Takeaways from the 2018 Aid Supplier Conference

CANBERRA — The second annual Aid Supplier Conference in Canberra, Australia, on Feb. 15, provided an opportunity for Australian aid suppliers to engage directly with the Department of Foreign Affairs and Trade, learning about new business opportunities and internal changes that will impact partner organizations. The importance of private sector partners to Australia’s aid program, engaged through competitive tender processes, was highlighted by the Senator Concetta Fierravanti-Wells, the minister for international development and the Pacific. “Around 18 percent of the Australia’s development assistance is delivered through commercial contracts,” she said in her opening remarks. Australia’s aid budget is $3.9 billion Australian dollars ($3.1 billion), with more than AU$700 million of business opportunities annually. And Devex was at the conference on the day to provide the key takeaways. Key changes for suppliers to note There will be a number of continuing barriers in which the Australian aid program and its suppliers will be required to work — including budgetary requirements, with numerous DFAT speakers not expecting additional funds to be available any time soon. “We have to make the most with what we have got,” said James Gilling, first assistant secretary with DFAT’s Contracting and Aid Management Division. But there are also changes being implemented aimed at improving awareness of business opportunities, competition for tenders and impact to Australian businesses. A new supplier engagement team, to be created within the Contracting Services Branch, will aim to improve outreach with suppliers — including NGOs — and visibility of opportunities. A reformed Aid Adviser Remuneration Framework will be implemented, seeing changes made to policies and procedures used to determine the payment provided to commercially contracted services in the aid program. Standing offers, or panels, for the aid program will be assessed over the coming year to determine whether another panel arrangement will be implemented to engage aid suppliers or other options — including DFAT or whole-of-government panels — be used. A new request for tender, or RFT, response template will be available from March 2018, with a key goal of reducing barriers to and cost of tendering to make tendering a more competitive process. The new template will enable consistency in responses and will also build upon tendering reforms DFAT has implemented — including requiring respondents to show how they provide opportunities to women, culturally and linguistically diverse groups, people with disabilities, as well as value to the Australian economy. And RFT responses are expected to demonstrate how their business and proposed solution engages Indigenous Australian businesses, as the Australian aid program aims to increase opportunities under the Indigenous Procurement Policy. Tenders will be marked on engagement with Indigenous Australian businesses The Indigenous Procurement Policy was launched in 2015 to encourage Australia’s federal government agencies to stimulate and grow the Indigenous business sector. For the 2016-17 financial year, DFAT awarded 116 contracts to Indigenous businesses, valued at a total of AU$5.6 million. The majority of these were to corporate contracts rather than the aid program. “But the money is in the aid program,” Darren Sharp, assistant secretary of the contracting services branch, said. From July 1, RFTs associated with the aid program will see businesses required to respond to an expanded definition of how their solutions provide value to the Australian economy to include engagement with Indigenous owned and operated businesses. It is a requirement responses will be assessed on, with Sharp urging suppliers to take seriously this change. “It’s important to me,” Sharp told the audience. “And I put the contracts out, so it’s got to be important to you.” Sharp explained that DFAT’s increased focus on Indigenous procurement will be a key focus of over the coming year, with activities to promote and expand on July’s procurement changes and a new charter focused promoting the economic interests of Indigenous Australian businesses overseas, providing information and guidance to Indigenous businesses on resources available to assist them in engaging in the global economy. Supply Nation will become an important resource for any organization seeking to engage with Australia’s aid program, providing information on Indigenous owned and operated businesses. The will soon be undergoing changes to improve searchability. But Rod Reeve, managing director of Ninti One, also urged aid suppliers to think outside the box in Indigenous businesses they engage with, explaining that many Indigenous businesses have extensive experience in working in development — just at home in Australia among remote Indigenous communities. Improving visibility of subcontracting opportunities Further changes are expected over the coming year to improve visibility of subcontracting opportunities available within the aid program. Gilling explained to the audience that DFAT has 10 big suppliers supporting the aid program. But despite this, suppliers to the aid program are not concentrated. Through subcontracting opportunities, there is wide scope for businesses to engage with DFAT and the aid program. Major contract managers for the aid program — including Abt Associates, AECOM, Cardno, Coffey and Palladium — pitched to potential partners their services and what they needed from suppliers — and how suppliers could engage with them and find contracting opportunities. 2018 will also see DFAT making these subcontracting opportunities more visible to current and potential aid program partners through a single subcontracting portal. This will also increase visibility of subcontracting internally to improve reporting to key stakeholders. Improving aid program reporting Reports from contracted services and grant recipients are important in DFAT’s engagement. They support aid program performance reports and information to department executives, ministers, and the public. But diversity in reporting tools and information they collected meant that DFAT staff have spent unnecessary hours in collecting, combining, and massaging data to work together rather than benefit from the analytical insights they could provide. A new contract reporting tool will be implemented this year to improve consistency in reporting, including on sub-contracting activities. The new reporting tool with additionally better match with data on grants within the aid program, collected through SmartyGrants, allowing easier integration and analysis of all aid funding. Improved, and simplified, reporting capabilities aim to reduce the paperwork required for partners. But they will additionally improve the ability for DFAT to aggregate project data to country and thematic specific reports, including for reports contributing to Australia’s commitment to the Sustainable Development Goals. Suppliers need to engage the with Australian taxpayers on the value of aid In her opening address, Fierravanti-Wells continued her campaign urging more voices to educate the Australian public in the aid program and how official development assistance is spent — including commercial contractors. “In 2018, I would really like to see commercial contractors play a more visible role in explaining to Australians what they do, why they do it, and why it benefits the Australian public,” she said. “You have the examples and the anecdotes that illustrate clearly the benefits, not just to the people receiving our Australian assistance, but to Australia. Your purpose, but more importantly your independence from the Australian government, means that your voice can more powerfully explain why ODA is so important.” Gilling told suppliers that in a time when aid contractors were facing criticism internationally, including in the United Kingdom with the Oxfam scandal, this was especially important. “It [aid contractor criticism] will inevitably find its way here,” he said. Gilling explained that the sector needed to be prepared for political and media questions it may face, and preempting problems by communicating a positive message on what the aid program does and achieves to support Australia’s regional security is an important role for all partners of the program Advice for suppliers On top of providing information on the internal happening at DFAT that may impact suppliers and business opportunities, the conference was also an opportunity for DFAT to educate organizations how they can improve their chances of winning business opportunities — as well as how to maintain a successful relationship as an aid partner. In responding to tenders, the Assistant Director of Procurement Policy, Innovation and Professionalism Tom Pearce urged suppliers to ensure they demonstrate an alignment with DFAT’s core values and objectives as well as ensure they have a strong understanding of the entirety of the aid program. This enables suppliers to understand where their project may overlap into other areas as well as ensure they can be seen by DFAT as a partner they can work with efficiently and effectively. And while it is important that suppliers demonstrate how their organizations could provide the Australian taxpayer with value for money, risk and diversity inclusion are among what is assessed rather than value alone. Pearce urged suppliers to put their best people forward, engage local partners and provide pricing that is appropriate to their solution. Responses to tenders needed to directly address selection criteria, taking note of the weighting to focus more on those with a higher value — and having writers who could best address this criteria and demonstrate the value of the organization to DFAT was a skill set Pearce recommended investing in. In maintaining strong relationships with DFAT, the Director of the Fraud Control Section Felicity Rowe explained that trust was important — and fraud detection and response was part of maintaining trust. In 2016-17, there were 208 new cases of fraud external within the aid program reported to DFAT, with the value of allegations totalling AU$2.6 million — not including the cost to investigate reports. But not all cases result in fraud and not all are associated with financial gain. Fraud is about personal gain that can be achieved through power and influence or simply lying. Rowe emphasised that reporting of fraud is not going to dampen relationships between an organization and DFAT — but hiding it or holding off on reporting until there is more information on how fraud occurred will. Organizations are judged based on their ability to prepare, detect, and respond to a report, not on whether or not fraud occurs. Approximately 69 percent of fraud referrals came to DFAT from implementing partners, with the remainder detected by DFAT through their own processes including spot checks and audits — and 55 percent were detected by personnel, and not internal audit systems. Rowe explained that having strong training procedures on what fraud is and how to respond was an important part of fraud processes within an organization. And she urged suppliers to ensure they had strong governance arrangement, including with subcontractors, and talk through any concerns with DFAT rather than allowing potential fraud to develop. Further engagement with DFAT The Aid Supplier Conference is an important annual forum for DFAT to increase engagement and visibility with suppliers — engagement which Gilling believed is currently “suboptimal” with room for improvement. “I have a sense of what we can achieve, but we are not there yet,” Gilling said. A number of mini conferences will occur throughout the year, beginning in April with sessions in Canberra, where there will be sessions on new opportunities and key changes. But DFAT will also be engaging with suppliers through a new LinkedIn network and urges suppliers to contact them directly with suggestions for changes and improvement.