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LABOUR MINISTRY SLAMS SP CHIEF OVER HIS CHOICE OF HIGHEST BIDDER

IT system tender raises questions

THE DIRECTOR of Slovakia's Sociálna poisťovňa (SP) social security provider broke laws on public procurement with the signing of a contract with computer company CSC for the agency's IT system, say officials from the country's Labour, Family, and Social Affairs Ministry.
Director of SP Miroslav Knitl signed the IT contract on April 7, without the approval of the agency's board of directors and after Labour Ministry officials walked out of negotiations in order to block the deal. Even after a Sk70 million (1.7 million euro) reduction of the initial offer, the package quoted by CSC, at Sk167 million (4.1 million euro), was Sk27 million (657,000 euro) higher than a rival offer by IBM, according to SP documents.
"This is not a dispute between labour minister Ľudovít Kaník and Knitl. It is a dispute on following existing rules and respecting procedures set out by law," said Labour Ministry spokesperson Martin Danko.


LABOUR Minister Ľudovít Kaník voted with his feet.
File photo

THE DIRECTOR of Slovakia's Sociálna poisťovňa (SP) social security provider broke laws on public procurement with the signing of a contract with computer company CSC for the agency's IT system, say officials from the country's Labour, Family, and Social Affairs Ministry.

Director of SP Miroslav Knitl signed the IT contract on April 7, without the approval of the agency's board of directors and after Labour Ministry officials walked out of negotiations in order to block the deal. Even after a Sk70 million (1.7 million euro) reduction of the initial offer, the package quoted by CSC, at Sk167 million (4.1 million euro), was Sk27 million (657,000 euro) higher than a rival offer by IBM, according to SP documents.

"This is not a dispute between labour minister Ľudovít Kaník and Knitl. It is a dispute on following existing rules and respecting procedures set out by law," said Labour Ministry spokesperson Martin Danko.

Labour Ministry officials say that SP's board of directors in February had ordered Knitl to submit any draft contracts worth more than Sk10 million (244,000 euro) for the board's approval.

"The minister is surprised and dissatisfied with the actions of Knitl. He ignored the finding of the board and a letter from minister [Kaník] that requested that the board of directors examine both offers," he said.

Kaník walked out of an SP board of directors' meeting in late March after complaining that board members could not explain why they had chosen CSC, whose initial offer of Sk237 million (5.8 million euro) was nearly twice the price offered by IBM.

"From the points of view expressed, it was clear that we were in the minority, so we had to create some kind of obstruction - our departure from the meeting removed the quorum," Kaník told the SME daily.

Officials from the parliamentary ANO party have suggested an inquiry into the matter, and have hinted at "personal consequences" for Knitl if the allegations of signing a disadvantageous contract are proven.

Kaník called a special board meeting on April 11 to discuss possible action on the matter, and has not ruled out moving to recall Knitl. However, a decision had not been reached by the time The Slovak Spectator went to press.

Despite the protests, Knitl says he acted within the law, and that only CSC would be able to deliver the system on time. According to SP officials, the IT system must be in place by September if it is to be adequately tested ahead of its planned January 2004 implementation.

"CSC offered a complex package and a prepared product that can be customised. That means that there is considerably less risk that the system won't work," said Knitl.

"If the executive organs had not made a decision on time, SP would have suffered damages," he said.

Knitl also says that he got the board's approval to buy the IT system at a January board meeting that signed off on SP's proposed budget plans.

"At that time, [the board] approved the budget of SP, which included the freeing of resources for the IT system," said Knitl, adding that current law on SP required him to consult the board only on contracts dealing with the sale of SP receivables.

"The law did not count on the possibility that government representatives on the board could boycott negotiations on taking whatever decisions that are in the interests of SP," said Knitl.

In addition, said Knitl, the reduction in price between CSC's initial and final offers was not a reflection of non-transparency, but the result of clarification in the contract's terms.

Officials from CSC dismissed suggestions that they had puffed up their initial price, saying that the adjustment stemmed from more clearly defined technical requirements.

"During negotiations on the contract, the details were more precisely laid out, as was the depth of required analyses and the number of software licenses needed for the project's realisation. On the basis of that, we were able to recalculate the initial price," said CSC general director Miroslav Mikulčík to the Hospodárske noviny daily.

"We signed the contract with SP on exactly specified, concrete requirements and on a concrete time period under [given] conditions. It is simply a guarantee of upholding all of the contract conditions," said Mikulčík.

This is not the first controversy in Slovakia surrounding a state tender for an IT system. In October 2002, Slovakia signed a contract on a state treasury IT system with Hewlett-Packard after four attempted tenders had been cancelled due to objections from rival bidder Siemens Business Services. IBM had also complained of being excluded from the fourth tender for the treasury IT system.

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