September 1998: The new hospital project is re-evaluated. According to a reply to PQ 749 by Minister Deguara, the new administration found a situation where:

The structure was built on the Ortesa designs for a 480-bed hospital – with an additional floor and an additional wing to Block D.

The mechanical and electrical services were suspended as from 7 February 1997 to 31 December 1998.

The new wing of Block D and car park were to be completed by February 1999.

A medical brief for a 980-bed hospital.

The hospital concept had been changed from one of research and training to a general acute hospital.

The new administration decided to re-dimension the new hospital to a 650-bed hospital with a possible extension to 825 beds. The new hospital was to cater for Malta’s acute medical needs into the next century whilst incorporating secondary and tertiary services including all major specialities. All the clinical functions were to have a strong research and teaching component.

The completion of the first section of Mater Dei Hospital was due in 2003 and to be fully completed in 2005.

It is decided to terminate the contract of designers Norman & Dawbarn.

11 November 1998: FMS terminates the Design Consultancy Contract with Norman & Dawbarn.

Due to previous experience on the project, the government concludes that it is far more advantageous to have one contracted entity to design and build the project. One has to note that this option was also considered during the Labour administration although it was not taken on board.

The contract with Norman & Dawbarn places no onus on the client to give a reason for the termination of the contract.

19 February 1999: A new FMS board is appointed for two years: Dr Joseph L Pace (president), Rene H Formosa (vice president – resigned 2 June 2000), Dr Ray Busuttil, Dr Ray Xerri, Albert Attard, Dr Natasha Muscat Azzopardi, David Spiteri Gingell (resigned 1 October 2000), Emmanuel Micallef (appointed 10 May 2000), Saviour Sciberras (appointed 10 May 2000), Paul Camilleri (appointed 25 October 2000).

6 December 1999: FMS starts negotiations with Skanska on the Design and Build Contract, with a draft proposal prepared by FMSA.

29 February 2000: Skanska Malta JV and the Foundation for Medical Services enter into an agreement for the building, finishing and commissioning of the new hospital in Tal-Qroqq. The contract is a Design and Build Contract.

Apart from FMS representatives, the FMS negotiating team also includes a prominent worker, a prominent lawyer from a local law firm and a foreign consultant belonging to an international firm specialising on contract advisory services.

The advantages of a Design and Build contract include the following:

Speed: It allows for a fast method of construction as construction time is reduced because design and building proceed in parallel. Early start on site is possible, long before tenders have been invited, for some of the work packages.

Complexity: An efficient single contractual arrangement integrating design and construction expertise within one accountable organisation. Design and construction skills are integrated at an early stage which will allow a better coordination of the design, procurement and construction works.

Quality: The client requires certain standards to be shown or described. Skanska is responsible for quality of work and materials on site and its expertise is fully utilised throughout all stages of the project including the design stage.

Flexibility: the client can modify or develop design requirements during construction, Management contractor can adjust programme and cost to meet the client’s requirements.

Competition: The management contractor has been appointed because of management expertise. However, competition can be retained for the works packages which will be subject to competitive tendering.

Responsibility: The client has access to all of the management contractor’s records due to “open book” system of working.

Controls applied to contractor: All of the Management Contractor’s systems of working are subject to discussions and approval, by the client’s control ones its employment of expatriate staff.

Sectional completion: The hospital will be completed in parts, which will allow the client the possibility of early possession and a flexible method of migration from St Luke’s Hospital. Failure by the management contractor to complete on time will be closely monitored and penalties will be applied where necessary.

Comparisons between Design & Build Contract and the pre-1998 administration negotiations:

Cost: the costs reported by Norman & Dawbarn were subject to confirmation only after considerable design development which was still to be carried out while the Lm10 million figure mentioned by Anshen Dyer Consultants can only be a very rough estimate as no professionally prepared estimate has been presented. In comparison with this, the estimated target cost of Lm83 million of the project was calculated on pre-construction documents giving scheme design details of all medical and engineering systems within this project.

Design: The Skanska and Norman & Dawbarn contracts cannot be compared on a “like for like” basis. Skanska’s Lm4.8 million incorporates a larger scope of work than N&D’s Lm3.9 million design.

Management fee: Skanska’s management fee as per 2000 per Design & Build contract = 7.5 per cent of Lm75 million = Lm5.6 million capped at Lm5 million. Skanska’s management fee as per 1998 negotiations: nine per cent of Lm10 million = Lm9 million.

Accountability: The Design & Build contract gives the advantage of contractor responsibility. When FMS had Ortesa as designers and Skanska as building contractors, significant designer-contractor problems emerged. With the 1998 Norman & Dawbarn appointment as designers, the problems would have persisted and this would have encouraged further delays.

Maltese control: The FMS team has been enhanced with professional staff as from 1990s. Before that it had a weak organisational structure.

Expropriation: The surrounding land areas of the MDH project are held from being built on in case of any future expansion. This would solve the problem of cramming buildings into each other if expansion is necessary.

Saving on penalties: Due to awarding the Design & Build contract to Skanska, the Maltese government saved circa Lm7 million that was due because of changes in designs.

Approval of expenses: All MDH project expenses have to be approved by the client (FMS).

An open book system allows FMS access to all related documents including wages and allowances of contractor’s employees.

18 February 2001: New FMS board is appointed: Dr Joseph L Pace president (resigned 28 May 2003), Albert Attard vice president (resigned 11 April 2003), Dr Natasha Muscat Azzopardi (resigned 28 May 2003), Paul Camilleri, Dr Ray Busuttil (resigned 28 May 203), Dr Ray Xerri (resigned 28 May 2003), Emanuel Micallef (resigned 31 December 2002), Saviour Sciberras, Prof Joseph Bannister (appointed 21 January 2002 and resigned 28 May 2003).

12 April 2003: The Nationalist Party is returned to power, Dr Eddie Fenech Adami is sworn in as Prime Minister and Dr Louis Deguara is appointed as Health Minister.

28 May 2003: New FMS board is appointed: Rene Formosa president, Paul Camilleri vice president, Prof. Albert Fenech, Alfred Rizzo, Saviour Sciberras, Jesmond Sharples (board members).

April 2004: Lawrence Gonzi is sworn in as Prime Minister. Following a Cabinet reshuffle, Dr Louis Deguara is appointed Health, the Elderly and Community Care Minister. Helen d’Amato is appointed Parliamentary Secretary.

April 2004: FMS Finance consultant Jackie Camilleri completes the Mater Dei Hospital Gap Analysis Target Value vs Projected Final Cost.

3 May 2004: FMS presents the same report to the Health Ministry.

12 August 2004: Rene Formosa resigns as FMS President. The Health Minister appoints Perit Paul Camilleri as acting president.

30 September 2004: The government decides to stop, with immediate effect, all negotiations regarding the Target Cost and the completion date of the project with Skanska after it received the company’s latest counter-proposals. The government remains open to further offers by Skanska.

Following the Prime Minister’s announcement that Target Cost and Completion of project were suspended, it is announced that Skanska submitted further proposals which were yet again rejected by government, describing them as a sign of good will but not yet good enough.

3 October 2004: Lawyer Dr Richard Camilleri, a government appointed member of the MDH Negotiation Team vs Skanska “sets the record straight” in The Times to allegations that his firm was chosen because he is the Prime Minister’s cousin.

Camilleri argues that “Like everyone else in Malta, I have countless close relatives, one of them being former minister Evarist Bartolo, who is my brother-in-law. This has never caused any problems and I have acted for government entities even under the 1996-1998 Labour administration.”