APPENDIX 16
Memorandum submitted by British Consultants
Bureau
INTRODUCTION
This memorandum on the implications of the unilateral
untying of British bilateral aid is submitted by the Chief Executive
BCB at the request of the 300 Consulting and other Professional
Service members who cover 115 disparate Sectors and all of whom
are engaged in working internationally. With some 60 per cent
of the membership having undertaken projects for DFID within the
last few years, BCB arguably represents the largest single concerned
commercial grouping. It should be underlined however that BCB
speaks for those in Professional Services rather than in the provision
of goods. The sum of money involved in tied aid is in the order
of £300 million of which £190 million is for consultancy
and therefore directly related to our work. In addition some of
the research-related consultancies benefit from receiving research
contracts allocated from another £100 million. We estimate
that this is equivalent to some 7 per cent of BCB's members' annual
fee earning worldwide. The BCB membership represents some 40,000
people involved directly or in support of international consultancy.
Our very real concern is that a substantial loss of DFID projects
to our international consulting competitors will result in a potential
loss of jobs for people working in or from this country, particularly
amongst the SMEs.
CONSULTATION
Although we in BCB may not be totally in agreement
with the policy change, particularly its timing, we would like
to acknowledge the effort made by the Secretary of State for International
Development and her senior officials in ensuring that BCB was
extensively consulted during the drafting and publication of the
White Paper. Furthermore, since then a working group made up of
BCB members and DFID officials has been meeting to use the experience
of the private sector in the process of improving and modifying
DFID procedures for untying. This is in line with the International
Development Committee's advice contained in the Eighth Report
(475).
ATTITUDE TO
UNTYING
The UK has one of the most well developed independent
Professional Services Sectors. It is highly regarded worldwide,
extremely successful in winning work and generally very competitive,
despite an adverse pound. The bedrock on which this is based is
the successful completion of projects funded from this country
and other IFIs. Recipient countries see how well UK firms carry
out consultancy projects, and these are the catalyst for inviting
such firms to do further work. Moreover this helps to generate
two-way trade between UK and the country in question. BCB is entirely
in agreement with the argument that firms in recipient countries
should be fostered and, provided they are capable and professionally
competent to do consultancy work, should be allowed to compete
on equal, or perhaps even more favourable terms. This is why BCB
advocates that members should open local offices, for the most
part staffed by local people, and of course many have done so
the world over.
By opening UK bilateral work to our continental
and other competitors who are not reciprocating in the untying
process, we open the door to them winning not only initial DFID
projects, but potentially any follow-on work or trade exchange
that may result. If therefore the policy of unilateral untying
does not, after a finite period, lead to others also untying,
UK should review whether the policy is in the national interest.
With a strong and successful international Professional
Services Sector, the UK has little to fear from a general untying
of aid. It is however unfortunate that the Government has not
waited until a larger grouping of like-minded countries agreed
to implement the policy together. Furthermore with deliberations
currently underway in Brussels into the legality of tied aid within
EU countries, it might have been better to have awaited their
ruling.
Last summer the International Development Committee
commented in detail on DFID's procedures. An implementation date
of 1 April 2001 undoubtedly sets the Department a very difficult
and perhaps unrealistic target to achieve procedural reform.
Despite these concerns, BCB accepts that the
policy of untying UK bilateral aid is effectively a fait accompli.
The Government must therefore now ensure:
— A political agenda is spelt out for
working with other like-minded countries to establish total untying
of bilateral aid worldwide;
— All concerned government departments
should work together so that the UK's commercial potential to
win work under multi-lateral development programmes is maximised;
— The Department for International
Development should have procedural changes in place to cater for
the untying of aid by the implementation date of 1 April 2001,
not just within UK but in all regional offices worldwide.
GENERAL UNTYING
OF AID
Certain European countries such as the Dutch
and Swedes are in favour of comparable untying policies. UK should
now make vigorous efforts to ensure that all those who agree with
this policy worldwide are working together to apply pressure on
the rest. Moreover specific efforts should be made to ensure that
untied projects in like-minded countries are positively identified
for the benefit of British consultants seeking to assist in their
completion.
At the same time pressure should be brought
to bear on the European Commission for an early conclusion to
the deliberation on the legality of tied aid. Furthermore with
much of the technical assistance from such as the World Bank or
Inter-American Development Bank provided by Trust Funds it is
important to ensure that all Trust Funds are untied, available
to all potential bidders for projects, and thus as cost effective
as possible.
OPPORTUNITIES FOR
UK FIRMS IN
MULTI-LATERAL
PROJECTS
Post untying the UK Government could do much
to assist British firms by ensuring that in the Multi-lateral
Financing Institutions, every opportunity is taken to help British
consultants win work. Too often in the past there has been a tendency
in International Committees, (for example in discussing Brussels-based
Development Programmes), to dwell on the development issues without
giving enough emphasis to the commercial potential for British
companies. This is in sharp contrast to our European competitors
such as the French and Germans who at every opportunity, irrespective
of their Government departmental allegiance, strive to ensure
that their commercial concerns are being suitably addressed and
the private sector notified about potential work. Helping exporters
should be incumbent upon everyone in this country not simply those
in trade-related posts or those seeking to work overseas. BCB
would like to see all concerned government departments working
as a team to ensure that the playing-field is level and the opportunities
for British companies are as good as those for anyone else.
DFID PROCEDURES
As explained in the introduction BCB is working
closely with DFID to ensure all required procedural changes are
in place for the opening-up of UK's Bilateral Aid to competition.
This will undoubtedly result in a major modification to DFID's
current working practices, both here in UK and in the regional
offices. A great deal of emphasis will have to be placed on advertising
projects correctly and for all to see, where appropriate in the
EU Official Journal, DFID Website etc. Moreover detailed procedures
are being revised for selection, explanation of rejection, and
project implementation etc as well as the introduction of a suitably
revised complaints procedure. All this is being discussed in detail
in the DFID/BCB Working Party .
It will however require enormous effort on DFID's
behalf to meet a 1 April deadline and we have some doubt that
this can be achieved.
CONCLUSION
The Unilateral Untying of Bilateral Aid is undoubtedly
a brave step. If this is the catalyst for a rapid move to general
untying of bilateral aid and the objective achieved of recipients
receiving the full benefit of the initial investment, it will
prove highly worthwhile. It is imperative however that the consequences
of this unilateral action are carefully monitored and the potential
for UK firms to win work is not sacrificed for a point of principle
which is eventually found to have had no influence on the rest
of the world.
Colin Adams
Chief Executive, British Consultants Bureau
January 2001
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