[kictanet] HP says laptop bid price changed to favour rival Olive Telcom: Cofek Perspective

Tue Feb 18 20:48:58 EAT 2014

Dear Mr Waithaka: 

Many thanks for your mail. We are keenly watching the unfolding scam in the
making. For now there is need to separate the belated matters of
value-addition with legal interventions. What you seem to be championing is
more of the (deliberately) missed sound public policy issue(s) - which the
ICTA and Konza Board, for instance, would have ably advised both ICT and
Education Secretaries to consider as specs before putting out the laptops
tender. Basic question, for instance, is who exactly generated the tender
ToR's and from what basis?  On the policy issues, of whether or not a local
assembly (like Nyayo Pioneer Car test case) would have worked on the laptops
- we are planning a public forum next month. We will invite listers. 

On the legal side, there are obviously a myriad procurement lapses and
related issues;  the carelessly negotiated kickbacks (>Sh1.4bn final offer
price variations) etc. The legal can be addressed at Procurement Appeals
Tribunal (our view is that sulking HP/Haier have a very weak case against
Olive Telecoms given the many ambiguities in the tender document) and/or at
the quality of delivery and products themselves. Both levels require solid
evidence and not imaginations/hearsays. Someone must, for instance,
demonstrate that both facts and spirit of the law were breached. With
fever-pitch high level political interest clouding the procurement, it will
take a while before some facts come out. Anyone with information with
evidence and/or useful information (not policy issues) can share with us in
confidence (even anonymously) at: hotline at cofek.co.ke 

Kind regards,

Japheth Ogutu

Program Officer

Consumers Federation of Kenya (COFEK)

Meky Place, Block F-45

Ngong Road/Ring Rd Kilimani Junction

P.O Box 28053-00200, City Square, NAIROBI, Kenya 

Tel. 254-20-2615496, 2300859 Fax. 254-20-3861719; Cell phones: 0715555550,
0770700007

E-mail: hotline at cofek.co.ke

Website: www.cofek.co.ke <http://www.cofek.co.ke/> 

Facebook: "Consumers Federation of Kenya (Cofek)" 

Twitter: @ConsumersKenya YouTube: "ConsumersKenya"

13th December 2012 -  President Kibaki assents to the Consumer Protection
Act, 2012 Read it here:
<http://www.cofek.co.ke/Consumers%20Protection%20Act%202012.pdf>
http://www.cofek.co.ke/Consumers%20Protection%20Act%202012.pdf

From: kictanet
[mailto:kictanet-bounces+hotline=cofek.co.ke at lists.kictanet.or.ke] On Behalf
Of Ngigi Waithaka
Sent: Tuesday, February 18, 2014 7:10 PM
To: The Consumers Federation of Kenya (Cofek)
Cc: KICTAnet ICT Policy Discussions
Subject: [***SPAM*** Score/Req: 05.20/5.0] Re: [kictanet] HP says laptop bid
price changed to favour rival Olive

Sometimes it beats me why such simple logic escapes all the Professors, Drs,
Masters, BSC's we have in that Ministry, and worse, the silence from
KICTAuthority is deafening...

Is Omtatah / COFEK anywhere in these forums? We should file a case in the
courts and say that we are not getting value for money and that those who
are responsible for giving the GoK sound advice have been compromised and
have abdicated their duties...

On Tue, Feb 18, 2014 at 6:45 PM, Kivuva <Kivuva at transworldafrica.com> wrote:

This has been debated before.

We all know the best way to go is setting a local manufacturing plant. And
this is what KICTANET and the taxpayers should be advocating for. Each year,
the taxpayer will be forking $268,899, 669 for standard 1 pupils. That is
not sustainable. In 10 years, $2.7 trillion will have been spent on cheap
plastics that we can develop locally and empower our youth, and keep local
dollar local.

The government should get more sensible on this. 

______________________
Mwendwa Kivuva, Nairobi, Kenya.
twitter.com/lordmwesh

google ID | Skype ID: lordmwesh

On 18 February 2014 07:00, Adam Nelson <adam at varud.com> wrote:

We're ignoring the elephant in the room.  Both vendor's laptops are going to
be garbage.

With that kind of budget, tablets are the only way to go.   Anyway, tablets
are so much more sensible from a pedagogical point of view as well as a
battery life (10 hours vs 1) and durability standpoint (you can drop a
tablet on a cement floor from 2 feet and the screen might crack but it can
be taped up and works fine).

Even Apple iPads are only $300 retail nowadays and surely the government
could get them for $200 or even $150 since Apple's CSR team would be all
over themselves to make the sale.  No ICT support would be required and
everything would 'just work' as long as the theft and breakage rate is kept
reasonable. 

If anybody in the government could do anything innovative with this thing,
it would catapult their career to the national and international stage.

--

Kili - Cloud for Africa:  <http://kili.io/> kili.io

Musings: <https://twitter.com/varud>  twitter.com/varud

More Musings: varud.com

About Adam:  <https://www.linkedin.com/in/adamcnelson>
www.linkedin.com/in/adamcnelson

On Tue, Feb 18, 2014 at 5:36 PM, Ngigi Waithaka <ngigi at at.co.ke> wrote:

If this line is true,

"...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...."

Then you know HP is being played for sucker, and I think they are....

The only option on the table, prepare themselves for a Judicial Review
(Takes about a year to conclude), PPARB decisions IMO are not based on
substance, and if they are, its of a different kind!

Waithaka Ngigi

On Tue, Feb 18, 2014 at 5:21 PM, S.M. Muraya <murigi.muraya at gmail.com>
wrote:

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-lap
tops-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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Regards,

Waithaka Ngigi

Chief Executive Officer | Alliance Technologies | MCK Nairobi Synod Building

T + 254 (0) 20 2333 471 |Office Mobile: +254 786 28 28 28 | M + 254 737 811
000

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KICTANetiquette : Adhere to the same standards of acceptable behaviors
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people and institutions interested and involved in ICT policy and
regulation. The network aims to act as a catalyst for reform in the ICT
sector in support of the national aim of ICT enabled growth and development.

KICTANetiquette : Adhere to the same standards of acceptable behaviors
online that you follow in real life: respect people's times and bandwidth,
share knowledge, don't flame or abuse or personalize, respect privacy, do
not spam, do not market your wares or qualifications.

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people and institutions interested and involved in ICT policy and
regulation. The network aims to act as a catalyst for reform in the ICT
sector in support of the national aim of ICT enabled growth and development.

KICTANetiquette : Adhere to the same standards of acceptable behaviors
online that you follow in real life: respect people's times and bandwidth,
share knowledge, don't flame or abuse or personalize, respect privacy, do
not spam, do not market your wares or qualifications.

-- 

Regards,

Waithaka Ngigi

Chief Executive Officer | Alliance Technologies | MCK Nairobi Synod Building

T + 254 (0) 20 2333 471 |Office Mobile: +254 786 28 28 28 | M + 254 737 811
000

www.at.co.ke

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