CANBERRA — The Aid Adviser Remuneration Framework has been a salary banding tool applied by the Australian Department of Foreign Affairs and Trade since 2011. But as of March 1, new contracts entered into with the Australian aid program will no longer include ARF clauses setting in stone contracting rates.
The decision from the Foreign Minister’s Office was made public on Feb. 20 and surprised both the International Development Contractors Community and DFAT staff who were anticipating changes to the existing framework rather that it removed entirely. ARF has been under review since 2017 — with expectation changes that would improve ARF, and supporting guidance.
“While the IDCC would have welcomed a substantially modified ARF, we cautiously favour its abolition over the prospect of maintaining the ARF in its current format,” IDCC said in a statement to Devex.
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The existing ARF has been in place since Jan. 1, 2016, establishing aid program pay rates for a range of services that help deliver development outcomes. But it has been steeping in controversy as the rates are lower than broader market rates for the same services — potentially dissuading experts from providing services to Australian aid partner countries.
“A rapid review of rates paid by government departments to consultants and contractors in non-aid related work demonstrates that the ARF rates are generally lower, and sometimes significantly lower,” IDCC said in a 2018 information brief. The ARF rates acted as a disincentive to potential advisors, particularly when we are recruiting for work in challenging environments such as Afghanistan or Papua New Guinea, the brief stated.
The ARF changes are aimed at improving diversification in the aid program and will be implemented with additional changes to contracts from March — clauses for diversity and inclusion as well as the Indigenous procurement policy can no longer be modified as part of contract negotiations to help draw new talent and ideas in supporting development outcomes.
Contracts engaged prior to March and extensions of those contracts will still be required to adhere to ARF rates, regardless of their expected end date.
Explaining the changes and potential causes of concern
Despite DFAT trying to diversify their development partners, contracting requirements include 10 or more years of experience with DFAT and within relevant sectors, as well as setting daily rates to work within the ARF guidelines. But these requirements mean DFAT has been missing out on a massive market of people who can add value to the aid program.
“The IDCC provided its views to DFAT on the ARF following wide consultation throughout the contracting community,” IDCC said in the statement.
“The IDCC noted that the ARF was unduly restrictive, with negative consequences in attracting women to work as advisers on overseas projects; attracting higher end specialists in some industries; and providing opportunities for smaller companies with specialist personnel,” according to IDCC.
Achieving value for money was a key reason for the implementation of ARF and will remain a primary consideration for all DFAT expenditure. But with the ARF changes, value for money may be achieved in different ways — including using a whole of government contracting panel arrangement that has established rates or comparing rates against like-countries. Other factors such as social impact and value to the Australian economy will also become increasingly important in determining which contractors provide the greatest value.
But there are concerns that the decision made could have negative consequences — including underpayment.
“The IDCC acknowledges that there were risks and unintended consequences with the ARF, and there will likely be a different set of risks and consequences going forward,” the IDCC statement said. “It will be important for DFAT to monitor and manage implementation of the new arrangements, especially to avoid inconsistencies between old and new contracts.”
Noting that there was no ARF in place prior to 2011, IDCC said it is confident that its industry will readily adapt to the new DFAT procurement process — minus ARF.
“The IDCC will be considering the impact of the change on our member organisations, and will be seeking further clarity from DFAT once we consult further with our members,” according to IDCC’s statement to Devex.
DFAT will be briefing development partners on ARF changes in Canberra on Feb. 26.