School computer project tender raises more questions than answers

School Children using tablets. [PHOTOS: FILE/STANDARD]


NAIROBI, KENYA: The saga surrounding the Sh24 billion laptop computers project for schools is far from over, even after the Kenya Government awarded the tender to an India-based company last week.

Controversy continued simmering after Education Cabinet Secretary Prof Jacob Kaimenyi announced on Friday last week that the procurement process would continue.

That was despite loud protestations by interested parties and a section of MPs who questioned how the tender was awarded.

It has now emerged that the firm that won the tender is to be scrutinised further following allegations that important issues were overlooked in the process.

One of the issues being questioned is how the tender was awarded amid claims that the Ministry of Education is yet to establish Olive Telecommunications’ financial position and its credit worthiness.

It is also unclear if the firm has factories to manufacture the laptop computers as claimed in its application.

Another committee will now be dispatched to Olive Telecommunications’ headquarters in India and its plant in China this week to carry out a “proper” study.

Parliamentary Committee on Education member Jared Odhiambo Opiyo told The Standard on Sunday that the team would focus on evaluating the firm’s capacity to supply 1.2 million laptop computers, 20,627 projectors and 20,627 printers to Kenyan public primary schools.

“What we received on Tuesday last week from the due diligence team was not a report but a brief on what had transpired since the tender was announced,” said Mr Opiyo.

The Awendo MP said the way things were moving so fast indicated that something might be wrong somewhere.

“The Ministry of Education has never shared with the committee the laptop samples it intends to buy. We therefore cannot benchmark what we will receive against any other gadgets,” he said.

Other bidders for the tender were Haier, with its roots in China, which was ranked third in the tender after it quoted Sh24 billion.

United States’ Hewlett Packard (HP) was second with a bid price of Sh23 billion. Ironically, the bid prices margin was Sh1 billion between successive bidders.

But interestingly, the tender price for the winner has moved from the Sh21 billion quoted to Sh24 billion.

According to Mr Opiyo, the award was announced even before the education committee received and scrutinised the due diligence brief.

He said the committee had urged Education Cabinet Secretary Prof Jacob Kaimenyi to be cautious about the project due to the huge public interest.

“Based on these facts, we may recommend the cancellation of the tender,” he said.

On Thursday, HP appealed against the award of the tender at Public Procurement Oversight Authority (PPOA), arguing that the winner was not an original equipment manufacturer.

At 4pm on Friday, Haier also lodged an appeal against the decision.

“We filed our appeal after we realised that the process failed to meet the stated requirements in the tender. Hopefully, PPOA will scrutinise our papers and the award be given to the deserving supplier,” said Mohindra Amit of Haier.

The PPOA communications department confirmed it was in receipt of the two appeals, but would not disclose further details.

Consumer Federation of Kenya Secretary General Stephen Mutoro told The Standard on Sunday that if indeed due diligence was carried out on only one firm, then that amounted to single sourcing.

Mr Mutoro observes that the way the process was being conducted had many characteristics of a scandal in the making. “This is a serious project that lacks serious evaluation,” he said.

Propping up firm?

Investigations by The Standard on Sunday reveal that innumerable flaws and massive interests marred the tender although Prof Kaimenyi argues that the process to award the tender to Olive Telecommunications Ltd was transparent.

He told The Standard on Sunday that the tender was based on a specially permitted procurement procedure endorsed by PPOA.

Insiders say from the start, the Ministry of Education had been propping up one firm, despite questions being raised about its experience and capacity to implement the project that was the centrepiece of Jubilee government campaigns.

Technocrats tasked with conducting background checks on the bidders only focused on Olive Telecommunications, the firm that quoted the lowest price for the laptop computers.

Eyebrows were raised when officials who questioned the way the tendering was being conducted were dropped from the due diligence team.

A senior officer at the Attorney General’s office, who was on the team, for instance, was moved to another group inspecting the procurement of projectors. Sources say the woman was sidelined after she questioned how the process was being undertaken.

In a telephone interview, Prof Kaimenyi confirmed that the team had visited only the premises of Olive.

“The tender documentation stipulates that due diligence be carried out on the premises of the lowest bidder. It is an absolute fact,” he said.

However, this is a departure from his January briefing to the Parliamentary Committee on Education, where he had stated that evaluations would be done on the three firms.

Chairperson of the Parliamentary Committee on Education Sabina Chege told The Standard on Sunday that due diligence was to be carried out in the premises of the three bidders so as to make a fair judgement on which one to supply the gadgets.

“(If) the process was only done in one firm, then that means the ministry had already made up its mind on who to supply the laptops,” said Ms Chege.

The Public Procurement and Disposal Act says the procuring entity must evaluate and compare the responsive tenders other than tenders rejected under section 63 (3). It further states that the evaluation and comparison shall be done using the procedures and criteria set out in the tender documents and no other criteria shall be used.

According to the laptop computer tender project documents seen by The Standard on Sunday, a short-listed firm would not just be declared a winner simply because it is the lowest bidder.

It says the award would be given to the “most advantageous” bidder in accordance with the specially permitted procurement procedure as per Section 92 of the PPOA.

It defines “most advantageous” player as one with most benefits, in this case, experience, ability to set up a local assembly plant and financial stability.

Procurement experts say the process has been a flop and could open a floodgate of legal challenges that could derail the plan.

On January 4, a Mr Ajay Jain, the sales director from Olive pre-empted that the due diligence team would visit the company by writing an e-mail to five people in the firm, asking them to provide information on their Original Equipment Manufacturing agreement. “We need to sign and send the same before the delegation arrives. Please e-mail me and I will scan and e-mail you back,” Jain wrote to Sherry Chaung, Claudia Wang, Alex Liao and Betty Chang.

Mr Opiyo affirmed that the education committee was investigating claims that after Olive discovered that an assessment would be carried out in its premises, it rushed to enter into a partnership with a tablet manufacturer in China.

But the firm says it enjoys a wealth of experience in education solutions.

“The devices that we provide to the students and teachers in emerging markets are not only plain hardware but have our integrated technology platform for education,” said Arun Khanna, chairman of Olive Telecom in an email.

Linked to railway

Olive claims to have sold over 20 million devices in 30 countries and their key customers include Airtel, Tata Docomo, Bakrie Telecom, France Telecom and Safaricom.

“We want to confirm that Olive Telecom is an Original Equipment Manufacturer. Olive Group has shipped devices to more than 10 countries in Africa,” said Mr Khanna.

He said the firm has plans to set up a multi-million dollar assembly unit in Kenya to cater for the country and other African markets.

Reliable sources say the laptop tender saga has been ignited by a tug of war between influential businessmen in the country.

One of them, allegedly campaigning for Olive, has adversely been linked to the controversy surrounding the proposed standard gauge railway, while the other is involved in communication and manufacturing industries.

Coincidentally, Haier and Olive Telecommunications share some business history.

Investigations by The Standard on Sunday show that in 2006, the latter entered into a joint venture with Haier to form Haier Telecom India, whose mandate was to create leadership for the Haier brand in the CDMA handset — a technology that enables several transmitters to send information simultaneously over a single communication channel.

A press release of November 19, 2009, in the firm’s website indicates that Olive Telecommunication was an associate company of the Haier Group when the former handed over its creative and media duties of its convergence brand, Olive Convergence, to Contract and Motivator, respectively.

However, Mr Amit claims the relationship went bust after it was realised that Olive’s market strategy was leaning towards low-end production.