That’s not pro-business

Hot on the heels of a damning audit report on the Electrogas report last week the National Audit Office released another report with a detailed insight into the operations of 22 different government departments and government authorities. The results are the closest you can get to an auditor’s nightmare.

The audit reveals several cases of public money spent without an audit trail, cases of credit cards on government ledgers without due account and repeated occurrences where the auditors have to state that the information and documents collected from public authority simply make it impossible to ascertain whether public spending was following the rules.

Yes, as odd as it might seem to some government operators, we do have rules on public spending. The present public procurement rules were, ironically, revised and streamlined by the Labour administration to fall in line with the European Directive on public procurement which the government and its MEPs in the European Parliament supported in negotiations in Brussels.

On paper we have a clear and modern set of rules to ensure public spending is transparent and open to competition. On paper. The practice scrutinised in detail by the National Audit Office reveals otherwise. The audit reveals a rampant and systematic recourse to direct orders bypassing the word and spirit of our own laws. The direct orders mentioned are not used to fill in emergency situations of a temporary and unforeseen need which would admittedly call for urgent measures. No, in most cases, direct orders simply replace or rather just avoid, the competitive process of public tendering.

What’s more interesting, or rather depressively predictable in 2018 Malta, is that the highest frequency of direct orders happened right in the few weeks before the last general election. In the case of the Health Ministry the audit reveals around €6 million in direct orders in just 20 days in May 2017. You can try to read into the exceptions to the rules for open and transparent public tendering, but I can tell you, you will find no mention of general elections as being sufficient reason to go for direct orders instead.

Another practice worth uncovering for its odious effect on small businesses is the government’s tendency to lump different and unrelated services into jumbo contracts instead of opening up different medium or smaller contracts to operators in the respective sectors. The new EU Directive implemented into our laws was pushed through the Brussels machinery precisely with the intent of opening up opportunities for small businesses. The Directive provides very clearly that insofar as possible, government authorities should cut their procurement offers into smaller pieces or so called ‘lots’ rather than jumbling up all together.

Instead, government practice as recently revealed in publicised cases like the cleaning contract in Saint Vincent De Paule, shows the exact contrary: the cleaning company is tasked also with the hairdressing, with the road maintenance and with the architectural services. One can perfectly understand the comfort of having one telephone number to call for whatever need under the sun, but the spending of public money calls for a management with public conscience, and that necessitates having a look at the rule book once in a while.

Many entrepreneurs depend on public procurement for their business growth. Government spending in Malta in fact amounts to roughly one third of our GDP. The practices outlined above point to a very worrying trend for our businesses. A trend which is severely affecting our ‘’less favoured’’ businesses, not on the list for direct orders. This trend will also, in the medium-term, inevitably lead to market distortions for the business sectors involved.

In the past weeks I have been approached by a number of businesses expressing concerns about this situation. As a candidate for the European elections I will give a voice to these concerns and other challenges faced by Maltese business in the upcoming campaign. Apart for regular public scrutiny, a number of other tools exist at European level to ensure government is in line with Maltese and European laws on public procurement. We will not hesitate to use these tools to make sure that what we voted for when we chose EU membership does not end up being the dead letter of the law.

Before that, I appeal to government to change course and consider respecting its promise of being pro-business. Its actions on public tendering so far clearly indicate it is not.