Distributing Contracts: Experiments in Nepal

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In our last blog post, we talked about the interviews we are doing with aid agencies to understand what systems could support them to procure more of their needs from small-scale manufacturers local to the communities where they operate. This post will focus on one of those systems, contract distribution, and talk about some work on it that MakerNet member Field Ready is doing in Nepal.

As part of the DFID-funded Frontier Technologies Livestreaming program, Field Ready has been exploring distributing contracts for 3D-printed parts. The customer is an NGO that trains masons and engineers in earthquake-resistant house building techniques, so they can build back with safer structures than those that crumbled in the 2015 earthquake. They plan to use 3D printed model houses with different features in different colours, to help explain techniques like corner stones, through stones, and reinforced concrete banding.

The 3D model of the completed house. Image credit: Field Ready

The 3D model of the completed house. Image credit: Field Ready

One of the issues with trying to persuade large buyers, such as governments and aid agencies, to use local manufacturers is that they don’t want the administrative burden of contracting with lots of different suppliers, all supplying small quantities that are needed close to where they are located. What is needed is a method of distributing contracts so that the large buyer only has to deal with one contract, but multiple small manufacturers can supply the goods needed.

The ‘offline’ way to do this is for another party to act as a contract intermediary. Sometimes this happens when several small producers come together in a co-operative, able to sell their products together. This can be an excellent solution, but it requires the producers to have a high degree of cooperation, which is not always realistic – particularly when you are talking about geographically dispersed producers. Sometimes one producer acts as a prime contractor and takes the risk on the contract, and sub-contracts other parties – but again it can be hard to get the necessary degree of cooperation, even if one manufacturer is large enough to take the contractual risk.

For this particular contract, Field Ready acted as an intermediary between the NGO buying the product and the 3 local producers making it. This meant that Field Ready took the risk and the quality control role. If one or more of the suppliers had provided poor quality product to Field Ready, they would still be required to provide good quality product to the customer NGO.

 

The separately printed components (left) and the houses taking shape (right). Image credit: Ram Chandra Thapa

The separately printed components (left) and the houses taking shape (right). Image credit: Ram Chandra Thapa

In this case, part of the objective was for Field Ready to help develop the skills & capability of the local suppliers. Two of them were new to 3D printing and needed a lot of technical support, as well as capacity building on the administrative side – issuing invoices, etc. The third supplier was already established and far more capable. With different degrees of support, all three manufacturers produced parts, in the required time, which met the quality tests.

One of the completed houses, demonstrating architectural safety features in different colours. Image credit: Zener Technologies

One of the completed houses, demonstrating architectural safety features in different colours. Image credit: Zener Technologies

MakerNet’s CTO Daniel Paterson is now working with the Field Ready team to develop a Minimum Viable Product version of a blockchain-based smart contracting system. This system, which manages contract distribution, quality approval processes, and payments, could one day remove the requirement for there to be an intermediary in the contract between one buyer and multiple sellers. That is what will make the possibility of one large buyer sourcing from many small suppliers far more practical and scalable. More on that later in the year!