AUSAID ADVISER REVIEW & REMUNERATION FRAMEWORK Industry briefing 4 March 2011

Use of Advisers in the Australian Aid Program In 2010 AusAID instituted a number of reforms that will change the way in which the aid program uses and remunerates advisers Over time we aim to make greater use of other forms of technical assistance and not default to advisers Where advisers are used they will represent the most appropriate development response and receive remuneration packages that can be publicly defended

Adviser Review In 2010 Australia and our partner countries jointly reviewed the use of advisers by the aid program to ensure that each adviser position is meeting agreed development needs and priorities and; to agree on a process for regularly reviewing the use of advisers and considering requests for new adviser positions. A report synthesising the findings of the review across all countries is now available

Adviser Review - Key Findings The Review: confirmed that the majority of the 952 adviser positions assessed are of high priority and valued by partner governments. identified 257 adviser positions – mostly in PNG and East Timor, which will be phased out within two years. made recommendations to improve adviser effectiveness, such as setting clear and realistic objectives for adviser positions and increasing partner country ownership and management accountability for advisers.

Adviser Review - Government Response The Government supports the recommendations of the Review AusAID has begun working with partner governments to start implementing review findings Developed policy guidance for staff on the use of advisers, which outlines requirements for planning, managing and reporting on advisers Put in place an Adviser Remuneration Framework

Adviser Remuneration Framework The Framework is a set of market-based, long and short term remuneration rates Applies to all commercially contracted advisers Replaces Interim Fee Guidance Ministerial commitment Announced by Minister Rudd on 15 February 2011 Now in force Strong mandate from Minister and Director General

Background and methodology Three key principles: Market-tested competitive remuneration Consistency Value for money Benchmarked against Australian labour market data and other donors Primarily ADB (for long-term adviser rates) Loading included in Framework short-term adviser rates to account for lack of entitlements (e.g. leave) and period without earnings Framework contains remuneration and specified allowances Management fees, profit and overheads excluded and still subject to competition and negotiation

Impact Downward pressure on adviser rates Consistency in rates Adviser pay is linked to performance Allows AusAID to report adviser costs accurately More rigorous approach to design More structured approach to negotiation and guidance

Impact Short-term rates – significant change Split remuneration systems – handling of Period Offers Some additional transaction costs May result in some advisers choosing not to work for AusAID and a need to broaden our pool of expertise AusAID will monitor these impacts closely

What determines adviser remuneration? Four factors : Type of expertise required (the Professional Discipline) Level of responsibility attached to the position (there are four Job Levels in the Framework) Duration of engagement (long-term or short-term). Credentials / CV / past performance record (determine the pay point in the remuneration range an adviser is paid)

Allowances The Framework contains two allowances, applicable to Long Term Advisers only: Mobility Allowance: for cost of living differences and other impacts personal associated with taking up a position in a country other than an adviser’s home country – calculated as a percentage of salary and varies depending on whether adviser is accompanied or unaccompanied Special Location Allowance: country-specific supplement for locations specified in AusAID OCOS No other discretionary allowances permitted under the Framework e.g. children’s education, reunion fares All work-related expenses charged at cost on a reimbursable basis e.g. accommodation, mobilisation, security

Management fees Competitive tenders (projects/facilities/period offers) Fee is subject to financial assessment of bids Direct sourcing (projects/short-term assignments) Maximum fee up to 10% of total adviser remuneration (for individuals) limited to costs not solely linked to the assignment (e.g. professional indemnity insurance, office running costs) Proposed fee to be assessed and cleared by PEPD (for projects)

Framework Application Tender documentation will specify how the Framework is to be applied. “Specified personnel” positions will be classified according to the Framework and determined at the design stage. Tenderers will need to classify any “unspecified personnel” positions according to the Framework. Where advisers are being engaged under an existing contract (e.g. Facility), AusAID approval in writing is required when: Offering a rate above the applicable Market Reference Point in the Framework. This should be agreed at the TOR preparation stage.

Long term rates – Discipline Group B

Adviser Performance All advisers now subject to mandatory Adviser Performance Assessment On completion (short term) or annual (long-term) Conducted by Managing Contractor for most subcontracted advisers or AusAID staff for directly contracted advisers or identified key positions Consistent with AusAID’s existing process for contractor performance and natural justice principles. Adviser and contractor performance records will be held on a central Register managed by AusAID: Record of underperformance requires AusAID approval to engage Record of high performance may justify Premium Rates

Transition to the Framework The Framework will apply to all design processes currently in train or completed prior to its introduction all contract extensions, unless the DG approves otherwise The Framework will not apply to existing contracts (including existing period offers) tenders that closed prior to its introduction The Framework will apply on a case-by-case basis to RFTs issued prior to its introduction but not yet closed

Monitoring Framework compliance is on the Audit Work Plan PEPD will monitor patterns in use of advisers across programs how positions are being classified actual remuneration rates acceptance/rejection rates Formal review point in 12 months time

Further information Suite of documents will be made available on Internet: Guideline – includes rates FAQ – updated regularly based on feedback Calculator Explanatory Note on the Framework Contact relevant AusAID contact officer, agreement manager or Period Offer Panel manager for Framework queries relating to existing contracts & tenders underway For all other general enquiries relating to the Framework, please use our email enquiry service adviser.remuneration@ausaid.gov.au