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Matthew Vella
An Italian firm claiming discriminatory treatment by the Malta Communications Authority (MCA) in a tender process, is insisting that its offer for the provision of eavedropping technology was 18 per cent cheaper than what the MCA has paid.
Luca Crovato, the sales director for RCS, reacted to the MCA’s breakdown of the costs of the unified legal interception system, by insisting that his firm’s offer was cheaper than that of Israeli spy-tech firm Verint.
The MCA has confirmed with MaltaToday that the total system price for the interception system will be Lm811,735 – a sum which will be paid over the next five years by telephony and internet providers for providing the Malta Security Service with the technology to intercept mobile and fixed line calls, and emails.
Companies will contribute Lm192,500 for the payment of the system this year, which includes Lm29,427 for the annual cost of internet bandwidth and leased lines. The cost for the system alone is actually Lm162,346.
Crovato said he was ‘surprised’ that the MCA had confirmed the cost of the system, because the authority refused to disclose the sum they would pay for the Verint system when they awarded the contract in December 2005. “It confirms my initial hypothesis, in an affidavit I presented to the Maltese courts, that our offer had been cheaper by around 15 per cent. But the MCA, which acknowleged that our offer was cheaper, never told us why it favoured Verint.”
Various companies are now contesting the payments they are being asked to contribute by the MCA.
The contract award for the provision of the Malta Security Service’s interception technology is a complex affair, because RCS have taken the MCA to court after the authority refused to allow the Italian firm to appeal its decision to award the contract to Verint.
The European Commission is also investigating whether the award could have infringed European procurement rules.
The MCA, which led the tender procedures throughout 2005, insists the contract does not fall under normal procurement rules because it concerns equipment for the Security Service, which have a special dispensation from public procurement rules.
RCS says the tenderers were never informed of a “dispensation” exempting the contract from normal procurement laws. On 29 December 2005 they were informed by the MCA that their offer had been rejected, and Verint awarded the contract.
In a meeting days later on 3 January 2006, MCA representatives told RCS its offer had been the cheapest and was also compliant and sound, but that Verint’s offer was “holistically superior”.
Then, two days later on 5 January, the MCA signed a memorandum of understanding with the Security Services, passing on ‘responsibility’ for the contract to the MSS – effectively exempting the tender from public procurement rules.
MEP Joseph Muscat has told the Commission the contract award breached EU procurement rules for lack of transparency and failure to treat economic operators equally, as well as failure to provide justification for the refusal and provide an appeal.
Charlie McCreevy, Commissioner for the internal market, said the Commission understands the contract was awarded following a secret procedure by way of exception to the EU procurement rules, which allow a derogation on public contracts declared to be secret.
“The Commission notes that the information provided does not enable it to verify whether the conditions necessary for the application of the above derogation are met in the case at hand. The Commission will investigate the matter further, in order to establish whether, in this particular case, there is an infringement of Community Law that warrants the opening of an infringement procedure against Malta.”
The secret contract
One of the main suspicions in RSC’s court application is that both the Security Services and Go Mobile already operated Verint’s legal interception system.
In his affidavit, RCS sales director Luca Crovato expressed his surprise at being informed by the MCA that Verint had sold to Go Mobile an upgrade on their lawful interception system.
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, “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.”
Among the list of witnesses that RCS’s lawyers have asked to testify over MCA’s tender process are the authority’s lawyer David Gonzi, Joe Demajo from the Demajo Group over the company’s relations with Verint, and Melanie Gonzi Balzan Demajo – wife to David Gonzi – to testify if she had ever offered any consultancy services to Verint, or whether she represented Verint in discussions with MCA. |
