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DFID Supplier Review

Volume 629: debated on Monday 9 October 2017

The UK is an acknowledged world leader in the provision of development and humanitarian aid. Our aid budget acts not only in the interests of the world’s poorest, but also in Britain’s long term national interest.

Our global leadership in development requires continuing efforts to improve value for money, efficiency, innovation and effectiveness. I am therefore introducing tough new measures to ensure that the aid managed by DFID contractors delivers the best possible results for the world’s poorest people, provides value for taxpayers’ money and upholds high standards of ethical and professional behaviour.

A tough new DFID supply partner code of conduct will cover commercial requirements, ethical behaviours, transparency obligations, environmental sustainability and social responsibility. DFID will monitor suppliers’ implementation of the code, with legally enforceable sanctions for non-compliance.

DFID will introduce greater transparency to drive down costs along its supply chains. DFID contracts will now include tough new measures to bear down even harder on costs, fees and overheads, and to provide greater transparency in contracts and throughout supply chains. These include open book accounting clauses enabling DFID to obtain, use and verify information from its suppliers to make sure we have access to full financial information on costs to enable us to fully challenge value for money. It will also include a clause which we can use if necessary to intervene to ensure a fair deal for the taxpayer.

DFID will open up procurement to new entrants in the UK and overseas, simplifying documentation and processes and making greater use of digital platforms and social media to allow potential suppliers to access contract opportunities. A programme of business engagement events in the UK and overseas will facilitate engagement by new suppliers and the Department will also carry out research into the specific barriers facing by local suppliers in developing countries in accessing contract opportunities.

DFID will level the playing field for small suppliers and sub-contractors, ending the imposition of agreements which restrict sub-contractors’ ability to work for other suppliers. It will introduce new protections for small suppliers and sub-contractors operating in consortia, including contract checks to eradicate so called “bid candy” practices in which major suppliers drop sub-contractors once they have won the contract. We will continue to break up suitable tenders into manageable sizes and services to better enable smaller suppliers to compete.

A robust, comprehensive approach to supplier management will enable the Department to hold suppliers to account across their entire portfolio of work with DFID, bringing DFID into line with best practice in the private sector. This will allow DFID to challenge delivery partners more strongly on value for money, identify underlying performance problems and tap into a supplier’s wider areas of expertise.

DFID will put more information in the public domain, so that members of the public can assure themselves directly that DFID’s aid is being used effectively. This will include a policy on allowable costs in day rates paid to consultants and annual league tables of supplier performance. We will publish annual information on our commercial practices, setting out performance during the year and making further recommendations for improvement.

These reforms will complement the detailed line-by-line review of every programme in DFID’s portfolio, either already approved or in design phase, carried out by my ministerial team. They will help to ensure maximum impact from the development programmes delivered by DFID’s contractors, complementing the work done in the civil society partnership review to strengthen value for money from grants to civil society organisations, and in the multilateral development review to improve the efficiency and effectiveness of the international development system.