Social insurer faces fine over tender

SLOVAKIA's state-run social security provider, Sociálna poisťovňa (SP), could be fined hundreds of thousands of crowns for violating the public procurement law, the Public Procurement Office (ÚVO) said on May 30.
The alleged breach concerns a tender process for the supply of an information system for paying social benefits.
SP director Miroslav Knitl signed an IT contract with computer company CSC on April 7, without the approval of the agency's board of directors and after Labour Ministry officials walked out of negotiations in an attempt to block the deal. Even after a Sk70 million (€1.7 million) reduction of the initial offer, the package quoted by CSC, at Sk167 million (€4.1 million), was Sk27 million (€657,000) higher than a rival offer by IBM, according to SP documents.

SLOVAKIA's state-run social security provider, Sociálna poisťovňa (SP), could be fined hundreds of thousands of crowns for violating the public procurement law, the Public Procurement Office (ÚVO) said on May 30.

The alleged breach concerns a tender process for the supply of an information system for paying social benefits.

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

The ÚVO looked into the sale following a complaint from Compaq Computer Slovakia that it had not been invited to closed talks on the contract for the IT system.

After the private negotiations, CSC was asked to supplement and amend its draft agreements, leading competitors to cry foul.

"This proves that the [original] draft agreements proposed by the winner did not observe the conditions and demands set by SP," ÚVO said, noting that SP could be ordered to cancel the contract with CSC.

Officials said SP was had broken the law by replacing the tender with closed negotiations, and by signing the contract without the approval of the SP board of directors.

The social security provider now faces a fine of up to Sk200,000 (€4,853) for not keeping conditions of the bid evaluation process, or a fine of up to 0.5 percent of the price agreed with CSC for employing an inadequate method of public procurement.

Before the ÚVO investigation, Knitl insisted that he had acted within the law, because 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.

Knitl also said 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.

- From press reports

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