Parliament calls for new rules for public contracts after wave of terminations

The House legal committee on Thursday called for improvements to the procedural framework surrounding public contracts, amid a wave of contracts being terminated by the government in the second half of this year.

The accountant-general’s office had submitted a list of suggested amendments to the committee, which would see changes to the approval process and other aspects of the laws regarding public contracts, including the way those contracts are amended after being signed.

One suggested change was the appointment of an official belonging to another contract authority as a “contract coordinator”, while other changes included stipulations regarding on-site inspections of the projects being carried out, and a codification of the framework regarding contract termination.

A representative of the scientific and technical chamber (Etek) on this point called for the legality of the proposed on-site inspections be ensured, and said that they should be carried out by an independent body.

The accountant-general’s office said one of the purposes of the suggested amendments is to allow for “more flexibility” regarding changes to public contracts, as well as to have the competent government authorities operate in a “more efficient” manner.

Additionally, the office suggested that the central committee of changes and claims only be responsible for considering amendments to contracts worth more than €100,000, with all amendments to other contracts being approved by the head of the contracting authority.

This, the office said, would reduce the number of cases being examined by the central committee by a third, from 900 per year to 600 per year.

Meanwhile the audit office requested that an amendment be written to specify that a “termination report” be published by the government whenever a contract is terminated.

A representative of the employers’ and industrialists’ federation (OEV) said moves towards amendments are “important”, but expressed the federation’s disappointment that they had not been consulted on the matter.

Committee chairman and Disy MP Nicos Tornaritis said the issue will return to the committee’s agenda in two weeks’ time, and added that both Finance Minister Makis Keravnos and Transport Minister Alexis Vafeades, as well as accountant-general Andreas Antoniades will be invited to attend.

“This is an issue, a gangrene if you like, which occupies public life, public debate, and certainly charges the public coffers many millions,” he said, adding that the committee is working with the aim of “things operating at a more sustainable level – a level which will defend first and foremost every euro belonging to the Cypriot taxpayer.”

Akel MP Aristos Damianou also called for a representative of the legal service to attend coming committee meetings, given the subjects being discussed.

The meeting comes amid a wave of public contract cancellations, with the contract for the road between Paphos and Polis Chrysochous and the contract for the development of the Liopetri river both having been torn up by the government on Tuesday.

Earlier in the year, contracts for both the Vasiliko liquefied natural gas terminal and the Larnaca marina were terminated by the government, with Alexis Vafeades on Tuesday saying the responsibility lies with the previous government for signing contracts with unsuitable companies.

“Those who designed this offer, those who approved this offer, obviously in a way which presented particular problems, bear responsibility. It is not the first time that we see this weakness,” he said while visiting Polis Chrysochous.

However, while Akel MP Valentinos Fakontis echoed this sentiment regarding the previous government, he also pointed a finger at the incumbent.

He said it is “clear that the responsibility for the bad agreement is borne by the previous government of Anastasiades and Disy,” but noted that “after 18 months in power, the current government cannot continue to watch as a mere spectator as one major project after another is terminated.”