Commission announces the closure of investigation into extension of Malta’s Delimara power plant

Thursday January 27th, 2011

The European Commission has closed an investigation into Malta’s possible breach of EU public procurement rules for a contract that was awarded for the extension and maintenance of a power plant station in Delimara.

The Commission’s investigation did not concern the entire process for the award of the contract, but focused only on two public procurement issues. First, a concern that a change in emissions legislation seemed to have favoured diesel powered plants over other available technologies (gas engines or gas turbines, for example). Second, that a lack of immediate individual notification of the award decision prejudiced the right of appeal of an unsuccessful bidder. The investigation is being closed because the Commission has not found evidence that Malta violated the specific EU public procurement rules they were under investigation for. The Commission retains the right to reopen any investigation should additional facts become available.

What is the aim of the EU rule in question?

Public procurement is about how public authorities spend public money on construction, goods and services. It covers purchases of everything from computer systems to waste water plants, ship building, and consulting services. Total public procurement in the EU is estimated at about 17% of the Union’s GDP. The open and transparent tendering procedures required under EU public procurement rules mean more competition, stronger safeguards against corruption, and better service and value for money for taxpayers.

Why did the Commission open an investigation in the first place?

Following a negotiated procedure in 2006, Enemalta, Malta’s main provider of energy generation and distribution, published a request for proposals for a power plant contract in Delimara, valued at €183 million.

A legislative change in relation to the emission limit values for plants powered by diesel engines1 occurred during the negotiation procedure. Enemalta subsequently informed all the bidders that new emission values applied to diesel engines and extended the deadline for submission of final bids by four weeks to accommodate the change. The contract was subsequently awarded to the bid presenting a diesel engine plant. The award decision was published on the website of the Maltese Department of Contracts as well as at their premises.

The Commission sent a formal letter to Malta requesting clarification of two specific issues relating to EU public procurement rules:

The Commission sought to determine, first, whether changes to the technical specifications in the course of the procedure had favoured diesel powered plants over other technologies and, second, whether a lack of individual notification of the award decision to the unsuccessful bidders could have prejudiced their right of appeal.

On the first issue, Malta replied that it was necessary to calculate new emission values for diesel powered engines since the former values applicable to them were no longer in force as a result of the abovementioned legislative change. New values for diesel engines were calculated through the use of Best Available Technology (BAT), while the original limit values for gas engines were already consistent with the use of BAT. As the legislative amendments did not concern gas turbines, emission limit values for them were not modified. Under these circumstances, and on the basis of the information made available to it, the Commission cannot conclude that the Maltese awarding authority infringed the principle of non-discrimination in this regard.

On the second issue, the conditions Enemalta set for this particular contract included individual notification of the award decision to all bidders. The ten day period in which unsuccessful bidders could file an appeal of the decision was said to start from the date of the notification of the award decision. Despite the lack of immediate individual notification of the award decision, the unsuccessful bidder was nevertheless informed of the outcome of the procedure and was in the position to exercise the right of appeal on the basis of these contractual conditions. Therefore, the Commission did not find evidence that their right of appeal was prejudiced by the fact that they were not immediately and individually informed.

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