The company Infomare has sent us an open letter expressing dissatisfaction with the current activities of the Ministry of Science, Education and Sports, specifically Minister Dragan Primorac, regarding the development of the IT sector in Croatia. We publish the letter in its entirety.
Dear Minister Primorac,
you are primarily responsible for the development of the IT sector in Croatia, its standardization, and public procurement, which are prerequisites for stimulating the production and export of software and related services. You are doing this insufficiently or poorly, just like your predecessors.
You are primarily responsible according to the following provisions regarding the area of responsibility (scope) of your ministry:
• “coordination and implementation of the development of the IT sector and
• planning and coordination of technological development in the Republic of Croatia”
We are monitoring the reforms and economic crisis in Croatia, the policies and practices of the executive authorities, especially in the IT sector that we know and live from.
The Croatian political and economic management is responsible for the economic crisis in Croatia. The circumstances of the global crisis cannot justify the state of our sector or domestic generators of the crisis. Political management must stimulate production and export. Economic management must produce quality and competitive products.
Many Croatian entrepreneurs are fulfilling their tasks. For example, our product – the business application system GPS® was implemented in the Ministry of the Interior of the Republic of Croatia in 1997 and was rated in 2005 as the best among 56 evaluated systems of the same purpose in state administration bodies (source: “Study of Rationalization of Public Finance Management” by the Ministry of Finance of the Republic of Croatia, prepared by a group of independent consultants).
This study found that our solution is 10 times cheaper than that in your ministry, although it was assessed that they have equal functionalities! We are not surprised, knowing that you continued to operate contrary to the findings of the mentioned study even after its publication.
Harmful trends are strengthening in the Croatian IT market for which we consider you partially responsible:
1. The Ministry has not fulfilled its tasks in the area of standardization of public procurement of information and communication technology and related services, nor has it initiated the adoption of missing implementing regulations:
a. It is necessary to develop unique models of standard and particularly important flows of processes and documentation for groups of similar public administration bodies (ministries, local self-government, counties…) and define standard communication interfaces.
Until this is done:
• “original”, incomplete, and imprecise functional requirements for the procurement of information technology will continue to be produced
• order will be slowly introduced, standardized, and improved in the work of public administration
• technology manufacturers will crucially influence the selection of solutions, sometimes questionable functionalities.
b. With several frequent changes to the Public Procurement Act, the “harmonization” of public procurement regulations with EU regulations has not been completed, nor have the weaknesses of the public procurement system been eliminated. Often, bidders are required to possess various “industrial” certificates that are neither international nor Croatian standards nor prescribed by the Public Procurement Act and implementing regulations to predetermine the selection. In fact, your ministry does this as well. There is no entrepreneur who could purposefully invest in the education and certification of employees to obtain all required certificates used for these purposes within an acceptable time. We expect you to prescribe the use of certificates in public procurement, the time and resources for their adoption until application for the purpose of developing the sector and ensuring equal conditions for all. Otherwise, stimulating small and medium enterprises is mere declaration.
c. It is necessary to prescribe the obligations of the contracting authority and mandatory phases in complex information systems and technology projects.
It is claimed that projects of the “turnkey” type should not be allowed in public procurement if the system to be built is not fully defined (designed). Therefore, for example, in construction, it is not possible to procure spatial plans, architectural, execution, and main projects with one tender, but procurement is done in phases.
In public procurement of state administration, there are frequent tenders for the construction of complex information systems without a project of the subject system, with incomplete or questionable specifications of the contracting authority’s requirements. Everything is presented as the procurement of “components” of the future system as if that system and its functionality are defined (known or designed). Technical requirements are described and conditioned in detail with unknown, incompletely defined, or implicit goals, organizational models, and functionality, or it is “already known who has everything the contracting authority needs”.
2. Disregard for Croatian knowledge holders and best practices
While you praise Croatian scientists and teachers, you indiscriminately import services that they and their entrepreneurial students can perform more successfully than foreign competition. You pursue an inconsistent, arbitrary policy of “encouraging” and “prohibiting” the realization of their own income in higher education institutions. While some are required to pay all funds generated from their own activities into the budget, “encouraged” can spend income earned from such services. They are not VAT payers, and the resources they work with are financed from the budget for performing scientific and teaching activities, thus competing with unjustifiably low (dumping) prices. Revenues thus obtained are mostly divided into fees. On one side, dependents and obedient individuals are created, while on the other, they are demotivated to work outside their primary activities.
3. State (“public”) enterprises compete with Croatian IT entrepreneurs
It is unacceptable and contrary to EU practice and legislation for public enterprises, financed from the budget, to compete with Croatian entrepreneurs monopolizing part of the services for state administration, based on solutions they do not produce but import and pay with budget funds, competing with those who create those funds.
4. State “encouragement” of the consolidation of IT sector entities
There are frequent examples of public procurement procedures favoring larger and stronger entities. This is achieved by requiring disproportionately large resources from suppliers in relation to the subject of procurement, even in violation of the Law. Some of those “encouraged” will succeed, and the public will attribute this to their entrepreneurship. Others will produce similar damages as the wizards of transformation. All this is contrary to the declared policy of encouraging small and medium enterprises.
5. Illegal procedures and errors in public procurement
You have done too little to ensure legality in the existing public procurement system. There are too many examples:
a. unjustified negotiation procedures in public procurement – direct contracts and prevention of market competition within public procurement.
b. prescribing special financial and other conditions for bidders, certificates, etc., which favor larger entities at the expense of small and medium enterprises, which the Government “swears by”.
Appeals are costly, and when appeals are rejected, most entrepreneurs find it irrational to initiate lawsuits before the Administrative Court due to the prolonged duration of such procedures which, when concluded, essentially cannot change what has already been implemented.
6. Insufficient transparency of “syndicated” (consolidated) procurement, which can be reduced to preferential contracts because Croatian companies do not participate on an equal basis. Periodic public selection of potential bidders and their public competition for such contracts is necessary.
All of the above favors corruption. Is it maintained because of it or due to ignorance? We are interested in who allows this, or why the mentioned weaknesses of the system are not eliminated.
We agree with you that knowledge is a fundamental resource and a driver of development and social change. The university is, in this sense, a cornerstone institution for the development of Croatian society.
The Croatian industry today cannot make an airplane and perhaps not even a car, although we have experts who can contribute to every phase in the life cycle of these products.
The Croatian knowledge industry produces very high-quality and competitive software. We have knowledge holders at universities and in the economy, excellent research, design, and development teams, necessary resources, and an established organization. We do not seek and do not need privileges, protection, subsidies… We demand a fair competition.
Globalization is inevitable, but it is not necessary to favor it, disregarding national resources and interests, among which knowledge is the most important, especially in the production and marketing of new values.
This letter was prompted by the recent procurement process of HŽ Croatian Railways Holding d.o.o. for the ERP system, with disputed and changed conditions. Since 1996, HŽ has conducted several expensive and lengthy preparations for the same procurement subject and has engaged numerous foreign and domestic consultants of various activities and profiles for this purpose. Significant funds and time have been spent for which the required system could have been implemented. Previous tenders were canceled or “quietly died” without cancellation (notification), which is improper and unethical. What have we learned from previous tenders and who needs it? We believe that the answer goes beyond HŽ.
We hope for your response.
I wish you a happy and more successful new year.
Sincerely, Zlatko Štrbinić, Director
