Intense competition for development contracts is encouraging companies to “say everything [they] possibly can” to win bids, MPs have been told.
The Department for International Development’s (DFID) procurement methods and lack of supply chain oversight has led to poor supplier conduct, the mistreatment of sub-contractors and the exclusion of smaller suppliers, according to a report by the International Development Commons Select Committee (IDC).
DFID said it welcomed the report and was reviewing its “work with suppliers to instigate root and branch reform”.
The evidence collected by the committee suggested that DFID “does not have sufficient understanding” of the impact its procurement has on the market, the report said.
While the department had explicit aims to help smaller organisations enter the market, its use of frameworks was locking out firms that lacked the resources or technical expertise to get on to them.
The committee was told by one contractor: “You will say everything you possibly can to win that contract” because there was “every incentive to win that contract and there is very little punishment for not delivering”.
“With the increase in the aid budget and the decrease in the headcount … you get bigger, more integrated contracts, which means that the risk of not winning is greater,” said the contractor, who was given anonymity in exchange for providing evidence. “The contractors will play every card they have and some they should not have to win the contract.”
The practice of using NGOs as “bid candy”, where contractors work with NGOs to make bids more attractive but drop them to increase profit margins after the contract is won, was said to be common.
Concerns about sub-contractors having their rates unilaterally cut, on some occasions by 25%, were also raised in the report.
Oversight of contractors’ conduct and performance was also lacking, the report said. DFID does have a “statement of priorities and expectations” for contractors but behaviour was largely self-regulated.
“It is not evident that DFID has an effective process for assessing effectiveness of individual contractors at programme level, nor whether it undertakes a sufficiently robust appraisal of all available options,” it said.
DFID said all allegations brought to its attention are rigorously investigated. “The secretary of state [Priti Patel] has been crystal clear that she expects all suppliers to deliver results for the world’s poorest, provide value for taxpayers’ money and that she will not tolerate anything less,” a spokesman said.
“The department is undertaking a fundamental review of its work with suppliers to instigate root and branch reform based on accountability and transparency. We welcome this IDC report as a helpful contribution to ensure UK aid will continue to save lives and change lives across the developing world.”
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