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3 NEWS 29.4.2021 FROM PAGE 1 The NAO said no urgency existed since the new blocks were still under construction and there was ample time to issue a competitive tender. Furthermore, no adequate documen- tation was found supporting the de- cision, "detracting from the transpar- ency that should characterise public procurement." "The actions were in breach of the Public Procurement Regulations, thereby possibly leading to the inva- lidity of the procurement undertaken," the NAO said. But "aggravating matters" was the commitment to disburse hundreds of millions of euro in public funds without SVPR seeking the required budgetary clearance from the Finance Ministry. "Worse still is that a commitment of this magnitude and importance was entered into without the sanction of Cabinet or the parliamentary secre- taries directly responsible for SVPR," the NAO said. The NAO investigation was request- ed by the Opposition members on parliament's Public Accounts Com- mittee in 2018 after the Government Gazette published the award of a di- rect order to the tune of €273,649,698. A kitchen and a 'gift' The contract came at the tail end of a controversial process that started in November 2015 when a call for ten- ders was issued for the provision of comprehensive services at SVPR. The tender was for the construction of a new kitchen at the residence and provision of catering services, but it also included an unspecified addition- al investment that the bidders had to propose for free. This unspecified 'gift' that bidders were expected to suggest was given significant weighting in the award of the tender. However, despite this being de- scribed as critically important and innovative, the NAO said it was una- ble to determine how the 'additional investment component' in the tender originated. The report said: "This Office has reservations as to why no parameters that were to guide potential tenderers formulate the additional investment that was to be provided were set. The NAO maintains that this omission al- lowed for the distortion of the level playing field that should be ensured in public calls for tender…" Two bidders responded to the call – JCL and MHC Consortium, made up of James Caterers and the DB Group; and CCE Joint Venture, an offshoot of the Vassallo Group. JCL and MHC were eventually awarded the tender, having proposed as a 'gift' the construction of two new blocks at the residence and the receipt of annual cash payments for 10 years. Two appeals lodged by the losing bid- der were rejected. The offer made by the JCL and MHC consortium was of €15.7 million for the catering aspect and €29.3 million for the additional investment. However, subsequent negotiations saw SVPR request the construction of four blocks instead of two. The addi- tional blocks were to replace the an- nual cash payments and the construc- tion had to be completed within the first three years of the contract. The NAO said that the change in terms accelerated the delivery of beds at SVPR but gave rise to obligations since the additional investment was contingent on government awarding the management of the new blocks to the consortium. "This obligation not only put an added onus on government, in that it now had to enter into negotiations for the provision of this service, but also rendered it at the willing mercy of the consortium in that government could not explore more advantageous ways of managing the additional blocks," the NAO noted. Inflated bed prices However, the audit also found that prices per bed quoted by the consor- tium for the management contract were substantially inflated when com- pared to beds for the elderly that gov- ernment was buying from the private sector. The NAO found that a discounted price agreed with the JCL and MHC Consortium saw government agree to a €99.17 daily per resident per occu- pied bed and €92.39 daily per resident per available bed. Rates paid by government to private contractors at the time stood at an average of €51.06 per occupied bed night for persons with a high depend- ency. The highest daily rate paid by gov- ernment to a particular home was €63 per occupied bed night. In November 2020, when the blocks were formally handed over the rates were revised upward to €118.44 and €110.35 for occupied and unoccupied bed nights, respectively. A comparative exercise carried out by the NAO showed that the average daily rate charged by service provid- ers under the Buying of Beds Scheme in 2020 for a highly dependent resi- dent per occupied bed was €65.13 in homes. The NAO commented that this was a "significant discrepancy, which detracts from the value for money sought by the SVPR". Cabinet and parliamentary secretaries did not sanction SVPR project Key findings Family Ministry, Department of Contracts and St Vincent de Paul breached the law when awarding €274m contract by negotiated procedure No urgency existed to justify the negotiated procedure instead of a competitive tender Government is paying substantially higher rates per bed for the SVPR extension than it pays to buy beds from the private sector SVPR did not seek clearance from Finance Ministry for management contract Contract was not sanctioned by Cabinet

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