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Shady tender deal

by Lesotho Times
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MASERU — The government is set to award a multimillion maloti contract to a German company to supply Basotho with electronic passports without going through an open tender process, the Lesotho Times can reveal.

The secret tendering, in which only five companies which were headhunted by top officials in the home affairs ministry submitted their bids, was closed on Tuesday morning and the bids were opened around 12 noon on the same day.

There are already concerns in the home affairs ministry why a selective tender process for such a national project was undertaken.

In a selective tender, officials approach specific companies of their choice and invite them to submit bids.

This is unlike an open tender process in which all interested companies that believe they can do the job are allowed to submit their bids.

A selective tender is open to manipulation and corruption because its process is not open.

Only interested officials have the power to decide who to invite to tender.

It is understood that the Ministry of Home Affairs’ current process has already excluded a number of heavy-weight international companies with vast experience in the e-passport trade who would have ordinarily tendered if they had been given an opportunity to do so.

The end result, according to highly placed sources, is the potential prejudice to Basotho taxpayers, due to lack of competition in the tender process. 

This paper has evidence that five companies from Germany, Israel, France and Malaysia submitted their tenders for the e-passport system on Tuesday.

Two of the companies are from Germany.

Germany’s Giesecke & Devrient (G&D), which last year won a contract to make 600 000 e-passport booklets for Botswana, is already understood to be leading the race for the multimillion Maloti contract in Lesotho.

G&D’s biggest customer is Austria where it has supplied more than 8 million chip modules for e-passports.

It has also provided Haitians with 1.5 million passports.

Macedonia, Turkmenistan and Latvia are also G&D’s clients.

The company is however well known for printing currencies, a business in which it claims to have 150 years of experience.

It is the same company that provided banknotes for Zimbabwe at a time when that country’s inflation was so high that one needed more than Z$20 billion to buy a loaf of bread.

Mϋhlbauer Group, a German company which is currently producing South African passports, is also in the running.

Founded by Josef Mϋhlbauer, a renowned security expert, the company controversially won an R692 million contract to supply Identification Cards (IDs) to Uganda.

Investigations have revealed that the Mϋhlbauer Group’s contract did not follow Uganda’s tender and procurement laws.

There were no competitive bids.

Mϋhlbauer Group is currently involved in a legal dispute over the contract.

Last year the company also won a secret tender to supply South Africa’s new passports.

Investigations have revealed that home affairs officials first approached a Malaysian company called Iris Technologies (M) Snd Bhd, which designed and developed Malaysia’s smart passport technology in 1998.

Unconfirmed reports this week said some home affairs officials recently visited the company in Malaysia.

Nikuv International Projects Ltd, an Israeli company, is also understood to have tendered.

FCO, a French company which has been providing passports to Basotho for the past few years, has also submitted a bid although allegations that its current product is easy to forge might have put paid to its chances.

This paper has confirmed that soon after the selective bids were submitted a team of home affairs ministry officials immediately flew out of the country headed for Botswana, where G&D is already providing e-passports.

The assistant home affairs minister Lineo Molise-Mabusela, principal secretary Rets’elisitsoe Khetsi and director of passport services Sello Mokoena were in Botswana this week. 

However, Deputy Prime Minister Lesao Lehohla who is also Home Affairs Minister, said the three officials were in Botswana on a fact-finding mission after that country introduced electronic passports earlier last year.

He however categorically denied that there had been a selective tender process for the companies to supply e-passports.

“There has never been any tendering for the job,” Lehohla said.

“The only thing I can tell you is that some companies sent their people here with their briefcases and they demonstrated how they could solve our passport problem,” he said.

On three occasions the deputy prime minister insisted that there had not been any tender for the job.

When the Lesotho Times put it to him that the deadline for submission of the bids was on Tuesday, Lehohla said: “As I have told you, these people came here to introduce their businesses to us after they heard that we had passport problems.”

“They are business people and they just came here uninvited,” he added.

However, the Lesotho Times has documentary evidence showing that there has been a selective tender.

That tender was closed on Tuesday morning despite concerns that the process is deeply flawed.

A document from the Ministry of Home Affairs indeed confirms the selective nature of the current process.

“Suppliers should submit both technical and financial proposals in one original and six copies (proposal should be in both hard copy and soft copy),” said the invitation given to the favoured five companies.

The document also says the supplier “shall provide the infrastructure in the new production centre”.

It also says the supplier should be able to provide training procedure, warrantee period and roll-out procedure.

The invitation said the supplier must be able to provide 200 000 e-passport booklets that carry “biodata, photo and finger prints”.

That information will be on a chip that will be in the booklet. 

The headhunted bidders were also told that the ministry needed to have live data capture, not less than 500 DPI finger capture and a signature pad on the e-passport.

There should also be the ability to view data and confirm it accurately, the list of specification said.

The selected bidders were told in the invitation document that there were approximately 5 000 passport applications per month countrywide.

Their proposal was supposed to provide printing solution and back-up solution.

The border control system should be able to link to the e-passport production centre for Lesotho citizens, the tender document said.

It also said the border control system should be able to connect to the international police system and it should have machine readable device.

“(The system) should have an automatic gate for authentication both for leaving the country and coming back,” the invitation document said.

The government’s decision to go for e-passports came amid concerns by other countries about how easy it was to forge the current Lesotho passport.

Services at the passport department have also been generally awful with citizens unable to access visas within a reasonable amount of time. 

For the past 10 years passport offices were marked by long queues of unsatisfied and complaining people who have not received their passports despite having applied for them for years.

There are nearly 200 000 Basotho waiting for their passports.

Lesotho’s passports have also come under the spotlight because they are easy to forge.

In 2009 the United Kingdom instituted visa restrictions on Lesotho because its passport was being abused by criminals abroad.

While the movement to e-passport is a noble decision, what worries some people is the manner in which the tender is being awarded.

They are worried that such a contract for a key national project is being awarded through a private tender, a process that is known worldwide for being susceptible to manipulation and corruption.

Aware of these dangers, the government of Lesotho issued new tender regulations in 2007.

The Public Procurement Regulations of 2007 provide that in a selective tender all firms with the required capacities should be invited.

“In carrying out a limited tender, the unit shall simultaneously send an invitation to tender to all firms with capacity to form the contract and thereby providing an equal opportunity to submit a tender,” the regulations state.

The regulations also explicitly state that limited tendering can be made only “where the number of bodies capable of executing complicated goods, works or services requiring high qualifications, expertise, equipment and technology is limited.” 

The selective tendering can also be made “where the requirement can only be secured from the single source” perhaps “due to ownership of exclusive design rights or patents”.

There is no evidence that the five companies headhunted by the home affairs ministry to tender feature in the requirements stipulated in the procurement regulations.

There is also no evidence to suggest that they are the best.

There are hundreds of companies that are capable of making internationally acceptable e-passports.

In fact some of the largest and more experienced in the business have been excluded in this process.

The tender for the National Identification documents which is funded by the Millennium Challenge Account went through an open tender process.

So have other national contracts.

Efforts to contact Molise-Mabusela, Khetsi and Mokoena were not successful.

An official with an American based company, who did not want his name or that of his company published, said his company only heard of the tender “through the grapevine”.

“We smell something fishy here. If the process goes ahead and a contract is awarded under these dark circumstances, we will make an outcry and ask our government to reconsider its aid programmes to Lesotho”.

Police commissioner Malejaka Letooane is in trouble with the law after she controversially awarded a tender to an American firm to supply uniforms to the police.

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