DFID in partnership with British Expertise International

Myth busting working

with DFID

London

Thursday 25th April 2019

Slide 1
Derrick Sanyahumbi
Chief Operating Officer
British Expertise International
DFID

Juliet Chua
Director General, Finance and Corporate
Performance

Thursday 25th April 2019

DFID Procurement

Rob Shooter
Deputy Head, Procurement and Commercial
Department
Thursday 25th April 2019
An introduction to DFID and
DFID procurement
 About UK Aid
• The UK is committed to providing 0.7% of gross national income on international development.
• Our mission is to reduce global poverty in the national interest.
• UK aid is untied.
• DFID delivers over £10 billion (about 75%) of UK aid each year.
• Our supply partners include multilateral organisations, civil society organisations, research
institutions and private sector businesses, funded by MoUs, grants and contracts
• Every government and organisation we fund must meet global transparency standards.
• A range of development targets:
– Save 1.4 million children’s lives by 2020, immunising 76 million children against killer diseases.
– Help at least 11 million children in the poorest countries gain a decent education.
– Improve nutrition for at least 50 million people who would otherwise go hungry.
– Help at least 60 million people get access to clean water and sanitation, to stop terrible diseases.
– Continue to lead the response to humanitarian emergencies, and establish a means to respond
rapidly to crises
Value for money means more funding to achieve these results
 Where does DFID work

Caribbean
 What does DFID buy?

Wealth Creation Services: business investment services, economic policy development, business
incubation services

Technical and Advisory services: planning and consultation to governments, business and
educational advice, technological and digital expertise

Research and Development: research across policy and delivery, supporting existing aid services,
ensuring continuous improvement

Health Services: supporting in-country health services, making communities more resilient,
delivering large-scale strategies

Wellbeing, Equality and Education Services: family planning, equality, and social education; hygiene
and sanitisation services; community engagement in hard-to reach areas

Climate and Environment: innovative approaches to green energies, addressing illegal practices,
providing innovation in farming

Humanitarian support: including life-saving support shelter, food, medicines and water, as well as
helping to rebuild communities and infrastructure
DFID’s humanitarian support
 Why are our suppliers important?
Who are they?
• Over 1000 suppliers enable us to provide vital services worldwide
– Our suppliers’ supply chains run into many thousands of suppliers
• Our suppliers include organisations of all types and sizes:
– Third and public sectors
– Multilateral delivery partners
– SME and micro organisations
– Large-scale private sector organisations

What do they do for us?

• Make aid services happen
• Deliver a huge range of specialist expertise
• Give us access to some of the hardest to reach communities across
the world
• Develop concepts, services, technology and research in the UK
• Provide innovation, flexibility and continuous improvement
 What we expect
We require:
• £1.26 billion in services procured in
2017/18
 Transparency
• 400 ‘Live’ contracts
 Excellent value for money through
market competition
• Work across 31 focus countries in Africa,
Asia, Middle East and Caribbean in 31
 Deliverable results-based outputs
focus countries
 Innovation and best practice
• Regional and central programmes
delivered from the UK  Flexibility and responsiveness

• DFID awarded 97 contracts in 2017/18.  Confidence that taxpayers money is safe from corruption,
Over 90% went to UK registered fraud and bribery, reaches the people who need it and is
companies good value for taxpayers’ money

• Over 40% of funding spent by SMEs  Assurance of ethical behaviour by all

 What we offer

From our surveys of partners What more can we do to improve:

• Brand and reputation  Communication

• Fair and reasonable treatment  Consistency

• Openness and transparency  Processes that are user-friendly,

but still deliver the value for
money required by taxpayers,
• A commitment to build
Parliament and Ministers
stronger, mutually beneficial
relationships
 Openness and transparency

 Stronger relationships

Helping to maintain public trust and support for UK aid

DFID Procurement

Tracey Tulloch
Head of Compliance and Supplier Risk
Thursday 25th April 2019
 Welcome
Terms and Conditions
Code of Compliance
Cost Template

Introduction
Follow

SRM

An overview of the Benefits of working and

adopting DFID Procurement Reforms
 Why Does DFID need Procurement Reforms?

• Public Pressure
• Government Policy
• Parliamentary Review
• Continuous Improvement
Code of Compliance

Terms and Conditions

• VFM for beneficiaries

Cost Template

DFID Reforms
01 02 03 04 05
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SRM

Revised Terms Strategic Supply Partner Cost Improve Local

and Conditions
Fair treatment for sub-
contractors, ending
Great
“exclusivity” agreements that
prevented them from bidding
for tenders as part of more
than one consortium and the
practice of “bid candy” that
removed small suppliers at
contract award;
Relationship Code of Conduct Transparency Engagement
Management
To improve New contract transparency Measures to open up DFID’s
Which sets out our
markets to new suppliers
collaboration with our commercial and ethical measures to make sure we’re
including Open for Business
partners and unlock expectations of our getting value for money from
learning, creativity and contracts, contract events across the UK to help
partners along our
amendments and grants; firms understand our
innovation across supply chains; processes and compete for
portfolios;
DFID business;
 Who do Procurement reforms apply to?

Primes Private and CSO

Sector
Code of Compliance

Terms and Conditions

UK and International large
organisations that deliver DFID

DFID Reforms
programmes either as a lead
Cost Template

contractor or consortium lead Industry Bodies

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Not suppliers, but an important

SRM

group to engage and consult with

on DFID commercial policy /
Downstream Partners approaches
UK and International downstream
partners that work through our primes
to deliver our programmes
SMEs
Potential Suppliers
Local or UK based organisations
Suppliers interested in working with DFID who delivering contracts directly or
are unsure how to engage with us through our primes
 What impact has the reforms had on DFID
Terms and Conditions?
DFID Procurement Terms and Conditions:
• Limits Subcontracting opportunities;
Allows Prime Supply Partners to use exclusivity agreements;
Myth’s •
• Impacts on the health of Supply Partners;
• Prime suppliers are not required to pay subcontractors promptly
Code of Compliance

Terms and Conditions

• Increased Supply Chain Visibility: introduces new measures to increase the visibility of subcontracting opportunities in
Government supply chains and to provide greater visibility of supply chain spend
Cost Template

DFID Reforms
• Supplier Profit: the Supplier must re-submit their pro-forma to DFID on an annual basis, except where Section 4 of the Contract
requires this on a six-monthly, or other, basis.
Follow

SRM

• Protection of Personal Data: New legislation on the General Data Protection Regulations (GDPR) came into effect on 25th May
2018.
• Financial Distress: A new provision requiring Suppliers to alert DFID of any downgrade in their financial position. Within 4
weeks of Contract Commencement, the Supplier must submit a Financial Monitoring Plan to the Project Officer which sets out
their proposal for monitoring and reporting on the financial position.
• Safeguarding: Enhancing requirements and expectations with respect to safeguarding policies and procedures against sexual
abuse, exploitation and harassment; provision of training to Personnel, whistleblowing policies, reporting, and record keeping
of any allegations of Serious Misconduct.
• Code of Conduct: DFID’s Supply Partner Code of Conduct sets out DFID’s expectations of its supply partners. We have now
strengthened the Code to include enhanced and specific safeguarding measures against sexual abuse, exploitation and
harassment.
• Exclusivity Agreements: Fair treatment for sub-contractors, ending “exclusivity” agreements that prevented them from bidding
for tenders as part of more than one consortium and the practice of “bid candy” that removed small suppliers at contract
award;
 What does SRM deliver?

Strategic Relationship Management:

• DFID v’s Our Partners
• Supply Partners are selected on Value of Contract!
Myth • It is only private sector Suppliers on the SRM programme!
• Impacts on active competitions
Code of Compliance

• SMEs are not on the SRM programme

Terms and Conditions

• SMEs not on the programme have no other way to engage DFID
Cost Template

SRM provides both DFID and Supply Partners with mutual benefit through open

Introduction
and honest discussions regarding strategic objectives
Follow

SRM
1. Value

45 Partners

2. Complexity
covering 80% 23 of these
4. Risk

of Contract and Partners are

Accountable NGOs.
grant spend by
April 2019.

3.Development Outcomes
 How do I become compliant with the Supply
Partner Code of Conduct
Compliance and Risk:
• The DFID Supply Partner Code of Conduct reinforces DFID’s key principles while introducing additional
Myth responsibilities, registrations, and verification measures.
• Compliance benefits far out weight the cost of being compliant;
• SMEs need to sign up to delivering compliance to the code of conduct

Code of Compliance

Terms and Conditions

Overarching Principles of the Code:
• Act responsibly and with integrity
Cost Template

Introduction
• Be transparent and accountable
• Seek to improve value for money
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• Demonstrate commitment to poverty reduction and DFID Priorities

SRM
• Demonstrate commitment to wider HMG priorities

1. Three Compliance Levels

• Compliance level 1 - portfolio of agreements £1m and above

• Compliance Level 2 – portfolio of agreements up to £1m
• Compliance level 3 – Under £118k
2. Six key themes
1. Value for Money and Governance
2. Ethical Behaviour
3. Transparency and Delivery Chain Management 3. 27 Performance
4. Environmental Issues Indicators
5. Terrorism and security
6. Safeguarding, Social Responsibility and Human Rights
 How does drive Cost Transparency?

• DFID are forcing down rates for subject matter experts providing specialist services?
Myth • Cost Template is overly complicated and not easy to navigate?
• Functionality of the cost template requires to be further automated.

Code of Compliance
We have introduced new tools for DFID staff to grip costs and fee rates, including Open Book Accounting,

Terms and Conditions

Cost Transparency
monitoring of supplier profit levels, a published policy for allowable costs and a fee rate database to better
benchmark rates.

Introduction
• Our Open Book and profit monitoring clauses now cover over £3.3 billion in contract value and more than
Follow

half our suppliers operate contracts with the new provisions;

SRM
• Our new fee rate database provides detailed information on fee rates by job role, geography and sector,
with over 15,000 live entries. Increased competition and systematic use of market intelligence has driven
a reduction in average fee rates;

• DFID’s fee rates benchmark well against those paid by other donors and development organisations and
provide good value for money. This was recognised by ICAI in its first report on our procurement;

• The commercial cost template was introduced in October 2017. Now that we have reached the end of its
first year of operation, we are reviewing feedback from suppliers on its use. Once we have completed this
review we will engage our supply partners, probably within a digital arena, to update the template to
ensure it is simple and user-friendly, while still delivering the cost transparency required by Ministers and
the taxpayer.
Contact us

Code of Compliance

Terms and Conditions

DFID Website: gov.uk/dfid

Cost Template
Supplier portal:

Introduction
https://supplierportal.dfid.gov.uk/selfservice/

Follow

SRM
Twitter: @DFIDProcurement
https://twitter.com/DFIDProcurement

Specific ques ons:

supplierengagement@dfid.gov.uk
Matthew Wiltcher
Director, MannionDaniels
Myth Busting working with DFID -
An SME Perspective
Matthew Wiltcher
25/04/2019
A perspective of the SME market
• We appreciate DFID and Government policy to increase SME engagement and opportunities for
SMEs to work with DFID.
• We believe SME’s have an important role to play in the sector with particular strengths such as
independence, creativity, responsiveness, technical specialism and value for money.
• However there are pressures operating within the market which have particular impact on SMEs:
• We believe in DFIDs policy on untied Aid, but it makes for a diverse and competitive market
• Some companies trading under established (SME) names are now owned and backed by larger organisations
• Increasing competition for smaller commercial contracts from larger international companies and (I)NGOs
• In contrast UK SMEs cannot compete easily in other markets such as US or bid for larger contracts. Also there is
uncertainty around European markets
• DFID is providing opportunities to SMEs, but also challenging the market on compliance, performance and PRB.
We believe this is right for taxpayers, but as SMEs its proportionally more challenging and risky to compete.
• The move towards Frameworks is interesting proposition for SMEs. It creates opportunities but also potentially
more difficult for the micro and smaller organisations to have a direct relationship.
• Within our business strategy we SMEs must navigate these pressures and look for ways to diversify,
decentralise and remain competitive

25/04/2019 24
MannionDaniels journey as an SME working with
DFID
• MannionDaniels is an independent privately owned group of companies. We are UK based, and have
companies in Kenya and Nigeria.
• We started in 2008 as 2/3 consultants working in Public Health and currently have 75 full time staff
across UK, Kenya and Nigeria
• We are self-financed. We have undergone careful organic growth with working capital from
reserves. We don’t have the luxury of core grant funding to support organisational development
and capacity improvements to meet compliance requirements
• DFID accounts for approximately 55-60% of our revenue. This fluctuates, but diversity is an
important part of our business model.
• We won our first major contract as a prime contractor to DFID in 2015. We are now prime contactor
on two centrally managed programmes UK Aid Direct and UK Aid Match and a supplier or sub-
contractor on other DFID projects including in-country programmes in Kenya & Nigeria
• We have direct experience of the procurement reforms
• We have bid successfully under the procurement reforms as a lead and sub contractor
• We have been through the supply partner compliance process as both a lead and as a sub-contractor
• And we are working with DFID through the Supplier Relationship Management process

25/04/2019 25
Challenges we have faced dealing with the
procurement reforms
• Bidding:
• For any SME, bidding is time intensive and highly competitive. We often have to make
difficult choices to juggle the pressures of programme delivery, meeting compliance
requirements and bidding. The smaller the organisation the more difficult this is to
absorb.
• Larger organisations can take greater risks on PRB and commercial aspects of bids.
• Bigger contracts, tend to attract bigger suppliers forming consortia
• Consortium: this term can misrepresent the true relationship. Working as a sub-contactor
or supplier to a prime can lead to less than favourable partnership arrangements and
conditions – or intentions that do not materialise in implementation.
• Supply partner Compliance
• The requirements are evolving and will continue to do so. New areas sometimes have to
be prioritised based on issues that arise, such as Safeguarding improvements
• Compliance requirements are imposed on us by multiple organisations as both a lead and
under subcontract. The interpretation of requirements depends on the legal departments
of the prime contractor. This will likely become more standardised over time.
25/04/2019 26
Benefits of Procurement and Compliance reforms
(1)
• DFID is challenging the sector which can create pressure on SMEs, but in
our view this is based on good improvements that we support. We believe in
strong values and the reforms have helped us to challenge ourselves.
• We support the scope and intent of the reform. It goes beyond cost
reduction which is often a focus of procurement reforms and puts an
emphasis on the importance of values, controls, performance, ethics and
relationships.
• Buying into reforms has been a driver of our own business improvement
plan:
• The Code has provided a good framework to look at our business, focus on areas of
improvement and to set benchmarks for ourselves
• It has been intensive, but the process has improved our business. We have better
controls and practices in place to drive our business forward.
• DFID have been open and flexible throughout and recognise this has to meet your own
business needs, and not just to serve as a compliance exercise.
25/04/2019 27
Benefits of Procurement and Compliance reforms
(2)
• Supplier relationship management has been a positive development as
a communication and performance channel at the organisational level
• Cost Template reforms have improved transparency around cost
effectiveness
• We are supportive of the updated cost templates: its in our favour as SMEs to look
transparently at cost and demonstrate that we’re cost effective.
• Completing the cost templates is about demonstrating pricing is justified,
reasonable and benchmarks favourably.
• We believe that this should be favourable for SMEs and show that they offer value
for money on cost drivers such as salaries, overheads etc

25/04/2019 28
 Panel Q&A
Leila Fazal – Head of Funding, Saferworld
Melissa Nicholson – Quality Manager, Coffey International
Matthew Wiltcher - Director, MannionDaniels Ltd
Tracey Tulloch - DFID
 Thank you to everyone who contributed to todays event.

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Networking