06 April 2017
Bid Candy And Worse
The details revealed.
By John Watson
Spring is in the air. A fire is burning in the hearth. The whisky bottle is to hand. It only remains to decide what sparkling work of literature to choose for the evening read. Should it be The Hound of the Baskervilles? No, I know the answer that one – the dog did it. What about 50 Shades of Grey? No, my only copy has been lent to the gardener (tut, tut, is this really a book that I should allow my wife or servants to read?). Okay then, what about one of Shakespeare’s plays? No, we don’t want to be too dramatic about this. What is needed is a really good piece of racy prose. I know the very thing. What about the report by the International Development Committee of the House of Commons into the use of private contractors by the Department for International Development and its associated public bodies? That should certainly set the pulse racing.
If you read The Times headline about taxpayers being ripped off by profiteers, it certainly sounds exciting. Overcharging, profiteering, whistle-blowing all served up with an alluring sprinkling of “bid candy” to spice it up. Yum! When you read the report, however, it is not like that at all but rather an analytical description of how an under-resourced department tries to control expenditure which has now grown to 0.7% of GDP. As the team is a relatively small one, it does not dispense the aid itself but relies on others to do that on its behalf. Some of it, known as multilateral spending, is simply passed to large institutions, the European Union or the World Bank for example, who take charge of its allocation. The rest of it, however, is dedicated to particular projects and out of that, although much is dispensed through Non-Governmental Organisations and international institutions, some is applied direct through contractors under agreements with the Department. It is the performance of those contractors which is the subject of this report and, for 2015/16, the total channelled in this way was £1.24 billion or 13% of the total aid budget.
Giving aid in this way leaves plenty of scope for the law of unintended consequences. It is all about value for money, of course, so you might think that the answer was to make payments by results, and indeed that is an important element of the system. The trouble is that it shifts the risk to the contractor so that only the biggest firms will be able to compete for jobs. Smaller operators, which might have a better specialist skills set, are restricted to the role of subcontractors and will frequently find themselves squeezed out of the remunerative work once the bid has been won. Then again you can’t have payment by results without setting targets and, guess what, the contractors will game them. That is all right if the targets and milestones were set with the wisdom of Solomon but, if not, the work will be distorted every bit as surely as the work of a primary school is distorted by the SATS test.
Then again, why do British companies predominate in the contractor market? Could it be that the Department knows better the standard to expect? Not that it would say that it took this into account, of course. In fact it denies that it is able to look at past performance as the law now stands. Still, being practical, it would only be human to do so and to find a way of relying on those who you knew would deliver. Self-defeating though if you are trying to strengthen the recipient country’s economy.
The report makes some useful recommendations. The team at DFIT needs to be strengthened with experts on development rather than relying too much on generalists. An arms length body should be created with a project management role. More emphasis should be placed on forcing contractors to share their knowledge – important to prevent them low-balling on research projects so that they can exploit their higher state of knowledge later. All this seems very sensible as is the call to clarify the strategy and to look at the past performance of contractors. What then about the profiteering so beloved of the media? Well, with a program of this size one can point at high rates here and there but the evidence to the Committee contained the following passage:
“Companies House data reveals that most DFID suppliers are earning an average net profit of 5.5%. Levels of net profit in the sector are typically between 3 and 7%. Comparing other industries, profit levels are 50% lower in development than in UK government consulting.”
Blimey, the topic is certainly a little less exciting that I had hoped. Hold on a moment, there must be something more lurid somewhere. Yes, what about being “bid candy”? What is that? Prostitutes in Paris for government employees? A trail of heroin, fast cars and casual sex? Even just particularly large boxes of chocolates? No such luck. It is slang for non-governmental organisations which are included in the bid to make it look attractive and then pushed out of the main work. Disgraceful, no doubt, but not quite the stuff of Book at Bedtime.
The report makes are a lot of constructive criticisms of DFID and its procedures, and no doubt it is right to do so. It does not, however, give a picture of a failing organisation but rather one that is struggling with an increased workload and gradually refining its methods. Of course there remains much to do and of course it will commit itself to doing it. But scandal, alas no. I should have read The Hound of the Baskervilles again, after all.
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