In the third of a series of articles for Development Finance, Darron Cox, CEO of DPSA, highlights why changing the way commercial and aid organisations work together is fundamental to achieving long-term humanitarian programme goals
In 2016 alone, a total of 311 million new internal displacements were recorded in 125 countries and territories–roughly the equivalent of one person forced to flee every second, as a result of disasters and conflict (GRID’s Internal Displacement Report, 2017). Yet responses to global humanitarian appeals, reported via the United Nations Office for the Coordination of Humanitarian Affairs’ Financial Tracking Service, reveal a widening shortfall between finance requested and received (Financial Tracking Service appeals overview, 2017). Given the the increasing demands placed upon limited development finance, do we need to find ways to do procurement differently to make aid go further?
An uneasy relationship
The role of the commercial organisation in the humanitarian sector is a cautious one at best, but it is a partnership that has the potential to generate innovative solutions, reduce risk and deliver significant cost savings.
By working together with aid organisations during the design phase of programmes, commercial procurement experts can identify and deliver tailored products and services that will help to achieve project outcomes. But this requires both sides to work differently. Moving from a transactional relationship across all parties to a long-term strategic partnership requires trust. And building trust is not without its challenges.
Humanitarian organisations may identify items they need to purchase quite late in a programme’s development, and tend to engage with their procurement specialists only on reaching this ‘buying’ stage. The conversation then becomes time-sensitive and purely transactional: give me X for Y price by Z date. At this point, value for money becomes more a matter of gaining the lowest price for what is available, and less about added benefit. At worst, programmes rely on what they have bought before, rather than taking the time to appraise new technologies or innovations in the global market that could significantly enhance outcomes.
Commercial organisations, meanwhile, cannot ready the market for responding to the procurement need. They cannot use that early awareness to negotiate and plan with the market, advise the client what options they have available, or provide alternatives. Bringing in options at such a late stage in the buying cycle would naturally be met with resistance; by then there’s no time to consider anything but the specification on the table.
The aid community and the private-sector suppliers they work with have much to gain from working together early on. Humanitarian organisations have strong grassroots connections in-country and can see how products could work in situ. The private sector has access to systems and expertise for sourcing innovation from the market and procuring products in a way to ensure they arrive when needed.
There is often a debate about whether products and services should be procured from the global or local market. But why do these two approaches have to be mutually exclusive? There are, of course, benefits and drawbacks to both. Global procurement potentially provides access to the best from the international marketplace, such as innovative solutions drawn from experience across other sectors and countries. On the other hand, local procurement can reduce logistics costs and support the development of local markets, businesses and the economy. Surely today we must use our procurement activities to help recipient countries build the trade capacity, skills and infrastructure they need to grow their economies?
Doing this, however, calls for decisions to be made early in project lifecycles between humanitarian organisations and their commercial counterparts; decisions that are based on robust challenge, by partners who agree to not just blindly accept the status quo. It requires commercial and humanitarian partners to examine together why such goods are needed in the first place, to question if there is a better way to achieve the outcomes and then to ascertain how best to procure the chosen goods and services. Sharing knowledge at the fact-finding stage leaves time to make an informed recommendation on the right product, service or solution.
Innovation in this context can mean many different things. It could mean considering the use of drones to deliver medicines in conflict-afflicted states, or developing solar-powered backpacks to support healthcare provision in hard-to-reach locations. There will be trade-offs between risk and innovation, but commercial organisations can support investment accordingly, based on experience and bringing the right experts to the conversation.
Doing procurement differently
At DPSA, we believe procurement has a key role to play in delivering new ways of working. We know that by taking a strategic approach to procurement, it is possible to derive greater value for money. This involves going beyond traditional models of simply asking what needs to be procured and then delivering it.
In Pakistan women and children don’t always get the nutrition they need. We were asked to assist in procuring highly specialised milling equipment to fortify foods with vitamins and nutrients. Being involved early enabled us to understand what the long-term programme goals were. We could assess the types of equipment that could add the required capability at existing mills, and identify suppliers in local and international markets, for consideration by our client.
Finding an equipment supplier that could provide machines capable of meeting the programme’s complex needs, and had the capacity to maintain them going forward, was key. Our early engagement is now helping to deliver a programme that is cost-effective and sustainable, enabling aid from the UK government to improve the lives of women and children in the local community.
Fulfilling long term goals
DPSA also put this approach into practice in Malawi. We procured outsourced quality-control services for testing pharmaceutical drugs, to increase the number and range of tests that could be carried out, funded with UK aid from the British people.
By engaging early and working together, we understood that the local ambition was to create a World Health Organization (WHO)-approved/ISO-certified laboratory. We recommended the available funds be used not only for engaging external quality-control services, but also for building capacity within the new local facility. This has the potential to develop local capability, promote sustainability and ensure that the humanitarian funds have a demonstrable impact for years to come.
Prioritising long-term goals has the potential to benefit many programmes, including those seeking to tackle malaria. Supplying requested medicines to treat the disease in a specific area may help many people. But there is more we can do. By assessing climate forecasts we might learn that malaria is set to become more widespread in that region. This could lead to a recommendation to also invest in preventative approaches, such as distributing insecticide-treated bed nets across a larger population. Then, by aggregating demand across multiple programmes and countries, you gain additional value on a level not realised previously. Granted, it might not be what the client wanted to buy originally, but it is potentially a better way to achieve long-term goals.
Strategic procurement has a significant role to play in building partnerships, driving innovation and improving programme outcomes. Networks shared through regional collaboration can lead to procurement across multiple programmes and thereby economies of scale. Early engagement between partners at the design phase makes it possible to demonstrate not just what we are doing, but how and, importantly, why.
At DPSA, we seek to engage early with our customers to help them find smarter solutions to their needs. We firmly believe that doing procurement differently will make a tangible, sustainable difference to the aid and development sector going forward.
This article was first published in Development Finance, 10/11/17.