No, my article is not about the late Freddy Fender’s famous song – it is a lament about the wasted efforts by SMEs that toil and labour under unfair procurement rules that mitigate in favour of bigger, more established bidders more than ever in government tenders. All this is happening in the decade since we joined the gilded club in Brussels – itself bursting with rules that revere SMEs in their fragile ascent up the nursery slopes during such recessionary times.
Yes, on paper these rules do exist, but experience has shown that they permeate our public procurement system rather slowly, if at all. It is crucial that adherence to EU public procurement rules centres on effective enforcement in all public entities and it is surprising that, in practice, one comes across instances where the monitoring of such implementation is tweaked – particularly in the implementation of good governance and transparency. This is not in the true spirit of EU rules.
Karel De Gucht, ex-European Commissioner for Trade, said: “I am a firm believer in making sure trade flows freely and government procurement must be an essential part of open trade markets worldwide. It's good for business, good for consumers and brings value for money for taxpayers. This proposal will increase the leverage of the European Union, in international negotiations and with our partners, to open up their procurement markets for European companies. I am confident that they will then get a fair opportunity at winning government contracts overseas and so generate jobs.”
Such transparency is vital to all bidders to government tenders but, of course, it is always the SMEs that suffer the most when they try to penetrate the inner sanctum of accredited larger suppliers. It comes as no surprise that Economy, Investment and Small Business Minister Chris Cardona was reported to have outlined: “...boosting transparency [and] removing [unnecessary] red tape”* as the government’s priority in this commitment for the improvement of the economy.
The reader may well ask if this article intends to recount particular instances where transgressions in procurement rules have occurred and, yes, they will be regaled with two flagrant examples. It is a pity that one expects nepotism and cronyism to have been completely purged from the contents of our public contracts division on the date we signed the Acquis Communitaire. Unfortunately, favouritism is still furtively lurking in the evaluation of some government tenders, particularly where SMEs are concerned, and of course they suffer in silence as they are expected to turn the other cheek.
Most reason that it is better to cry alone in the corner than to protest and be blacklisted. Readers may question my line of reasoning and say that this is a story about sore losers and moaners – as they waste time recounting tales of missed opportunities. Still, one can stop and reflect how – on the anniversary of a bright new dawn from the election of fresh-faced political masters who sport light-blue ties – we encounter new initiatives amidst the not-so-smart meters and passport confetti that present a sad look at the more sombre facets of public administration.
Of course, sensationalism is largely to blame in this respect, where if something is free of media scandal it fails to pique the interests of the ‘sanscoluttes’ – although, truth be told, the crowd, much like an infant, eats what it is given and so we have squared the circle.
But let the fun and games proceed – by opening Pandora’s Box to discover that public procurement is a realm that generally only crosses swords with those who partake of the same, or – in other words – try to make the cut.
There is an acute problem with local procurement enforcement that is parasitic in nature. You may remember my article last December on a particular misadventure by an SME with decision of the Central Bank procurement team on the award of a tender.
This travesty of justice came sugar-coated, with CBM’s top officials writing to the press defending their selection procedure and giving the impression of retaining the moral high ground. On this unhappy occasion, the SME lost the appeal which was particularly painful to endure because while the robustness of the CBM appeal system is conspicuous by its absence, the bank’s privileged position exempts it and its officers from falling under public procurement review. Here, they are absolutely untouchable (a holy cow), as nobody at Castille would become involved, despite a clear conflict of interest in the award that was brought to light.
Typically, at no time during the clarification meetings did the officials from the procurement section inform the aggrieved SME that its methodology was unacceptable. Through its communication officer, the CBM replied in the press denigrating the merits of the bid offered by the SME (consisting of a joint venture with three specialist firms) and saying that – and I quote – “The applicant displayed serious technical deficiencies and limitations in its ability to carry out this project as requested. It would be much better for the applicant to strengthen these deficiencies rather than embark on a baseless attack of the CBM and its evaluation team. As noted above, price was not the only consideration and in this case, limited technical competencies outweighed the price advantage.”
At no time did the joint venture team think it worthwhile to challenge the insalubrious remarks written by the communication officer. A wise man will tell you that a libel court case can drag on for years, during which time the contract will have been executed.
So it’s all wasted days and wasted nights for any SME to claim redress. Here one may relent and be contrite in the knowledge that being a small fish in a pond ridden with sharks one has no choice but to seek a peaceful co-existence. Fools believe that where entities fall squarely under the public procurement regime, one would think it was permissible to harbour higher hopes of justice being seen to be done.
Alas, and despite how excellent or productive appeal hearing sessions may be, the result is often a blow of loss of confidence in the system, as once again the phantom of the shackles that bind judicious hands make their presence felt again. But is this the talk of moaners and sore losers or is it a knee-jerk reaction that ought to send a distress signal to the elected mandarins in their ivory tower in Valletta?
Undoubtedly, this year there has been a lot of talk – behind closed doors and in perceptively high places – of re-vamps and overhauls and a complete upheaval, where trumpets are sounded for the new broom that sweeps clean, new political appointees are ushered in, then out and then in again who are bright-eyed and bushy-tailed .They come filled with as much enthusiasm as they can muster, but for how long? In a very short time it becomes bleakly clear that when the fresh-faced mandarins move from side to side they do so because they are responding to the twists and turns of their handlers.
And no matter how many faces change, the same hands pull at the various strings. At this point, allow me to refer to a particular example. This is a decision issued by the reconstituted Public Contracts Appeal Board re Objection T 075/2013: Tender for the Provision of Financial Audit Services to the Malta Information Technology Agency (MITA) – where an SME was denied the job, even though it was cheaper and awarded full marks, and was given a low mark on its technical ability. Nexia BT, the next bidder, was selected even though its offer was double that of the cheaper rate. Decisions by the Contracts Appeal board that legislatively should be made and delivered within a stipulated timeframe are left in limbo for weeks on end, and it takes several prods of the proverbial spur to elicit a reaction, typically prompting a four-page document laden with badly transcribed Minutes, insults to the intelligence and equally poor conclusions that, once watered down, offer little to no resolve.
During the appeal stage, the SME involved repeatedly directed the same question to the contracting authority: how could they justify the ridiculous award of just 10 marks out of 100, despite it more than meeting all the technical experience criteria requested. The only reply was a smirking “That is a technical point.” This was despite new rules binding contracting authorities to provide reasoned justifications and replies of a satisfactory nature.
One could weep on remembering how the MITA management justified awarding the contract to Nexia BT by saying it was the “most economically advantageous tender”, at the phenomenal cost of €68,875 when the SME’s offer was for €37,325.
Is this how MITA, as a government entity, wishes to save public funds at a time when the country is facing the scrutiny of the Excessive Deficit Mechanism? Let us all stand up and sing in harmony an ode to the joy of past profligate days, when politicians assured us that “money is no problem”. MITA blatantly and repeatedly refused to answer the questions that were at the core of the entire objection and for which the appellant paid the money (and prepared its legal defence) to rightfully obtain an answer.
Yes, the lyrics of the song Wasted Days and Wasted Nights fit like a glove and demonstrate the grave disappointment that SMEs – ostensibly protected by the dormant Small Business Act – so frequently experience. Readers may argue that the cheapest is not always the best. The flip side to this is that the procurement rules, as they stand, allow contracting authorities to repeatedly and successively turn down competitive applicants until reaching the bidder of their preference. The result is that contracts are awarded to bidders with significantly higher tenders, details of the evaluation procedure are locked away and the reasons for the decision are not divulged.
In an attempt to expose the elephant in the room, this too was brought to the attention of those in apparently high places, but was declared to be beyond even their remit to do anything about such travesty – apart from acknowledging its existence.
What a waste of energy and effort.
George M. Mangion
[email protected]
The writer is a partner in PKF an audit and business advisory firm.
*www.independent.com.mt/articles/2013-10-11/news/think-small-first-checking-on-progress-and-looking-ahead-2862284801/