Bigger EU contracts to tackle big #globaldev challenges

Development issues are increasingly caught up in a web of crosscutting global themes. For the European Union, this will affect the way its programs are being set up: larger programs and less room for smaller, individual contracts. Under President Jean-Claude Juncker, the new European Commission — the EU’s executive arm — is reshaping its working methods by coordinating, clustering and cross-pollinating the activities of its commissioners. EuropeAid, the commission’s international cooperation and development department, is no stranger to this approach and has been advocating for policy coherence across departments for some time. The new commission structure has brought with it the formation of a number of cluster groups. Neven Mimica, the commission's development chief is now part of the Commissioners’ Group on External Action, under High Representative and Vice President Federica Mogherini, together with Christos Stylianides, the commission's humanitarian aid chief, and their colleagues for European neighborhood, trade, migration and home affairs; climate action and energy; and transport policies. EuropeAid Deputy Director-General Marcus Cornaro told Devex in an exclusive interview that “the magnitude and the complexity of the issues call for stronger European responses, which go beyond a bundle of stand-alone measures by EU member states or U.N. agencies.” He confirmed that EuropeAid is now increasingly in demand to federate these larger responses, thanks to the convening power of Brussels and its ability to pool a “larger spectrum of analysis and response capacity.” Even some of the larger EU member states that are usually “quite skeptical” of Brussels' methods have come to appreciate the way EuropeAid is running themes, conferences and joint responses, Cornaro confirmed. From the outset, the commission’s external action group shaped itself as an open-ended, subject-driven group, not a portfolio-driven group. The new work model is also affecting the design of the EU’s development programs. For example, a migration project in the Sahel region would now potentially be much more accessible to policymakers who look at migration as an issue within Europe, so that they can use these experiences in designing their own programs. Larger, crosscutting programs This will lead to larger programs and broader decision-making, Cornaro said. “But that’s something we very much appreciate,” the deputy director-general stressed. “The broader policy approach will challenge little project niches that are nicely rolled over from one year to another, from one to the other small call for proposals, under everyone’s radar.” With some 15,000 contracts on the books topping 10 billion euros ($11.41 billion), EuropeAid still expects that there will be enough room for smaller partner organizations to be involved. Smaller contracts, however, would be bundled, Cornaro confirmed. Instead of issuing small calls and individual contract decisions as in the past, smaller activities would be launched in a larger, more wide-ranging setting, under the contracting authority of a larger consortium of operators. These could then be subgranted by the consortium, instead of being individually contract-managed by the commission. The practice of grouping together in a consortium is already familiar to consultants and commercial firms vying for tenders from the commission through Framework Contracts. But they too have sensed EuropeAid’s push toward larger crosscutting programs. “Contracts are being established for a longer period of time, while at the same time the scope of work is becoming more complex, covering an increasing number of themes," Gregory Whye, who heads the Brussels office of Austrian consultancy Human Dynamics, told Devex. Whye expects that this could become a problem for smaller firms that focus on specific sectors. In the future, he said, they will need to find a “safe haven” for their work within a consortium. Fierce competition Antoine Rivet, managing director of the German development consultancy firm GOPA, sees new opportunities now that the commission is approaching projects in a different way. But it also signals a shift in the way organizations such as his are working. “The main drawback is that the competition will become even more fierce,” he noted. “Applying for such a large contract will require either that companies grow to enable them to cope with the volume, or that enormous consortia are built.” Rutger-Jan Schoen of Span, a consultancy in the Netherlands, who has worked on commission projects for many years, agrees. “The big programs are getting bigger, and it’s getting harder for the smaller firms to join in.” Moreover, the dynamics of working with the European Union has changed during the past decade, following the enlargement process that saw 13 new member states join the bloc, bringing the total number to 28. This has seen consultancies from these countries brought into the fray, putting pressure on tariffs and making competition for contracts an even tougher proposition. Fundamental transformation For implementing nongovernmental organizations, the move toward bigger contracts and increased cooperation through consortia will represent a much more fundamental transformation. “The discussion has been going on for some time, and now we see that there is a shift in aid modalities,” said Alexandra Makaroff, who heads Plan’s EU office. Indeed, the change is already noticeable under EuropeAid’s thematic program for Civil Society Organizations and Local Authorities. Of the CSO-LA’s budget of 1.91 billion euros ($2.18 billion) for the period 2014-2020, the biggest part — some 65 to 75 percent — is dispensed following calls for proposals at country level by EU delegations to help CSOs and LAs contribute to governance and accountability. Devex has learned that the commission has assured partners and participants that these local calls for proposals will continue to be the main aid modality. But at the same time, the CSO-LA program also allows for broader regional or thematic alliances among implementers, which will sign a framework partnership agreement to this effect — a method that EuropeAid is very keen to push forward. Bigger projects will lead to bigger budgets, allowing actors to pool resources and reduce transaction costs, one well-placed commission source told Devex. “This is in line with the agenda on aid effectiveness that was agreed at the high level forums in Rome, Paris, Accra and Busan: doing more with less and avoiding fragmentation,” the source added. Moreover, the commission hopes that forming broader alliances under an FPA will provide added value by building partnerships with other stakeholders such as U.N. organizations and the private sector. From theory to practice To date, the new approach with NGOs has not yet been tested on the ground. The first five FPAs under the CSO-LA program were signed in late January, with five organizations representing cities and regional and local governments. NGOs expect, however, that EuropeAid will also move to introduce crosscutting programs via FPAs in another, much larger thematic program: the Global Public Goods and Challenges instrument, which was created in 2014 to replaced four earlier thematic programs. The new program has about 5 billion euros to spend in 2014-2020. The GPGC’s five “flagship themes” — environment and climate change, food security and sustainable agriculture, human development (including health, education, gender, youth, employment, jobs and culture), sustainable energy, and migration and asylum — will allow for overarching multistakeholder projects that can bind actors together under an FPA. The commission source acknowledged that not all implementing NGOs are pleased with the new trend. In the older and bigger EU member states, well-established NGOs are used to working on large-scale projects and will have less difficulty adapting to the new setup. But in the EU’s newer member states — the so-called EU-13 — NGO networks are still relatively small and developing. “For them, it was always easier to work with smaller grants. They will have to team up with larger organizations,” the source noted. Tackling the new strategy People In Need, an aid NGO from the Czech Republic that works in crisis and development areas across the globe, is one of the newer players confronted with EuropeAid’s new strategy. “We are aware of the discussion, and we have experienced the move towards larger contracts,” Jan Mrkvička, director of PIN’s relief and development department, told Devex. “It’s not a major threat for us, but we realize that we must adjust our way of working and thinking.” Mrkvička is taking up the challenge in two ways. First, by joining forces with other aid NGOs, including Alliance 2015, a strategic network of eight European NGOs that works to reach the Millennium Development Goals. And secondly, by being recognized as offering added value. “We try to include a unique innovative approach in our work, for instance in Cambodia, where we developed a mobile phone health SMS system for pregnant mothers,” Mrkvička said. Overall, Plan’s Makaroff is quite positive about the EuropeAid’s push toward bigger contracts that bring together more partners. “If you work on a larger scale for a longer period of time, you will achieve more impact than with a small project where you can assist 10 communities for a few years without knowing whether there will be a lasting and sustainable effect after you leave,” she said. But while the principle is broadly welcomed, the devil may lie in the implementation. To date, there are no clear criteria on how organizations will be selected to join a consortium, or how to determine the various roles within such a grouping. Subgranting by consortium members may also prove to be a challenge. The commission sees advantages in a system whereby NGOs provide financial support to third parties within the framework of a program. This could make it possible to include smaller program elements that would otherwise fall outside the scope of an FPA: They would be funded with small grants that could reach grass-roots organizations by using simplified application procedures. In addition, aid actors would be able to respond in a more agile and timely way to meet local needs. But this would leave the lead NGOs to carry the administrative burden of overseeing subparts of the program. Moreover, they would have to shoulder the financial risks as well. Large established aid organizations would be able to cope with this, but what about smaller NGOs? Furthermore, an NGO morphing into a donor would affect relations with local partners, Makaroff said. “Presently, we are considered as equal partners, but there could be a change in the dynamic,” she said. “Will they work with us because of a shared vision and cause? Or because we will be delivering the money?” How will the EU’s move toward larger programs and less room for smaller, individual contracts impact development implementers? Have your say by leaving a comment below. Check out more insights and analysis for global development leaders like you, and sign up as an Executive Member to receive the information you need for your organization to thrive.