Believe in contracts

Two years ago, U.S. Secretary of State Hillary Clinton caused a stir when, during a speech in Washington, she indicated that the administration was eager to rein in large contractors. It’s a theme that has persisted ever since.

And over the past year, AusAID has been overhauling its procurement after needling criticism of the amount it spends on consulting fees.

Development contracting has got a bad rep around the world over the past few years.

But is it deserved? The argument has been so one-sided recently that it’s hard to tell, even from within the industry. Has AusAID been paying its contractors too much? Are USAID contractors wasting money abroad? In our news coverage here at Devex, we’ve struggled at times to look past the rhetoric and get to the bottom of it all.

Just last week, we reported about an op-ed in Politico written by James R. Petersen, a former senior auditor for the U.S. Office of the Special Inspector General for Afghanistan Reconstruction, who suggested that as much as 90 percent of aid money to Afghanistan is being wasted. I suspect few in the international development community would agree with such a stark figure, but who is making the counterargument?

The nonprofit community has been much better over the years in deflecting criticism and refocusing the debate on its social mission.

“Interfacing is part of their DNA,” Betsy Bassan, president and CEO of the Panagora Group, said about NGOs at a Society for International Development event in Washington on Friday (Jan. 13) that showcased the new Coalition of International Development Companies.

But contractors have learned from the NGO community, and — at least in the United States — they are ramping up efforts to convince lawmakers and the public of their value for money.

At the center of the U.S. campaign are institutions such as the U.S. Global Leadership Coalition and the Professional Services Council’s international development task force, as well as the CIDC, launched last June as an independent body within PSC.

The creation of CIDC could be seen as a “maturation” of the for-profit aid community, Bassan suggested last week. CIDC’s goal is to educate — and to draw a line between development contractors on one side and defense and security contractors on the other.

“We realized it was easy to lump us in with companies that, while in federal contracting, are actually not at all like us - the big IT companies, the defense companies, the security companies,” Bassan said. “This chatter was not so new, as much as it was increasingly loud, and increasingly influencing policy in ways we felt were not beneficial to the future of development.”

Development contractors represent 40 percent of USAID business, and a similar share of other donors’. So what should the for-profit community’s message be?

Bassan put it this way: “Contracts are amazing platforms for catalyzing innovation, providing transparent and accountable results, and for lowering costs through competition.”

In Australia, a series of articles (some in the Murdoch-owned tabloid The Advertiser), used lucrative AusAID consulting contracts to generate attention-getting headlines, some of which we repeated in our own news coverage. But closer examination suggests there’s a strong counterargument that could be made along the lines CIDC makes, if only contractors and their allies made it.

Clearly there’s a role for all implementing partners, whether private or nonprofit. At Friday’s event, Paul O’Brien gave an NGO perspective on CIDC’s cause.

“I don’t think it’s smart to spend much time defending the industry,” said O’Brien, who serves as Oxfam America’s vice president for policy and advocacy. “I think it’s smart to spend time defending the ideas and be willing to let the wheat separate from the chaff as you do so. And for that, you’re going to have to have ideas, and then you’re going to have an investment in getting them into the right forms in the right ways.”

Earlier in the week, I spoke with Charito Kruvant, CEO of Creative Associates International, one of CIDC’s founding partners. I asked Kruvant, who also serves as CIDC’s chairperson, whether contractors deserve the bad press they’ve received lately.

She said: “I’ve lived in places in the world where the rule of law was always subverted, and you could never really believe in contracts. All of a sudden, to believe that the word contract is bad — I have difficulty to do that.”

“We’re all implementers,” Kruvant continued. “Whenever we did something wrong, we spoke up and things changed. But also, we shouldn’t feel bad about who we are and what we do.”

Read last week’s Development Buzz.