How To! Do MSD procurement #4: modifying internal processes to suit adaptive programmes

Adaptive management is central to market systems development. Programme teams adjust interventions, add and drop market actor partners, and pivot sectors as their knowledge of market systems improves. Yet each of these decisions has financial and legal implications. The underlying organisational and contractual infrastructure for MSD can easily be taken for granted and most adaptive management guidance is focused on technical issues.

Here we identify key principles for MSD programme managers who want to modify internal procurement processes that allow adaptation of partnership agreements and contracts. These include the importance of building trust and relationships with operations leaders and staff in programme teams at the HQ level and with donor agencies.

Competitive procurement processes do not work well when MSD programmes look to contract one private firm as an intervention partner (sole sourcing). But grant agreements, designed for working with local NGOs, can be difficult to amend or adapt to work with private sector actors. Hybrid mechanisms are desperately needed, but not easy to develop.

The problem manifests itself in relationship issues at two levels:

• at the programme level, between technical and operations teams
• at the organisational level, between programme leaders and HQ leaders

Areas of change and guiding principles

1. Modifying procurement and contract processes

There are processes you need to modify in any organisation to address the specific needs of MSD or working with private sector partners. How do you set up the contracts so that, when there is a change in your intervention or activity, you don't have to go through the process of a contract amendment every time you want to make a change?

• Develop contracts with market actors that reflect principles of self-selection
• Minimise approvals for changes to interventions/partnerships

2. Integrating technical and operations teams

Every MSD programme has its own internal organisational and team structure. It is up to programme leadership to make changes to formal and informal structures that increase trust and connectivity between technical and operations team members.

• Treat operations staff as a valued core part of MSD programme teams
• Change workflows to increase technical-operations interactions
• Explain the rationale behind policies and procedures

3. Relationships with donor

MSD programmes are acting on behalf of donors. The challenge is to stay true to the principles of the approach, while being accountable to rules, guidelines and processes of the donor.

If adaptive management is to function well, it is essential for all parties involved to be informed about what is taking place within activities. People and relationships become central. A narrow focus on only compliance and procurement misses an important opportunity for change: trusting relationships between programme leaders and donor counterparts. While there are structural incentives that can create a distance between donors and implementers, much can be done to improve the quality of relationships.

• Shift from a transactional model to a partnership model
• Understand donor incentives, constraints and risk tolerance

4. Relationships with HQ: programme managers and global support functions

Possibly the most under-appreciated opportunity for improving MSD is the internal relationship-building between field-based programme teams and their colleagues operating thousands of miles away in headquarter offices.

While leaders at HQ level are crucial for fostering understanding with other colleagues (in operations, finance and procurement), programme teams who are closer to implementation may perceive that top management at HQ is the primary source of flexibility and significant change. In such cases, strong leadership, foresight and clear communication from the donor can be useful leverage for influencing HQ to approve internal system changes. ‘By the book’ interpretations from donor and HQ alike can constrain programme leaders in the flexibility of their contractual toolkit. Some regulations may simply be unavoidable - and HQ teams tasked with ensuring adherence may simply be doing their job - even if they end up perceived as inflexible by programme teams.

• Create and exploit opportunities for HQ staff to spend time in-country
• Proactive efforts to build trust on both sides of the HQ-Programme divide adds value to implementing organisations
• Develop global organisational policies with some room for adjustment by programme teams

Read the full paper

BEAM Exchange’s full paper provides advice for programme managers on how to integrate operations experts into technical MSD strategies and build relationships with the donor representative and the implementer HQ. The guidance in each area of change is supported by examples from leading programmes, including several that have undergone overhauls from a more conventional value-chain or direct delivery to adopt the MSD approach.

It (and its three companion papers) is the collaborative product of a group of accomplished MSD practitioners and donors who worked together voluntarily over four months in early 2020 to synthesise their accumulated knowledge and experience of procurement arrangements for programmes.

Paper 1. Decisive structures: procurement format options for MSD programmes and their different
implications
Paper 2. Deepening the relationship: a stage-by-stage guide to strengthening partnerships between
donors and implementers in MSD programmes
Paper 3. Getting off the ground: practical lessons for the launch phase of MSD programmes
Paper 4. Fit for business: modifying internal procurement processes for adaptive MSD programmes

[Published: September 2021]

_______________________

This ‘How to!’ note, is one of a series in which practitioners share technical information about how to tackle a commonly met challenge in market systems development. If you would like to share your own ‘How to!’ note, please contact editor@beamexchange.org.