The sense of urgency and an incomplete audit trail in the 2015 agreement for the procurement of public transport “diluted good governance and transparency,” a National Audit Office (NAO) report found.
The deal with Autobuses de Leon was signed in 2015 and is expected to cost government more than €430 million over the contract’s 15-year duration.
Noting that the scheduled bus service in Malta carries significant social importance, particularly since it is the sole large-scale transport service that provides mobility to the general public, the NAO examined whether the procurement process followed the principles of good governance and safeguarded Government’s interests, and subsequently that of the taxpayers’.
In its review, the NAO outlined a number of shortcomings in the bidding process, including missing documentation, which it said impeded it from assessing whether negotiations were conducted in accordance to principles of good governance.
“NAO is primarily concerned with the fact that the scoped process s conducted with a sense of urgency, which generated obvious and otherwise avoidable risks to a sector that carries significant social and financial materiality,” the report concluded.
According to the study, the number of passengers declined significantly during the Covid pandemic. The total number of passengers went down from almost 57 million in 2019 to 34 million in 2020 and 35 million in 2021.
However, the compensation to Autobuses de Leon increased from €30.5 million in 2019 to €37.3 million in 2020 and €34 million in 2021.
The review also showed that prospective bidders were provided with draft financial statements of the operating company they intended to procure rather than the audited accounts. Moreover, the draft financial statements were only provided to bidders mid-way through the process.
The NAO noted that Transport Malta’s refusal to extend the Expression Of Interest submission deadline as requested by a number of bidders following the delay in providing draft financial statements resulted in a drastic reduction in the time during which bidders could finalise the financial element of their bids.
Pointing out the need to have such procurement processes comprehensively documented and adequately archived, the NAO urged Transport Malta to initiate any future procurement process well in advance of its expiry.
In its recommendations, the NAO said it understands that any procurement process, particularly those of significant financial and social implications, has to be carried out without unnecessary delays.
“Notwithstanding it recommends that reasonable time still has to be allowed for all related processes to be completed diligently and comprehensively. While this Office does not contend Government’s stated decision to not opt to operate Malta Public Transport Services Operations Ltd (MPTSO) for an extended period of time, it still is of the opinion that the overarching sense of urgency which prevailed in this procurement process could have been mitigated if this transition period (in which MPTSO was operated by Government) was allowed a more reasonable timeframe, particularly during its initial phases. NAO also notes that such an extension of this period would have required that the temporary running of MPTSO is duly covered with robust operational and administrative plans.”
The NAO also strongly urged Transport Malta to ascertain that any future call for offers features all relevant information from the start, particularly that as important as financial information related to a company being offered for purchase.
“NAO further stresses the importance that such information needs to be as accurate and complete as possible (and audited where applicable) when being presented to prospective bidders. This is to: ensure clarity; enable interested parties to put forward reasonable offers; and reduce the risk of having potential bidders opting not to submit offers due to incomplete information.”
The review also recommends that different options are objectively weighted rather than giving one absolute preference over the rest. The NAO said such a weighting mechanism would ensure that, in the event that a significantly advantageous bid is submitted under a different option, this would be afforded the possibility of being duly considered rather than being dismissed outright in favour of bids submitted under the preferred option.
