The Ministry of Agriculture made errors in IT procurements worth almost CZK 1,000 million

Press Release – January 21, 2013

The Supreme Audit Office (SAO) scrutinized the Ministry of Agriculture (MoA) and its management of funds, which were utilized for IT purchases, operating, and maintenance within the period 2005–2011. Auditors scrutinized expenses in the total amount of CZK 2,300 million and focused on projects that were overall described as “MoA Network Integration“. Auditors concluded that the Ministry had violated several laws. The Ministry made serious errors when procured IT worth nearly CZK 1,000 million.

The Ministry already violated the Act on Public Procurement at the beginning of the MoA Network Integration project. In 2005, the Ministry assigned an order worth CZK 500 million without a tender, only on the basis of a supplement to the previous agreement. The Ministry failed to provide a strategic or conceptual document, which would define the goals of the MoA Network Integration project. The auditors also wanted to check the economic evaluation of the project, the investment plan, and the implementation analysis, but the Ministry could not present such documents.

“In simple terms, the Ministry made purchases worth CZK 500 million without knowing what they wanted, for how much, and for which purpose they made the purchases. In addition, the Ministry obtained the purchased goods from one selected provider without competition, in spite having two expert’s opinions from two independent legal offices that stated that such ordering without competition would contravene the law“, said Jan Vedral, Member of the SAO Board who managed the auditing operation.

When the previous agreement expired, the Ministry continued to proceed according to the same principle. It was clear that the agreement would expire in 5 years, but the Ministry failed to invite tenders in due time and entered a contract worth CZK 203 million with the previous supplier. The following order was put out to tender, but the technical requirements were defined in a way, which favoured the former supplier. The Ministry disrespected the decision of the Office for the Protection of Competition, which cancelled the negotiation procedure, and entered an agreement worth CZK 142.6 million. When the auditing operation was about to finish, the Office for the Protection of Competition had not yet issued a final decision on the matter.

The Ministry violated the principles of effective economic activities when managing the information and communication technologies. For example, a purchase of advisory services was divided into two individual contracts and negotiated as simplified below-the-threshold procedures. As a result, the Ministry obtained two separate documents – Conception of ICT and Strategy of ICT – for the total amount of CZK 4.5 million. Both documents were 20 pages long and three quarters of the texts were identical. “These pricey documents were not officially approved or used in any other way“, said Jan Vedral. In 2008, the Ministry entered a contract of advisory services worth CZK 46.3 million, without reasoning their necessity. The Ministry could not give evidence of the outcomes’ utilisation. In 2009, the Ministry purchased a software application for CZK 4.1 million but the application has never been used.

With respect to the desired efficiency of public management, the SAO has been aware of high risks carried in the field if IT purchases. “For the future, the SAO is preparing audits of this particular field. In 2013, the SAO will perform audits of IT purchased through simplified below-the-threshold procedures, as such activities pose the highest risks“, said vice-president of the SAO Miloslav Kala.

The state administration has ordered a large amount of procurements without publication. According to a survey made by the SAO, the state ministries have ordered purchases worth CZK 21,300 million without publication within the period 2009–2012, which makes 38 % of the total amount of public procurements ordered by ministries. “More than half of them, amounting to CZK 13,600 million, are related to IT purchases“, said Miloslav Kala.

Based on findings from the auditing operation, the SAO has been analysing the Ministry’s criminal liability and is preparing to lodge a criminal complaint.

For further details about the auditing operation No. 12/04 (in Czech only), see the following link: (pdf 266 kB).

Communication Department
Supreme Audit Office

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