China firms fight over security system tender

Rival Chinese technology companies, ZTE Corporation and Huawei Technologies, are locked in a two-pronged court battle over the control of a multi-billion-shilling tender to supply police with a communication and surveillance system.

The tender relates to the supply, installation, testing and commissioning of equipment for the National Police Service.

Referred to as the National Surveillance, Communication, Command and Control Systems, the tender was advertised by the Ministry for Provincial Administration and Internal Security.

The protracted court dispute pitting the two firms, the Public Procurement Administrative Review Board and the provincial administration, and the Internal Security ministry, has assumed a new dimension after Head of Public Service Francis Kimemia claimed to have canceled the tender.

Huawei claims ZTE won the tender despite having a higher bid and offering inferior technology.

However, in an advertisement in the local print media on Friday, ZTE dismissed Huawei’s allegations saying the solutions it is offering are based on third generation (3G ) technology that can be evolved to 4G.

In the advert, the giant state-controlled corporation also denied claims of exaggerating costs, arguing that the quotation was calculated according to the actual requirements of the tender.

Flawed tendering

Through lawyer Donald Kipkorir, ZTE now wants Mr Kimemia to be cited for contempt for interfering with a dispute before the courts after he instructed Internal Security PS Mutea Iringo to halt the project over alleged flawed tendering and spiralling costs that shot up from an estimated Sh7-10 billion to Sh18 billion.

“The process was conducted unprofessionally, and there are allegations that the tenderers influenced the evaluation by bribing some officials who received varying amounts of kickbacks to influence preferred outcomes,” said Mr Kimemia in a communication to Mr Iringo.

In the letter, which was copied to Treasury Permanent Secretary Joseph Kinyua and Internal Security minister Katoo ole Metito, the Civil Service boss explained that the government cannot afford to fund the project in view of other commitments occasioned by devolution, the General Election, rising wages and other State priorities before and after the polls.

Huawei had also asked for a review of the decision to award the contract to ZTE, but the procurement board dismissed the application on January 14 and directed that the procurement process should proceed.
Consequently, the technology company obtained a court order barring the Internal Security ministry from signing the deal with ZTE until its application was heard and determined.

Jeopardise procurement

The court ordered the review appeal be heard afresh on Wednesday (February 27).

But in a countersuit, ZTE sought for an earlier hearing date arguing time was of the essence to avoid jeopardising the procurement process.

“The tender that gave rise to the whole procuring process is for the benefit of the general public as the surveillance system is intended to boost security within the nation,” says ZTE in its application.

ZTE further argues that the court proceedings arising from the tendering process are intended to frustrate the procurement and implementation of the contract.

The National Surveillance, Communication, Command and Control Systems is supposed to be implemented under the Ministry of Internal Security but the winning contractor would be expected to be on a build, operate and transfer contract.