4.2 Contracting & Start-up
Once the partner is selected it is time to agree on the terms and conditions of the partnership. Contract negotiations, as well as starting-up the partnership, can be a lengthy process. It often happens that this process takes too long, causing frustrations and delays in the response. Having a framework agreement in place developed during the EPP, will significantly reduce the time spent in this process. Still, for every individual project, the following steps will need to be done:
Contracting & Start-up Checklist
- Decide on your model of collaboration
- Develop and agree on partner budget
- Develop and agree on partner work plan
- Develop and agree on M&E plan and tools
- Negotiate terms and conditions & sign off partnership agreement
- Transfer 1st instalment to partner
- Conduct inception workshop
The content of a partnership agreement, as well as the accompanying budget and work plan, should be developed jointly. Do not impose anything to your partner. This will only cause a lot of frustration and problems during the implementation stage.
A ‘model’ for partnership will describe how much, and in what ways, CARE is to be involved in operations. At one extreme, partners might have great autonomy, while CARE just monitors and receives reports. At the other, CARE can be very hands-on-directing activities; handling procurement, logistics or finances; providing training or mentoring; and participating in day-to-day decisions.
Factors that should inform decisions about the model for collaboration include the capacities of each agency, the programme complexity, the partner’s track record, the degree of trust and the amount of funds. These vary case-by-case. But in general, the smaller the funding, the greater the partner’s capacity; and the more trust CARE has, the more hands-off it can be.
- Whether all aspects of a programme can be implemented by a partner, and whether CARE should conduct some of the activities
- Which functions-procurement, logistics, warehousing or financial-can be managed by partners, and which should be handled by CARE
- Whether CARE should provide TA or training, for example, in programme approaches, standards, finance or procurement
How the relationship will be coordinated and managed-who makes what decisions, how often management meetings take place, etc.
- Agree on budgets before programmes start-negotiating them after the start is more difficult.
- Use formats and budget line descriptions that meet donor/CARE standards.
- Review budgets to ensure all costs are covered, and are not too high or low.
- Be clear on administration/programme split. A split of 40:60 is a common upper limit.
- Pay partner overhead. This is often 5-10% of budgets. If donors won’t pay it (and they often won’t), CARE can agree a split, or find other ways to budget it.
- Be firm. Some see emergencies as an opportunity to submit ‘fat’ budgets.
- Use established partner scales for salary, benefits, per diem and transport, within permitted donor limits. Otherwise, use CARE or common local rates.
- Avoid duplication of project staffing structure between CARE and partner. Remember that CARE is not a direct implementer and has different responsibilities.
- Include simple narrative notes in budgets to explain costs.
- Budget line flexibility should be clear. Establish which budget lines may vary, and by how much. Budget line flexibility is usually around 10%.
- Budget amendment must be governed by contracts. Justification is essential.
- Assign partner costs to a sub-grant account if possible. Otherwise, consider how to manage account codes.
- Agree on exact activities, division of responsibilities and timeline. This is the time to get specific and think about the details.
- Be flexible. Particularly during emergencies the situation will change on a daily basis. Hence the work plan may be modified multiple times to reflect the changing situation on the ground.
- Include training sessions and capacity building interventions where relevant.
- Also start working on a procurement plan as soon as numbers and locations are known. Procurement may take a lot of time so the sooner this plan is ready the better.
- Developing a M&E plan during the contracting/start-up stage ensures the partner is well aware of the M&E standards and obligations.
- Agree on key indicators, data tracking sheets and reporting requirements.
- Keep M&E light, simple and easy to use! Focus on getting essential M&E data only. Complicated tools and heavy M&E protocols are not suitable for emergencies. This can cause delay in program implementation by overburdening the partner with paper work.
Consider the following when developing the partnership agreement:
- A standard format and conditions should be pre-agreed by senior CO staff (and possibly a lead member representative). If possible, use established formats.
- The conditions of the contract should be discussed and determined jointly with the partner agency. Do not just impose conditions to them.
- Senior staff in finance, support and programme departments should be consulted and approve sections of the contract related to their area of responsibility.
- Approval and sign-off authority for contracts should be clarified in the sub-grant procedures. Usually the size of the grant determines the level of sign-offs.
- Make at least one original copy of the contract each for the partner and for CARE. CARE should hold at least one original in the CO HQ. The project managers must also at least get a copy for reference.
The following is an example of the structure and content of a standard partnership agreement:
- Contract number, date
- CARE/partner name, address, contract manager and key staff if required
- Start & End date
- Goal, objectives and perhaps also more general core values
- The scope of work/cooperation (what, where, when)
- Roles and responsibilities, such as:
- meeting programme standards and adhering to codes of conduct
- ensuring coordination and management
- Organisation-project management, coordination structures
- Amount of grant and eligible expenses
- Disbursements and bank details
- Reporting requirements
- Specific donor requirements (if any)
- Asset and inventory management
- Account keeping and audit
- Methods of dispute resolution, amendment and termination
- General issues-use of name, rights to work, visibility, force majeure, etc.
- Clauses to insure against fraud, corruption, terrorism
- Annexes should include:
- Activities, targets, work plan, budget and disbursement/reporting schedule. These might be in a donor-approved project proposal
- reporting requirements, reporting formats
- Procurement, logistics and financial management rules.
- M&E plan
In order to save time and commence implementation immediately, some COs authorize partners through a pre-authorisation letter (PAL) to begin charging expenses up to a certain amount (usually start-up costs). The PAL can be signed immediately after having received formal approval from a donor, and is effective until the date of signing of the partnership agreement. Costs made in the start-up phase of the project will then be reimbursed under the resultant partnership agreement. Using a PAL is a good practise to speed-up the process and keep things moving during the start-up stage.
Once the partnership agreement is signed off by all parties, the 1st installment should be transferred to the partner. CARE has an obligation to transfer funds to a partner as soon as possible. Delay in transferring funding to the partner can be a huge obstacle in effective program implementation, particularly with partner that have limited pre-financing capacity. The new grant will have to be set-up in the administration systems and this may take some time. Following up on timely installments to partners is a critical task for CARE staff.
An inception workshop (usually 1 full day) should be organised a soon as budgets and work plans are agreed upon. The workshop is meant to introduce the program to all relevant staff and kick-start implementation. This is the perfect occasion to introduce CARE’s culture and principles, explain specific donor regulations, agree on programming standards, clarify mutual expectations and refine your implementation plans. Typically, staff from programs, finance, procurement as well as safety & security is invited and will organize short sessions.