DfID Procurement Process Now Tougher, More Competitive

In the first six months of the U.K.‘s new coalition government, the country’s direction on international development funding has been made crystal clear. “Value for money,” a watchword carried over from the Conservative Party manifesto, has been trumpeted at every opportunity by ministers and officials, together with an emphasis on greater transparency and accountability. >> Nick Clegg, Andrew Mitchell Unveil DfID Aid Priorities This month will see the first concrete evidence of how these policies will affect the non-governmental sector, as the first round of major funding decisions are finalized and a new fund, tightly targeted toward the attainment of the Millennium Development Goals, is opened for bids. It is already clear that future funding will involve higher levels of competition and the closer monitoring of results than NGOs have been used to. Bids from outside the U.K. will be more actively encouraged. The Department for International Development distributed almost 600 million pounds in grants to NGOs and other civil society organizations worldwide in the year that ended in April, according to the latest published figures. That represents some 15 percent of the U.K. government’s total 4 billion pound commitment to bilateral development aid. Those grants are administered both through DfID’s country offices in the developing world and through its central offices in London and East Kilbride, Scotland. More than 360 million pounds went to U.K.-based NGOs in 2009-2010, including for emergency humanitarian work. >> DfID Outlines Reforms to Encourage Private Sector-led Development “Results, delivery and value for money” In charge of the 240 million pounds central budget is Roy Trivedy, head of DfID’s civil society department, who joined DfID in 2000 after working for more than 20 years with a number of NGOs in India and with Save the Children and Oxfam in Africa. He served as a conflict adviser in Africa, a program manager for Central Asia, South Caucasus and Moldova, and the head of DfID’s Tanzania office before taking up his current job. “Results and delivery and value for money – these are the priorities of the new government,” Trivedy told Devex. “These things have to be there in all funding bids.” >> Andrew Mitchell: UK Aid Funding to Focus on ‘Value for Money’ >> A Conversation With Andrew Mitchell on UK Aid Reform The biggest part of his budget, at almost 130 million pounds last year, goes through Program Partnership Arrangements. The latest round of these is currently out to competitive tender. These three-to-four year deals currently support 29 U.K.-based organizations: from Oxfam getting 27.8 million pounds for 2008-2011 to the Ethical Trading Initiative, an alliance of companies, trade unions and voluntary organizations that is receiving 1.6 million pounds for the same period. These amounts are subject to an annual audit, but allow organizations a lot of flexibility over how they deliver against mutually agreed targets. Established 10 years ago, PPAs have so far mostly backed the U.K.’s best-known NGOs. But This could be about change. More intense competition When the bidding process for this round was opened in July, PPAs were opened up for worldwide competition. The result: More than 400 initial “concept notes” from various groups were submitted. These were narrowed down to about 70 organizations, which have now submitted full proposals. The first successful bids are expected to be announced this month. This is not the only change to the PPAs that has been made. “This round is more competitive with a tighter set of criteria,” Trivedy said. “There is also the issue of leadership roles, where an organization will have to show that it is not only good at delivering, but that it also plays a role in improving work in that whole sector.” >> Former Auditor to Lead DfID’s New Aid Impact Commission >> UK Names Aid Watchdog Chief The competitive element will also continue after a bid is won, with monitoring and evaluation taking place against a much tighter set of criteria, with rewards for the better performers. “If after year one or year two we find that an organization is not performing well, and if it is unable to improve, then we will stop funding it and move the funds to a better-performing organization,” Trivedy said. >> UK Axes Ugandan Aid over Commonwealth Funding Misuse Massive changes in the offing Similar themes appear strongly in the conditions for the brand-new Global Poverty Action Fund, which was launched with initial funding of 40 million pounds. The first deadline for bids is December 14. >> UK Launches Global Poverty Action Fund An “innovation window” accounts for 10 percent of this fund, where DfID will pay 100 percent of grants up to 250,000 pounds to NGOs with new ideas for reducing poverty around the globe. The remaining 36 million pounds will be distributed under the “impact window” for specific projects in grants of up to 4 million pounds. These, for the first time, will be subject to demands for “matched funding,” where DfID will only pay a maximum of 75 percent for any approved proposal linked to helping to realize one of the MDGs. “Take for example the MDG on girls’ education, which is massively offtrack. Our idea is that we will support particular interventions that will change that,” Trivedy said. “We will provide up to 75 percent, requiring an organization to provide a minimum of 25 percent from their own resources.” The competitive element comes in where an organization can provide more than that, in which case it will have a higher chance of success. This would include a situation where a grant is used to leverage additional funding from different sources, further reducing the proportion of the total provided by DfID. It will also extend to comparing the costs of different organizations at delivering similar services. “If, for example, Sightsavers are offering to carry out eye operations, we would be asking how much it would cost and how that compares with competitor organizations,” said Trivedy, referring to a charity which works to eliminate avoidable blindness and promote equality of opportunity for disabled people in the developing world. “We’ll be asking: Might we be better to do that through another organization?” How was money handled in the past? So, is the implication of these reforms that there was not “value for money” in the way that funds were allocated in the past? “The question would be: Did you have the proof that it was value for money?” Trivedy said diplomatically. “Sometimes some of that evidence was not there in the past.” One major change has been over the issue of transparency and the introduction of a UKaid Transparency Guarantee, where all of DfID grants will be recorded on its website, he said. All recipients will be asked to sign up for this commitment and make the information available on their own websites. >> DfID Seeks Suggestions for Implementing Aid Transparency Initiative But doesn’t all of this involve a bigger workload for NGOs, whose time might be better spent on delivering services? Not according to the latest DfID thinking. “We strongly believe that having more transparency produces better value for money, higher standards and better delivery,” said Trivedy. The next few weeks could illustrate just what this will require from NGOs – and who will be the winners and the losers under this new regime. Read more DfID business news: - DfID Aid Reviews: Winners and Losers - Andrew Mitchell: UK Aid Funding to Focus on ‘Value for Money’ Read more international development business news.