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Matthew Vella
An Italian firm is suing the Malta Communications Authority for damages over the authority’s decision to award a contract for eavesdropping technology to Israeli company Verint.
The contentious award for technology which will allow the Malta Security Services (MSS) to intercept emails, mobile telephone calls and VoIP calls over the internet, was awarded to Verint despite RCS having had the cheapest offer.
The new technology will be a unified system by which all lawful interception will be handled from a single site, operated by the MSS. Previously each telecoms operator had to acquire their own interception system.
But the MCA also denied RCS the right to appeal the decision, claiming that it was not bound by public procurement regulations since the contract was issued by the security services.
RCS claims prospective tenderers were never informed of a “dispensation” that exempted the contract from public procurement laws.
From information seen by MaltaToday, the MCA only signed a memorandum of understanding with the security services on 5 January 2006 – a week after rejecting RCS’s offer, so the MCA could claim the contract was secret and issued under the auspices of the Malta Security Services, thereby falling outside normal procurement rules. The MSS is afforded special powers by law including the right to spend money without having to account for its expenditure.
RCS is now suing the communications regulator, claiming its decision was illegal and discriminatory.
Its defence counsels have presented an extensive list of witnesses, which apart from MCA and security services personnel includes MCA legal representative David Gonzi, Joe Demajo from the Demajo Group – to testify on the firm’s relations with Verint – and Melanie Gonzi Balzan Demajo, wife of David Gonzi, to testify on whether she had offered consultancy services to Verint and whether she was the company’s representative in discussions with MCA.
Discrepancies
The MCA told prospective bidders as early as June 2005 that it was the entity that would sign the contract with the vendor. “However, depending on the outcome of the memorandum of understanding, things might change and the Malta Security Services will sign the contract with the vendor,” engineer Colin Camilleri had told bidders in a briefing meeting on 28 June.
On 29 December, Camilleri informed RCS its offer had been rejected. In a meeting with Camilleri on 3 January 2006, RCS was told that although its offer had been cheaper as well as compliant and sound, Verint’s offer was “holistically superior”.
Two days later on 5 January, RCS wrote to MCA chairman Joseph V. Tabone requesting a meeting, stating that if their bid was cheaper than Verint’s “there was no reason at law why their bid should have been put aside in preference to one which was more expensive”.
That same day, the authority signed its memorandum of understanding with the security services, and later claimed the contract was secret and issued under the auspices of the Malta Security Services, meaning it did not fall under normal procurement laws.
It then used this argument to refuse RCS an appeal. Months later, after RCS initiated legal action in June, the MCA claimed the firm could have taken recourse to the Board of Appeal on Communications.
But Luca Crovato, the sales director at RCS, has claimed that the firm had asked about the possibility of appealing from the first day they were informed their offer had been rejected: “They never gave us a clear answer and, rather, tended to deny such a possibility.”
After meeting with the authority on 6 February, RCS wrote to the MCA that same day asking why the dispensation it had got from the contract was not brought to the notice of the tenderers prior to making their bid.
Crovato also claims in an affidavit that during the meeting, MCA informed the company that Verint had sold to Go Mobile an upgrade on their lawful interception system.
“We were surprised with this,” Crovato said in the affidavit, “because I believe it gave them an unfair position by putting Verint in a stronger position and of course creating a stronger relationship between MSS and Verint.”
Crovato speculated that since the legal interception system will be funded by network operators such as Go Mobile, “therefore what would have happened had the tender been awarded to RCS rather than Verint? Go Mobile would have acquired a solution that was not compatible and would have caused a problem in creating the fund necessary to pay the tender issued by MCA.”
Crovato argued that since the new interception system would be a single, unified system covering all operators, relieving operators from being responsible for their systems, “I do not believe that the ‘upgrade’ sold to Go Mobile was to be simply dismissed once the tender was awarded, but was to be ‘reused by Verint’… By reusing an upgrade, Verint was able to, de facto, change the scope of the supply for the tender.”
Crovato also challenged the MCA’s stand that the contract was not subject to public procurement laws.
Crovato also said that the security services had daily contacts with Verint since it had already installed such a system for Go Mobile. RCS instead meet the MSS only twice.
“The manner in which this project has been handled by the MCA leads me to believe that the MCA purposely hid important information from RCS and that it changed the goalposts, and the criteria for awarding the tender, after we had submitted out tenders.”
mvella@mediatoday.com.mt
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