News & Events

Malta News - 10/12/2013

Central Bank – less cheer for the boys



Author: George Mangion
Published on Malta Today, 10 December 2013

tenderIt does not rain but pours for the Central Bank nowadays, where its procurement division is concerned. Apparently, the Deputy Governor (DG) was worried about my articles in the papers complaining about lack of probity in issue of tenders. Rumour has it that he got his knickers in a twist over the way the statistics office had to rebuild a massive database and a new software system because it was beyond repair. Hefty consultancy fees are being paid, to comply with the wish of changing the whole IT system called IBGL. It’s another  project involving millions of money.

Back to the database debacle, which occurred when in an sudden effort to rebuild precious data, the CBM worked in tandem with consultants from Banca D’Italia. The job was rumoured to have been secured for free by the omnipotent Policy Advisory Committee (the powerhouse driven by the deputy governor). Everyone was expecting the job would be done pro bono. They believed that this is free of charge since after all their counterparts form part of the Eurosystem.

As happens in most commercial arenas there is never a free lunch… an invoice for about €3 million was mailed much to the chagrin of the deputy governor (the ‘doing more with less’ mantra has not yet invaded the CBM). Surely, strict procurement rules of such a noble institution precluded the direct order of such a massive contract without a call for tenders. The internal auditors raised the alarm, more so when this was given as a direct order by the DG. Perhaps a solution will be to slice the invoice in many parts so as to go under the radar, and everyone would be happy and no sweat at a time when Christmas is approaching. An urgent trip to Banca D’Italia is not excluded. Still, wonders can happen, such as treating the charge on a cost-recovery basis.

In a previous article I wrote of a tender given for the second time to a firm which employs the DG’s wife. Tender No 4/2013, ‘Survey on Household Finance and Consumption in Malta’ was issued by the Central Bank of Malta in June 2013. The procurement department received three bids but finally decided to award the tender to EMCS at three times the cheapest bid (€93,263) without a justified reason for refusal to the cheapest bidder (€37,000). The Central Bank does not have an independent appeal structure as is customary at the Director of Contracts. It therefore appointed a retired manager to hear the two sides, but never informed the said manager with the price and conviction that EMCS won the tender. One can judge how impartial this ex-employee can be when he is paid by CBM itself!

The SME at first refused to meet the delegate, yet it had no choice but to repeat its grievances to this manager who confessed that he was not informed of the rankings given to EMCS, and so could not understand how the choice was made at three times the cheapest bid. The SME has in the meantime written under protest to the Director- General of the European Central Bank and they referred the matter back to the procurement agent in Malta, since this is not a matter of monetary policy – an area which the CBM is constitutionally protected from any interference from third parties.

Can this injustice happen in such a noble institution? I guess the inevitable answer is in the affirmative. Citing an article published on the Malta Independent on Sunday 1st December 2013, the Central Bank published the names of appellant and ridiculed it for recruiting university graduates to carry out the survey as “not acceptable to the evaluation panel as it could compromise the quality and quantity of the fieldwork”. At no time during the clarification meetings did the officials from the procurement section inform the aggrieved SME that graduates are not fit for this task.

The SME asked CBM if it has any alternative to the use of B.Com. and B.Sc. graduates given that it was rumoured that the previous survey was conducted by retired persons or busy housewives with little financial or computer literacy. The SME wrote many times to the Governor, who never bothered to answer clarification letters during or post adjudication but took offence when facts were released to the press. He found time to write a press release to It-Torca and the Malta Independent. In the Governor’s own words “what is required in such surveys are experienced and skilled interviewers who are able to put respondents at ease to obtain accurate replies given the delicate and sensitive issues discussed in the survey.”

He also contradicts himself by saying that the SMEs signed a declaration not to do sub-contracting but at the same time he refers to the recruitment of B.Com. students on a sub-contracting basis. The prejudice against the SME was highly evident, such that after assuring CBM in writing that a joint venture with a specialist firm of qualified economists run by Gordon Cordina, together with Access Point, an IT company, was signed to guarantee quality control on data collection and cleaning, the Governor conveniently omitted this important fact in his press release.

CBM replied last Sunday denigrating the merit of a joint venture of three specialist firms saying that “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 a baseless attack of the CBM and its evaluation team. As noted above, the price was not the only consideration and in this case, limited technical competencies outweighed the price advantage.”

While noting that the above is rather a comical contradiction since the only purpose for such experienced skill being identified is the ability to relax survey respondents, the cheapest-bidding SME wishes to clarify a few things. Firstly, that its proposal included also internal recruits from its own statistics department, a fact conveniently omitted above.

Secondly, CBM did not award points to the competence of the respected economist Gordon Cordina and his supervisory team together with the IT professionals from Access Point. The travesty of the evaluation team can be seen when it downgraded the SME’s technical competence to 12% marks. In fact, at proposal stage the SME already had 31 skilled applicants in waiting, among whom were persons with experience in carrying out former Central Bank surveys (the list included housewives who worked on the previous EMCS tender). The previous CBM survey tender issued two years ago was also awarded to EMCS where the wife of the deputy governor works; for transparency’s sake, tenders were given to firms with family connections under the previous administration.

This scandal defies the Central Bank‘s chief dictum of awarding tenders to different and new entities, giving new entities a chance and avoiding stagnating quality levels, as expressed by the CBM complaints officer to the SME during the appeal meeting. In a letter published on Sunday 8th December in Torca and in the Malta Independent last week, the spokesperson for the bank confirmed that the complaints officer was informed of all the marks accredited to EMCS , when this was not true since on many occasions the SME asked him for this information in order to better gauge its defence strategy

The complaints officer kept telling the SME “the winner has not been informed so the price has not been released” that he didn’t know anything about the price, so much so that he said he would ask CBM about it. The SME challenged the DG to reveal the calibre of the specialists or full-time professionals offered by the winner, but this was refused. And in the light that the cheapest bidder offered de facto persons who conducted the Central Bank tender survey last time around, whichever way you slice it, the Central Bank is running out of justifications for awarding the tender to EMCS. It is no consolation to read in press releases extolling meritocracy by giving equal opportunities to new bidders, especially the SMEs which by way of lip service, are encouraged to thrive under the Small Business Act promulgated in 2011. It takes more than trumpets to break in the solid walls of Jericho, that fortress built in the Policy Advisory Committee.

Author: George Mangion
Published on Malta Today, 10 December 2013