Education secretary Jacob Kaimenyi (centre) with principal secretaries Colleta Suda (left) and Belio Kipsang’ during a press briefing on the schools laptops project tender in Nairobi in October last year. FILE
What you need to know:
Procurement war erupts as Ministry of Education picks Indian marketing company for the Sh17 billion job.
It has emerged that the company that topped the list of firms that passed the first round of evaluation did not meet the basic tender rules.
Olive Telecommunications, an Indian marketing firm, was picked alongside renowned global computer manufacturers Hewlett Packard (HP) and Haier.
President Uhuru Kenyatta’s flagship computer for schools project has run into strong procurement headwinds after the Ministry of Education picked an Indian company for the multi-billion-shilling job contrary to the rules it published last year.
It has emerged that the company that topped the list of firms that passed the first round of evaluation did not meet the basic tender rules that restricted the bidding to companies that manufacture devices.
Olive Telecommunications, an Indian marketing firm, was picked alongside renowned global computer manufacturers Hewlett Packard (HP) and Haier.
Olive, which beat the field of competitors with a Sh22 billion bid, is not a device manufacturer, a key requirement in the revised laptop tender that was floated in November last year.
US computer giant Hewlett Packard with a Sh23 billion bid was second, while Chinese firm Haier Electricals Appliances Corporation was third with a Sh24 billion quotation.
In an advertisement published in the media last year, the government had restricted the Sh17.5 billion tender to device manufacturers, technically referred to as Original Equipment Manufacturers (OEM).
The listing of Olive, an Indian trading company, as one of the top bidders has therefore raised serious process questions that are only expected to deepen in the coming weeks.
The Jubilee government is seeking to buy 1.28 million laptops for each Standard One pupil as part of the pledge it made to the electorate during last year’s polls.
Olive Telecommunications uses Chinese contract manufacturers to make electronic devices, including tablets and smartphones that are branded ‘Olive’ or names of its customers such as mobile telecoms carriers.
Keen followers of the tendering process say Olive, which reaches its global clientele through a website, amended the communications on its webpage to include computers after it was shortlisted by the Kenyan authorities for the laptop project.
Bid documents show that Olive had initially listed Chinese firm New Century Optronics — a manufacturer of LCD TV and LCD monitors as its principal partner.
But the Indian firm appears to have realised that New Century lacks experience in tablet or laptop assembly and was last week frantically shopping for a new device maker to partner with as a team of Kenyan officials prepared to leave for a factory visit in China.
“Could you share with me your standard one-page ODM and OEM agreement for contract manufacturing? We need to sign and send the same before the delegation arrives,” Ajay Jain, the sales director at Olive, wrote to a device manufacturer last week in an email seen by the Business Daily.
This indicates that Olive does not qualify as an OEM and should thus not have participated in the multi-billion shilling tender.
“Only Original Equipment Manufacturers (OEM) may participate in the tendering,” reads one of the rules in the laptops tender meant to lock out brokers from the deal.
A team of eight persons from the Ministry of Education is currently in China undertaking due diligence on Olive, which claims it has assembly lines in India and China.
Olive had formed a joint venture with Telkom Kenya in the first round of tendering with a Sh32 billion bid. Telkom Kenya said it selected Olive as its partner after confirming that the Indian firm had the capability to supply the devices.
The transparency of the tender process has also come into question after Ministry of Education officials opened HP and Haier’s bids containing the pricing and value added offers but did not do the same for Olive.
Haier has subsequently fired a letter to the Ministry of Education, accusing it of not making public Olive’s value added offers such as transport and training that were needed to determine the true cost of the devices.
“During the negotiation held on December 10 it was made clear to all bidders that all free or value additions were to be compiled in an annex and given values. These values were then to be considered in the total costing of ownership,” said a senior Haier official in response to our questions on the matter.
“We humbly request that you provide us with details of how this is/has been done and what the total cost of ownership is per unit for each bidder,” Haier said in a letter to the ministry.
Rising questions on the integrity of the tendering process are the latest setback to hit President Kenyatta’s flagship education project that suffered a false start last year.
The laptop deal first ran into headwinds after all bidders quoted more than triple the initial Sh9.7 billion budget set aside for buying the computers, forcing the government to cancel the deal and advertise afresh.
The list of procurement battles facing the Jubilee administration includes deputy president William Ruto’s leasing of a luxury jet mid last year and the planned additional works at his official Karen residence.
The Business Daily has since established that Intel, the US chip maker, is a minority shareholder in the Indian IT company.
“In 2008 Intel Capital made an investment in an online education company Vriti Infocom which offered a testing and assessment platform for the education space. Olive acquired Vriti in 2013 and as a result Intel Capital is a minority shareholder in Olive,” said Danie Steyn, Intel general manager in charge of East Africa.
Mr Steyn could, however, not point out any large-scale education projects similar to the Kenyan laptop programme that Olive has undertaken.
“Olive would be best placed to respond to this question directly,” he said. Neither Olive nor Ministry of Education had replied to our queries by time of going to press.
American IT firm HP was the lowest bidder in the first tender with a bid of Sh28.7 billion while Shen Zhen Auto Digital quoted Sh30.3 billion and Mastec placed two bids quoting Sh32.6 billion in one and Sh31.3 billion.
The decision to lock out brokers and IT firms that outsource laptop production was meant to help bring down the prices of the gadgets.
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