Olive’s school laptops tender is revoked by appeals board
A tech-savvy class in Thika. Appeals board Tuesday ruled that Olive had no capacity to supply the 1.3 million laptops at a cost of Sh24.5 billion. Photo/Salaton Njau
What you need to know:
Appeals board allows the buying of computers to go on with HP and China’s Haier as the only contenders.
Olive Telecommunications, the Indian marketing firm that the Ministry of Education awarded the contract to supply the 1.28 million laptops for schools, was Tueday thrown out of contention for the job, putting its rivals on the path to winning the multi-billion-shilling job.
The Public Procurement Administrative Review Board (PPARB) revoked the award of the Sh24.5 billion laptop purchase tender to Olive and directed the tender committee to complete the procurement process with only Hewlett Packard (HP) or Haier Group in contention.
The review team, whose powers are quasi-judicial, found that Olive was not an Original Equipment Manufacturer (OEM) – a requirement for the award of the contract – and did not meet the requirement that the bidders be companies with a turnover of Sh8 billion.
It also emerged that senior government officials inflated prices for the controversial laptops tender by as much as Sh1.4 billion after the final bids were made.
“The requests for review of the tender by the first and second applicant (HP and Haier) are hereby allowed,” the review board ruled, even as it directed the Ministry of Education’s tender committee to do due diligence on the two petitioners according to the provisions of the procurement act.
HP had in an application filed through the Nairobi law firm, Iseme Kamau and Maema Advocates told the review board that the procurement of the laptops was shrouded in secrecy that irredeemably compromised the award.
HP said Olive had on December 13 quoted a price of Sh23.1 billion ($268,899,669) as its final offer and accused senior government officials of colluding with Olive executives to inflate tender prices by as much as Sh1.4 billion after the final bids were made.
The Indian company had on December 13 quoted a price of Sh23.1 billion ($268,899,669) as its final offer but was awarded the tender at a price of Sh24.5 billion ($284,814,957).
Education secretary Jacob Kaimenyi while announcing Olive as the winner of the contract said the Indian firm had made the cheapest offer, beating its rivals to the job.
The ruling affirms investigations by Business Daily which exclusively reported that the laptops tendering process was fatally flawed and was not above board.
The PPARB on Tuesday ruled that Olive had no capacity to supply the 1.3 million laptops at a cost of Sh24.5 billion.
HP said 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’s Sh27.2 billion. All prices were subject to further negotiations.
But HP said it later learnt on December 13 that following 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 position with a price of Sh24.8 billion while Haier was last with a final offer of Sh25 billion.
HP’s lawyer Kamau Karori said Tueday’s ruling leaves his client as lowest bidder, meaning the procuring entity must give it top priority and only consider Haier after it fails to agree as per the provisions of the Procurement Act.
Direct beneficiary
This makes HP the direct beneficiary of the decision and the favourite to clinch the tender. The board directed the tender committee to finalise the contract in the next 45 days.
The latest findings confirm a recent study by PricewaterhouseCoopers (PwC) that tendering fraud has overtaken bribery and corruption to become Kenya’s fastest-growing economic crime.
Cancellation of the laptops tender now leaves President Kenyatta with yet another procurement headache after the controversy that followed the award of the Mombasa-Malaba standard gauge railway contract to a Chinese firm.
Powerful cartels
Mr Kenyatta has personally admitted to the existence of powerful cartels in government that are helping shadowy contractors clinch State tenders.
PwC said in a report published last month that one in every three Kenyan business leaders had reported procurement-related fraud in the past two years, making it the most common type of economic crime in the country.
Four out of every 10 Kenyan CEOs or 36 per cent said they had been asked to pay bribes to win a tender or get business.
Bid documents seen by Business Daily showed that Olive had initially listed Chinese firm New Century Optronics — a manufacturer of LCD TV and LCD monitors — as its principal partner but later changed tact.
The board said there was no evidence that Olive had partnered with any company in a similar project and ruled that it is not an OEM.
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