Doing business with DFAT: A procurement process guide

Australia fell “under new management” in September 2013, when Tony Abbott was elected prime minister. Shortly after taking office, Abbott introduced changes to the Australian aid program — beginning with the integration of what was then the Australian Agency for International Development into the Department Foreign Affairs and Trade. Barely a year later, Minister for Foreign Affairs Julie Bishop introduced further reforms in the Australian aid program. Dubbed the “new aid paradigm,” the revised policy now sets performance benchmarks for the country’s implementing partners. Under the new scheme, DFAT intends to strengthen the “link between performance and funding” by planning to deliver value for money in at least 85 percent of its aid investments. Well-performing projects will be given additional financing through the Performance Incentive Fund, which will be rolled out in the 2015-16 financial year. But projects that don’t meet their development targets will be terminated if there are no improvements within a year. According to some of DFAT’s top contractors, this new aid structure offers both risks and opportunities. The new policy could increase transparency and accountability of the Australian aid program. It also allows implementing partners to become more engaged through a 140 million Australian dollar ($122 million) innovation hub. But startups and smaller organizations that lack institutional capacity might find it difficult to meet DFAT’s tighter appraisal criteria. Folding the country’s aid agency into the foreign affairs department necessitated changes in DFAT’s operations, however, including in the way it does business. For instance, the department had to carefully compare and consolidate AusAid’s procurement framework with its own, a process that has taken months to complete. The full procurement framework is still being finalized and is expected to be available this month, but the process remains largely the same. Tenders and bidding documents are published on the government’s official procurement website, AusTender. More importantly, under DFAT’s management, existing agreements with AusAID remain legally binding. The infographic below provides a basic guide to DFAT’s process for aid procurements. Check out more practical business and development advice online, and subscribe to Money Matters to receive the latest contract award and shortlist announcements, and procurement and fundraising news.