The Ministry for the Economy, Investment and Small Business (MEIB) effected payments to a service provider beyond the period allowed by the Finance Ministry resulting in the contract price being exceeded by €55,857.
A report produced by the National Audit Office on the public accounts for 2015 revealed as such, describing the contract price as being “substantially exceeded.”
The full document comprises of 21 reports on the operations of various ministries, departments and other government entities, including an analysis of the Financial Report 2015.
The report also noted that a “lack of supporting documentation and approvals were also identified while testing expenditure incurred following Malta’s participation in the Expo Milan 2015. Concerns relating to travel abroad were also noted.”
In relation to the cleaning services contract, it highlighted that on 14 March 2014 the Finance Ministry issued “its definite approval for the procurement of cleaning services at MEIB offices on 28 March 2014.
“The service was to be provided for a period of four months, at an hourly rate of €6.33 (VAT excluded). The approval was granted on condition that the total amount of €12,000 (VAT excluded) was not exceeded.”
It noted that following the finance ministry’s approval, the contract signed between the cleaning service company and MEIB was dated 27 March 2014 – a full day before it received the necessary approval from the Finance Ministry.
“Although MFIN’s definite approval covered a four-month period, payments were issued to the service provider for cleaning carried out between April 2014 and March 2015. No documentation was traced in the Ministerial file reviewed evidencing that this cleaning service was formally extended.
“Since its engagement on 27 March 2014 till 29 April 2015 (i.e. the date on which the last payment was effected by MEIB), the service provider was paid a total of €70,0172, thus exceeding the limit imposed in MFIN’s definite approval, as transposed in the contract, by €55,857. In the absence of documentation to prove otherwise, payments effected to this service provider over the prescribed threshold were neither covered by Finance authority nor by a binding agreement between the contracting parties.
“The Performance Guarantee submitted by the service provider covered only a three-month period, effective from 7 April 2014. For the remaining nine-month period to March 2015, no Performance Guarantee was in place, resulting in the Ministry not being legally covered.”
In its recommendations, the NAO wrote that should the MEIB envisage a situation where conditions laid out in approval from the finance ministry no longer applies and changes are needed, it should seek approval immediately. It stressed that conditions laid out by the finance ministry must adhered to:
“The Ministry is to ensure that all the conditions laid out in finance approvals are abided with. Where it is envisaged that the service will be required for a longer period than catered for in the original approval granted, guidance is to be sought from MFIN accordingly. Moreover, the agreement and Performance Guarantee are to cover the full period for which the service is needed.”