€400 million tender ‘compromised’ but government will not clarify ‘mistake’

There is a good probability that the massive government tender for a €400 million incinerator has been compromised and will have to be cancelled or reissued after financial data on bidders’ offers were published prematurely while a competitive dialogue was still ongoing.

The waste-to-energy tender is one of the largest public procurement processes the country has ever seen and it is now on its second attempt after the first was cancelled shortly after its launch.

Sources close to the process have expressed disbelief over how the process has been botched yet again and have raised suspicions about behind-the-scenes manoeuvres to favour one particular bidder.

Issued last year under the so-called ‘Competitive Procedure with Negotiation’, the Department of Contracts has called for bids for the design, build and operation of a waste-to-energy facility.

There are no local suppliers or expertise in the field, which is new to Malta, and interest in the project has mainly been registered from large multinationals.

The concept, which has been in the pipeline for at least a decade, is to build a €200 million incinerator in Maghtab that will convert domestic waste into energy. Another €200 million will be given to the winning bidder for the incinerator’s operation for the following 20 years.

According to public procurement procedures, the government is allowed to begin competitive dialogues with shortlisted bidders to ensure the best technological solutions are being offered, before a final financial bid is requested.

But even though such talks with the five shortlisted consortia are still ongoing, the Department of Contracts has, contrary to standard procedure, published the indicative prices of four of the five bidders shortlisted.

The publication divulged sensitive information to rival competitors before they are to be requested to make their final offers.

The financials that were published prematurely can be downloaded here.

The move immediately raised eyebrows among the tender’s observers, who described it as a ‘mistake’ that is “compromising the whole process.”

Former MP Jason Azzopardi has, in fact, publicly called out the incident as a “planned mistake aimed to give an advantage to a particular company close to the Prime Minister”.

The government, meanwhile, is not answering questions about what happened or whether the publication of the financials had been done in error or not

The Shift also asked the Department of Contracts to explain why such financial data has been published when the competitive dialogue is still ongoing and before the best and final offer details – known as the BAFO –are still to be sent to the competitors.

The contracts department has not yet replied to those questions. Nor is it explaining whether the tender will now have to be cancelled and if anyone will be held responsible for the blunder.

The five consortia shortlisted

According to the erroneously-published data, a Spanish-German consortium named Maghtab Gdida Energija Nadifa indicated the lowest price at €395 million, just under the tender’s €400 million indicative value.

The consortium is made up of Urbaser S.A.U, a Spanish recycling multinational, Gruppo Cobra, another Spanish multinational and German equipment supplier Standardkessel Baumgarte GmbH S.A.

Another Spanish consortium, Sacyr Industrial Operation, indicated a price of €422 million. That was followed by French Paprec Energies together with local construction magnates Bonnici Group at €617 million and Japanese Hitachi Zosen Inova AG at €983 million.

Another consortium, FCC Medioambiente International S.L.U., is also still in the running but has not yet lodged an indicative offer. That consortium comprises FCC Medioambiente (Spanish), Termomeccanica SPA, Italian and Acciona Industrial SA, based in Madrid.

Malta’s Bonnici Group is the only Maltese shareholder among the bidders.

Although the publication error gave an indication of what the bidders are offering, it will be the price they submit at the end of the competitive dialogue, which is expected by July, that will matter.

Since the bidders now know, thanks to the government’s mistake, what their fellow bidders have indicated, they are now expected to adjust their strategies and final financial offers, meaning the process has been compromised. Bidders may now ask for the process to start afresh.

Any cancellation or legal challenge to the tendering process will continue to delay Malta’s already late goal to reach the EU’s binding waste management targets.

The tenders fall under the political responsibility of Environment Minister Miriam Dalli and her political appointee, WasteServ CEO Richard Bilocca.