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

Wed Feb 19 10:48:51 EAT 2014

Muraya

I concur with your assertions. Knowledge Economy is good but for us to really get the true value of economic growth we must also learn to do. Your idea of mini-factories is already something that is proven and being done. For example in Israel the Kibbutz system has learnt that value addition is critical to improving their lot. They have mini-dairies, mini-food processing plants etc. This has grown their Agri-Business industry. 

Ali Hussein

+254 0770 906375 / 0713 601113

"I fear the day technology will surpass human interaction. The world will have a generation of idiots".  ~ Albert Einstein

Sent from my iPad

> On Feb 19, 2014, at 9:25 AM, "S.M. Muraya" <murigi.muraya at gmail.com> wrote:
> 
> If Asians listened to Western doubts about their prospects and potential, they would not have the manufacturing capabilities they do today.
> 
> China imports raw materials from Africa, and like them, we should not give our children a chance to learn to transform these into other products?
> 
> First we build labs (mini factories) then...
>> On Feb 19, 2014 9:00 AM, "Adam Nelson" <adam at varud.com> wrote:
>> Keep in mind though that supporting industry and helping kids with a final product are two independent things.  The more money that goes into spinning up a manufacturing capacity, the less money that goes into getting the technology to the kids.  Kenya can't magically produce laptops cheaper than China can.
>> 
>> Kenya has no chance of having a meaningful laptop assembly capacity because it doesn't have the economies of scale that South East Asia has.  Europe and the US are giving lots of technology to their children and none of that stuff is produced in-country because manufacturing plants can't exist in isolation.  
>> 
>> A laptop assembly plant is just one of dozens of plants (chemical manufacturing, plastic-shaping, aluminum foundries, LED, etc...) needed in close proximity to eachother just to create the first laptop.  Having a laptop assembly plant in Kenya and all the preceding plants stay in China isn't economically viable.  And also, if the plant is only creating a few million laptops, it's doubly not viable.  It has to produce more like 10M/year and in order to do that and so the plants would need to export those laptops.  Where are these laptops going to be exported to and how?  Is a typical Rwandan going to buy a Kenyan laptop over a Chinese one?  Maybe, just maybe, with a solid $5-$10B of pure investment Kenya could get a real industry going but then to what end?  Computer manufacturing has already plateaued (currently one computer produced for every 20 people each year) and it's agreed that future growth will happen in tablets and mobiles where most of the value is in commodities and intellectual property, not assembly line labor.  Tablet sales are already 60% of computer sales and the industry is seeing 50% YoY growth.
>> 
>> Kenya has all the raw ingredients to leapfrog manufacturing and go straight to a knowledge economy - it just needs to invest deeply in its children through strong, universal education.  Having young people working on assembly lines is not a way to empower youth.
>> 
>> 
>> 
>> --
>> Kili - Cloud for Africa: kili.io
>> Musings: twitter.com/varud
>> More Musings: varud.com
>> About Adam: www.linkedin.com/in/adamcnelson
>> 
>> 
>>> On Tue, Feb 18, 2014 at 10:12 PM, S.M. Muraya <murigi.muraya at gmail.com> wrote:
>>> They are taking electricity to thousands of schools to make this project work.
>>> 
>>> http://mobile.nation.co.ke/News/Electricity+and+stores+pledge+in+laptops+plan/-/1950946/1978754/-/format/xhtml/-/adm3ge/-/index.html
>>> 
>>> Have noted in the past, the ecosystem effects are significant, even if the laptops fail to increase interactive learning.
>>> 
>>> The power of Go.Ke to demand electronic assembling plants has also significantly increased.
>>> 
>>> Regards
>>> 
>>> Murigi / Stanley Muraya
>>> 
>>> "Better a patient person than a warrior, one with self-control than one who takes a city." Prov 16:32
>>> 
>>> 
>>>> On Tue, Feb 18, 2014 at 8:24 PM, Sean Moroney <seanm at aitecafrica.com> wrote:
>>>> Here, here, Adam.
>>>> 
>>>>  
>>>> 
>>>> The entire project is garbage, from beginning to end, but unfortunately rational thought and action are not given priority in politics.
>>>> 
>>>>  
>>>> 
>>>> Imagine what could have been achieved if the laptop budget had been allocated to capacity building for teachers, and developing secure solar-powered computer labs for all school years to use.
>>>> 
>>>>  
>>>> 
>>>> Sean Moroney
>>>> Chairman
>>>> AITEC Africa
>>>> seanm at aitecafrica.com
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>>>> 
>>>> From: kictanet [mailto:kictanet-bounces+seanm=aitecafrica.com at lists.kictanet.or.ke] On Behalf Of Adam Nelson
>>>> Sent: 18 February 2014 15:00
>>>> To: Sean Moroney
>>>> Cc: KICTAnet ICT Policy Discussions
>>>> Subject: Re: [kictanet] HP says laptop bid price changed to favour rival Olive
>>>> 
>>>>  
>>>> 
>>>> 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: kili.io
>>>> 
>>>> Musings: twitter.com/varud
>>>> 
>>>> More Musings: varud.com
>>>> 
>>>> About Adam: 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-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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>>>> 
>>>> 
>>>> 
>>>> --
>>>> 
>>>> 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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>>>> The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform for 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.
>>>> 
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