e-lection connections
Prokom came under suspicion for using political connections during its involvement in a tender for a computer system for state insurance company ZUS in 1998. When state auditor NIK ruled that ZUS acted illegally in awarding the contract to Prokom, it fuelled speculation that the bid, allegedly heavily underpriced, had received heavy backing from government cronies.
"People say that Prokom has political connections," said Jarosław Pasternak, analyst at BDM PKO BP. "Some investors think it's good that Prokom has connections since it enables them to win more business."
Prokom, which was floated on the WSE in 1998, has acquired a reputation for landing big public contracts and orders from the largest state-owned concerns, including Poczta Polska, PZU and ZUS.
In 2000, it won a two-and-a-half year IT servicing contract with state-owned insurance company PZU worth €20.8 million (zł. 82.8 million) and a licensing deal with TPSA worth €11.2 million (zł. 44.9 million). Last year it won a contract to become the system administrator of ZUS for €31.5 million (zł. 125.7 million).
The national computer voting system was tipped by the National Elections Office (KBW) to speed up the transfer of votes from the regions to the central collating point in the capital. KBW ordered the pilot vote counting system from Prokom for €6.5 million (zł. 26 million) and from Łód software house Pixel Technology.
The system was to make election results known in less then 48 hours after the last vote was cast.
Farce
But by the time polling booths closed on the evening of October 27, election officials at the KBW announced that the computerised data-transfer system had malfunctioned, had been reduced to farce.
The elections, which take place every four years, seem to have taken KBW by surprise. Andrzej Florczyk, the head of the IT department at the KBW, claims that he had no time to organise a tender because this was impossible until an election date was set. He also claimed there wasn't a need for one due to a conflict between various laws and that a tender would commit him to a seller when he did not have budgetary funds.
Florczyk also blamed the hurried proceedings for insufficient testing of the voting system, which brought about delays. "The time I had to organise the elections was two months," Florczyk said. "Thus I had to forget about the idea of a full dress rehearsal. Now I see this was a mistake, and I will have to pay for it."
Prokom leapt to pin the blame for the technical problems on Pixel. It was Pixel, said Prokom, that had created the regional "transmission module" that connects to Prokom's central server.
"We have just finished the analysis of the data, which was only possible because of Prokom's substantial help, which was beyond the obligations as laid out in the contract," a Prokom statement said. "We did this to be able to repair the transmission part of the program made by Pixel."
The state auditor (NIK) has been asked by KBW for an urgent inquiry into the choice of the computer companies involved. A spokesperson for NIK confirmed that it received the request, but pointed out that constitutionally NIK can only investigate matters when directed to do so by Parliament. The auditor only plans a routine inspection of the local elections, which will be carried out at the end of this year.
Controversial
In 1998, Prokom won a highly controversial tender to computerise state insurer ZUS, to allow the firm to collect and transfer insurance contributions to private pension funds as part of a wider reform of the state insurance system introduced by the former AWS-led coalition. The project, valued at €251 million (zł. 1 billion), remains heavily delayed and significantly overshot Prokom's original estimates.
Controversy surrounded the transaction from the outset when the tender commission, headed by former ZUS president Anna Bańkowska, invited bids only from companies that generated at least 15% profit in 1994-1995, isolating Prokom as the only possible Polish candidate.
In addition to the Prokom bid, the tender commission selected two offers that did not meet the tender rules, submitted by Hewlett-Packard and IBM. The tender commission decided to award the contract to Prokom on the basis of the claim that it was the only bidder which kept to the rules.
Under the procurement laws, ZUS had no right to award the contract to Prokom since it effectively had no competitors, and the tender should have been annulled. While an investigation into the competition by NIK in 2000 confirmed the tender broke the rules, it came too late to reverse the decision as ZUS had already spent large amounts of taxpayers' money.
Shadow
But the selection procedure was not the only shadow over the ZUS transaction. Unofficial sources have criticised Prokom's bid in the ZUS tender as unworkable. They point to the fact that since Prokom's price was roughly half of those offered by IBM and Hewlett-Packard, the Polish integrator's bid was clearly based on the hope of renegotiating fees after winning the tender.
Despite the cloud of controversy surrounding Prokom's dealings with ZUS, Prokom has by means fallen out of favour with the state insurer. This year Prokom signed an extension contract with ZUS to provide systems administration services. The contract is worth nearly €28 million (zł. 114 million) and is scheduled to run for 12 months. The previous deal, signed last year, earned Prokom €31.9 million (zł. 127 million).
"They have been making election software for the government for a while," Jarosław Pasternak said. "They know how it works. They know people in the election office. Everyone likes to work with people they know."
