DFAT to trial new procurement method

CANBERRA — The Australian Department of Foreign Affairs and Trade will be trialing a new method of procurement over the next year, encouraging suppliers to respond to an expression of interest to help develop requests for services before they go to the market. The new process was announced Thursday at the Big Meet, the fourth annual DFAT aid supplier event, in Canberra. The event is a forum for DFAT to collaborate, engage, and network with current and future suppliers to the aid program, with the aim of finding the best solutions to support its work in lower-income countries. In addition to the new procurement process, updates were provided on opportunities supporting Australia’s “Pacific step-up” program, and DFAT highlighted its emerging needs for suppliers to deliver climate-friendly and resilient solutions — both in aid programs and everyday operations. We dig into those three key announcements: 1. A more flexible method of procurement The Scaling Frontier Innovation program, supported by DFAT through InnovationXchange, aims to help social enterprises scale their development impact in the Indo-Pacific region. As part of the program, four brokers are used to strengthen the financial ecosystem supporting social enterprises. Last year the opportunity to identify and engage brokers went to market initially as an expression of interest. Stephanie Kimber from InnovationXchange explained that as DFAT does not have deep expertise in financial transactions in capital markets and investment, it wants people with experience in the space to help identify the challenges that the request for proposal would target. “I had a pocket of money — not a huge amount — and being in the InnovationXchange meant that I had a bit of license to be creative and try something new,” Kimber said. “But I didn’t know what I wanted.” Inspired by USAID and its broad agency announcements, Kimber said DFAT put out a request to solicit ideas from the market to help shape the design. The expression of interest asked for a five-page proposal, and 31 responses were received. These were narrowed down to 18 with potential — with the applicants invited to a two-day co-creation workshop in Jakarta to help DFAT understand what the market barriers were for capital and investment supporting social enterprises, and to identify solutions. Understanding that the room was full of competitors, Kimber said an “excellent facilitator” helped keep the discussion moving. Consortia were developed in the room and the final tender financed four solutions, rather than one, to help trial and test them. The success of the process has inspired Simon Cann-Evans, director of the DFAT aid procurement team, to use a similar approach in as many requests for services to the market as possible. “We want to be more engaging,” he said. “By adopting a much more accessible approach to the market, and by doing a light expression of interest that asks really normal, human questions on how the organization is aligned to deliver results, it opens the door to a greater mix and innovation.” A two-step procurement process to encourage greater engagement with the market will be used in an upcoming tender for the Solomon Islands infrastructure program, which Cann-Evans said is to ensure DFAT is “not restricting ways to achieve outcomes.” A collaborative workshop working through ideas that are identified as having potential in this expression of interest will take place in January or February, with the invited participants then responding to a closed request for proposal. “Rather than giving strict guidelines on what needs to be delivered, we want to be saying there is more than one way of skinning a cat — and be open to those ideas,” Cann-Evans told Devex. He explained that there would be trial and error in this approach over the coming year as his team learns what works and what doesn’t, and adjusts the process accordingly. The aid procurement team would also be determining whether the new scheme is applicable to all approaches to market, but the sense from suppliers has been that it’s a welcomed approach. “We’ve been broadly building up to this conversation and we’ve been engaging with industry ... and the feedback has been that it is an approach that is receiving pretty unanimous support,” Cann-Evans said. 2. Call for climate expertise Australia’s aid policy is currently at the beginning of a refresh, and the ability to deliver climate capability is expected to be an important part of it. Mai Linh Huynh, DFAT’s sustainability and climate change branch, said that moves are already being made to improve capability within the aid program and DFAT more widely. “We have only just started, however what we do know is that climate change is an important and embedded issue of good development practice,” Huynh said. “It’s a cross-cutting issue that is relevant to all the policy sectoral areas across the whole aid program, as well as across all geographic areas.” An important part of this, she said, was suppliers demonstrating their capabilities to support DFAT. This meant bringing climate expertise, but also ensuring that reduced emissions, climate risk, and climate resilience were built into the project proposals of suppliers, as well as into their everyday operations. Huynh said the new Climate Change Action Strategy, released by DFAT on Nov. 1, was an important source of information for suppliers to understand the direction that DFAT is taking in aiming to embed climate considerations into all aspects of its work. DFAT would also be defining a baseline of knowledge that suppliers are expected to have to be able to support aid program objectives, including targets to monitor and assess progress in delivering on new climate objectives. 3. Business opportunities supporting the Pacific step-up Business opportunities supporting the Pacific step-up, including the delivery of the Australian Infrastructure Financing Facility for the Pacific, were an important part of the Big Meet discussions. Charlotte Blundell, assistant secretary of the program enabling and strategy branch for the Office of the Pacific, explained that the work of the Pacific step-up was focused on three pillars — security, creating and facilitating regional connections, and economic cooperation. Up to 15 new actions are being implemented, which began in July. To support the work that needs to be delivered, a new panel will be established for services providing construction and project management services — with the tender being released in late November and closing late January or early February. The panel will be used to deliver and support AIFFP projects, as well as by other areas of DFAT for broader construction and project management works, including the construction of new embassies. The panel will also be open to other Australian federal government agencies. Cherie Russell, director of AIFFP, explained the tender will have two components with suppliers able to bid for one or both. The first component focuses on project management, and the second on head contractors for construction work. Tenders will need to demonstrate capability in services supporting water, energy, telecommunications or transport, which are the key focus of AIFFP. “There will be an advantage for organizations that can deliver across all of the services,” Russell said. “What that means for smaller or more boutique firms is that the opportunity is at the subcontracting level. Our expectation is that over 50% of the work that goes through companies on the panel will be subcontracted.” These opportunities will be advertised through AusConnect. While AIFFP has a pipeline of projects waiting for approval, Russell said its commercial-in-confidence nature prevented this from being shared with applicants to shape whether applying to the panel would be worth the effort. But she advised that the past infrastructure panel had delivered approximately $170 million Australian dollars ($116 million) in contracts, which might guide tenderers in their decision to respond.