Gozo Channel workforce employed by direct order for €1.7 million

The bulk of the Gozo Channel’s workforce is being outsourced to just one company, without a public call for tenders.

Gozo Channel employs its seamen, mooring men, cafeteria and cleaning staff, all through one of more companies by security entrepreneur Jovan Grech.

Grech, a former squad member of the anti-terrorism Special Mobile Unit, received over €1.3 million in direct orders to provide the ferry service with employees instead of employing them directly.

Grech is however contesting the description of the contracts as direct orders, and says they were simply extensions to his original tender.

In 2017, his company Signal 8 Security was paid €786,499 in seven separate direct orders, for the provision of security offices and mooring men. In 2016 and 2017, his joint venture Trust Business Solutions (TBS) was awarded a total €521,335 in 21 separate direct orders for cleaners, cafeteria staff, and mooring men. TBS is a joint venture with JF Security.

The direct orders are part of an ongoing saga about Gozo Channel’s employment practices, which Nationalist MP Chris Said had previously attacked as a pre-electoral ploy for favours through jobs and contracts. Direct orders are contracts given out without a public call for tenders, and always require the approval of the finance ministry.

But Jovan Grech told MaltaToday the data, presented in parliament as a reply to a parliamentary question, should not have read as direct order, but an extension for the contracts. "I confirm that we have never, ever been awarded any direct orders from Gozo Channel. The extensions were being given due to the public service obligation the Gozo Channel has to go through. We do not provide service any longer since a call for quote was issued and the cheapest, compliant offer was awarded with the contract until the PSO is finalised. Our last day of provision was the 31 January 2018."

Grech also said the only direct orders he knew about were those awarded toi Executive Security Services for the provision of mooring men, and to Ozo for security services just before the 2017 election, under former Gozo minister Anton Refalo. This information is also provided in the data presented in parliament.

Trust Business Services had already been granted a public tender for cleaning services on Gozo Channel in July 2015, for €120,000.

When the tender was awarded, one of the bidders protested that three bidders failed to split their offers as instructed between manpower costs and overhead costs, a rule that allows decision-makers to spot cases of precarious employment. The appellant, Kooperativa Indafa Pubblika (KIP) said TBS had made a one cent provision for overheads, effectively making a mockery of the rules since “it was not conceivable that they award the service at 1c per hour as overheads, and still pay the employees the minimum wage.”

KIP had told the public contracts appeals board that TBS’s offer meant that they would be paying their employees the legal wages, but not declaring their overheads, making a loss. The Gozo Channel company replied that even if certain bidders were bound to make a loss, this was of no interest to the contracting authority, which was only interested in the financial offer. In its decision, the appeals board upheld the Gozo Channel’s reasoning and said that the contract did not preclude bidders from quoting zero rates per hour for overhead costs.

Gozo Channel executive chairman Joe Cordina, a former Labour party executive and candidate, has in the past defended the practice as mere outsourcing. “We sub-contract. Mooring is all sub-contracted, and crew members are part sub-contracted,” he had told the Malta Independent, likening the situation to restaurants which employ more in summer but need to retain flexibility during low seasons.

Gozo Channel has been using short-term contracts during 2017, usually at three months at a time, ostensibly because the public service obligation was due to close in September and the company was instructed in July not to issue any long-term offers until then.

During the entirety of 2017, the company engaged its workers through various security companies, such as Executive Services, which was given four direct orders totalling €390,346 for the provision of seamen.

In total, Gozo Channel’s outsourcing strategy – via direct order and not with any public call for tender – cost €1,769,702.