Marsaskala Family Park contracts did not warrant claimed urgency - NAO

The Auditor General concluded that there were significant divergences from WasteServ Malta’s initial estimation of costs to actual contracted amounts in a number of contracts which amounted to over €34 million.

Today, the Auditor General presented a report entitled ‘An Analysis of WasteServ Malta Limited’s Procurement: A Case Study Perspective’ to Parliament.

Variations between contracted amounts and final project costs were most pronounced in two case studies, that is, the construction of a leisure area at the Marsaskala Family Park and the improvement undertaken with respect to the Sant’ Antnin Waste Treatment Plant and Material Recycling Facility. 

In these two cases, the recorded variations amounted to approximately €600,000 (53% over the contracted amount) and €6,000,000 (23% over the contracted amount), respectively.

Last year, a report by the OPM's management efficiency unit (MEU) on the Marsascala family park revealed how an expedient procurement was carried out urgently, and perhaps in time for a pre-electoral show of strength.

The MEU was instructed by environment minister Leo Brincat to compile a technical report on the €7 million Family Park in Marsascala, which the government claims is blighted by administrative and infrastructural problems.

The MEU concluded that the development of the Sant' Antnin Family Park was "excessively reliant on the process of variations and direct orders to such a degree that this can only be explained by lack of foresight and adequate planning."

Moreover, the NAO said that concern arose from the justification presented, since the nature of the procurement did not warrant the claimed urgency.

"The main audit concern of the contract for the supply and maintenance of play equipment at the Marsaskala Family Park was WSM resorting to a negotiated contract, and the fact that this process involved only one contractor,” the report said.

The main objective of this audit was to determine whether WasteServ Malta Limited (WSM) procurement practices were compliant with and adhered to pertinent public procurement regulations.

In view of the numerous contracts awarded during the period under review (2006-2012), the National Audit Office (NAO) said the contracted value corresponding to the five case studies selected was that of €34.32 million.

In addition to the five case studies, NAO reviewed the appeals lodged by third parties in relation to WSM contracts with the Public Contracts Review Board (PCRB) during the period 2011-2012.

Noting that the initial project estimate was essential in ascertaining value for money, NAO said that in the cases reviewed, it concluded that there were “significant divergences from WSM’s initial estimation of costs to actual contracted amounts. Shortcomings in this regard imply that WSM did not have a reliable benchmark against which to gauge the financial viability of offers received.”

NAO considered such substantial differences between WSM estimates and contracted amounts, ranging from 42% over-estimation to 15% under-estimation, attributable to two factors.

“First, such discrepancies may have been indicative of poor estimate compilation, with insufficient attention directed towards the sourcing of essential market intelligence. Second, discrepancies of this magnitude may also have resulted from vast changes to project scope and/or design.”

Aside from reservations in determining value for money emerging in relation to the reliability of project estimates, NAO noted significant variations that mainly stemmed from changes in project design after contract award.
 
Out of the 15 appeals lodged against WSM during the period 2011-2012, 10 of these objections were upheld by the Public Contracts Review Board (PCRB), NAO said. 

In NAO’s opinion, this situation left much to be desired, particularly so when one considered the process of review that such procurement is subjected to.

It transpired that PCRB overturned the award decisions for a variety of reasons.  Most notable were instances where the contract was awarded to a non-compliant bidder, the award of a contact despite ambiguity in tender instructions, a lack of adherence to the stipulated evaluation criteria, and a case where an appellant had to lodge three appeals with respect to the same contract.