parks responsible for the management of industrial estates on the island.
Malta Healthcare Caterers Ltd is the other member of the consortium. It is owned by Seabank Hotel and Catering Ltd and James Caterers Ltd. James Barbara, Silvio Debono, Jesmond Vella and Joshua Zammit sit on its board of directors.