Government bypassed procurement rules in four major contracts, says Principal Auditor

The Principal Auditor has accused the Government of failing to comply with its own Purchasing and Procurement Policy and adhering to procurement regulations, leaving it open to criticisms of lack of transparency.

In his annual report, the Principal Auditor highlights four recent cases where proper tendering procedures were bypassed and the Procurement Office was excluded from key decisions.

He notes that he already raised similar concerns in his previous report covering 2016-2017 and 2017-2018, and he calls for a review of the existing rules. 

The four contracts singled out by the Principal Auditor relate to the Northern Defences, Digital Health Records, Occupational Health Services and the Waste Management Facility. In each case, the Head of Procurement was either not consulted or his advice was ignored. None of the contracts included a “VEAT Notice” - a document that explains why standard competitive procedures were not followed, and so ensures transparency and regulatory compliance. 

The Northern Defences contract was awarded to Fortress Attractions Limited through an Expression of Interest process rather than a formal tender. The Procurement Office was not involved, and the Head of Procurement only learned of the award through a Government press release in October 2024. He said it was “possible and probable” that the contract value would exceed the £5.37 million legal threshold, and advised publishing a VEAT Notice. He later attributed the failure to do so to an “oversight”, but the Principal Auditor warns that this exposes the Government to the risk of the contract being declared ineffective by the courts if challenged.  

In the second case, the Gibraltar Health Authority paid £700,000 to EMIS Limited to upgrade and extend its digital health records system – above the £663,500 threshold for this type of contract. The Head of Procurement told the Auditor he was not aware of the payment, which was apparently made despite his earlier advice that it exceeded the legal limit and should have been put out to tender. 

A similar issue arose with a three-year, £1.1 million contract awarded last December to Maritime Medical Services Limited for occupational health services. The Auditor describes the decision to ignore the Head of Procurement’s advice to re-tender, and to exclude the Procurement Office, as “concerning”. This case also raised potential conflict of interest concerns, as a GHA doctor was listed as a director of Maritime Medical Services. The doctor was later granted a three-year career break, effective from the start of the contract. 

Finally, the contract for a new Waste Management Facility, awarded to Recycle.gi in May this year, was also handled through an Expression of Interest process, without Procurement Office involvement. The Chief Secretary cited strategic national importance, the need for resilience and contingency planning as reasons for not tendering the project. However, the Head of Procurement maintained that given its potential value, the contract should have been formally advertised.  

In his concluding remarks, the Principal Auditor emphasises the importance of involving the Procurement Office throughout the procurement process. He says the Government has exposed itself to reputational risks by failing to ensure transparency in the award of contracts for goods, services and works, andrecommends that the Head of Procurement review the Purchasing and Procuring Policy to incorporate the necessary changes.