It’s Valentine’s Day…
We all know that healthy relationships require trust. This goes for romantic, platonic and business relationships. Misaligned incentives, unfair power dynamics, and inconsistency between actions and words break trust and do harm.
So we need to talk about something that’s breaking trust within the global development community.
It’s called bid candy. It’s when a large contractor promises to work with smaller, more innovative firms, and especially local organizations, in order to make their proposals to government agencies and donors like USAID more attractive.
But once they’ve won the award, big contractors cut smaller firms out of the deal.
Or, they’ll wait to subcontract any work until the last year of a multi-year award. But by that time, they’ve cut the budget in half, changed the scope of work, and given the firm just a fraction of the time they need to deliver results.
Or, they’ll ask smaller partners to write substantial parts of their proposals, but cut them out of the final product and submit the technical approach to USAID as if it were their own.
Why does bid candy matter? The vast majority of USAID’s spending still flows through just a handful of its legacy contractors, so subcontracting is still the only viable way for local organizations and smaller organizations to work with USAID.
Small firms and local organizations spend tens of thousands of hours and dollars every year trying to subcontract with USAID’s largest prime contractors. They depend on that promised revenue to serve their communities and scale their impact.
74%
But nearly 74 percent of local organizations and other non-traditional USAID partners told us the agency’s largest contractors routinely cut them out of promised work.
Over the last five years, of the nearly $60 billion they made from USAID, larger US-based contractors sub-awarded just over 14 percent of what they made to local organizations.
“If we don’t see changes soon, we’re out... We are so disenchanted with this sector. We are losing our ability to work in it.”
So on this Valentine’s Day we’re asking for your help to rebuild trust:
If you’re a large USAID contractor, when you submit your proposal to USAID, publish up-front what you said you’d do. Disclose publicly the percent of work you said you’d sub-award to smaller firms, including local organizations. Then, each quarter, publicly report how you’re following through.
If you’ve been a victim of bid candy, or if you are a frontline organization and you want to help us build a new way forward, you have a role to play. We’re drafting a new Terms of Service to show what a more equitable way of working with USAID’s largest partners can look like. Help us identify what needs to change. Fill out the survey below to get involved.
Finally, USAID, if you’re reading this, here’s what you should do. Barring security and safety concerns, you should require contractors holding large awards to make all award data public. That includes the promises they made to win the award and then public, quarterly reporting to show they’re keeping their word. Administrator Power has talked about the bid candy problem before. It’s time to take action.
To do the hard work of building a future together we need a solid foundation based on trust. Get involved and help us build relationships that allow for thriving ecosystems for generations to come.
