The reform of the Supplier Review will include stricter rules for aid suppliers to ensure better results and “provide value for taxpayers’ money”, the UK international development secretary Priti Patel told the Conservative Party Conference today.
A new code of conduct to ensure high standards for Department for International Development suppliers will also be introduced, she said.
The shake-up also includes tougher scrutiny of costs and greater transparency, through new clauses in contracts to allow Dfid to inspect costs, overheads, fees and profits of suppliers in detail and new powers to intervene to tackle profiteering and cut out waste.
Patel said: “These tough reforms provide a clear message to aid suppliers – any misuse of taxpayers’ money is a scandal that will not be tolerated”.
“Dfid is leading the way across government with new measures that will ensure aid is spent in the best way, with every single penny delivering value for money. New legal penalties allow us to take firm action against those who break the rules.”
She added: “We will make the supplier market we work with more competitive and transparent, providing greater opportunities for new and smaller business in the UK and ensuring we work with those who can achieve the best results that UK taxpayers and the world’s poorest deserve”.
Additionally, the reforms will cut the red tape to boost competition and open the Dfid’s market to new business.
In December 2016, Patel announced a review of Dfid’s management of its contracted suppliers to ensure high ethical standards and protect against possible profiteering.
Earlier this year, the International Development Select Committee accused the UK aid contractors of “appalling behaviour”, said to be facilitated by a hands-off approach to procurement by the country’s aid department.
New contract terms and conditions have been introduced to all new procurement tenders and extensions from 1 September this year and renegotiations with existing contracts will begin today, Dfid said.
Dfid also pledged to stop “bid candy” practices, by which large suppliers include smaller business to win bids, but then drop them from the contract.
Mike Cherry, the national chairman for the Federation of Small Businesses (FSB), said: “When more small businesses win contracts, they bring innovation to the public sector, which creates better value for the taxpayer.”
He added that small business won 19% of public sector contracts over the last 12 months. The government pledged to increase this number to 33% by 2020.
Dfid’s spending via for-profit, private sector firms increased in 2015/16 to £1.34bn, representing 22% of the aid budget.
CEO of Integrity Global, a service and consultancy provider, Anthony Ellis welcomed the reforms. He said: “This is great news for the many small businesses who could play a positive role in international aid, in the service of the British public”.
Aid contractors play an important role in development work, provide specialist expertise and flexibility, Dfid said.
