Tonio Fenech outsourcing VAT records to private operator

Finance minister Tonio Fenech is outsourcing the storage and digitisation of VAT receipt books, as well as their printing and distribution, to the private sector as part of its drive to have government focus on its “core business”.

The tender, whose value is as yet unspecified, involves printing and distribution of some 220,000 VAT receipt books over a period of five years, as well as their storage and data recording.

The books will remain in the possession of the contractor for a further two years after the contract expires, even if another contractor wins the new tender. The tender specifies that the contractor is obliged to maintain professional secrecy both during and after the contract's completion.

Fenech said outsourcing in the VAT department - whose reputation was recently tarnished by a €10 million bribery network of six employees - was essential to have government focus on its role as a regulator. "Government does not need VAT department employees stamping VAT books, but instead to strengthen the department's role as regulator and see to enforcement of VAT laws," Fenech said.

On his part, Labour shadow minister for the economy Charles Mangion - who raised the matter during a business debate on Friday with his counterpart - said the outsourcing contract raises questions of confidentiality.

"We have already seen cases happening in the United Kingdom, for example, where careless employees of private companies handling government data had lost reams of sensitive data from their cars, ending up in third parties' hands.

"This is a matter of confidentiality, where such sensitive data now is no longer in the hands of the State but is being passed on to a private company."

Reacting, Fenech said private companies who are awarded such tenders would have to abide by confidentiality agreements to carry out the operation.

One of the aspects of this public tender is that no evidence of economic and financial standing is required for prospective contractors.

On the other hand, tenderers must be able to prove they have performed a volume of annual deliveries worth not less than €150,000 over the past three years. The prospective contractor will also be able to sub-contract up to 30% of the total value of the work.

Tenderers must also declare they have no potential conflict of interest, and staff will have to respect human rights and "undertake not to offend the political, cultural and religious morals of Malta".

Mangion, a notary by profession, also said previous outsourcing projects like the public registry searches to the company Eureka Services had generated millions for the company, with little return to the government itself.

The direct order issued to Eureka Services earned the company over €2 million every year since 1999, for the digital searches of public deeds that the government outsourced without a call for public tenders.

When the contract expired in 2010, the government paid €2.7 million to Eureka for the databases and other software, servers and computers, as well as training to government employees, so that the public registry could continue effecting the researches for notaries.

MaltaToday has also revealed that the Malta Environment and Planning Authority had outsourced the scanning of planning documents to Maltapost plc, in a direct order worth €853,581 over five years.

The contract was awarded under former MEPA chairman Andrew Calleja in 2006. The contract - which expired last year - was not renewed.

Confidential documents like planning applications had to be transferred to a Maltapost branch in Gozo to be scanned. Asked how MEPA ensured that the confidentiality of the documents was respected, a spokesperson for the Authority insisted that the contract signed between MEPA and Maltapost contained specific conditions, which ensured strict standards of confidentiality with respect to any data delivered to Maltapost by MEPA.

"Until the date when the contract was terminated last November, the Authority had never received a report that any of these conditions had been breached."

This story appeared in the print edition of MaltaToday on Sunday on 8 May, 2012.