Inefficient Costs. Observations of the Control Chamber and the Response of SNCO of the Ministry of Education and Science

In 2013 and 2014 around 757 million 144 thousand AMD and 766 million 376 thousand AMD respectively were allocated from the state budget for the maintenance of the RA Educational network service and equipment. According to the analyses of the Control Chamber (COC) these sums were not spent effectively.
The calculations of the expenditures made by the National Center for Educational Technologies SNCO of the RA Ministry of Education and Science necessary for the maintenance of the Armenian Educational Network (AEN) from the state budget were calculated based on the expenditures that are necessary for the expenditures spent for one pupil, which in 2013 amounted to 44.970 AMD per pupil. In other words, the number is multiplied by the number of 1403 schools of Armenia and 12 months and it appeared that the 757 million 114 thousand drams were needed.
The Chamber of Control’s recent report has come to the conclusion that the costs for AEN were not reasonably estimated and as a result the maintenance service cost for it was not reasonable either.
To the question of about the methods used for calculation of the costs, Mr. Artak Poghosyan, Director of the National Center for Educational Technologies SNCO answered, ” The estimates are made based on the results of previous years, prices of open competitions. Moreover, in each subsequent year, the average unit price is reduced which is not only reflected in the next year’s budget requests, but in addition a qualitative and quantitative indicators were added.”
Referring to the reasoning of the cost for one unite, Mr. Artak Poghosyan said that maintenance and servicing of the AEN does did not imply only purchase of equipment (AEN’s the daily work of staff, trips, additional electricity costs, etc.), besides, and, given the specificity of AEN, it does not permit the calculation of unit price.
” Institutions involved in the provision of services and network connection costs vary. This is because for example, a school in Yerevan and a school in a remote and mountainous borderline or high school in the same community may not provide a universal calculation for the implementation of the same work. The same applies to the working conditions of around 300 communication nodes and their maintenance services.” According to Mr. Poghosyan this was the reason for approving the averaged unit price 1 school/month.
“Ucom” is the most experienced: Statement of the NCET
The other observation of the Chamber of Control is that NCET has violated the requirement of Clause 35,1 of the Government Decision 168–N “On Organization of Procurement Procedure”, according to which prior to the tender invitations the corresponding markets were not studied. With regard to this Artak Poghosyan mentioned, “… the reason is the specify of AEN (the responsible unite for purchases for AEN maintenance services had mentioned the same reason).” In the answer sent to the COC (which the head of staff of the COC also sent to, the NCET had mentioned in regard to this note, “The order provided in the Government Decision 168–N “On Organization of Procurement Procedure” was repealed, by the order, which was enacted by decision of the RA Government 105-N on 1 April of the current year, which provides that the study of the market is not provided. However it should be noted that in this case the tender for purchases was approved before the above mentioned decision had entered into force, and the former order was still operating.”
The COC had also mentioned the problem that over the 80% (590 million 400 thousand AMD) of the funds transferred to “Ucom” Company which was implementing the services provided by the purchase contract was being allocated to a third person, which in fact implements the service of the network. With this regard the COC recommended to foresee in the draft purchases tender (and later in the contract as well) a provision that the AEN maintenance shall be provided by the company implementing the service individually, without transferring commitments to another person.
“This would provide opportunity for participation of a more experienced company in this sphere for participation in the purchase procedure of the corresponding service, which in its turn may lead to the decrease of the service prize,” indicated the report.
When asked why such provision is not foreseen in the contract Mr. Poghosyan answered, “Provision on carrying out maintenance service only by one organization is not very realistic, as such a requirement is discriminatory and will decrease the range of participants.”
Whereas in the reply to the COC they had mentioned the following, “… It was not possible to envisage a more experienced company than the one (“Ucom” CJSC) which had applied, participated and won the purchase tender in the previous years. the list of the companies that participated in the tender for years proves this.”
Whereas the report indicates the following “…In the period of February June, 458 educational institutions (from 808 institutions) used the average monthly Internet traffic less than 1 GB. sample visits were carried out to 43 educational institutions from these 458. As a result it was revealed that 28 of these 43 mentioned the bad internet connection as a reason of low volume of the use of internet.” Whereas NCET had not reflected bad internet connection in its report.
Why AEN maintenance is not carried out by NCET?
In the report of the Control Chamber offers to consider the option of carrying out ACN maintenance by NCET, considering the fact that the network is the property of NCET, and the devices necessary to ensure its uninterrupted options are purchased by the NCET, through the state funds. In his answer Artak Poghosyan mentioned that the issue of maintenance of ACN by NCET was discussed and currently is being discussed, however the purchase of this service is still a working and reliable option.
According to Article 24, Part 2 (z) of the RA Law on Control Chamber, the head or the official of the controlled object should provide information of the recorded violations within one month to COC.
But, as can it be assumed from the responses of NCET received, the information concerning the recorded violations is does not refer to elimination of the violations, but they are reasoning why they cannot be removed.
To’s question whether the response of NCET was sufficient, or whether the violations were eliminated, Mr. Artavazd Nersisyan, head of staff of the Control Chamber said, “It is clear from the provided information that the authorized body, as well as the implementing organization have started the process of solution of the main problems raised in the report.”