Estonia, Financial Services, Legislation, Technology

"Implementation of the SKAIS2 project has been difficult, and it makes sense to end cooperation on the current basis. As a result of intense negotiations, we arrived at an outcome that allows us to do it," Ain Aaviksoo, deputy secretary general of the Ministry of Social Affairs for the development of e-services and innovation, said in an announcement published on the ministry's website.

"The work done so far will serve as basis for developing the information system further -- the Social Insurance Board is paying all social benefits and the new maintenance allowance on the basis of the SKAIS2 information system," Aaviksoo said.

Tieto Estonia will have paid the state 450,000 euros when the compromise steps into force, made up of a payment of 270,000 euros to be executed when the compromise takes effect and a payment of 180,000 euros made in December 2016.

After the signing of the compromise Tieto Estonia will still perform critical works worth 124,476 euros that are necessary to ensure the payment of benefits and allowances and will ensure maintenance of the software during the next 12 months.

Initially, the Ministry of Social Affairs sought a fine of 855,000 euros from Tieto.

"Concluding a rational compromise is the best solution for all parties to SKAIS2. Under the agreement signed on Friday, Tieto Estonia will continue doing maintenance work and critical developments of SKAIS2. The state will be able to continue developing the system on a new basis," Tieto Estonia manager Anneli Heinsoo said.

The Social Insurance Board decided in August to terminate an agreement on the development of information systems for the Social Insurance Board concluded with Tieto several years ago on the grounds that deadlines are not met and there are many errors. Tieto has received 5.2 million euros under the agreement from Estonia so far.

The Ministry of Social Affairs is planning to announce new tenders under the services modernization project which, apart from IT developments, is aimed at making processes within the Social Insurance Board more effective. The total value of the new tender is 10 million euros.

Development of the new information system started in collaboration between the IT companies Tieto and Icefire in 2014. From the end of 2015 onwards the developer was Tieto Estonia.

Executives at Tieto have said the repeated delays can be ascribed both to the changes in the legislation that have taken place in recent years and the teams that have been working on the project.