The NAO has expessed concerns relating to the poor contract management practices employed by the MHAS were aggravated following the testing carried out by this Office on certain items procured.

The discrepancy in the amount of copper cable procured with that utilised, the significant difference in network fail rates between that cited by Infinite Fusion Technologies Ltd and that by the Malta Information Technology Agency, and warranty-related anomalies were of concern to this Office.

In December 2015 and December 2016, the Ministry for Home Affairs and National Security (MHAS) awarded two contracts to Infinite Fusion Technologies Ltd. for the upgrading of the network at the Corradino Correctional Facility (CCF) and other related sites. The contracts were directly awarded through negotiated procedures for a value of €1,038,400. Following allegations of wrongdoing in the media, on 19 April 2017, the Minister for Home Affairs and National Security, the Carmelo Abela, requested the Public Accounts Committee to refer the matter to the Auditor General.

Although the MHAS maintained that the CCF lacked a proper network, resulting in frequent outages, documented evidence justifying the need for the works undertaken through the first contract entered was not provided by the MHAS and the CCF. The additional works undertaken through the second contract further attest to the poor planning process that characterised the commissioning of works. The justification for the additional works cited by the MHAS was partly the address of variations arising from the first contract and partly the result of a broadening in the scope of the project to include other sites. However, the poor interface between the CCF and the MHAS in the management of these changes compounded the shortcomings identified.

An element that could have contributed to ensuring value for money was the independent determination of the value of the works that were to be undertaken. The MHAS relied on bills of quantities arrived at by Infinite Fusion Technologies Ltd rather than an independent assessment of the works required. In addition, the MHAS failed to source other quotations from suppliers of their choice, which would have been in line with the negotiated procedure adopted. This would have afforded a greater degree of certainty that value for money was ascertained.

The first contract, dated 18 December 2015, was for works valued at €461,103 that were to be completed within six months. The National Audit Office (NAO) ascertained that €461,103 were paid; however, the works were not concluded within the stipulated timeframe. This Office’s attention was drawn to the proximity of invoices raised and payments made, most notable an invoice for €161,186 dated 24 December 2015 paid that same day. Although the MHAS indicated that the procurement process was expedited in view of the end-of-year savings that could be allocated to the project, the NAO maintains reservations regarding payments effected without the appropriate certification.

Works commissioned through the second contract, dated 28 December 2016 and due for completion by October 2017, had not been concluded. Of the contracted amount of €577,296, €472,526 were paid, with pending works estimated at €100,000 to be completed by end 2019. The NAO noted the proximity of invoice and payment dates, with €397,356 paid prior to the signing of the contract. The MHAS contended that the Department of Contracts’ approval had been obtained, the items invoiced were delivered and payment was made to utilise remaining funds. However, the NAO’s reservations persist as these disbursements were not regulated by a contract, entailed the advance payment of €68,000 in labour, and no documentation of supplies reportedly delivered were retained. These factors exposed the MHAS to risks that were not to be borne by government.

This report may be accessed through the National Audit Office website www.nao.gov.mt or on its Facebook page www.facebook.com/NAOMalta.