2 Asian firms sue Jkuat over cancelled Sh1bn laptops contract

Two foreign companies and a local public university are embroiled in a dispute over a Sh1 billion contract to manufacture educational laptops and tablets.

VGTS Company Ltd of Hong Kong and MPGIO Ltd of Korea have sued to challenge the decision of the Jomo Kenyatta University of Agriculture and Technology (Jkuat) Industrial Park Ltd to cancel the contract that was negotiated in a Zoom meeting in October last year.

The companies were to supply 13,105 laptops and 8,280 tablets as semi-knocked-down (SKD) kits for local assembly in Kenya, court documents show.

Jkuat was to pay $200 for each tablet and $615 for each laptop or a total of $9,715,575 (Sh1 billion).

Draft contract

The companies aver that a draft contract was indeed issued on November 3, 2020 and signed before the expiry of the bid validity period.

They said that during the negotiations, Jkuat sought from them commercial and intellectual property information pertaining to the bid items, which included pictures of the SKDs and tablet covers with qwerty keyboards and a manufacturing and delivery schedule.

They said they gave out the confidential information in good faith, having been assured that a contract would be issued as their consortium was the successful bidder.

This kind of information, they said, is not ordinarily disclosed in the absence of a contractual relationship between parties.

But a day after signing the contract on November 4, 2020, Jkuat Industrial Park Ltd cancelled the contract, citing its inadequate budgetary allocations, material governance issues and unforeseeable circumstances.

Overturn Jkuat’s decision

The firms want the court to overturn Jkuat’s decision. Pending the determination of the case, they sought orders barring the university from re-advertising or awarding the procurement tender to another company.

The companies are worried that Jkuat Industrial Park may use the information and knowledge obtained from them to assemble the devices or engage another supplier.

But Justice James Makau has declined the request, saying there are other alternative remedies to the dispute.

“The respondent, being an educational institution, is required to ensure the supply of electronic devices such as laptops to Kenyan students at affordable prices,” he ruled.

“The mandate of the respondent is of great public interest and should not be sacrificed so as to protect the interest of a bidder who can always be compensated for any loss incurred as a consequence of its dalliance with the respondent.”

It was not in the public interest, he said, to stop any procurement Jkuat may want to commence regarding the educational devices.

But he noted that the companies have a right to protect whatever they gave to Jkuat on the understanding that they would be awarded the tender to supply the devices.

The companies argued that the cancellation violated Section 53(8) of the Public Procurement and Asset Disposal Act, 2015, which stipulates that an accounting officer should not initiate a procurement process without first securing or establishing the availability of the requisite funds.

Improper termination

They deem the university’s decision an improper termination of a procurement process.

But the university denies ever engaging the companies in any tendering process, whether via a restricted tender or a request for quotation.

Jkuat Industrial Park Ltd acting Managing Director Kibet Langat says the two companies are not on the list of their prequalified suppliers.

Dr Langat says the university only requested general information from VGTS and other international original device manufacturers with a view to forming a business partnership for the supply and delivery of semi-knocked-down devices for laptops and tablets for assembly in Kenya.

No confidential information of any commercial value was shared by the applicants during the meeting, he says. He also denies the companies’ claim that it agreed to issue a draft contract during the virtual meeting.

Virtual meeting

But Justice Makau has directed the Jkuat Industrial Park Ltd to furnish the companies with minutes of the virtual meeting held on October 29, 2020 to help them in prosecuting their petition.

“Jkuat Industrial Park Ltd cannot be allowed to hold onto the minutes on the ground of their sensitivity and confidentiality considering that the minutes are a record of the meeting between the parties. There is nothing unknown to the applicants (the two companies) in those minutes,” he said.

He also barred Jkuat Industrial Park Ltd from sharing, disseminating, circulating or disclosing to third parties or relying on the information obtained from the two companies in relation to semi-knocked down tablets and laptops.

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