Priti Patel has vowed to bring in a tough new code of conduct for foreign aid contractors, which will allow a new compliance team in the Department for International Development to end contracts for unethical behaviour.
The international development secretary laid out plans for legally enforceable sanctions, as part of a wider review that details a shake-up of the “crony” market in which Britain’s aid provision operates.
The move comes months after MPs on the International Development Committee accused her department of a “worrying over-reliance” on self-regulation, calling on them to take a “more robust approach” to set and enforce rules.
Their inquiry followed accusations that Adam Smith International (ASI) - one of the UK’s biggest foreign aid contractors - had tried to profiteer from leaking DfID documents.
The committee also noted that the department's headcount had not kept pace with the increasing aid budget, and said its low administrative capacity had led it to offer too many contracts to a handful of larger external organisations.
Patel's plans include increased scope for the department’s compliance team to "inspect costs, overheads, fees and profits of suppliers in detail and new powers to intervene to tackle profiteering and cut out waste", as well as enforcing a code of conduct with legally enforceable sanctions, including ending contracts early, for those caught breaking the rules.
The code of conduct for suppliers and DfID staff alinforms them of their duty to report violations, be aware of conflicts of interest and ensure relationships with external partners are "managed professionally".
It says: "To protect our reputation as an organisation that always strives to do the right thing, we need everyone doing business on behalf of DfID to live up to our values and standards of behaviour. It is important to remember that, as a member of staff, you represent DfID during working hours, not yourself as an individual."
Following a review into DfID's management of its contracted suppliers, the department introduced new contract terms and conditions that have been applied to new procurement tenders since the beginning of September.
Today it has also begun the process of renegotiating existing contracts in line with the changes.
Patel also vowed to publish annual league tables of supplier performance, with a promise to “name and shame” those falling short of expectations.
She has long attacked the wasteful practices of some of the contractors handling Britain's £13bn aid budget, and said the new powers would be used to tackle that waste alongside uncurbed profiteering.
She has also been deeply critical of hefty pay-outs to bosses and said new proposals will end “excessive rewards” for the consultants and middle-men who implement aid contracts, while bringing an end to “underhand practices of recent years”.
The new rules also aim to cut back on red tape to allow DfID procurement to be opened to new entrants, and protect smaller businesses from exploitation by larger companies, who would previously use them to launch a bid and then dump them once they had won.
Addressing the Conservatives party conference, Patel said the reforms were about encouraging the private sector to work with DfID while bringing “end the appalling practice of fat cats profiteering from the aid budget”.
“I‘m taking the toughest approach in Whitehall to crack down on contract costs,” she said.
“On my watch I will end the crony market where a handful of suppliers, would win contract after contract, which blocked innovation and competition.
“I will always put the interests of taxpayers and the world’s poor ahead of consultants and middle-men.”
She said the government was committed to winning over taxpayers' confidence in the sector, which she admitted was at a low point.
“We all know that money spent by ministers and civil servants does not belong to them. It belongs to you – the very taxpayers who have worked hard for it," she said.
“As Margaret Thatcher once said: ‘Pennies do not come from heaven. They have to be earned here on earth'. The public are right to be angry when they hear stories about wasted aid."