IBM sells itself short

IBM lost a lucrative government contract because it made a bid for the work which was too low.

While most government contracts automatically go to the lowest bidder, it seems that the Finns were not particularly impressed with IBM.

The Finnish Tax Administration wanted to replace 70 tax systems with a big single system. It controversially selected the Fast Enterprises’ Gentax taxation software, along with Finnish-Estonian Nortal, which plans to implement the project for €62 million with the overall price of procurement running around €226 million over 15 years.

However, the contract raised the eyebrows of local hacks who noticed that IBM came in with a much lower bid of €38 million with a total value of €143 million over 15 years, but the FTA was not interested. IBM is appealing the decision to the Finnish Market Court, which may reverse the decision.

Finnish Public procurement laws say the contracting authority may reject abnormally low tenders.

Chief information officer of the Tax Administration, Markku Heikura told Artic Startup that it was essential that the operational reliability and success of the taxation will be ensured in the future,

Heikura said that the price that IBM has given was so surprisingly low, he didn’t believe that with that price it is possible to make the whole project ready.