IMSS to tender IT contracts for US$150mn in 2004

Mexico's social security agency IMSS plans to tender software and IT services contracts worth at least US$80mn and hardware contracts for US$70mn in 2004, according to IMSS technological development director Luis Miguel Chong. "It is a major economic injection for the local market. However, we are still very far from [addressing all the needs] of the IMSS, which is an organization with a US$17bn budget and 400,000 employees," Chong told BNamericas at the sidelines of a press conference celebrating the launch of local system integrator Empeiria on Thursday. "We had a technology lag for budgetary reasons, and we are only recently going to the market to address this problem," he said, adding the agency plans to spend US$400mn on software, hardware and IT services between 2003 and 2004. This year IMSS plans to purchase US$70mn in software and services, for which contracts of US$50mn has already been awarded. The balance will be tendered in two contracts, one for the development of an information system linking 250 hospitals nationwide and the other for a budgeting system, Chong said. The tenders will be put out to bid in September and the contracts awarded before the end of November. In the area of hardware IMSS has budgeted US$75mn for procurement, of which bids for US$50mn have been received, he added. Mexico's IT association Amiti has identified public sector procurement as having the potential to drive growth in the local software industry. Until only recently, federal agencies developed their own software in-house, to the detriment of private sector business. IMSS alone employed at its peak 1,200 people dedicated to software development. According to Chong, the agency's goal is to cut in-house development from 80% of software needs in 2000 to around 30%. While operating system contracts will go to world-class software firms like SAP (NYSE: SAP) and Oracle (Nasdaq: ORCL), the IT needs of government agencies are such that there is plenty of room for domestic firms to compete. In fact, the administration of President Vicente Fox has mandated that starting next year 10% of government purchases go to small- and medium-sized enterprises, rising to 30% by the end of 2006. The economy ministry has identified at least 500 local software and IT firms eligible to bid for federal contracts, according to the ministry's director of domestic trade and IT initiatives Sergio Carrera Riva. In the case of the IMSS, Chong expected 40-45% of this year's software and hardware spending would go to local companies.