DfID guidelines: Focus on control, compliance could squeeze smaller contractors

By Jenny Lei Ravelo 04 November 2013

One of the first issues Justine Greening tackled when she took over the U.K. Department for International Development was the agency's relationship with contractors and consultants. Photo by: / CC BY-NC-ND

One of the first issues Justine Greening tackled when she took over the U.K. Department for International Development was the agency’s relationship with contractors and consultants.

In September 2012, Greening announced an internal and independent review of the agency’s spending on technical experts. The review was prompted by questions — many of which were asked by the conservative British media — about the millions of taxpayer pounds spent on advisers each year. A month later, the international development secretary ordered that she must review and approve all contracts worth more than 1 million pounds ($1.6 million).

In January, the agency published a document with five new guidelines for contractors:

  1. Improve value for money.
  2. Act with professionalism and integrity.
  3. Deliver transparency.
  4. Be accountable.
  5. Align contract work with DfID’s international development goals.

Of these goals, the one that raised more eyebrows among contractors was value for money, and, in particular, the recommendation to “actively reduce costs through the life of the contract.”

Squeeze

U.K. aid watchdog Independent Commission for Aid Impact released in May its own independent review of DfID’s use of contractors, giving the agency a positive score, but pointed out weaknesses in the procurement and management processes.

The internal spending review DfID carried out, meanwhile, was never made public — a decision that many continue to question to this day.

According to Devex sources, the internal review led to policy changes that will affect the way DfID does business. Specifically, the rules could make it more difficult for smaller firms and local organizations to comply with bidding and procurement regulations and thus compete fairly for projects.

This theory is supported by the fact that the changes were initially made known to only 12 of the agency’s leading contractors, leaving the rest out of the loop.

Asked about why the agency didn’t inform other parties, at least in the beginning, DfID sources confirmed to Devex: “This tough new approach is about ensuring the very best value for taxpayers’ money. We prioritised DfID’s top suppliers first, since these cover a large proportion of our spend.”

They also said the total value of contracts awarded last year to the top 12 suppliers was 215 million pounds, 44 percent of the total contract value awarded in 2012.

Delays

One DfID partner contractor who spoke on condition of anonymity expressed concern that the ageny’s new requirements for contractors — in particular Greening’s stamp of approval for contracts worth more than 1 million pounds — could lead to delays.

The partner also raised questions over a section of the guidelines that instructs suppliers to actively seek to “reduce costs through the life of the contract,” indicating that such a vague clause cannot and should not be applied to all contracts and projects.

DfID sources explained that signing up was not compulsory, but it “could be something taken into consideration when we’re in the pre-qualification part of the tendering process, when we’re considering doing business with them in the future.”

According to the agency, its 12 leading suppliers — along with more than 300 smaller firms — have consented to the new guidelines. DfID also stated that at least 70 contracts worth more than 1 million pounds had been approved as of early July “with no unreasonable delay.”

“Contracts are submitted weekly. The process allows for a period of time from the point of submission for ministers to undertake the review and ask any questions. The general guidance period we advise for planning purposes is a four-week review period, but there is no real norm as projects … are very specific and individual and vary greatly in cost, complexity, risk, etc., which affects the time taken to review them,” sources from the British aid agency noted.

Any procurement delays, DfID argued, have been “due to projects requiring further review to ensure value for money is being achieved, thus demonstrating the benefit of the control.”

Value for money

The agency stressed that the new controls have provided significant lessons learned and “strengthened the focus and understanding of value for money of the project and supplier proposals. It also claimed the changes are supporting better project planning, with regular dialogue taking place during the process with the suppliers to ensure understanding and status.

Specifically, DfID cites improved project planning through a more rigorous controls process, and greater transparency and breakdown of costs from suppliers.

“This tough new approach is about ensuring the very best value for taxpayers’ money,” DfID sources explained, but it remains unclear if contractors feel the same way.

Several of the agency’s implementing partners contacted for their viewpoint on the new guidelines declined to comment.

Delta Partnership, a small consultancy firm with offices in the United Kingdom and Uganda, told Devex that the changes have not yet directly affected their work. However, the firm did express frustration over how DfID contracts now appear to flow only to the big fish.

“It is frustrating for relatively small firms that a high proportion of DfID contracts are now going through large firm led consortia,” Bridget Petty, Delta business development coordinator, said.

“We are not convinced that this offers greater value for money for DfID, as it restricts competition and access to the comparative advantages of smaller firms who are often squeezed out of the consortia.”

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About the author

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Jenny Lei Ravelo@JennyLeiRavelo

Jenny Lei Ravelo is a Devex senior reporter based in Manila. Since 2011, she has covered a wide range of development and humanitarian aid issues, from leadership and policy changes at DfID to the logistical and security impediments faced by international and local aid responders in disaster-prone and conflict-affected countries in Africa and Asia. Her interests include global health and the analysis of aid challenges and trends in sub-Saharan Africa.


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