The Treasury and the procurement oversight authority approved a contract that tied the Agriculture ministry to a three-year deal for the supply of fertiliser worth Sh6 billion.
Acting Agriculture Cabinet Secretary Adan Mohammed and Principal Secretary Sicily Kariuki said the ministry also found it easier to have the National Cereals and Produce Board (NCPB) provide insurance of the fertiliser while in transit.
“We did consult the Treasury, the Public Procurement Oversight Authority on the legality and the value for this,” said Ms Kariuki told MPs Thursday.
She cited sections of the Public Procurement and Disposal Act that allow for consumables that will be frequently required to be procured on that kind of contract.
Ms Kariuki said this would also allow the ministry to negotiate the prices based on formulas and to ensure that Kenya gets the best deal available for the farm input.
Mr Mohammed said it is not unusual to enter into long-term contracts as long as certain aspects are not locked in, which would be detrimental to the government’s interests.
Ms Kariuki said they agreed to get the three-year deal after learning from experience.
“Even when that money was gotten from the Treasury on an ad hoc basis, there were delays everytime, that when the procurement started and the fertiliser was imported and delivered, the season would be long gone.”
She said they had computed and found that it would take between four to seven months to complete the procurement so they figured it would be best to have certainty on when the fertiliser would be delivered.
NCPB was also found to have been experienced in handling the insurance for fertiliser, said Ms Kariuki, and they thus saved the government Sh200 million. She cited a case where it claimed Sh166 million from an insurance firm.
“On the face of it, I would confidently say we have gotten value for money by these savings,” she added.