An in-depth examination by the Audit Service has uncovered a range of serious issues in public contracts, including delays, oversights, misjudgments, cost overruns, and subpar workmanship. These discrepancies have resulted in the state, and by extension, taxpayers shouldering unnecessary costs.

Notably, the findings detail instances where the Contracting Authority had to compensate contractors due to changes in timelines. Moreover, there's a considerable concern regarding the quality of the works. A striking example is a project valued at 13.5 million euros where the cost for defective work exceeded 744,000 euros. The Audit Service found that nearly 80% of the 181 sample cases had quality issues.

The findings are set to be discussed today (5/10) before the Parliamentary Audit Committee. This committee, in its review of public contracts, identified several weaknesses on the part of Contracting Authorities, which has led to additional costs for the state.

In its special report, the Audit Service highlights nine main issues and offers recommendations to address them. Key findings include:

1. Timeline Discrepancies: A review of the timelines between the announcement date of the tenders and the contract signing date showed significant delays by the Contracting Authorities. This was particularly prevalent in the period between the submission of bids and the signing of contracts, regardless of whether an appeal was made to the Offer Review Authority.

2. Cost Overruns: In many cases, the contract award amount exceeded the estimated value of the tenders. This discrepancy suggests that the market assessments made by the Contracting Authorities didn't align with the real-time market conditions during the tender announcement period.

3. Project Delays: Delays were noted in the initiation of many contracts. More concerning is that the vast majority of the contracts reviewed were completed much later than their stipulated completion date. In instances where justified extensions were granted by competent bodies (e.g., the Departmental and Central Committees for Changes and Requirements), these significantly extended the contractual execution time. Even in cases where a revised completion date was approved, delivery did not occur within these adjusted timelines, leading to further unjustifiable delays.

4. Cost Inflation Due to AA Changes: The final costs for many contracts significantly exceeded their original value. These cost overruns were primarily due to modifications initiated by the AA. These changes were related to additional tasks/deliverables and time extensions, which resulted in corresponding compensations to the contractors. In some cases, even when the final cost was less than the contract value, because amounts like provisions and unforeseen expenses were deducted, the cost was essentially higher than it should have been, due to these modifications/requirements.

5. Excessive Contract Modifications: An excessive number of changes were approved during the execution of the contracts. These changes were mainly due to additional tasks/deliverables requested by the AA, modifications in designs, technical specifications, or quantity sheets. They were also due to ambiguities and shortcomings in the construction studies and later legislative changes. Additionally, a significant number of time-related requirements were approved which extended the contract duration. Furthermore, there was an excessive number of financial demands which notably burdened the contract budget.

6. Quality Concerns in Deliverables: In a significant number of contracts (81% of the sample), there were multiple tasks with quality issues (defective tasks). These amounted to 2.5% of the contract value, raising concerns since this implies increased maintenance/repair costs during the operational phase after the contracts' objectives have been delivered.

7. Contractual Disputes: Approximately 30% of the sample of 145 contracts (one in every three contracts) saw disputes between the AA and the contractors. These disputes either resulted in arbitration or court proceedings or were resolved through amicable/out-of-court settlements.

8. Inexperience and Mismanagement in Coordination: Coordinators without prior experience in managing contracts were tasked with overseeing multiple contracts simultaneously. Meanwhile, coordinators with over 35 years of experience were assigned just one contract. The fact that these inexperienced coordinators hadn't received proper training in contract management has evidently led to challenges and inefficiencies in their handling of contracts. Additionally, in many cases, coordinators were appointed long after the contracts had been signed. This not only breaches the relevant regulations but also meant that several contracts went unmonitored and unmanaged for extended periods, a practice that didn't safeguard the public interest. Interestingly, it was observed that coordinators with over 35 years of experience managed contracts of lesser value (from €0 million to €10 million), while those with experience ranging from 1 to 15 years oversaw contracts of greater value (from €20 million to €70 million).

9. Lack of Accessibility to Contract Details: It's been noted that there isn't easy access to the fundamental details of contracts, neither at the coordinator level nor at the AA level. This lack of accessibility complicates the overall monitoring and management of these contracts. This finding is especially concerning given that the sampled contracts ranged in value from €2 million to €60 million.