01 SOW.docx

Statement of Work

Advisor to Support Compact Development Team (CDT) Transport Infrastructure Indonesia II

A. Introduction

The Millennium Challenge Corporation (MCC) is a Federal Corporation created under Title VI of the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2004. Its mission is to provide assistance that will support economic growth and poverty reduction in carefully selected developing countries that demonstrate a commitment to just and democratic governance, economic freedom, and investments in their citizenry.

Compacts typically include the planning, design, construction, operations and maintenance of major infrastructure elements. Since its inception, MCC has developed and implemented many Compacts in various low and lower-middle income countries that included the planning, design, and construction of transport and vertical structure infrastructure.

The MCC requires professional services to provide advisory expertise to support Indonesia II compact development team (CDT) based in Jakarta focusing on assessing and developing investments in transport and logistics sector within the framework of Indonesia II compact.

Background

Infrastructure development in Indonesia faces challenges at both the supply and demand sides of financing. On the supply side, the problem is prompted by shallow, costly financial intermediation. On the demand side, the absence of financially viable infrastructure project pipelines, caused by weaknesses in project planning/prioritization combined with low readiness and poor delivery of projects, restricts the ability to absorb the existing supply of infrastructure financing, and to attract commercial sources of funding. Existing infrastructure financing practices by state-owned enterprises, commercial banks and weak involvement of institutional investors, lead to inefficient financing structures over the lifecycle of infrastructure assets, which dampens enthusiasm to invest and as a result restricts innovative types of financing from emerging.

Poor project preparation and lack of expertise to match the needs of different investors and the characteristics of projects are among the challenges on the demand side. Lack of such capacity has contributed to the scarcity of financially viable infrastructure projects. At the central government level, another problem relates to public investment framework that is not yet reflecting the best practice to leverage private financing. There is no clear criteria nor procedure governing the ways in which projects can be undertaken by a government unit through public procurement, or through which they can be assigned to SOEs or be offered to the private sector through a PPP scheme. The current public investment framework may also limit the number of financially viable infrastructure projects bid out to the private sector.

Given the above challenges, the demand side of the Concept Note as submitted by the Government of Indonesia (GoI) to the MCC for investment consideration as part of Indonesia II compact development focusing on the following three (3) interrelated elements namely:

i. Encouraging the use of blended finance and the development and application of de-risking instruments.

Activities under consideration include:

· Development of clear PIMG to improve the way in which public investments in infrastructure are incorporated into the budget during the planning process from the local to the national level. The PIMG will include references to the regulations and guidance regarding gender equality, social inclusion, women's economic empowerment, and citizen participation in the planning, design, and implementation of infrastructural development initiatives.

ii. Development of a Regional Project Development Facility (RPDF) Activities under consideration include:

· Creating a provincial-level Project Preparation Facility (PPF) to build capacity at the local government level, particularly with the Government Contracting Authorities (GCAs) responsible for project origination, development, and procurement strategy, while developing and preparing a pipeline of viable transport and logistics infrastructure projects. The anticipated “product” from such a PPF includes a streamlined and technically sound project identification and preparation process that is consistent with international best practices related to engineering, economic, financial, environmental, and social performance, and that guides project development through distinct stages of planning, preparation, transaction, construction and commercial operations resulting in viable projects which leverage bankable public-private partnerships (PPPs).

iii. Identification, development and implementation of demonstration transport and logistics infrastructure projects that can attract commercial capital.

Activities under consideration include:

· Identification, development and implementation of demonstration infrastructure projects could emerge from the sub-national or national level planning process. The demonstration project(s), at the minimum, must be technically feasible, demonstrate a minimum of 10 percent Economic Rate of Return, have mitigatable environmental impact, involve minimal land acquisition, benefit women and other vulnerable groups, is fully implementable within the 5-year compact period. The project(s) should clearly demonstrate the implementation of an innovative financing structure through the financing period; property ownership; financing credit basis; financing purposes; source of repayment; guarantee; and degree of financing risk. Any projects should present minimal environmental and social challenges and have clear economic, financial, and social merits in their own right. The demonstration projects should also be implementable within the MCC compact’s five-year period in terms of construction, and be officially handed over to the relevant sponsor/owner before the end of the compact term.

Focus on Transport and Logistic Sector

The impact of lagging transport and logistic infrastructure currently appears in a number of forms in Indonesia. Congested ports, underdeveloped inter-island and inter-area transport systems, and deteriorating road systems at the province and district level have led to expensive logistics costs. Logistics costs in Indonesia are estimated at about 14% of total production costs, much larger than the current 5% in Japan, the highest performing country surveyed. 2019 World Bank Logistics Performance Index (LPI) ranks Indonesia 51, (lower than Thailand at 34, and Malaysia at 35) but does better that the Philippines which is ranked at 64. A World Bank survey of logistics costs for manufacturers in five big cities in Indonesia, i.e. Jakarta, Surabaya, Semarang (Java), Palembang (Sumatra), and Makassar (Sulawesi), suggested that the average total logistics cost is 20% of sales, broken down into 17% logistics administration, 26% inventory, 17% warehousing, and 40% percent transport and cargo handling. Congested and underdeveloped international ports also limit the efficient integration of Indonesia’s manufacturing sector into international production networks. As a result, when a business cannot operate as efficiently as possible, its overall productivity is harmed. Therefore, the development bottleneck created from Indonesia’s currently lagging infrastructure compromises the sustainability of medium- and long-term economic growth.

B. Overall Scope

MCC seeks an individual consultant to assist the CDT in Indonesia to undertake various assignments aimed at providing direct professional services to help coordinate identify, assess, and develop transport and logistics infrastructure demonstration projects for investment consideration by MCC under the Indonesia II compact. The scope of the consultant includes advising the CDT on various aspects of transport infrastructure planning, engineering, design, construction, operations, maintenance, finance, budgeting, policy, regulatory, as well as assess institutional framework, capacity building/ technical assistance (TA) interventions that may be considered/proposed as part of the MCC in the sector.

C. Country

Indonesia and any other eligible MCC country.

D. Tasks and Deliverables

Tasks:

D.1 TASK I: Overall Support to CDT transport and logistic infrastructure sector

Within the context of project identification, planning and Indonesia II compact development process, consultant shall:

· Review all relevant documents pertaining to the sector demonstration project(s) that are under consideration such as conceptual/preliminary studies, pre-feasibility and full feasibility studies, etc., and communicate to CDT pertinent points/findings as applicable;

· Interface with all the relevant government and non-governmental institutions including State Owned Enterprises (SOEs), private sector, and civil societies and the donor community for the purposes of gathering information pertaining to potential demonstration projects in the sector;

· Undertake analysis and studies in the transport infrastructure to support planning and decision support to the CDT during compact development process as may be required;

· Coordinate with MCC staff including legal, financial, procurement, gender and social inclusion, environmental and social performance as well as consultants/contractors that provide services to the CDT as may be required.

· Develop study reports, meeting minutes, presentations and short-term action plans and other routine correspondences for the CDT as may be required;

· Undertake both domestic and international business travel(s) as may be requested and produce relevant trip reports.

D.2 TASK II: Technical Support in Planning, Development and decision Support

The consultant shall provide rigorous technical analysis/studies to the CDT to support decision making in the planning and development of transport infrastructure that include the following:

· Assist in the due diligence and program development of selected infrastructure projects in the sector that may be considered for MCC investment as demonstration project(s);

· Undertake data collection, analysis and studies in the sector to support planning and decision making by the CDT as may be required;

· Assist the CDT in reviewing the relevant institutional, policy and regulatory framework governing the sector in planning design, development, financing, and implementation of transport infrastructure projects and identify gaps and areas requiring improvement for consideration under Indonesia II compact;

· Review and advise the CDT on the quality and standards of conceptual, pre-feasibility, feasibility, designs and other relevant technical studies of candidate demonstration projects in the sector and identify gaps relative to best international practices and areas for improvements for consideration under Indonesia II compact;

· Review and assess order-of-magnitude cost estimates, plans, specifications and construction schedule, works bid documents of selected demonstration infrastructure projects in the sector to support decision making on the part of the CDT;

· Review the applicable or appropriate implementation arrangements and program/project management processes particularly involving PPPs and blended financing that may be under consideration for demonstration projects;

· Review the appropriate technologies, construction processes, and means and methods of construction of proposed demonstration infrastructure projects;

· Review all documents related to compact development and reports such as Compact Administration Manual, Risk Assessment and Management Plan, and Preliminary Engineering Design Report leading up to the approval of the investment project.

D.3 TASK III: Design, Procurement, Construction, Operations and Maintenance (O&M) Services

The consultant shall assist the CDT in the various phases of formulating implementation arrangements with respect to procurement, construction, O&M processes including the following:

· Assist in assessing local design, construction, operations and maintenance capabilities in the sector;

· Develop and/or review Terms of Reference (TOR)/Scope of Work (SOW), and Terms and Conditions for conceptual studies and technical assistance services to be procured by the CDT;

· Review and assess estimated levels of effort and fees for design and construction management, program management services as may be required as part of implementing demonstration transport infrastructure projects, and

· Assist in reviewing and evaluating technical proposals/bids submitted by planning, design, and construction firms.

Deliverables:

Deliverables will be outlined via Technical Directives that will be issued by the responsible CDT Officer. Deliverables may include some or all of the following:

· Technical Memorandums

· Technical Study Reports

· Trip Reports

· Presentations

· Ad hoc reports as may be required

All deliverables shall be submitted in electronic form where feasible, and in hardcopy as necessary and/or required. For Technical Study Reports, deliverables will be considered “draft” upon initial receipt. Drafts will be reviewed and accepted or concerns raised/comments provided within one weeks of receipt. The Consultant shall appropriately address the Corporations’ concerns and provide final deliverables within one week of receiving the MCC response.

E. Period and Place of Performance

All work under this contract will be completed between effective date of the contract award through a one year period with up to two option year periods. The estimated level of effort is estimated at up to 1200 hours for the Base year and 600 hours and 500 hours for Option 1 and 2 years, respectively. An estimated 5 domestic business travels and 2 international per year. MCC anticipates this level of effort but does not guarantee it, as it may decrease depending on actual project requirements.

The performance period of the contract is as follows:

The Consultant shall perform the tasks under this contract in Jakarta, Indonesia CDT office(s) and at his/her own facilities.

F. Subcontracting

Experts are authorized to subcontract data collection, data preparation, data or economic analysis, and related services as needed. The overall costs for subcontracting shall not exceed 25% of the expert’s total negotiated unloaded direct labor cost.

G. Conflict of Interest

The expert will be precluded from bidding on work and services (design, assessment, construction, and supervision) to be procured by the local accountable entity or using funds advanced under MCC work in the relevant country.

H. Timing and Reporting

All formal communication with MCC, including reports, will be submitted to the COR/PM. The COR/PM for this requirement will be identified via separate correspondence.

The COR/PM will have technical responsibility for monitoring the contractor’s performance. The COR/PM will review and evaluate the contractor’s performance, and also will coordinate any communications with relevant counterparts and other donor agencies and organizations.

Any changes in the terms of the Call Order will be made in writing and approved by the Contracting Officer. No representation of the COR/PM shall serve as a basis for an alteration in the general scope of this Call Order or of the terms and conditions of the Call Order unless confirmed in writing by the Contracting Officer. The contractor must communicate with the Contracting Officer on all matters that pertain to the Contract terms. Proceeding with the work without proper contractual coverage could result in nonpayment for that work.

The designated Expert would be expected to coordinate with local authorities responsible for MCC Compact implementation as well as other donors, where relevant. However, designated Expert would report directly to the designated COR/PM.

I. Evaluation Criteria

The Senior Transport Advisor will have a background appropriate to the tasks and output set out above shall, at a minimum, have:

· A master’s or advanced degree in civil engineering or the equivalent from a recognized university;

· Minimum 20 years successful experience in transportation and logistics infrastructure project that include project planning, preparation, financing, budgeting and implementation including knowledge of environmental assessment and land acquisition processes in Indonesia;

· Extensive knowledge of policy, regulatory, institutional, planning, budgetary processes with good understanding of private sector partipation and PPP based project financing involving blended financing in the transport sector;

· Proven ability to navigate through a complex institutional environment both the governmental and nongovernmental spheres involved the identification, planning, preparation, financing, procurement, implementation, operations and maintenance of infrastructure both on a national and subnational levels in Indonesia;

· Demonstrated ability to work as part of a team of experts, and experience engineering design, project management, construction management, operations, maintenance, financial, policy and regulatory aspects and institutional capacity building,

· Written and spoken fluency in Bahasa Indonesia and English, including ability to conduct oral presentations and to produce reports of high quality, and

J. Other requirements:

International travel is required. The Consultant may be requested to mobilize on a short notice and will be expected to deliver high quality finished products in a timely manner.