The State Agricultural Intervention Fund is dependent on the main supplier of its IT system, which costs over half a billion CZK each year
Press Release on audit No 20/07 – 26 April 2021
The Supreme Audit Office focused on how the Ministry of Agriculture (MoA) and the State Agricultural Intervention Fund (SAIF) purchased, operated, and developed information and communication technologies (ICT) between the years 2016 and 2019. In particular, the auditors focused on the functioning and use of selected IT systems1, but also, for example, on the way in which they were procured and the costs associated with their operation. In addition, the SAO also examined whether both institutions had acted conceptually and strategically in the procurement of ICT. The audit showed that the only information system of the State Agricultural Intervention Fund (IS SAIF) which is being used, comes at a very high cost. The costs are also linked to SAIF’s strong dependence on the main supplier of the system. To date, the SAIF has not been able to put an end to this dependency, of which it has been aware for many years.
In total, between the years 2016 and 2019, the SAIF paid the main supplier almost CZK 2.1 billion for application support which helps with the operation and development of the IS SAIF, i.e., approximately half a billion CZK per year. This is an amount that exceeds by a factor the expenditure on other audited information systems which are operated by the Ministry of Agriculture. In the case of the IS SAIF, this expenditure was about ten times higher than for the Land Parcel Identification System, where the annual costs were around CZK 50 million, and five times higher than in the case of the Integrated Agricultural Register. This system amounted to approximately CZK 100 million per year.
High unit prices of the work carried out by external IT specialists contributed to the significant costs of the IS SAIF. The SAIF paid CZK 27,733 for one day of work of a ‘SAP specialist’. This is at least twice as much than what the Ministry of Agriculture paid for the same specialist. The MoA spent on the work of such a specialist between CZK 9,668 and CZK 13,915. Such high unit prices for work on the IS SAIF are a specific negative manifestation of dependency on a single supplier.
However, the differences between the Ministry of Agriculture and the SAIF did not concern only specific information systems. For example, the MoA monitored the use of its licences for the SAP software and gradually optimised its use accordingly. The SAIF paid almost CZK 417 million for these licences between the years 2016 and 2019, but the use of the licenses was neither monitored nor evaluated in any way. A similar approach was taken in conceptual and strategic issues. The SAO assessed, on the basis of strategies and concepts, that at the time of the audit there was only a slight risk of non-conceptual ICT development at the MoA – that is to say, a smaller risk of inefficiently spent funds and other problems. In contrast, the SAIF lacks certain basic plans and documents for the operation and development of IT, which may lead to additional problems or unnecessary expenditure on ICT.
The auditors also examined a sample of public contracts of the Ministry of Agriculture worth CZK 1.3 billion. In the case of two contracts, the Ministry of Agriculture breached the prohibition of discrimination against other suppliers by giving preference to the incumbent supplier. In another case, it unlawfully split the subject-matter of the contract below the statutory financial thresholds and, without a tendering procedure, concluded three contracts with a contractor for more than CZK 6.5 million. In doing so, according to the SAO, it infringed budgetary discipline.
The Ministry of Agriculture manages 16 public administration information systems. Overall, between 2016 and 2019, it spent an average of CZK 453 million per year on ICT. The SAIF manages one information system. The SAIF’s annual average total of ICT expenditure for the same time period was on average CZK 750 million.
1] For example, the information system of the State Agricultural Intervention Fund, the Land Parcel Identification System, or the Integrated Agricultural Register.