[kictanet] HP says laptop bid price changed to favour rival Olive

[S.M. Muraya]

What did Olive Telcom offer in terms of local assembly/support, maintenance
and connectivity?

http://www.businessdailyafrica.com/HP-says-tender-team-rigged-pricing-of-laptops-for-rival/-/539546/2210772/-/view/printVersion/-/4t0eatz/-/index.html

HP says laptop bid price changed to favour rival Olive

IN SUMMARY

  * HP says Olive Telecommunications had on December 13 quoted a price of
Sh23.1 billion as its final offer.

  * Computer maker also claims Olive and Haier are associates that should
not have been allowed to place separate bids.

  * The allegations add to the controversy that has stalked procurement of
laptops for primary schools.

Senior government officials colluded with executives of an Indian company
to inflate prices for the controversial laptops tender by as much as Sh1.4
billion after the final bids were made, it has emerged.

American computer maker Hewlett Packard (HP) says Olive Telecommunications
-- the Indian company that won the tender to supply the laptops -- had on
December 13 quoted a price of Sh23.1 billion ($268,899, 669) as its final
offer.

But Education secretary Jacob Kaimenyi later announced that Olive
Telecommunications had won the tender to supply the laptops at a price of
24.5 billion ($284,814,957) without reference to the alterations.

"It is clear from the foregoing that the procuring entity amended the total
price quoted by the successful bidder and which was read out at the opening
of BAFO (Best and Final Offer) and awarded it (Olive) the sum of
$15,914,288 (Sh1.4 billion) more than it had actually quoted," says HP in
documents filed Thursday before the Public Procurement Administrative
Review Board (PPARB).

HP also alleges that Olive and rival bidder Haier, which was among the
three shortlisted bidders for the supply of 1.3 million laptops, are
related companies that should never have been allowed to submit competing
bids meant to lock out rivals.

According to HP, the tender committee should have disqualified Olive and
Haier Group's applications on grounds that the two companies are related
and could not place separate bids.

"To the procuring entity's knowledge the said two companies had previously
entered into a joint venture to form Haier Telkom (India), a company that
is still active," says HP.

The allegations add to the controversy that has stalked procurement of
laptops for primary schools.

HP accuses the tender committee of colluding with Olive Communications to
undermine rival bidders.

The American firm claims that Ministry of Education officials allowed Olive
to submit an incomplete price list that left room for price manipulation
and enabled the Indian firm to overtake it [HP] as the lowest bidder.

In an application filed through Nairobi law firm Iseme Kamau and Maema
Advocates, HP says procurement of the laptops has been shrouded in secrecy
that has irredeemably compromised the award.

HP accuses the tender evaluation committee of disclosing the price quoted
by the bidders and in effect allowing price comparison and undercutting -- a
claim that if proved will cast doubt on the entire process.

The American company says it was the lowest bidder when the financial
offers were opened on December 6, having offered to supply the 1.28 million
laptops for Sh25 billion compared to Haier Electrical's Sh27.2 billion and
Olive Communications' Sh27.2 billion.

All prices were subject to further negotiations.

HP claims that the tender committee used every opportunity to release
confidential information in the bid documents to competing firms it says
were sister companies used to undercut its offer.

"Release of the said information created the very mischief sought to be
prevented by Section 44 of the (Public Procurement and disposal) Act," HP
says, adding that rival bidders used the unit prices to undercut the
applicant.

Meyrin Branch, who oversees HP's corporate accounts, says in an affidavit
that only his company's application should have been subjected to further
evaluation, including price negotiations, and that the tender committee
should only have engaged rival bidders in the event that the talks
collapsed.

Instead, the tender committee invited all bidders to price negotiations on
December 10 at Windsor Golf Club against HP's expectation.

The technology firm further says it was invited through a letter dated
December 6, but which was delivered on the morning of negotiations,
allowing them no time to prepare.

Each firm held separate negotiations with the tender committee during which
they were asked to reveal their BAFO.

"The mode of negotiation adopted made it very possible for information of a
particular bidder to be disclosed to others with the aim of sabotaging
certain bidders," says HP.

Ministry of Education officials are alleged to have failed to define the
scope of negotiations to participating bidders and instead confronted them
with questions at the meeting.

The tender committee is also accused of refusing to supply HP with the
minutes of the negotiations or even a summary of what transpired.

The information was needed for purposes of filing the appeal.

HP later learnt on December 13 that following the price negotiations, Olive
had dislodged it from top position with an offer of Sh23.1 billion, a
reduction of Sh4.1 billion from its initial offer of Sh27.2 billion.

The American computer maker was then left in the second lowest bidder's
position with a price of Sh24.8 billion while Haier was last with a final
offer of Sh25 billion.

"It was therefore surprising when on February 7, 2014... Prof Jacob
Kaimenyi announced that Olive Telecommunication had been awarded the tender
at Sh24.6 billion," says HP.

HP also claims that the committee declined to consider its offer to provide
value-added services to the tune of Sh4.4 billion free of charge.

It says the tender committee should have disqualified Olive and Haier
Group's application on grounds that the two companies are related and
should not have placed separate bids.

The details emerged even as the parliamentary committee investigating the
laptops for schools tender called on the government to suspend signing of
the contract.

The MPs argued that Olive is a small company that partnered with another
firm called CMC to tender for the laptop and that it is not an original
equipment manufacturer (OEM).

The MPs' claims give credence to HP's argument that the committee breached
one of the requirements that limited bidding to OEMs.

The parliamentary committee has accused Prof Kaimenyi of awarding the
tender even before the due diligence report on the winning company is
scrutinised.

MPs are expected to independently investigate the matter and produce a
report.

Ministry of Education officials are also accused of rejecting HP's bid for
the supply of projectors on grounds that it is not an OEM for projectors
even as it accepted Olive's bid for laptops.

"Since the requirement that bidders must be OEMs was specifically set out
in the tender documents, HP accepted the decision (to reject its bid for
projectors) and reasonably expected that similar criteria would be used in
respect of other bidders," HP says.

The government in October re-advertised for the supply of laptops, printers
and projectors to public schools in fulfilment of Jubilee alliance's
campaign manifesto.
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