DFID’s Use of Contractors to Deliver Aid Programmes
DFID uses private sector contractors to assist in delivering aid, accounting for 9% of its aid expenditure in 2011-12. This report examines their role in programme delivery.
This report focuses on contractor programme delivery, likely to remain an important option for DFID given its increasing budget and focus on fragile and conflict states. We reviewed DFID’s central procurement group (PrG) and five case studies of varying sizes with a combined contract value of £264 million. This included programmes in Bangladesh, Yemen and Nigeria; a global climate and development knowledge network; and due diligence on civil society organisations receiving DFID funds.
Our findings show that in the case studies we examined contractors are an effective option for delivering aid. DFID has selected contractors that have delivered positive results at competitive fee rates. DFID’s poor end-to-end programme management, however, has led to delays. In the case studies that we examined, this has had the greatest impact during the mobilisation phase and is exacerbated by a lack of ‘whole life’ individual responsibility for programmes. In addition, learning is not being captured from contractors or used to inform future programming.
The reform of DFID’s central procurement group has improved processes but is too slow and lacks prioritisation. As a result, decisions to use contractors are not guided by a strategic plan to deploy the right contractors, including major, niche and innovative new entrant organisations, to best effect.
As a result of our findings this review is marked Green – Amber.
Recommendation 1: DFID should support its devolved delivery model with strategic guidance, informed by its sectoral experts, on when and how contractors of different sizes and specialisms can deliver most effectively. This should include a strategic partnering model for how best to use its major and SME contractors.
Recommendation 2: DFID should prioritise its commercial reforms, so that PrG can support more strategic decision-making on the use of contractors and develop more productive relationships with them.
Recommendation 3: DFID should update its bid evaluation process, strengthening the role of the programme’s designers during procurement, to enable a more sophisticated and balanced assessment of costs, timings, risks and results.
Recommendation 4: DFID should develop a resourced plan for improving its programme management capability, to ensure end-to-end accountability for programme delivery and minimise disruption from staff rotations.
Recommendation 5: DFID should strengthen learning from contractor-delivered programmes, to feed into the design, procurement and delivery of other programmes.