How could a tender for HRK 53 million be closed only 35 seconds after it was opened?



Boris Kovačev/Srdđan Vrančić / Hanza Media

Darko Horvat i Gabrijela Žalac

The tender that went too far was opened by Ministry of Economy, whose Minister Darko Horvat announced that the "fastest finger" method of application will be discontinued

It's so nice to see Minister of Economy Darko Horvat announce the annulment of the scandalous tender for funding of entrepreneurs by the "fastest finger" method. However, anyone who has observed the EU funding process for at least a while knows very well that the problem with such tenders, and with the eFondovi online application, has been around literally from day one.

In the absurd case of the 35-second tender last Tuesday for HRK 53 million in funds for "Improving Competitiveness and SME Performance through Information and Communication Technologies (ICT)" fund money was won only by the lucky applicants who were able to log on and apply within the half-minute deadline.

It was just the tip of the iceberg that many state-level consultants have been warning about since May, when the first fiasco with the internet application for EU funding through the eFondovi system was recorded.

It was a tender for the equipping and construction of production capacities for small and medium-sized companies, organized on the same principle as the Tuesday one: the funding was doled out to projects until the budget was depleted, without evaluation of project documentation, in a system in which only the minimum of the prescribed conditions have to be satisfied and the fastest bids win.

Alas, shortly after the opening of the tender, at 9 am, the system was giving error reports to entrepreneurs who had been putting together project documentation for months. It went on for more than an hour, and applicants were unable to log on.

The tender was annulled sometime later and the applicants advised to submit their bids by mail, rather than online. They occupied the post offices very early in the morning in order to be the first to send mail and receive the date stamp that proved the bids were sent within the first minute of the reopening of the tender.

Humiliation for Businesses

As if this was not humiliating enough, a new "fastest finger" tender (officially the "open permanent tender"), this time with HRK 15.2 million  in funds for small and medium-sized businesses, opened on 13 August. The name was "www.vouchers for MSEs" and the aim was financing the improvement of network solutions in the presentation and sales of products.

The bidding process was the same: no appraisal or scoring of projects; the funds were allocated to the fastest bidders. As early as 11.05 am, five minutes after the opening, the system had 160 entries and it was quite clear that no one who had logged on even a minute later than the very opening of the tender had a chance to get the funding.

Some entrepreneurs immediately complained that the system, besides being unjust in itself, had technical issues, getting stuck and 'frozen', whereupon the Ministry of Economy explained that the problem was in the applicants "not refreshing their browsers".

While Minister of Regional Development and EU Funds Gabrijela Žalac claims that the tenders done on the "fastest finger" principle are common throughout the EU, the consultants with whom Jutarnji discussed the matter say that the EU does not dictate the way in which the tenders are performed.

- Tenders can work with document evaluation and selection of high quality projects, or in the form of open, permanent tenders in which the money will be allocated to the fastest applicants, an anonymous consultant for EU funds told us.

- In my experience, this second type is getting increasingly frequent in Croatia, likely because it's easier for the state administration to let the system pick the fastest applicants than to actually read project documents. It is problematic in itself, but then the online application via the eFondovi system introduces a whole range of technical problems on top of that, she admited.

Officials find it easier, but ...

Her claims are supported by data from the website: about a third of open types of tenders are the "permanent" ones - those in which the speed of the bid, rather than project quality, is the basis for approval - and this appears to be the rule in tenders for small and medium entrepreneurs, who have the greatest interest and need for such funding.

A number of IT experts whom we consulted, who prefer to stay anonymous, explain that the crucial role in the process will be played by a number of factors that have nothing to do with the tender itself.

First, they say, the speed of the bid can be affected by the speed of the applicant's computer. It means that the entrepreneurs with the poorer IT equipment will be at a disadvantage to start with.

The internet connection is also important.

- The ADSL system, for example, has a much lower speed than optical cable, an IT expert told us. In addition, the speed of the bid can be affected by the choice of the Internet service provider. - If the bid is sent via the same ISP that the recipient uses, it is very likely that the connection will be faster, he explains.

The tender process can be greatly influenced by the way in which the server of the administration body responsible for receiving the bids is set up.

This appears to be the major part of the problem the consultants have specifically been warning about since Tuesday.

Namely, two clicks are needed for a successful completion of the application: first on the "submit" button, and then another on the pop-up window asking "Are you sure you want to submit a project application?"

It is difficult to explain the differences in the timing of the pop-up window logically.  To some applicants it popped up after just a few seconds; to some others it took a few minutes after "submit" had been clicked. Many projects 'submitted' simultaneously ended up separated by as much as a hundred places in the final order of bids.

No one has hinted at any rigging, but the way the receiving server has been set up and optimized seems to have an influence on the success of getting a bid through.

- With most servers, the amount of data they can receive simultaneously is limited. Once the server is overloaded, the system can start behaving erratically, says the expert we have consulted. - Looking strictly from the technical point of view, the server might not have been prepared for such a large amount of bids. Still, receiving data from 900 different users at the same time  is not such an insurmountable problem today. One can temporarily expand the server capacity for the needs of the tender, thus solving the problem technically. In the long run, the only correct solution is to go for a type of tender in which the funds are awarded according to the quality of the project, says our expert.

Miroslav Škoro's company produced the system

The eFond application system was presented last April, and was made by Omega software d.o.o.

The company is known for being co-owned by the popular folk-pop singer Miroslav Škoro. The last time the media turned its eyes on it was in 2014, when it sold the "Moj Zagreb" application to the City of Zagreb.

The City paid HRK 1.7 million for the program, which was estimated by many to be five times the usual cost of such applications.