Achieving value for money through procurement Part 2: DFID’s approach to value for money through tendering and contract management

Review

Our review found an appropriate overall approach to procurement with good performance in most areas of tendering, but significant weaknesses in contract management. We therefore awarded a green-amber score and made three recommendations to government.

Findings

• Since 2015, DFID has progressed towards a more mature procurement approach.
• DFID’s tender process follows current EU legislation and UK government guidelines and cross-government peer reviews confirm improvements in DFID’s procurement approach.
• The Supplier Review lent momentum to the reforms but risks having unintended consequences.
• Poor consultation with suppliers has heightened the risk of unintended consequences.
• DFID is reviewing its business processes to protect aid recipients from sexual abuse and exploitation.
• DFID does not always choose the most appropriate procurement process but a new strategic sourcing process has resulted in stronger procurement planning.
• DFID has built up its commercial capability, but this will need to be an ongoing process.
• The contract management function in DFID is poorly defined and contracts are frequently amended or extended beyond their advertised length and values.
• Inception phases are often too short for adequate preparation and planning.
• Progress on flexible and adaptive programming will require more innovative approaches to tendering and contract management.

Recommendations

1. Before the next major revision of its supplier code and contracting terms, or future changes that may materially affect suppliers, DFID should conduct an effective consultation process with its supplier market, to ensure informed decisions and minimise the risks of unintended consequences.
2. DFID should accelerate its timetable for acquiring a suitable management information system for procurement, to ensure that its commercial decisions are informed by data.
3. DFID should instigate a formal contract management regime, underpinned by appropriate training and guidance and supported by a senior official responsible for contract management across the department. The new regime should include appropriate adaptive contract management techniques, to ensure that supplier
   accountability is balanced with the need for innovation and adaptive management in pursuit of development results.