Over at the excellent Czech weblog websky.cz, I’d say they came up with a pretty good scoop – AutoCont’s response to reports about financial mismanagement connected with the Internet to Schools project. They call it an “exclusive” with tongue firmly in cheek.

In the interest of fairness, I’ve translated this letter, just as I translated the report from Lidové noviny yesterday.

Note: this memo comes from Websky.cz, and is translated by me. Please excuse any rough spots in what is admittedly a long document written at times in heavy Business Czech. Items marked in [brackets] are my translation notes.

Dear colleagues,

In light of the fact that news appeared in the media yesterday about the issuing of criminal complaints in connection with the NKU’s report on the management of the Ministry of Schools, Youth and Physical Education, allow me to present commentary on the whole issue.

The media, as well as part of the report from the NKU, includes activities which have nothing to do with Internet to Schools. In the NKU report, the signing of contracts and the auditing of their fulfillment comes in for the most frequent criticism. Never in the media is it stated that the criticized contracts, which have nothing to do with Project III and AutoCont (for example, contracts on media monitoring, training methods, etc.) and the agreement with the General Auditor. The NKU report presents basically three doubts in the area of Project III in connection with AutoCont On Line and Czech Telecom:

Passive Ports
In the NKU report it is presented that four expert opinions were prepared, which were on average 2-3x lower than the offered price. The brief for these opinions was different from the one in the RFP documentation for Project III, where the candidate had to present all expenses connected with the network construction, without the ability to account for additional expenses.

In the NKU brief for expert opinions, work related to the network design, transport, data switch, management of the building of networks in schools in the entire country, other unexpected expenses, etc. was not presented. That our bid was adequate is evidenced by other candidates in Project III. During the opening of bid envelopes in 2001, other bids were read, and our bid was the second lowest of six candidates.

150 million CZK deposit
In 2001 we were officially requested by representatives of the Ministry of Education to invoice for 150 million CZK, because there was a delay in the start of the SIPVZ project (State Informatics Policy in Education), and in the chapter on the Ministry of Education, funds remained that would have been returned if not expended. Of course we decreased the monthly payments for SKP [?] by the above-mentioned amount [150 million CZK].

The ACOL [AutoCont On Line] bid should have been rejected because its bid had too many pages
In clarifying the RFP, the Ministry noted that the bid can have a maximum of 200 pages without counting assumptions of qualification. In our case our bid had 250 pages, and of these, 85 pages were assumptions of qualification, and in this, we fulfilled the terms of competition.

The NKU report also presents, without further concrete details, that “part of the resources earmarked for the SIPVZ [see above] in the amount of 884 million CZK were not expended economically, or were used to cover non-essential needs…” The media is trying to create the impression that these resources were “stuffed into the pockets” of the participating firms and individuals. The reality is much simpler. Part of the amount above, 670 million CZK, are funds the former Minister of Education had to use for teachers’ pay raises as a result of budgetary errors by bureaucrats in the ministry in 2002. It is true that these resources were used contrary to budgetary rules, but the transfer was approved by the Finance Ministry and the Government. This has nothing to do with the realization of the SIPVZ project or with us, except that these resources are missing from the budget in future years, and we should complain about this as well.

Maybe you are wondering how it is possible that such a report came about. In our opinion it is a result of communication between the NKU and the directors of the SIPVZ department. The new management has no interest in revealing the facts and reality of the project and the NKU is working only with their own background documents, despite the fact that we have offered our cooperation.

The criminal complaint that is being discussed in the media is directed (if at all) toward the former management of the Ministry of Education and in no way toward our company. We have decided to react strongly to the accusations of the media and constant connections of unrelated matters in the NKU report with the Internet to Schools project. In this regard meetings have been held on the highest levels (V. Palata [AutoCont Director] – P. Buzková [current Education Minister]) where clarifications of the relationship were made and future cooperation was confirmed. We will continue to push for publication of the prices of all bids, so that it can be shown that our bid would have prevailed even in the event of comparisons to the competition. Efforts by the media to put us into the role of “otherworldly” beings that run this country are interesting, but outside reality.

We meet with the reality of what this project has brought to the schools themselves every day. Even though there have been small problems, we have something to be proud about. Schools are happy that the project has been realized, especially the smaller schools, which have gotten information technology they would not have gotten without the Internet to Schools project. In the eyes of the expert community, the project is perceived positively, and especially as regards its technology and organization (rollout). Finally from a former critic of the project we now receive words of acknowledgement, how we have done a bravura job on the rollout. The realization of the project literally “shot” the Czech Republic above the European average in the count of Internet-connected PCs.

The vast majority of you have taken part in the Internet to Schools project. You know better than I do what all we have built in the schools, and that we definitely have nothing to be ashamed of. The current campaign in the media can harm AutoCont and we are using all possibilities to eliminate these damages or at least minimalize them. On the other side is the fact that one cannot directly fight the media, because the battle is lost beforehand. Sensationalism takes precedence over facts, and there is apathy to the results of such a campaign for the participants and possibly their other interests. It is very difficult to argue factually and without emotion, when an article stands before you with the headline “One billion crowns for nothing.”

Let’s take these issues partially as a “success tax” because AutoCont definitely is a successful firm.

On the other hand I would like to request that those of you mentioned above communicate actively with others around you, especially with our clients and partners, and to help what is referred to as our “media picture,” which has only a slight resemblance to everyday reality.

I will keep you informed on possible further steps by the management of AutoCont.

Thanks for your cooperation,

Martin Grigar
Director
AutoCont CZ a.s.
Brno, 13.8.2003

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