IT buying: Why can't governments ever get it right?
In Poland, regulations around government tenders have been notorious for putting an emphasis on price at the expense of quality. An update to Polish law earlier this year was supposed to put a stop to that, but ended up adding new complications to the tendering process that could make IT procurement even more painful in future.
Local Polish elections last month were mired in delays and irregularities around announcing the results. Politicians standing in one town suddenly 'won' in a neighbouring district, for example, and it took more than a week for the country's electoral commission to confirm all the official results. The cause was a new - and faulty - IT system that had been intended to speed up the vote-counting process.
Industry watchers immediately pointed to one underlying reason why the system failed so miserably, one that has been the bane of IT projects in the past: a broken public tender system that caused the electoral commission to choose the cheapest offering, having disregarded other key factors that should have informed decision-making. It's a criticism that's been levelled at all types of tenders, not just those concerning IT.
The problem was caused by Polish officials' fears of being accused of corruption and wasting public money, says Witold Jarzinski, an associate in Magnusson Law Firm and the author of a Polish language blog on public tender regulations.
The stats, he says, are shocking: "According to reports on functioning of the public procurement system in Poland in 2013, 86.5 percent of all awarded contracts had values below EU [norms]," he said. "The awarding entities selected offers with the lowest price. In 2013, price was the only contract-award criterion in 92 percent of newly-commenced procedures."
However, it's far from the only problem with procurement procedures in the country, Jarzinski says; the voting system snafu is more serious than just a public sector body skimping on the price. "At the end of 2013, the National Electoral Commission announced a tender for this complex vote-counting system. However, it was cancelled due to many mistakes in the tender documentation," Jarzinski said. "The commission didn't have enough time to repeat the tender procedure. Therefore, it was decided to divide the tender into parts, which was a clear violation of the law because it allowed them to circumvent some strict rules. Added to that, the tender documentation was full of mistakes, inaccurate provisions and unrealistic deadlines, so none of the 'big players' in the market submitted offers."
The most important contract concerned developing and managing election software modules and was awarded to a small company in the Polish city of Lodz, just three months before the elections kicked off.
"Writing an IT program is not that complicated but the implementation usually is," Jarzinski says. "The commission didn't add time for that to the project, nor did they allocate funds and time for training."
It's not the first time things have gone wrong with an IT tender, and it won't be the last. "What's specific to IT-related tenders in Poland is the tendency to choose single-source procurement, and the occurrence of vendor lock-in," he says. One prominent example Jarzinski cites is an information system for the Polish social security system ZUS, which is under investigation by the country's Supreme Audit Office and in which case 14 people were formally charged with tender fraud. "They have been trying to get a decent system for 20 years, and are still spending billions of zlotys on it."
Even with the new law signed in September that should remove the 'price first' incentive, Jarzinski thinks the recent amendments will not change much in day-to-day practice.
"The amendment to the Polish Act on Public Procurement does not impose any requirements as to minimum [weighting given to] criteria other than 'price only'," he says. "As a result, it can be assumed that the bodies awarding the tenders will grant the minimum or symbolic weight to the non-price criteria, and in fact they will select the tender with the lowest price. Therefore, price will remain the most important factor." He also points out that the public procurement law is frequently changed, even though the same government has been in office for over seven years. "We've seen five to six amendments per year," he says.
"A big problem in our market is that complicated and public procurement law is overregulated," he continues. And it gets worse with the recent update to procurement regulations: "There are so many instances of over-complication it's hard for me to pick one. If I have to, one example is that in the new law, they added two articles in which two different regimes have been put into place for non-priority projects, when they actually need very little regulation or even no regulation at all."
In this case, he blames the lack of a general focus, as the law is a compromise between four parties in parliament. Because of that, "instead of simplifying it, they needlessly complicated it."
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