A contract awarded to a consortium for services at St Vincent de Paul Residence for the elderly, valued in excess of €274 million, was in breach of the law and possibly invalid, according to a report published by the National Audit Office (NAO) on Wednesday.

The agreement was made in November 2017 by the St Vincent de Paul Residence and the JCL and MHC Consortium – awarded directly following a negotiated procedure. It related to services to be provided for 504 beds within four blocks yet to be built.

The construction of these blocks was linked to an additional investment valued at €29 million that the consortium was to provide, at no cost to the St Vincent de Paul Residence, in relation to a separate tender for comprehensive services, that also comprised the provision of catering and the construction of a kitchen.

The contract relating to the tender, also signed in November 2017, was valued at €57 million.

After the Public Accounts Committee requested the NAO to audit these contracts, the Office found a number of serious irregularities. As well as concerns on the legal validity of the contract, the NAO noted the absence of authorisation and the failure to secure value for money in a report that is highly critical of the process.

The NAO was unable to determine how the “additional investment component” originated. “This Office has reservations as to why no parameters that were to guide potential tenderers formulate the additional investment were set. This concern assumes greater relevance given the disproportionate weighting that this was assigned in the evaluation criteria.”

“The concept of an additional investment at no cost to the contracting authority, as applied in this case, is fallacious, for in a transaction of significant value with commercial interests, nothing is ever secured for free,” the report adds.

Gravest among concerns identified is that the basis cited as justification authorising the negotiated procedure was in breach of legislative provisions, “thereby possibly leading to the invalidity of the procurement undertaken”.

Authorisation was sought by the St Vincent de Paul Residence, endorsed by the Ministry for the Family and Social Solidarity (MFSS) and granted by the Department of Contracts (DoC) on the basis that competition was absent for technical reasons and for reasons of extreme urgency.

“The NAO contends that there existed no technical reasons that precluded competition since the management of these blocks could have been undertaken by other operators,” the report states, pointing out that in fact there was no urgency as the blocks were to be under construction for at least 18 months during which the St Vincent de Paul Residence could procure these services through an open procedure.

Conspicuously absent was any political authorisation endorsing the government’s commitment to a project of over €274 million.

The agreement for the management of the additional blocks was not brought to the attention of Cabinet despite the project’s national importance.

The NAO concluded that no political authorisation to enter into a negotiated procedure with the consortium was requested from and provided by the Parliamentary Secretaries involved – the Auditor General’s report describes this as “incredulous”.

“Even if the project was not referred to the parliamentary secretaries for their authorisation, their failure to enquire as to the regularity of this procurement is in clear breach of their duty arising from the political post held.”

No analysis on what government was being charged for highly dependent residents in other care homes was undertaken. The rate charged by these homes was significantly lower than the €99.17 daily per resident per occupied bed paid to the consortium. The average daily rate that the government was paying private contractors for persons with a high dependency in 2016 was €51.06.

In November 2020, at the time of the handover of the blocks, the rate charged by the consortium was revised to €118.44 – almost double the average of €65.13 charged under the Buying of Beds Scheme.

“This difference raises doubt whether value for money was secured,” the NAO concluded.