A “better approach” to procurement has achieved savings of £400 million in the Department for International Development’s (DFID) aid budget over the past four years.
International development secretary Justine Greening told SM “driving a harder bargain” with suppliers had been key to generating the savings, which were being ploughed back into aid efforts.
Greening said an overhaul of purchasing at DFID had involved “shaping up” procurement processes and they were now focused on creating a more competitive marketplace among suppliers.
“A big part of this is driving a harder bargain, with people who are tendering for contracts, to end up getting a better deal,” she said.
“We have changed our procurement approach to be generally more effective. When I look at contracts people tell me how much we’ve been able to improve the final version compared to what we started with.”
Greening added: “It’s good news for the taxpayer but it’s also good news for development because what it means is we’re getting more out of the money we’ve been given and having a bigger impact with it on the ground.”
Greening said savings of £14 million had been achieved on administrative spend during 2014-15, such as business travel, through greater use of the Crown Commercial Service. She said while the UK government’s aid budget, 0.7 per cent of gross national income, was not subject to the spending review, DFID’s back office budget was.
“Phase one was: ‘Let’s get ourselves shaped up’ and phase two is: ‘Let’s now give ourselves a better chance of procuring from a more competitive marketplace’,” said Greening.
Speaking at a DFID supplier conference in London, Greening said she wanted more SMEs and NGOs bidding for contracts. “I need to get a better deal for the taxpayer,” she told delegates. “I want more competition and more innovation.”
Greening said results-based outcomes were now the norm in contracts, along with transparency clauses, and there was more oversight of projects.
She also said DFID was on course this year to meet the UK government’s target of spending a third with SMEs, “which is way ahead of schedule”.