TALLINN, 7 April 2004 - The SAO examined how the Ministries have managed the procurement of IT systems, software products and software services. The audit led to the conclusion that in most cases the public officers organising the competitive tendering procedures and some tenderers are not capable and experienced enough and therefore one could not expect very good results for the government.

The audit indicated that there is uncertainty in the procurement of strategic IT solutions – neither the top management nor the IT specialists of agencies possess the required knowledge and Estonia does not have too many businesses capable of being wholesome partners for the public sector. The uncertainty is even aggravated by the lack of IT development programs, which would encompass the Ministries’ government areas and be compatible with the development of the core activity.

The Audit Manager, Olav Lüüs notes: “Although the audit was based on a sample consisting of certain procurement projects of the Ministry of Environment, the Ministry of Economic Affairs and Communications and the Ministry of Agriculture, the conclusions drawn apply to most of the other public departments.” According to Lüüs, the audit by the SAO aimed to determine the reasons why competitive tendering in the field of IT procurement gives rise to a relatively large number of disputes over the adequacy of the qualifications and of tenderers and their capabilities and why the results of these procurements do not meet the expectations.

The interviews with the public sector management staff conducted during the audit revealed that they don’t always have full assurance that the strategic objective of the procurement is justified and they hope that suppliers help to solve strategic issues. Furthermore, a top level manager may not always be competent enough to decide whether the technical terms and conditions set out in the invitation to tender correspond to the needs and therefore he or she is unable to form an opinion on the explanations and recommendations of the agency’s IT specialists – he or she can only accept these.

Often the IT specialists of public departments are not sufficiently qualified to decide all the issues related to IT procurement. In most cases, the IT specialist’s task is to provide assistance to users in the field of IT systems and software. These relatively limited and routine work duties do not develop the competence required for formulating the terms and conditions of an invitation to tender concerning new systems or software solutions in a manner, which takes account of all the questions that might arise in the course of the procurement procedure and of all the possibilities offered by the market.

In addition, the number of providers of high-quality services is very limited. There are quite many IT companies in Estonia (almost 170), but most of them are small and do not possess enough knowledge or experience necessary for the development of complex IT systems, software products and software services and for participating in competitive tendering in that field. They do not have the prerequisites for completing such projects in accordance with the set quality standards and time limits. Nevertheless, they participate in tendering, hoping to get a contract that ensures work for years and to grow and develop rapidly in the course of performing the contractual work.

The Ministers in charge of the audited Ministries and the Minister of Finance, who expressed his views in this regard, agreed to the positions of the SAO.

The Ministers agreed to the opinion of the SAO that in solving issues related to the management of IT procurements the public departments should rely more on the Government Information Systems Development Centre operating within the government area of the Ministry of Economic Affairs and Communications. The SAO proposal to establish separate rules for managing IT procurements (like the legislation currently provides for the public procurement of construction work and building design) was accepted as well.

Both the Minister of Economic Affairs and Communications and the Minister of Finance agreed to the position that major IT development activities should be financed on project basis; the Minister of Finance stated that, where possible, this principle will be applied already in conjunction with the establishment of the state budget for 2005.

The audit report, to which the responses from the Ministers have been annexed, can be found at the SAO web site www.riigikontroll.ee.


Sven Soiver
Press Representative of State Audit Office
Telephone: (372) 640 0787
GSM: (372) 53 414464
E-mail: [email protected]

• Posted: 4/7/2004 12:00 AM
• Last Update: 10/1/2015 11:46 AM
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