Leading USAID contractor unveils new subcontracting mechanism

Jean Bernard Chassagne, the second mayor of Port-au-Prince, with a group of local residents, prepare to clear rubble in the aftermath of the January 12, 2010 earthquake in Haiti. DAI launched the Haiti Recovery Iniative, a project funded by the U.S. Agency for International Development, to help bring stability to the quake-ravaged country. Photo by: DAI

For small businesses, securing subcontracting work in the international development industry can be challenging. It involves bidding to join a prime contractor’s consortium – a process that can take months – and at times, even associating with the winning prime contractor does not guarantee work.

Now, one of the U.S. Agency for International Development’s largest contractors has launched a new initiative to address these challenges, and at the same time expand its supplier base beyond partners that are part of the consultancy’s pre-bid consortia.

DAI is creating a new subcontracting mechanism that it says would allow small businesses to find guaranteed work opportunities under its USAID-funded projects. The Maryland-based company is currently managing more than 60 USAID projects in several developing countries.

DAI describes its Competitive Subcontracting Mechanism as an easy way for small businesses to join the company’s implementation team. At the same time, this mechanism is expected to boost the firm’s competitiveness as a project implementer.

How the subcontracting mechanism works

Small businesses that register with DAI would be eligible to bid for cost-plus-fixed-fee, fixed-price work and goods orders as part of the consulting company’s USAID-funded operations. The company implements projects in a wide array of sectors, so subcontracts could provide anything from office equipment to translation and research services.

The new mechanism is not designed to replace the pre-award procurement process that DAI uses to put together consortia of subcontractors before bidding for USAID projects, according to Zan Northrip, DAI’s managing director for economic growth. Rather, it is an additional opportunity for small businesses to bid on work orders after DAI has won a contract, he said.

Work orders available under the mechanism are “real-time” opportunities, meaning they will be implemented within as little as 60 days from the submission of a competitive proposal, Val Bloomberg, director of procurement and subcontracts at DAI, told Devex. This gives small businesses a higher level of certainty when it comes to bidding for a subcontract because the work they are applying for is defined and the time frame is more specific, he added.

The development of the mechanism is in line with DAI’s campaign to widen its engagement with small businesses, said Steven O’Connor, DAI’s director of communications.

At the same time, the mechanism is expected to boost DAI’s competitiveness as a project implementer by expanding and diversifying the company’s global supplier base. This will allow DAI to offer more responsive and tailored approaches to its clients’ needs and requirements.

“We will be able to use the mechanism to provide the skills and capabilities our clients are looking for very close to the actual time that those skills and capabilities are needed, rather than trying to prejudge a year or more beforehand who might be the finest person or company for the job,” Northrip said.

Contractors are often forced to look into the original consortium they bring into the bidding process to identify an urgently needed subcontractor for an assignment even if that organization was not the best possible choice, he said, explaining that project scope and requirements usually evolve through the length of a donor’s procurement process. The new mechanism, Northrip said, will give DAI better means of responding in such situations.

Bloomberg added that while it is not unusual for contractors to want to develop their supply base, other USAID prime contractors have yet to “go down this path.”

Joining the mechanism

The mechanism is open to U.S. and international small businesses interested in USAID projects. DAI said it is especially looking for nonprofit organizations, veteran- or service-disabled veteran-owned organizations, women-owned firms, educational institutions and foreign government agencies as well as businesses enrolled under the U.S. government’s Historically Underutilized Business Zones program. It likewise welcomes subcontractors that have worked or are working with DAI.

Organizations interested in signing up for the mechanism need to accomplish and submit a supplier information form to subcontracts@dai.com. Additional information can be found in DAI’s request for information.

DAI will screen companies according to their financial capacity to shoulder certain upfront contract costs, their experience in project management, and the extent of their technical capacity.

DAI will keep requirements at a minimum because it wants to engage as many subcontractors as possible, Bloomberg said.

DAI did not give a time frame on when it will announce the companies that have made it into the mechanism. The company will determine its next steps based on the volume of interest and response to the call for registration, said Brad Longman, a DAI subcontracts negotiator.

Subcontracting and non-donor tenders can now be posted on devex.com. For questions and submissions, please contact Devex Director of Member Services Jamie Bay.

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About the author

  • Ivy Mungcal

    As former senior staff writer, Ivy Mungcal contributed to several Devex publications. Her focus is on breaking news, and in particular on global aid reform and trends in the United States, Europe, the Caribbean, and the Americas. Before joining Devex in 2009, Ivy produced specialized content for U.S. and U.K.-based business websites.