Review of DFID Framework Agreements

The Department for International Development (DFID) is undertaking a review of its Framework Agreements.  DFID is seeking supplier input to feed into a new strategy for Frameworks.

The UK’s Security and Resilience Industry Suppliers Community (RISC) has taken a particular interest in those Framework Agreements relating to capacity building (usually in high risk countries).  This follows RISC’s extensive work with the Foreign and Commonwealth Office to facilitate private sector involvement in delivering capacity building projects as government resources have declined.

RISC wants to build on its successful work with the FCO and engage DFID, not least because given the Secretary of State for International Development’s desire for her Department to do more with the private sector.  It has had good engagement with the Head of the Business Engagement Hub in DFID (a new post) and the Small Business Forum and recently provided feedback on how the Framework Agreements have operated.  A copy of RISC’s input is below, covering:

    1. How DFID’s Framework Agreements have operated in practice and whether they have delivered value for money and quality.
    2. Whether the Framework Agreements have helped or hindered access to projects by companies, particularly SMEs.
    3. How future Frameworks should be structured so they effectively operate and deliver.

Executive Summary

  • Of most relevance to RISC are the Framework Agreements that cover capacity building projects, including the Fragile and Conflict Affected States (FACS) and the Governance and Security Framework Agreements.
  • DFID’s routes for communicating opportunities to apply to be part of Framework Agreements did not reach the vast majority of potential suppliers. A common message is that companies lack ‘docking points’ with DFID. The Framework Agreements quickly became out of date as there was no ability to ‘refresh’ them.
  • Companies specialising in capacity building are usually smaller, specialist outfits. SMEs did not have the infrastructure necessary to meet the requirements of Framework Agreements and are unlikely to do so in the future if similar Frameworks are issued. Smaller organisations therefore required visibility of projects/programmes being issued to larger suppliers on the Frameworks to try form part of a supply chain. However, there was a lack of communication about what projects or programmes have been issued through the Frameworks. Where SMEs successfully established contact with Framework suppliers about specific opportunities they invariably encountered numerous challenges in relation to Intellectual Property (IP), cost, assurances of role and contractual terms.
  • DFID’s principal driver seems to have been to select larger organisations specialising in large-scale programme management for the Framework Agreements. There should be a better balance between focusing on organisations with expertise in overall programme management and those organisations that actually deliver quality projects on the ground. Larger suppliers seldom have experts in delivery of capacity building. DFID does not appear to undertake any form of due diligence on the “experts” who are offered by large suppliers to deliver on projects.
  • For future Framework Agreements, a challenge will be to ensure they do not quickly become out of date.
  • DFID should also strike a better balance between focusing Framework Agreements on large programme management organisations versus the specialist providers who actually deliver projects on the ground.
  • If the Prime route is deemed as being a more efficient and lower risk option for tendering requirements, DFID should adopt measures to encourage and protect the use of SMEs.
  • A preferable approach would be for the development of more flexible Frameworks that recognise both SMEs and Primes. For example, DFID could develop a list of “approved” or “accredited” SMEs who could be sent the same information as Framework suppliers and/or Framework suppliers could be required only to work with these approved SMEs. This would enhance quality.
  • DFID should consider how due diligence is included within the Framework process.

How have DFID’s Framework Agreements operated in practice?

1. The most immediate observation is that the Framework Agreements quickly became out of date; they did not reflect rapid changes in the nature of the supplier base. Companies specialising in capacity building represent a very vibrant sub-sector of the security sector and are usually smaller, specialist outfits. DFID has not been aware of, and the Framework Agreements did not provide access to, the majority of potential suppliers, as there was no ability to ‘refresh’ the Frameworks at regular intervals. Many good quality suppliers were therefore excluded from the opportunity to bid for projects issued through the Frameworks, unless through organisations already awarded Framework status (hereafter referred to as ‘Framework Agreement Organisations’ or FAOs). However, working through FAOs has posed challenges, particularly for SMEs (see paragraphs 8 to 10).

2. This situation has been compounded by the fact that DFID’s routes for communicating opportunities to apply to be part of Framework Agreements did not reach the vast majority of potential suppliers. There has also been a lack of communication about what projects or programmes have been issued through the Frameworks, to allow smaller companies to try to partner with or become part of the supply chain of a FAO. Many companies therefore simply lacked visibility of opportunities to engage. A common message is that companies lack ‘docking points’ with DFID.

3. Even if smaller companies were aware of the opportunity to apply to be on a Framework Agreement, feedback suggests they lacked the confidence to compete. This is because DFID’s principal driver seems to have been to select larger organisations specialising in large-scale programme management. This is understandable to an extent, as DFID awards multi-billion, multi-year programmes. However, there should be a better balance between focusing on organisations with expertise in overall programme management and those organisations that actually deliver quality projects on the ground (usually in high risk countries). The latter is particularly important. Larger suppliers seldom have experts in detailed delivery and thus will take the cheapest route, not necessarily the most effective. Alternatively, they feel they can access the same subject matter experts as SMEs but do not tend to have the currency or knowledge to ensure that these Associates (i.e. contractors) are legitimate, credible or current. For example, CVs are often misleading but used as the basis for selecting contractors. Furthermore, large programme management organisations often do not have the in-house expertise to validate and quality assure planning or delivery of capacity building projects and programmes; this is a specialist rather than generalist area. DFID does not appear to undertake any form of due diligence on the “experts” who are offered by large suppliers to deliver on projects.

4. As a benchmark, it is worth noting that FCO’s Counter Terrorism Department approached RISC for two reasons. First, it felt that the organisations on the FCAS Framework Agreement did not specialise in the type of work that it required, for example police, forensics and judicial training. FCO CTD wanted access to a broader range of suppliers. Secondly, CTD had concerns about their previous approach of awarding programmes/contracts to large consultancy or programme management organisations: this meant they did not have oversight of what was being delivered on the ground, including who was undertaking what activities and where and how money was being spent. This posed challenges both for value for money and quality and resilience of delivery. CTD preferred to break large programmes into smaller-scale projects which it contracted individually and directly. It also required that, as part of ITT responses, suppliers provide complete visibility of their supply chain, including defined roles for named individuals in partners and subcontractors, assurances about the dates partners and contractors/subcontractors were available, how much money they would be paid and when, and so on.

Have the Framework Agreements helped or hindered access to opportunities?

5. In general, Frameworks both help and hinder access.  They help as they reduce commercial bureaucracy per bid and it is easy to find out who is currently registered. However, applying to be on a Framework and/or finding out about opportunities and accessing the organisations able to bid can be difficult.

6. Overall, DFID’s Frameworks, under their previous guise, provided no access to small businesses that were not on the original PQQ.

7. SMEs did not have the infrastructure necessary to meet the requirements of Framework Agreements.

8. To try access opportunities, smaller organisations therefore required visibility of projects/programmes being issued to large FAOs. This was not provided unless specifically asked for. However, this required SMEs to have knowledge of what was being tendered or likely to be tendered – that was not always the case – and of which Framework suppliers were interested.

9. Smaller companies made repeated attempts to engage with FAOs. They found the large suppliers unresponsive and difficult to engage, even when introduced by DFID officials or other government departments and agencies.

10. Where SMEs successfully established contact with a FAO about specific opportunities they invariably found the following:

11. A Prime’s decision to provide access to an SME was largely based upon the SME’s ability to demonstrate how they could be a substantial differentiator to the Prime’s bid, for example through regional experience or access to experts the Prime did not have in-house or was not able to recruit. However, this was often difficult for an SME to do without giving away large amounts of IP and given security sensitivities.

    • If an SME was included in a supply chain, rates were aggressively negotiated down to compensate for the Prime’s large overheads whilst safeguarding their (Prime) profits.  The SME was unlikely to have visibility of the commercial and financial aspects of the final proposal, so had to take a Prime’s word on assurances of parity.
    • SMEs were used to develop technical components of the bid, with very limited assurances of their role if the Prime was successful.
    • The Invitations to Tender were usually written in imprecise terms with no scoring matrix.
    • Primes used standard contractual terms that did not meet the requirements of capacity building projects and SMEs. SMEs felt both exposed and exploited as a result.
    • SMEs were often not aware of what actual evaluation criteria DFID would use to assess bids and received little meaningful feedback.
    • Despite a competitive procurement process, large-scale projects would be broken up into smaller parts ex post facto and awarded to a third contractor without any further ITTs being issued.

How should future Frameworks be structured?

12. A significant challenge is to ensure that Frameworks do not quickly become out of date. The ability to ‘refresh’ Frameworks at regular intervals should be considered. Alternatively, the Frameworks should be kept open to enable new entrants to join at any point in time.

13. DFID should strike a better balance between focusing Framework Agreements on large programme management organisations versus the specialist providers who actually deliver projects on the ground. DFID may need to consider breaking larger programmes into smaller ‘lots’ or components and ensuring Framework Agreements reflect this.

14. If the Prime route is deemed as being a more efficient and lower risk option for tendering large requirements, DFID should:

  • Ensure specialist, smaller suppliers know when and how to connect to large Framework suppliers and have the opportunity to do so. SMEs must be given visibility of the opportunities that are issued to suppliers on Framework Agreements, and supplier days should be held to allow Business-to-Business introductions to be made.
  • Establish measures to encourage Primes to use SMEs. Frameworks should measure SME contact and engagement and include a requirement for Prime providers to demonstrate how they are sharing work amongst SMEs.
  • Develop mechanisms, including as part of the ITT process and contracts, to protect SMEs from Prime exploitation, for example direct pass through of SME rate, rules for transparency on direct/in-direct charges passed on by the Prime, or limits on fees imposed on SMEs by a Prime. ITT processes should also require Primes to be very specific about how and when SMEs will be used if the Prime is successful.

15. A preferable approach would be for the development of more flexible Frameworks that recognise both SMEs and Primes. For example,

    • DFID could develop a list of “approved” or “accredited” SMEs who have the expertise to deliver on Framework Agreement projects but do not have the infrastructure necessary to be classed as FAOs. These SMEs could be sent the same information as FAOs and /or FAOs could be required only to work with these approved SMEs. This would enhance quality.
    • DFID could view SME consortia as an alternative to the traditional supply model (where a Prime leads a supply chain).

16. Finally, and as implied throughout, DFID should consider how due diligence is included within the Framework process. DFID could make better use of providers who can scope whether it is taking unacceptable financial and other risks in dealing with a regional, governmental, sub-governmental or commercial provider in the international development scene.