| 1. | DFID's 2000 Departmental Report represents a further significant improvement in DFID's accountability to Parliament. It gives the reader an excellent overview of the policy priorities of the Department, placed clearly in the context of the year covered by the Report. In particular we welcome its analysis of recent policy developments, current debates and important events, and the increased level of detail about the Department's activities over the past year and its plans for future years (paragraph 2).
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| 2. | We welcome the reversal of the decline in UK official development assistance which has taken place during the past two years, and the Government's announcement in the recent Spending Review of an increase in DFID's budget to £3.6 billion in 2003/04, equivalent to 0.33 per cent of UK GNP (paragraph 9).
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| 3. | We preface our discussion on DFID's bilateral country programme expenditure plans with the comment that, both in our scrutiny of DFID's expenditure in this inquiry and more generally in our work during the course of the past year, we have found the provision of figures for planned bilateral country programmes at a country level in the Departmental Report to be an extremely valuable resource. We congratulate DFID on its openness and transparency in this regard (paragraph 11).
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| 4. | We welcome the flexibility of DFID's approach to its bilateral country programmes, and its willingness publicly to discuss changes in its plans for individual countries (paragraph 12).
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| 5. | We note that the planned increase in DFID's bilateral country programme in China was not delivered in 1999/2000. We shall monitor with interest, and in the light of the concerns about human rights expressed in our Report on the 1999 Departmental Report, DFID's future expenditure in China (paragraph 16).
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| 6. | We welcome the introduction of the new Policy Performance Funds for Africa, Asia and the multilateral development institutions. We look forward to information being provided in future Departmental Reports on how and why the Funds have been allocated between country programmes and institutions. We would welcome further information from DFID on the intended purpose of the International Policy Performance Fund (paragraph 19).
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| 7. | We welcome, and look forward to receiving further details of, the new cross-departmental budget for conflict prevention and post-conflict reconstruction. We recommend that DFID keep us informed of further details of this budget as they become available, including details, for example, of the mechanisms which will be put in place for administering the budget, the resources allocated to the budget, and how the Departments concerned will account for the expenditure to Parliament (paragraph 20).
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| 8. | DFID's performance targets, as contained in the Public Service Agreement, fail to meet the Government's own 'SMART' criteria (which specify that targets must be specific, measurable, achievable, relevant and timed), and they fail to cover the full range of DFID's policies and Departmental Objectives (paragraph 35).
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| 9. | We do not question the value of the International Development Targets, and we congratulate DFID on its work in mobilising support for them among other donors and development partners. Nor do we doubt that in various ways DFID's work is contributing significantly to their achievement. It is our view, however, that measuring DFID's performance as a Department by relating its expenditure at country levels to specific development outcomes in a disparate set of countries is so simplistic as to be uninformative and useless (paragraph 36).
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| 10. | We welcome DFID's commitment to revise its PSA, and we look forward to examining the revised targets (paragraph 37).
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| 11. | We recommend that DFID revise its PSA so as to differentiate between its overall objectives (to contribute to the achievement of the IDTs) and the measurement of the effectiveness of its own programmes and projects (and those of the multilateral development organisations to which it contributes) against comprehensive, clear, specific, measurable and timed targets. The targets should be built on a strong basis of evaluation at project and programme level, the results of which may then be aggregated to show DFID's performance in each of its key policy areas (paragraph 38).
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| 12. | There is no doubt that there is a large amount of policy analysis information now available, produced by DFID and by others, perhaps most notably the World Bank. Whilst this is welcome, it is not sufficient for DFID to learn from its own successes and failures, and to be held properly to account for its expenditure. A significant investment must also be made in expenditure analysis and evaluation procedures. This is necessary in order to establish the effectiveness of individual programmes and projects in producing the desired outcomes (paragraph 39).
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| 13. | In its 1998 and 1999 Departmental Reports, DFID included in each section a table showing information on its expenditure captured by Policy Information Marker System data, which measures expenditure according to key policy areas. In its 2000 Departmental Report, DFID has discontinued this practice. We recommend that in future Departmental Reports, in each section of its report relating to one of its policy objectives, DFID include a table showing relevant Policy Information Marker System, Policy Objective Markers and Poverty Aim Marker data for the past three years. This will provide a clear and readily-accessible picture of DFID's expenditure profile in relation to its objectives (paragraph 41).
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| 14. | DFID's project completion report forms have been revised recently to capture more information about lessons learned from successes and failures, and we look forward to this information being available on an annual basis in future project completion report synthesis studies. This will represent a significant improvement in their value as tools for learning lessons and applying them in future projects and programmes. We recommend that, in each section of future Departmental Reports, tables be included showing the success of projects in each policy area in reaching their objectives (as reported in the most recent project completion report synthesis study), along with a summary of the key lessons which have been learned (paragraph 43).
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| 15. | The Project Completion Reports alone do not present a comprehensive picture of DFID's performance. They must be supported by evaluation studies which are independent, published, are conducted after the completion of projects and programmes, and which measure the broader and longer-term impact of projects and programmes, and their contribution to poverty eradication (paragraph 44).
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| 16. | We recommend that DFID revise its publications catalogue to include evaluation studies, and that it update its Internet site to include all evaluation studies on a regular basis. This will enable other organisations outside DFID to benefit from the studies more easily (paragraph 48).
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| 17. | We are sure that DFID's in-house Project Completion Reports are compiled in good faith. Nevertheless we would interpret cautiously an evaluation portfolio which consisted almost entirely of self-assessment, without any supplementary independent evaluations. At the very least, there is an undeniable value in obtaining a second expert opinion on the strengths and weaknesses of a project or programme and the nature and extent of its impact, and on the lessons which may be drawn for future work. We recommend that DFID significantly increase the proportion of its projects and programmes that are subjected to evaluation studies. We recommend that DFID publish an evaluation strategy and invite suggestions from its staff and from the development community on projects and programmes which might usefully be independently reviewed. The strategy should include all aspects of its work, including budgetary support and sector wide adjustment programmes (SWAPs) (paragraph 50).
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| 18. | We look forward to the establishment of the new Development and Impact Resource Centre, and request that DFID keep us informed of progress in its work (paragraph 51).
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| 19. | DFID publishes a large range of policy analysis documents, strategy papers, and evaluation studies. It has in place good evaluation systems, and has been working to improve them. All this we welcome. There is a gap, however, between these qualitative assessments of DFID's role and performance, and the need to provide summary quantitative information about the overall performance of the Department against clear and meaningful targets. We recommend that DFID produce a set of revised departmental targets, based on the results of its Project Completion Reports and Evaluation Studies, disaggregated according to its objectives and expenditure profile (paragraph 52).
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| 20. | BOND welcomed the new Civil Society Challenge Fund in written evidence as a move which reflected "exciting new strategic priorities for DFID's funding of civil society organisations and [which] could offer significant benefits to the world's poor people".[139] We agree. We welcome the establishment of the Civil Society Challenge Fund as a special fund which has a remit to strengthen civil society in developing countries. We consider this an important element in DFID's overall programme (paragraph 56).
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| 21. | Given the priority themes for 2001/2002 funding under the Civil Society Challenge Fund, we recommend that DFID substantially expand its traditional NGO list so as to include more trade unions, labour organisations, local government organisations, private sector interests, and southern-based NGOs (paragraph 57).
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| 22. | We invite DFID, in the light of the allocation of funds in the 2000 Spending Review, to comment on future levels of funding for the Civil Society Challenge Fund, taking into account the increased competition for funds resulting from the amalgamation of three channels of funding into one and of DFID's attempts to attract new partners. We further recommend that DFID, as suggested by BOND, maintain records of sound projects which are not awarded funds as a result of lack of available resources, in order that a possible case for increasing the volume of resources available through the Civil Society Challenge Fund may be properly assessed (paragraph 58).
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| 23. | We consider the assertion that "the world has changed" and it is no longer difficult for specialist NGOs to raise funds for sexual and reproductive health projects to be a naive and incorrect one. It is our view that there continues to be a strong case for the provision of 100 per cent funding for innovative or catalytic projects in this field. It may well be the case that the new Civil Society Challenge Fund is not an appropriate instrument for such funding, and we are reassured by the fact that there are other channels through which it may be obtained. We request that in its response to this Report, DFID provide details of the level of funding available through these additional channels, what is the process for applying for funds, and by what criteria they are allocated. Overall, we would not wish at this stage to see a net reduction in the levels of resources available for non-governmental sexual and reproductive health projects (paragraph 61).
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| 24. | We recommend that DFID conduct and publish an early analysis of the difficulties in raising funds for sexual and reproductive health projects compared to projects relating to other policy areas, and that, on the basis of that analysis, DFID review its funding mechanisms for NGOs running such projects. More generally, it would be wrong for the funding mechanism to have as a result that support is skewed to causes which find it easier to raise funds from the public. We look forward to learning from DFID how it intends to prevent such distortions and ensure that its development objectives are met (paragraph 62).
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| 25. | We recommend that DFID provide details of other funding channels which may be used by NGOs which have received funding under the CSCF for a project, and wish to apply for further funds to continue the project (paragraph 63).
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| 26. | We welcome DFID's review of its contracting procedures, and we trust that our comments will assist DFID in identifying areas which could usefully be examined as part of the review (paragraph 66).
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| 27. | We accept DFID's argument that there are some short-term or highly specialised contracts where open advertising would not be cost-effective or productive, since there are only a small number of consultants with the relevant skills or the timescale makes it impossible. It is unfortunate, however, that some contracts are let non-competitively simply because of their comparatively low value. We recommend that DFID increase the proportion of its smaller contracts which are let competitively. We suggest that DFID consider ways of disseminating information about contracts, and inviting expressions of interest from consultants, in cost-effective ways, such as via its Internet page, and through open days for consultants, regular bulletins, and networking organisations such as the British Consultants' Bureau. More generally, we recommend that DFID significantly increase the amount of information on forthcoming competitions for contracts on its website, and that the website be updated on a more regular basis. Outdated information is of little use (paragraph 75).
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| 28. | The comments made by British Consultants' Bureau and International Family Health in written evidence lead us to question the adequacy of the mechanisms DFID currently has in place to ensure fair and effective decisions are made on the selection of contractors. We recommend that in its review of procurement, DFID include consideration of how its selection procedures might be improved so as to remove the perception that its rules are not always applied fairly, consistently or transparently (paragraph 79).
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| 29. | It appears that DFID does allow contractors involved in the design of a project to bid for future contracts for the implementation of the same project. We recommend that in its response to this Report DFID confirm that this is the case, and provide details of what mechanisms are in place to prevent consultants from designing projects which only they can implement (paragraph 81).
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| 30. | We recommend that DFID review the information it provides to consultants bidding for contracts so as to ensure that they are furnished with all the necessary information about the project (paragraph 82).
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| 31. | We are puzzled as to why DFID took the decision to embark on a resource centre agreement with John Snow International, despite its failure to meet all the criteria for inclusion on DFID's Consultants' Index. We recommend that DFID provide us with a full account of the circumstances under which approval may be given for consultants to be hired who do not meet the eligibility criteria (paragraph 89).
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| 32. | We welcome the work DFID has done to seek a multilateral agreement on aid untying. We also welcome the recent communiqué from the leaders of the G8 countries, which contained a commitment to an agreement to untie aid to the least developed countries, and look forward to further progress being made in negotiations at the OECD (paragraph 96).
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| 33. | We welcome the steps taken so far to decentralise DFID's procurement capacity, and we consider this to be an essential step towards increasing its use of local consultants, with the potential result of achieving a much greater and more sustainable development impact (paragraph 97).
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| 34. | We welcome the work that has taken place to increase the proportion of contracts which are let locally in those countries where DFID has been piloting new initiatives and building its procurement capacity. We also welcome the overall increase from two to six per cent of contracts which are let to local consultants (paragraph 99).
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| 35. | We recommend that DFID give consideration to ActionAid's proposal for larger contracts which would normally be let to UK-based consultants to be broken down into smaller contracts and let locally instead (paragraph 102).
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| 36. | We invite DFID to comment upon the potential use of targeted procurement in developing countries (paragraph 103).
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| 37. | Technical co-operation represents a large portion (43 per cent in 1998[140]) of DFID's bilateral oda. This portion of the programme must be fully incorporated into DFID's evaluation strategy (paragraph 104).
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| 38. | We recommend that, in addition to individual project appraisals, DFID periodically review the performance of each of its resource centres (paragraph 105).
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| 39. | We welcome DFID's pilot of outputs-based contracts, and we look forward to examining the results, and any proposals for changes in consultancy contracting procedures, in due course (paragraph 106).
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| 40. | We are not satisfied by the responses we received from DFID when we put to its officials our perception that there was a widespread fear among contractors of complaining about any aspect of its work. We are reassured to some extent by DFID's admission that it perhaps needed to work to obtain better feedback from its contractors, but we are alarmed rather than comforted by the implausibly low number of complaints dealt with by the complaints officer (paragraph 111).
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| 41. | We recommend that in reviewing its procurement procedures, DFID actively seek out constructive comments from consultants about the matters we have discussed in this Report, paying particular attention to their views on how complaints procedures might be amended to dispel the fear of complaining which currently prevails and to encourage constructive criticisms which might improve the Department's work (paragraph 112).
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| 42. | We recommend that DFID include in its contracting procedures a check to establish whether potential contractors appear on the World Bank's list of companies debarred from funds as a result of corruption. Such companies should not be awarded contracts by DFID. We recommend that DFID review the potential for cooperation with other donors on this matter, and inform us of the outcome of its deliberations as soon as they are available (paragraph 114).
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| 43. | We invite DFID to comment upon the possibility of adapting the DETR and HM Treasury guidelines on ethical purchasing to its consultancy procurement procedures (paragraph 116).
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| 44. | We accept that DFID should use consultants to implement some of its programmes. During this inquiry, however, we have found that DFID's procedures require improvement. In particular, there are concerns about the selection of contractors, the ability and willingness of contractors to make complaints to DFID in confidence, and appropriate safeguards against corruption. We look forward to the outcome of the current review, and trust that it will heed our recommendations (paragraph 117).
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