The mother of all direct orders

Direct orders have always figured in Malta’s political discourse. Every government since independence was criticised by the Opposition of the day for its direct orders – because they can be subject to abuse.

The biggest direct order I can remember was when Mintoff negotiated the purchase of a boiler for the Marsa power station – eventually bought for some nine million Malta pounds – directly from the Japanese manufacturers. The deal was struck after the Japanese visited Castille innumerable times with Mintoff using his incredible tactics that could squeeze the proverbial blood from an inert stone. I cannot say that Malta did not get a good deal. But this was a one-off case that could hardly be repeated.

That record seems to have been broken in a deal that made the news this week. Although listed as a direct order in the official Government Gazette, some say that this was also part of a tender/private partnership (PPP) process.

The process was, in fact, a mind-boggling chimera that is part tender, part PPP and part direct order – the last part amounting to a whopping €274 million!

The whole process was so convoluted that one wonders how – and why – people in their right senses thought of doing it.

It all started when the Contracts Department issued a tender that was only partly a tender. It called for the setting up of a PPP for the provision of catering services at St Vincent de Paul old people’s home. Bidders were to submit a price for meals per day – which price would include the demolishing and the rebuilding of a fully furnished kitchen. So far so good, as bids could be compared easily – apples with apples, as the saying goes.

But – and this is a big but – bidders had to offer also an additional investment of their choice. Common sense indicates that the authorities of this home for the elderly should have decided what the nature of the ‘additional investment’ should be and not the bidders. It is the authorities who know what they need.

With a large ageing population and with the institute in a bad shape, I would have thought the people responsible for the running of the place had a masterplan indicating the investment the place needs as well as a chronological plan for the phasing of such investments.

But lo and behold – this task is given to the tenderer for the catering services needed. How and why a catering firm can decide on the priorities of a home for the elderly is anyone’s guess.

The first part of the process considered the tendering part of the tender/PPP. The process was a normal one and was awarded to one of two bidders on technical grounds; with one bidder’s omelette being deemed inferior to the other bidder’s pork pie. The other and cheaper bidder objected to the decision and appealed twice, first to the Public Contracts Review Board and then to the Court of Appeal. He lost both cases as, presumably, there were no flaws in the evaluation process and decision.

So far so good.

Then the ‘other part’ of the bids was opened. The bidder who had been selected during the first part of the process offered an additional investment of €29.2 million, while the other bidder had only offered an investment of €10.9 million. This is where comparing apples with apples was no longer possible – simply because the bidders themselves were deciding what the additional investment should be!

The award was given to the first bidder who had luckily guessed what the old people’s home needed most – the construction of a new wing! I do not know whether he submitted detailed plans and specifications of his proposals.

This time the other bidder did not appeal the decision. Coincidentally at about the same time, the losing bidder was given a direct order to the tune of €3 million to receive and care for elderly patients who will be transferred out of Mount Carmel hospital.

The plot now gets fudgier and fudgier.

Apparently, the authorities at this stage somehow discovered what they really needed and in negotiations with the winning bidder they asked for a bigger extension than that which had been offered. The bidder accepts to enlarge the new proposed wing as part of the deal, if he is given the management of the facility for a number of years. The negotiated price for this management is €273.65 million – increasing the price of the original ‘tender’ by more than €200 million!

There is no way how to award this second contract except by a direct order incidentally issued a week before the contract envisaged by the original tender was awarded. Undoubtedly, this is the mother of all direct orders.

If this isn’t a mess of gargantuan proportions, I do not know what it is.

I cannot believe the extent of the stupidity of those who concocted this mise en scène. They must have thought that they are very clever – too clever by half, in fact. And their folly is so immense, that they even think that everybody else is stupid.

Uncle Sam says so

“Anyone doing business with Iran will NOT be doing business with the United States,” Donald Trump tweeted on Tuesday.

Imposed three months after President Trump pulled the US out of the international accord limiting Iran’s nuclear activities, the sanctions came into effect on Tuesday, with the first batch of measures targeting financial transactions, trade in gold and other metals, the car industry and commercial aviation.

The EU has meanwhile concocted a so-called “blocking statute”, to shield European companies that do business with Iran, allowing firms to recover damages from bodies that enforce US sanctions.

This statute will be difficult to enforce and many international companies are withdrawing investment from Iran rather than face stiff US penalties and the potential loss of access to US markets.

The problem is that passing money from one country to another depends on US banks as the dollar is the world’s international exchange currency. In the US, busting US sanctions is illegal and leads to accusations of money coming from criminal activity – hence money laundering – even if it actually came from above board trading.

If you do not believe me, ask Pilatus Bank owner Ali Sadr Hasheminejad!