RIX Technologies loses contract; LMT, Tet and LVM could be tasked with developing election IT systems

RIGA - The Smart Administration and Regional Development Ministry (VARAM) has terminated its contract with the election platform developer RIX Technologies and instead proposes entrusting the development of election IT systems to the state-owned companies Latvijas Mobilais Telefons (LMT), Tet, and Latvijas Valsts Mezi (LVM).

The ministry has proposed such changes "to ensure the unquestionable legitimacy of the Saeima elections and to avoid possible reputational risks," said Sabine Spurke, an adviser to Smart Administration and Regional Development Minister Raimonds Cudars.

VARAM proposes these particular companies as the possible contractors because "they are managed by the state, have implemented important national information technology infrastructure projects in the past, and employ highly qualified professionals".

According to the solution proposed by VARAM, software development contracts on behalf of the Cabinet of Ministers would be concluded in accordance with the procurement exemption provision of the Public Procurement Law.

The software development contracts are expected to include the previous key deadlines set by the Central Election Commission (CEC) in order to ensure the timeline for the technological support for the Electoral Platform initially agreed in fall 2025 between the CEC and the National Digital Development Agency (VDAA).

VARAM has decided to submit such a proposal to the Cabinet of Ministers.

The ministry says that the contract with the previous developer of the Electoral Platform, RIX Technologies, which won the right to carry out the programming works for the Electoral Platform as a result of a procurement procedure carried via the Electronic Procurement System, has been terminated, as the company has not fulfilled its obligations under the terms of the contract.

Cudars recently told the Saeima that a contract had been concluded for the adaptation of the IT systems for the forthcoming parliamentary elections. RIX Technologies reportedly assured that the work can be completed by June 30, but pointed to certain obstacles.

As reported, the State Police, in a criminal case launched by the European Public Prosecutor's Office (EPPO), detained 21 persons, including state officials, over EUR 1.5 million IT procurement fraud. Among the detainees were public procurement specialist Ainars Biders, the State Digital Development Agency's former director Jorens Liopa, and Corporate Solutions Group's owner and head Aigars Ceruss.

The Transport Ministry suspended Biders from his job pending the investigation, while the Smart Administration and Regional Development Ministry suspended its state secretary Edvins Balsevics.

The criminal proceedings were launched at the end of last year under the Criminal Law's sections on large-scale fraud committed by an organized group and large-scale laundering of the proceeds of crime by an organized group.

The investigation has established that an organized group of individuals entered into an unlawful secret agreement to determine in advance who would win the public procurement for at least six projects, funded by the European Regional Development Fund with up to EUR 1.5 million.

There are indications that the participants colluded to ensure that project tasks were awarded to pre-selected companies. The resulting illicit profits were allegedly shared among the co-conspirators. It is further alleged that the contracts were unlawfully secured with the assistance of public officials.

The implementation of some of the projects may also cause potential state security risks, as they could impact elections and democratic procedures, the EPPO said in a statement to the media.

According to Latvian Television, the criminal proceedings, launched and monitored by the EPPO and investigated by the State Police, focus on a procurement organized last year by the Digital Development Agency for consulting and quality monitoring services in software and documentation development, which resulted in the signing of a framework agreement with companies Agile & Co, Corporate Consulting, Ernst & Young Baltic and PricewaterhouseCoopers as the head of the supplier alliance.

Investigators believe that one of the central figures in the organized group is public procurement specialist Biders, who previously created procurement portal iepirkumiem.lv. He allegedly developed technical specifications of the procurement to ensure that they favored specific companies.

Liopa, as head of the agency organizing the procurement, met with the owners and representatives of the companies involved, including after he was suspended from his job, to agree on the division of responsibilities, Latvian Television said.

One of the winners of the procurement, Corporate Consulting, is a subsidiary of Ceruss's company, and he and the other members of the group may have agreed on the division of responsibilities, Latvian Television reported.

According to Latvian Television, investigators believe that the group also included IT specialist Ivars Sulcs, who is currently a member of Rigas Siltums heating utility's supervisory board, and that the following persons may have been involved in meetings with the group: Harijs Baranovs, head of IT Consulting Department at PricewaterhouseCoopers, Rudite Springe-Karnite, head of Ernst & Young Baltic's Technology and Cyber Governance Consulting Practice, and Aigars Staks, member of the board at Agile&Co Ltd.