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Board cancels Sh24.6b school laptop tender awarded to Indian firm

By By Augustine Oduor and Kurian Musa | Published Wed, March 12th 2014 at 00:00, Updated March 12th 2014 at 08:00 GMT +3
Public Procurement and Administrative Review Board meeting Tuesday in Nairobi. [PHOTO: BEVERLYNE MUSILI/STANDARD]

By Augustine Oduor and Kurian Musa

Kenya: The Sh24.6 billion laptops tender for Standard One pupils — which is at the heart of President Kenyattas’s pre-election pledge — has been cancelled after an appeals board found the award to an Indian firm questionable.

The jolt to the programme Jubilee administration wanted rolled out in the first year could be considered unsettling to the Uhuru team because it was supposed to have been rolled out in the first year of office by the team that took over last year April 9.

The Public Procurement Administrative Review Board ruled that Olive Telecommunications Pvt Limited did not win the tender fairly as the probe unearthed irregular dealings and found the Indian firm was favoured.

Olive, which was awarded the tender by the Ministry of Education, Science and Technology, does not have the financial capability to supply the 1.2 million gadgets.

The board said the annual turnover of the firm between 2010 and 2012 was between Sh6 million and Sh768 million, which was below the Sh8 billion minimum required for supply of the gadgets.

The board also found that Olive received preferential treatment. Information on feedback on the progress of tendering was not the same to all bidders as Olive obtained more detailed information.

Jubilee manifesto

It was also determined that the committee that awarded the tender to Olive did not consider the fact that the last quotations had been altered from the initial asking price, contrary to the Procurement Act.

The Board also found out that Olive was not in a joint venture with another Chinese firm, as they submitted to the review board.

“There was no joint venture document supplied to the board,” said the procurement watchdog.

In their surprise verdict affecting a tender at the heart of the president and Jubilee manifesto, the board asked the Ministry of Education to undertake fresh retendering and complete the entire process within a period of 45 days.

 The review board, however, said the tendering process must not start afresh but from the Best And Final Offer (Bafo) stage.  “The only parties that shall be allowed to participate further in the process shall be HP and Haier Electrical Appliances,” said Josephine Wambua Mong’are, chairperson of the board, shutting the door against Olive.

‘The tender committee is directed to proceed with the tender process from the point of opening of the best and final offers and thereafter conduct due diligence in accordance with the criteria set under clauses 34.2, 34.3 and 34.4 of tender document,’ reads the board’s ruling.

In addition to this, the board has directed that the “procuring entity shall deduct any sum wrongly added on to the contract sum for any of the two parties best and final offers deducted.”

Olive had quoted Sh1.4 billion over and above their original price. This means that the laptops tender award will not go beyond Sh23.2 billion in the next tender award.

Even then, Olive will be locked out of the entire process once it resumes. The board however absolved any of the firms from a financial burden. Ms Mong’are said the first determination of the board was to ascertain whether it had jurisdiction to determine review of the tender.

She said one of the complaints lodged by Chinese firm, Haier Electrical Appliances Corporation Limited and Hewlett-Packard (HP) Limited from Europe was whether Olive met the financial, technical and production capabilities to deliver the equipment.

Ms Mong’are said the financial requirements were audited balance sheets, financial statements and soundness of the bidders.

Level of evaluation

She also said the firm was to “demonstrate access to availability to financial resources such as liquid assets and accompanied real assets and other financial means other than any contractual advance payment.”

She noted: “The firm was also to have experience of supply in three contracts in at least five past years with an average value of Sh500 million successfully and substantially completed.” The review board also said that Olive was not an original equipment manufacturer (OEM) and was not qualified to bid. It also said Olive did not tender as a joint venture as earlier indicated. The Indian firm indicated that it had partnered with another to supply, install and maintain the laptops through the existing networks. The board said Olive should have not been allowed to move to the next level of evaluation after it submitted its bid as a joint venture while this was contrary.

Evidence before the board showed that the procurement committee of the Education ministry awarded the tender to Olive in contravention of the ITT requirements.

It further noted that Olive does not have a distribution network of its own and intended to supply the 1.2 million laptops through “an non-existent-partnership” with a company that manufactures computers. Knut Secretary General Wilson Sossion said teachers are not bothered by the manner in which the laptops are sent to children.  “There is a general excitement over the project. If they cannot send the laptops by end of this month then let them use that money to pay teachers because they are already teaching the pupils.”