RFP72012121R00002_revised_w_attachments.pdf

REVISED REQUEST FOR PROPOSALS (RFP) NO. 72012121R00002, USAID FINANCIAL SECTOR

REFORM ACTIVITY DATED JUNE 25, 2021

Issuance Date: June 11, 2021 Closing Date/Time for Questions: June 22, 2021, 9:00 a.m. Kyiv Time Closing Date/Time for Receipt of Proposals: July 20, 2021, 9:00 a.m. Kyiv Time

Subject: Request for Proposals (RFP) No. 72012121R00002, USAID Financial Sector Reform Activity

The United States Agency for International Development (USAID) is seeking proposals to implement the USAID Financial Sector Reform Activity as described in the attached Request for Proposals (RFP).

USAID/Ukraine anticipates awarding one cost plus fixed fee (CPFF) term type contract with 20,815 professional technical staff person productive days level of effort (LOE) and a period of performance of five (5) years. The principal geographic code for this contract is 110 and 937. The North American Industry Classification System (NAICS) code for this acquisition is 541690.

USAID invites all interested and responsible organizations to submit offers in accordance with the requirements of this solicitation. USAID will conduct this procurement as a full and open competition. The procedures set forth in Federal Acquisition Regulation (“FAR”) Part 15 will govern the procurement. Proposals will be accepted from eligible organizations. USAID encourages participation to the maximum extent possible of small business concerns, small, disadvantaged business concerns and women-owned small business concerns in this activity as prime contractor or as a subcontractor, in accordance with Part 19 of the FAR.

Please refer to Section L for information regarding proposal requirements. Offerors should take into account the expected delivery time required by the proposal transmission method, and they are responsible for ensuring proposals are received at USAID by the due date and time as specified above. Failure to comply with the submission date and time will deem any submission unacceptable and it will not be reviewed or evaluated.

Section M states the criteria by which proposals will be evaluated. Faxed proposals are not acceptable, nor will they be reviewed or evaluated. Pursuant to Block 12 of Standard Form 33 of this RFP, offers must remain valid for 220 days.

Any questions regarding the RFP’s requirements must be submitted no later than the time and date stated above to Contracting Officer Maria Televantos, mtelevantos@usaid.gov, and Acquisition and Assistance Specialists Olga Luchuk-Vysotska at oluchukvysotska@usaid.gov and Elena Parinova at eparinova@usaid.gov .

This RFP in no way obligates USAID to award a contract nor does it commit USAID to pay any cost incurred in the preparation and submission of a proposal. Award of a Contract under this RFP is subject to availability of funds and other internal USAID approvals. This RFP can be viewed and downloaded from beta.sam.gov. USAID bears no responsibility for data errors resulting from transmission or conversion processes. Further, be aware that amendments to solicitations are occasionally issued and will be posted on the same website from which you downloaded the solicitation. USAID advises to regularly check the above website for amendments.

Sincerely, ___/s/___

Maria Televantos Contracting Officer mailto:mtelevantos@usaid.gov mailto:oluchukvysotska@usaid.gov mailto:eparinova@usaid.gov http://www.fedbizopps.gov/

72012121R00002

SOLICITATION, OFFER AND AWARD

4. TYPE OF SOLICITATION2. CONTRACT NUMBER 3. SOLICITATION NUMBER

7. ISSUED BY CODE 8. ADDRESS OFFER TO (If other than Item 7)

ORDER UNDER DPAS (15 CFR 700)

6. REQUISITION/PURCHASE NUMBER

NOTE: In sealed bid solicitations "offer" and "offeror" mean "bid" and "bidder".

NEGOTIATED (RFP)

SEALED BID (IFB)

5. DATE ISSUED

1. THIS CONTRACT IS A RATED RATING PAGE OF PAGES

1 122

C. E-MAIL ADDRESS

EXT.NUMBERAREA CODE

B. TELEPHONE (NO COLLECT CALLS)A. NAME

10. FOR

INFORMATION

CALL:

CAUTION: LATE Submissions, Modifications, and Withdrawals: See Section L, Provision No. 52.214-7 or 52.215-1. All offers are subject to all terms and conditions contained in this solicitation.

(Date)(Hour) local timeuntildepository located in copies for furnishing the supplies or services in the Schedule will be received at the place specified in Item 8, or if hand carried, in the

SOLICITATION

9. Sealed offers in original and

PART IV - REPRESENTATIONS AND INSTRUCTIONS

OTHER STATEMENTS OF OFFERORS

EVALUATION FACTORS FOR AWARD

INSTRS., CONDS., AND NOTICES TO OFFERORS

REPRESENTATIONS, CERTIFICATIONS AND

LIST OF ATTACHMENTS

CONTRACT CLAUSES

PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACH.

I

J

K

L

M SPECIAL CONTRACT REQUIREMENTS

CONTRACT ADMINISTRATION DATA

DELIVERIES OR PERFORMANCE

INSPECTION AND ACCEPTANCE

PACKAGING AND MARKING

DESCRIPTION/SPECS./WORK STATEMENT

SUPPLIES OR SERVICES AND PRICES/COSTS

SOLICITATION/CONTRACT FORM

PART II - CONTRACT CLAUSESPART I - THE SCHEDULE

H

G

F

E

D

C

B

A

SEC. DESCRIPTION PAGE(S) (X) DESCRIPTION SEC. (X)

11. TABLE OF CONTENTS

18. OFFER DATE17. SIGNATURE

SUCH ADDRESS IN SCHEDULE.

IS DIFFERENT FROM ABOVE - ENTER

15C. CHECK IF REMITTANCE ADDRESS

EXT.NUMBERAREA CODE

15B. TELEPHONE NUMBER

(Type or print)AND

ADDRESS

OF

OFFEROR

CODE FACILITY

16. NAME AND TITLE OF PERSON AUTHORIZED TO SIGN OFFER15A. NAME

DATEAMENDMENT NO.DATEAMENDMENT NO.

and related documents numbered and dated):

amendments to the SOLICITATION for offerors

(The offeror acknowledges receipt of

14. ACKNOWLEDGEMENT OF AMENDMENTS

CALENDAR DAYS (%)30 CALENDAR DAYS (%)20 CALENDAR DAYS (%)10 CALENDAR DAYS (%)

(See Section I, Clause No. 52.232.8)

13. DISCOUNT FOR PROMPT PAYMENT

designated point(s), within the time specified in the schedule.

by the offeror) from the date for receipt of offers specified above, to furnish any or all items upon which prices are offered at the price set opposite each item, delivered at the

NOTE: Item 12 does not apply if the solicitation includes the provisions at 52.214-16, Minimum Bid Acceptance Period.

OFFER (Must be fully completed by offeror)

IMPORTANT - Award will be made on this Form, or on Standard Form 26, or by other authorized official written notice.

28. AWARD DATE

(Signature of Contracting Officer)

27. UNITED STATES OF AMERICA

25. PAYMENT WILL BE MADE BY

26. NAME OF CONTRACTING OFFICER (Type or print)

CODE 24. ADMINISTERED BY (If other than Item 7)

ITEM

(4 copies unless otherwise specified)

23. SUBMIT INVOICES TO ADDRESS SHOWN IN

41 U.S.C. 253 (c) ( 10 U.S.C. 2304 (c) (

22. AUTHORITY FOR USING OTHER THAN FULL AND OPEN COMPETITION:

21. ACCOUNTING AND APPROPRIATION20. AMOUNT19. ACCEPTED AS TO ITEMS NUMBERED

AWARD (To be completed by government)

CODE

REQ-121-21-00000706/10/2021

X

720121

USAID/Ukraine Department of State 5850 Kyiv Pl.

Washington DC 20521-5850

09:00 Kyiv 07/20/2021

Olga Luchuk-Vysotska oluchukvysotska@usaid.gov

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X

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PAGE(S)

Maria Televantos

AUTHORIZED FOR LOCAL REPRODUCTION

Previous edition is unusable

STANDARD FORM 33 (Rev. 9-97)

Prescribed by GSA - FAR (48 CFR) 53.214(c)

12. In compliance with the above, the undersigned agrees, if this offer is accepted within _____220_________ calendar days (60 calendar days unless a different period is inserted

X

USAID Financial Sector Reform Activity (RFP) No. 72012121R00002

Table of Contents

I. PART I - THE SCHEDULE

SECTION B - SUPPLIES OR SERVICES AND PRICE/COSTS

B.1 PURPOSE

B.2 CONTRACT TYPE AND SERVICES

B.3 ESTIMATED COST, FIXED FEE, AND OBLIGATED AMOUNT

B.4 BUDGET

B.5 INDIRECT COSTS AND ADVANCED UNDERSTANDING ON CEILINGS

B.6 COST REIMBURSABLE

B.7 PAYMENT OF FIXED FEE

SECTION C – DESCRIPTION/SPECIFICATIONS/STATEMENT OF WORK

C.1 ACTIVITY TITLE

C.2 PURPOSE

C.3 CONTEXT AND BACKGROUND

C.4 RELATION TO USAID'S STRATEGY

C.5 THEORY OF CHANGE

C.6 KEY REFORM PRINCIPLES

C.7 COMPONENTS

C.8 IMPLEMENTATION PRINCIPLES

SECTION D - PACKAGING AND MARKING

D.1 AIDAR 752.7009 MARKING (JAN 1993)

D.2 BRANDING STRATEGY

D.3 BRANDING AND MARKING POLICY AND CREATION AND DEVELOPMENT

OF WEBSITE

D.4 BRANDING IMPLEMENTATION PLAN (BIP) AND MARKING PLAN (MP)

SECTION E - INSPECTION AND ACCEPTANCE

E.1 NOTICE LISTING CONTRACT CLAUSES INCORPORATED BY REFERENCE 26

E.2 INSPECTION AND ACCEPTANCE

E.3 RESPONSIBLE OFFICIAL

SECTION F - DELIVERIES OR PERFORMANCE

F.1 NOTICE LISTING CONTRACT CLAUSES INCORPORATED BY REFERENCE 27

F.2 PERFORMANCE PERIOD

F.3 PLACE OF PERFORMANCE

F.4 PERFORMANCE STANDARDS

F.5 PROFESSIONAL TECHNICAL LEVEL OF EFFORT (LOE)

F.6 KEY PERSONNEL

F.7 DELIVERABLES AND REPORTS

F.8 AIDAR 752.7005 SUBMISSION REQUIREMENTS FOR DEVELOPMENT

EXPERIENCE DOCUMENTS (SEP 2013)

F.9 GEOSPATIAL REPORTING REQUIREMENTS

SECTION G - CONTRACT ADMINISTRATION DATA

G.1 NOTICE LISTING CONTRACT CLAUSES INCORPORATED BY REFERENCE 37

G.2 CONTRACTING OFFICER

G.3 CONTRACTING OFFICER’S REPRESENTATIVE (COR)

G.4 CONTRACTOR’S PRIMARY POINT OF CONTACT

G.5 PAYING OFFICE

G.6 INVOICING INSTRUCTIONS

G.7 ACCOUNTING AND APPROPRIATION DATA

G.8 CONTRACTOR'S PAYMENT ADDRESS

G.9 TECHNICAL DIRECTION/RELATIONSHIP WITH USAID

SECTION H - SPECIAL CONTRACT REQUIREMENTS

H.1 NOTICE LISTING CONTRACT CLAUSES INCORPORATED BY REFERENCE 40

H.2 AIDAR 752.7007 PERSONNEL COMPENSATION (JUL 2007)

H.3 ADDITIONAL REQUIREMENTS FOR PERSONNEL COMPENSATION

H.4 AUTHORIZED GEOGRAPHIC CODE

H.5 AIDAR 752.225-70 SOURCE AND NATIONALITY REQUIREMENTS (FEB 2012) 41

H.6 ADS 302.3.5.19 USAID-FINANCED THIRD-PARTY WEB SITES (NOV 2017)

H.7 AIDAR 752.7004 EMERGENCY LOCATOR INFORMATION (JUL 1997)

H.8 AAPD 17-01 “DEFENSE BASE ACT (DBA) INSURANCE FOR 2015-2021

H.9 AIDAR 752.228-70 MEDICAL EVACUATION (MEDEVAC) SERVICES (JUL 2007) 45

H.10 LANGUAGE REQUIREMENTS

H.11 ENVIRONMENTAL COMPLIANCE

H.12 AUTHORIZED WORK WEEK

H.13 AIDAR 752.7034 ACKNOWLEDGMENT AND DISCLAIMER (DEC 1991)

H.14 AIDAR 752.231-71 SALARY SUPPLEMENTS FOR HOST GOVERNMENT

EMPLOYEES (MAR 2015)

H.15 FOREIGN GOVERNMENT DELEGATIONS TO INTERNATIONAL

CONFERENCES (ADS REFERENCE 350MAA)

H.16 EXECUTIVE ORDER ON TERRORISM FINANCING

H.17 AIDAR 752.229-71 REPORTING OF FOREIGN TAXES (JUL 2007)

H.18 AIDAR 752.222-70 USAID DISABILITY POLICY - ACQUISITION (DEC 2004)

H.19 CONFLICTS OF INTEREST

H.20 STANDARDS OF CONDUCT - IMPROPER BUSINESS PRACTICES

H.21 AIDAR 752.7025 APPROVALS (APR 1984)

H.22 AIDAR 752.7032 INTERNATIONAL TRAVEL APPROVAL AND NOTIFICATION

REQUIREMENTS (APR 2014)

H.23 BUSINESS CLASS TRAVEL

H.24 CONTRACTOR’S USE OF PROJECT VEHICLES AND LIABILITY INSURANCE

REQUIREMENTS FOR PRIVATELY OWNED VEHICLES

H.25 DISCLOSURE OF INFORMATION

H.26 CONSENT TO SUBCONTRACT

H.27 SUBCONTRACTING PLAN AND REPORTING

H.28 AIDAR 752.245-71 TITLE TO AND CARE OF PROPERTY (APR 1984)

H.29 ELECTRONIC PAYMENT SYSTEM

H.30 GENDER CONSIDERATION

H.31 GRANTS UNDER CONTRACT

H.32 LOGISTIC SUPPORT

H.33 SUBMISSION OF DATASETS TO THE DEVELOPMENT DATA LIBRARY (DDL)

H.34 RESTRICTIONS AGAINST DISCLOSURE (AAPD 16-02) (MAY 2016)

H.35 MEDIA AND INFORMATION HANDLING AND PROTECTION (AAPD 16-02) .59

H.36 LIMITATION ON ACQUISITION OF INFORMATION TECHNOLOGY

H.37 FAR 4.21 PROHIBITION ON CONTRACTING FOR CERTAIN COVERED

TELECOMMUNICAITONS AND VIDEO SURVEILLANCE SERVICES OR

EQUIPMENT (SECTION 889) (JAN 2021)

H.38 ELECTRONIC AND INFORMATION TECHNOLOGY ACCESSIBILITY (AAPD

16-02) (APRIL 2018)

PART II - CONTRACT CLAUSES

SECTION I - CONTRACT CLAUSES

I.1 52.252-2 CLAUSES INCORPORATED BY REFERENCE (FEB 1998)

I.2 FAR 52.204-1 APPROVAL OF CONTRACT (DEC 1989)

I.3 FAR 52.229-8 TAXES-FOREIGN COST-REIMBURSEMENT CONTRACTS (MAR

1990) 67

I.4 FAR 52.203-19 PROHIBITION ON CONTRACTING WITH ENTITIES THAT

REQUIRE CERTAIN INTERNAL CONFIDENTIALITY AGREEMENTS (JAN 2017) ...67

I.5 FAR 52.204-25 PROHIBITION ON CONTRACTING FOR CERTAIN

TELECOMMUNICATIONS AND VIDEO SURVEILLANCE OR EQUIPEMENT (AUG

2020) 68

I.6 AIDAR 752.7013 AIDAR 752.7013 CONTRACTOR-MISSION RELATIONSHIPS

(OCT 1989) [DEVIATION (JUN2020) (DEVIATION NOs. M/OAA-DEV-AIDAR-18-04c

(JUNE 2018)]

I.7 FAR 52.204-23 PROHIBITION ON CONTRACTING FOR HARDWARE,

SOFTWARE, AND SERVICES DEVELOPED OR PROVIDED BY KASPERSKY LAB

AND OTHER COVERED ENTITIES (JUL 2018)

I.8 FAR 52.203-17 CONTRACTOR EMPLOYEE WHISTLEBLOWER RIGHTS AND

REQUIREMENT TO INFORM EMPLOYEES OF WHISTLEBLOWER RIGHTS (JUNE

2020) 72

I.9 AIDAR 752.222-71 NONDISCRIMINATION (JUN 2012)

I.10 AIDAR 752.7036 USAID IMPLEMENTING PARTNER NOTICES (IPN) PORTAL

FOR ACQUISITION (JUL 2014)

I.11 AIDAR 752.231-72 CONFERENCE PLANNING AND REQUIRED APPROVALS

(AUG 2013) [(M/OAA-DEV-AIDAR-20-01c) (APR 2020)]

I.12 FAR 52.217-8 OPTION TO EXTEND SERVICES (NOV 1999)

I.13 52.232-40 PROVIDING ACCELERATED PAYMENTS TO SMALL BUSINESS

SUBCONTRACTORS (DEC 2013)[(DEVIATION JUN 2020)]

II. PART III – LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACHMENTS

SECTION J - LIST OF ATTACHMENTS

PART IV – REPRESENTATIONS AND INSTRUCTIONS

79SECTION K - REPRESENTATIONS, CERTIFICATIONS AND OTHER STATEMENTS

OF THE OFFEROR

K.1 NOTICE LISTING SOLICITATION PROVISIONS INCORPORATED BY

REFERENCE

K.2 FAR 52.204-8 ANNUAL REPRESENTATIONS AND CERTIFICATIONS (MAR

2020) 78

K.3 FAR 52.204-24 REPRESENTATION REGARDING CERTAIN

TELECOMMUNICATIONS AND VIDEO SURVEILLANCE SERVICES OR

EQUIPMENT (OCT 2020)

K.4 FAR 52.204-26 COVERED TELECOMMUNICATIONS EQUIPMENT OR

SERVICES-REPRESENTATION (OCT 2020)

K.5 FAR 52.209-5 CERTIFICATION REGARDING RESPONSIBILITY MATTERS

(AUG 2020)

K.6 FAR 52.209-7 INFORMATION REGARDING RESPONSIBILITY MATTERS (OCT

2018) 85

K.7 FAR 52.209-11 REPRESENTATION BY CORPORATIONS REGARDING

DELINQUENT TAX LIABILITY OR A FELONY CONVICTION UNDER ANY

FEDERAL LAW (FEB 2016)

K.8 FAR 52.209-13 VIOLATION OF ARMS CONTROL TREATIES OR AGREEMENTS-

CERTIFICATION (FEB 2021)

K.9 FAR 52.222-22 PREVIOUS CONTRACTS AND COMPLIANCE REPORTS (FEB

1999) 88

K.10 FAR 52.222-25 AFFIRMATIVE ACTION COMPLIANCE (APR 1984)

K.11 FAR 52.225-2 BUY AMERICAN CERTIFICATE (FEB 2021)

K.12 FAR 52.230-1 COST ACCOUNTING STANDARDS NOTICES AND

CERTIFICATION (JUN 2020)

K.13 FAR 52.230-7 PROPOSAL DISCLOSURE – COST ACCOUNTING PRACTICE

CHANGES

K.14 INSURANCE - IMMUNITY FROM TORT LIABILITY

K.15 AGREEMENT ON, OR EXCEPTIONS TO, TERMS AND CONDITIONS

K.16 SIGNATURE

SECTION L – INSTRUCTIONS, CONDITIONS, AND NOTICES TO OFFERORS OR

RESPONDENTS

L.1 FAR 52.252-1 SOLICITATION PROVISIONS INCORPORATED BY REFERENCE

L.2 FAR 52.216-1 TYPE OF CONTRACT (APR 1984)

L.3 FAR 52.233-2 SERVICE OF PROTEST (SEP 2006)

L.4 GOVERNMENT OBLIGATION

L.5 GENERAL INSTRUCTIONS

L.6 DELIVERY INSTRUCTIONS

L.7 INSTRUCTIONS FOR THE PREPARATION OF THE TECHNICAL PROPOSAL

L.8 INSTRUCTIONS FOR THE PREPARATION OF THE COST/BUSINESS

PROPOSAL

L.9 WAIVERS UNDER FAR PART 4.2101 PROHIBITION ON COVERED

TELECOMMUNICATIONS AND VIDEO SURVEILLANCE SERVICES AND

EQUIPMENT

SECTION M - EVALUATION FACTORS FOR AWARD

M.1 GENERAL INFORMATION

M.2 TECHNICAL EVALUATION CRITERIA

M.3 COST/PRICE EVALUATION

M.4 COMPETITIVE RANGE DETERMINATION

M.5 SOURCE SELECTION

M.6 AWARD

ATTACHMENT J.1 -– PAST PERFORMANCE MATRIX

ATTACHMENT J.2 – USAID SMALL BUSINESS SUBCONTRACTING PLAN TEMPLATE

ATTACHMENT J.3 – INITIAL ENVIRONMENTAL EXAMINATION DCN: 2021-UKR-033

I. PART I - THE SCHEDULE

SECTION B - SUPPLIES OR SERVICES AND PRICE/COSTS

B.1 PURPOSE

The purpose of this contract is to provide technical assistance and other services as described in detail in Section C for the implementation of USAID/Ukraine’s program entitled USAID Financial Sector Reform Activity.

B.2 CONTRACT TYPE AND SERVICES

This is a Cost-Plus-Fixed-Fee (CPFF) term contract. For the consideration set forth below, the Contractor must provide the level of effort described in Section F to accomplish the goals and objectives set forth in Section C.

B.3 ESTIMATED COST, FIXED FEE, AND OBLIGATED AMOUNT

(a) The estimated cost for the performance of the work required hereunder, exclusive of fixed fee, if any, is $_________. The fixed fee, if any, is $_________. The estimated cost plus fixed fee, if any, is $_________.

(b) Within the estimated cost plus fixed fee (if any) specified in paragraph (a) above, the amount currently obligated and available for reimbursement of allowable costs incurred by the Contractor (and payment of fee, if any) for performance hereunder is $_________. The Contractor shall not exceed the aforesaid obligated amount.

(c) Funds obligated hereunder are anticipated to be sufficient through $_________.

B.4 BUDGET

a) The budget for this contract is as follows:

Line Item Total Direct Costs Subcontracts Grants Under Contracts $5,000,000 Indirect Costs Total Estimated Cost Fixed Fee Total Cost Plus Fixed Fee

b) The inclusion of any costs in the above cost categories does not obviate the requirement for prior approval by the Contracting Officer of cost items designated as requiring prior approval by any of the terms and conditions of this contract, including the applicable cost principles (see FAR § 52.216-07, “Allowable Cost and Payment”);

nor does it constitute a determination of allowability by the Contracting Officer of any item of cost, unless specifically stated elsewhere in this contract. Also, these amounts may not be adjusted without a written modification signed by the Contracting Officer. The Contractor must not bill any amounts against this contract in excess of the amounts specified for each line item.

B.5 INDIRECT COSTS AND ADVANCED UNDERSTANDING ON CEILINGS

Pending establishment of revised provisional or final indirect cost rates, allowable indirect costs must be reimbursed on the basis of the following negotiated provisional or predetermined rates and the appropriate bases for prime contractors:

Offeror Fringe Rate

Overhead Rate %

Overhead Ceiling Rate %

G&A Rate %

G&A Ceiling Rate %

PRIME (Insert Name) Base of Application Source: (insert) Period: (insert)

NOTE: Insert additional indirect rates as needed for the Contractor in the above table.

*Special Note: The un-shaded columns in the indirect cost table are the current approved indirect cost rates for the prime.

The Contractor will make no change in its established method of classifying or allocating indirect costs that impacts this contract without the prior written approval of the Contracting Officer.

Reimbursement for indirect costs must be at final negotiated rates, but not in excess of ceiling rates specified above.

The Government must not be obligated to pay any additional amount associated with indirect costs above the ceiling rates established in the contract. This advance understanding must not change any monetary ceiling, cost limitation, or obligation established in the contract.

Note: Contractors are allowed to recoup indirect costs (OH, G&A, etc.) as other direct costs if it is part of the contractor’s usual accounting procedures, consistent with FAR Part 31 and the contactor’s NICRA.

B.6 COST REIMBURSABLE

The U.S. dollar costs allowable shall be limited to reasonable, allocable and necessary costs determined in accordance with FAR 52.216-7, Allowable Cost and Payment, FAR 52.216-8, Fixed Fee, if applicable, and AIDAR 752.7003, Documentation for Payment.

B.7 PAYMENT OF FIXED FEE

Subject to FAR 52.216-8, Fixed Fee, if applicable, payment of fixed fee shall be allocated based upon the proportion of the level of effort (LOE) specified in Section F.5 that was provided by the Contractor in the period covered by the invoice. Normally, the Contractor will be paid the portion of the fee specified that corresponds to the proportion of LOE delivered by the Contractor during the period covered by the invoice. In the event that the Contractor does not provide the total LOE stipulated in Section F.5, the total amount of fixed fee will be reduced in similar proportion.

END OF SECTION B

SECTION C – DESCRIPTION/SPECIFICATIONS/STATEMENT OF WORK

C.1 ACTIVITY TITLE

The title of this USAID/Ukraine activity is Financial Sector Reform (FSR).

C.2 PURPOSE

The purpose of the activity is to support systemic changes in Ukraine’s economy. FSR aims to transform the country’s financial sector into a sophisticated, well-functioning, competitive market that is aligned with European Union (EU) standards and integrated into international financial systems. This transformation will mobilize private finance for sustained economic growth in Ukraine.

FSR will be implemented through four interlinked components:

• COMPONENT 1: Market Regulation and Supervision

• COMPONENT 2: Financial Infrastructure

• COMPONENT 3: Private Sector Intermediaries and Facilitators

• COMPONENT 4: Transparency and Communications

Together with key reform and key implementation principles, these four components will address the constraints to the supply side of the financial market. The Contractor must apply a flexible approach, integrate market-driven solutions, engage the private sector and civil society, and adapt to change in the operating environment.

C.3 CONTEXT AND BACKGROUND

A well-functioning financial system is essential to sustainable economic growth. Entrepreneurship and innovation require financing on reasonable terms. Financial intermediaries – not just banks but leasing and insurance companies, pension funds, and others – accumulate funds for productive investments. Efficient financial markets enable price discovery, raise capital, facilitate savings, allocate resources, and allow risk management through the pooling of resources and asset diversification. In a developed financial market, small businesses and consumers rely on a variety of financial products (loans, leases, insurance policies, pension annuities, etc.) to support their businesses and manage their lives.

Overview Ukraine is a large developing country in terms of Gross Domestic Product (GDP), and it is well endowed with human and natural resources. The lack of a mature financial system, however, represents a key missing link in the chain of inputs needed to drive inclusive, sustainable, market-driven growth. Ukraine’s financial sector – banks, non-bank financial institutions (NBFIs) and, particularly, capital markets – remains underdeveloped and inadequately integrated into the international financial system. The dire condition of Ukraine’s financial sector is reflected by the World Economic Forum, which ranks the country 136/141 in terms of financial sector competitiveness in its 2019 report1.

The global financial crisis of 2008 caused Ukraine’s economy to contract by 15%. Subsequently, the 2014 Revolution of Dignity Ukraine cut ties with its major trading partner, Russia. Combined with the annexation of Crimea and the war in Donbas, GDP fell 10% in 2015. The Ukrainian banking sector was significantly weakened

1 http://www.weforum.org/reports/global-competitiveness-report-2019 http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf http://www.weforum.org/reports/global-competitiveness-report-2019 after suffering repeated crises as a result of both these events and other factors.

Since 2014, the National Bank of Ukraine (NBU) has become one of the country’s most important reformers and anti-corruption champions. The overhaul of its supervisory functions required banks to increase transparency of their assets and property and comply with new macroprudential regulations to decrease the risk of money laundering. These efforts, among others, led to a reduction in the number of banks in the system by 60%. The reforms also ensured remaining banks maintained adequate capital and operated according to sound business practices. As a result, most measures of financial soundness have improved. The banking system is now well-capitalized and liquid, foreign exchange risks have decreased, many banks have returned to profitability, and deposits have been growing, indicating a revival in trust in the system as a whole.

Despite these positive developments, the Ukrainian banking sector continues to play a relatively small role in supporting private sector growth, failing to fulfill its most important function in a market-based economy. The highly concentrated structure of the Ukrainian banking system remains problematic: four state-owned banks continue to dominate the system and account for over 50% of total assets2. While the number of banks has declined, the 10 largest banks now account for almost 80% of assets. The combination of state-dominance and high concentration is not conducive to competition and a level playing field. Lending to the private sector from banks, never high in Ukraine, has been steadily declining, falling as a percentage of GDP every year since 2015 to levels far below regional peers. High levels of non-performing loans on balance sheets are also a drag on new lending, especially to segments of the economy perceived to be higher risk. These trends have been exacerbated by the pandemic as banks are further tightening lending standards and requirements and are closing physical branches.

Private sector businesses, and Small and Medium-Sized Enterprises (SMEs), in particular, still have limited access to affordable credit. Loan terms are short and interest rates remain high. Banks dominate the financial sector and their lending to SMEs represents a very small portion of total lending. NBFIs and products, while promising alternative sources of financing, still remain in a nascent stage of development. Capital markets are fragmented and operate with rudimentary infrastructure. Limited regulatory and oversight structures often function as barriers to further market development and competition in this area. Consequently, there is miniscule trading of equities, little organized commodities trading, and virtually no trading of secondary market on existing exchanges.

Despite improvements to Ukraine’s financial sector in recent years, many challenges remain. Ukrainian companies and consumers face significant financing gaps, limited choice of financing options, and expensive capital - all of which undermine inclusive, sustainable market-driven growth.

Ukraine’s financial sector has experienced periods of significant disruption and crisis. With support from the IMF and other donors, including USAID, the government responded with strong and sometimes difficult measures to stabilize the financial system. While these measures were necessary and largely successful the government struggled to explain to the public what they were doing and why. In addition, there are bad actors who actively work to discredit the reform effort, undermine trust in the government, and degrade confidence in the financial system.

Reform Efforts In the last two years, the enactment of several important pieces of financial sector legislation along with the consolidation and strengthening of the financial sector regulatory authorities are promising developments, and critical steps toward a well-functioning financial sector. For example, the Government of Ukraine (GOU) has been

2 https://bank.gov.ua/en/news/all/oglyad-bankivskogo-sektoru-lyutiy-2021-roku https://bank.gov.ua/admin_uploads/article/Banking_Sector_Review_2021-02_eng.pdf?v=4 https://bank.gov.ua/en/news/all/oglyad-bankivskogo-sektoru-lyutiy-2021-roku working to improve the legal and regulatory framework governing the non-bank financial sector, capital and commodity markets, and consumer protection, among other areas. These developments have improved the enabling environment for market participants, both providers and users of finance, allowing them to play a more substantial role in financial sector reform and development.

The GOU has published a development strategy for finance -- “Strategy of Ukrainian Financial Sector Development until 2025” (Strategy 20253). Key stakeholders in the financial sector participated in the development of Strategy 2025: the Ministry of Finance, the National Bank of Ukraine (NBU), the National Securities and Stock Market Commission (NSSMC), and the Deposit Guarantee Fund (DGF). Strategy 2025 sets forth a detailed vision for the Ukrainian financial sector in five strategic directions – financial stability, macro-economic development, financial inclusion, financial market development and innovation development. Strategy 2025 outlines the GOU’s goals and performance indicators. More importantly, the Strategy 2025 provides a pathway to mobilize the private sector towards goals and performance indicators that fully align with the government’s strategy.

USAID Assistance to Financial Sector FSR will build upon the work of USAID’s Financial Sector Transformation (FST) activity. FST achieved important results related to: increasing public confidence in the banking sector through improved communications and financial literacy; transforming the legal/regulatory framework for NBFIs and for capital and commodity markets;

quadrupling leasing finance for small businesses; and pioneering consumer protection for financial services users.

FST also addressed the needs of vulnerable groups, promoted digital financial services (e.g., Pension Fund of Ukraine e-Services), and contributed significantly to the creation of a more equitable and sustainable pension system.

FSR must build upon these prior efforts and continue supporting Ukraine’s regulators and market institutions. FSR must take up efforts to improve the legal/regulatory framework for capital and commodity markets. It must also continue to pursue transforming the non-bank financial sector regulatory system; developing and introducing new financial instruments through engagement with the private sector; and expanding digital finance solutions.

C.4 RELATION TO USAID'S STRATEGY

USAID/Ukraine's programs are guided by its five-year Country Development Cooperation Strategy (CDCS) for the 2019-2024 period. This strategy reflects the U.S. Government's country development priorities to tackle corruption, mitigate the impacts of Russia's aggression, strengthen democracy, and improve Ukraine's economic prospects.

FSR will contribute to USAID/Ukraine's Development Objective 4: Inclusive, Sustainable, Market-Driven Economic Growth, and the Intermediate Result 4.4: Inclusive, Innovative Finance Expanded. This Intermediate Result refers generally to creating the conditions for financial markets that increase Ukraine’s self-reliance and contribute to sustained economic growth. In addition, the activity will contribute to Development Objective 1:

Corruption Reduced in Target Sectors, and the Intermediate Result 1.2: Economic Impact of Corruption Reduced in Key Sectors. USAID anticipates that successful implementation of this activity relates to reform efforts from other critical sectors, including rule of law (courts), market concentration (anti-monopoly), state-owned enterprise reform and privatization, macro-economic stability (including the IMF), and public trust and confidence (anti corruption).

3 https://bank.gov.ua/en/news/all/strategiya-rozvitku-finansovogo-sektoru-ukrayini-do-2025-roku-7686 https://bank.gov.ua/admin_uploads/article/Strategy_FS_2025_eng.pdf https://www.usaid.gov/ukraine/cdcs https://bank.gov.ua/en/news/all/strategiya-rozvitku-finansovogo-sektoru-ukrayini-do-2025-roku-7686

C.5 THEORY OF CHANGE

FSR aims to enhance Ukraine’s ability to finance its economic and social development by promoting capital mobilization, and improving conditions for private investment and functioning capital markets. Development of a market-based, competitive alternative to a dysfunctional system with weak institutions, rooted corruption, and political interference is critical for successful reforms in Ukraine (including non-economic reforms). This is an ambitious, yet essential objective for Ukraine as Ukraine’s current financial system remains under-developed, provides few financial products and services, is not trusted by consumers and investors, and is subject to corruption/insider dealing. As such, the financial system does not adequately serve to advance the country’s economic growth and development.

To achieve these objectives, the activity’s theory of change is:

IF independent financial market regulation and financial market supervision builds confidence in the integrity and soundness of the financial marketplace and enables competition; and IF financial infrastructure supports the financial marketplace by enabling efficient payments and transactions;

and IF financial intermediaries and facilitators provide new financial services and instruments to create greater diversity and depth in markets; and IF business advocates and consumer watchdogs have access to transparent data and communicate strategically to protect consumers and small and medium sized businesses that seek finance;

THEN Ukraine can develop a sophisticated, well-functioning, competitive market to mobilize private finance for sustained economic growth.

C.6 KEY REFORM PRINCIPLES

FSR prioritizes mobilizing finance and private sector engagement as critical approaches for U.S. development assistance. Under these development approaches, USAID seeks to collaborate with the private sector and to improve a partner country’s ability to finance their own economic and social development by promoting a comprehensive approach to mobilize capital, expend funds effectively, and enable conditions for private investment and functioning capital markets. The activity is entirely about improving Ukraine’s ability to finance its own development. Financing self-reliance is particularly important in Ukraine because the private sector is dominated by financial-industry groups that have captured state and regulatory functions. This current system squeezes out competition, discourages investment, multiplies inefficiencies, instills weak regulatory institutions, and promotes corruption.

The activity is grounded in a number of key reform principles for the financial sector:

a. Trust: Information disclosure, transparency, and fairness are the essential building blocks for confidence in financial services. In addition, trust must be reinforced by a legal and regulatory regime that enforces rights and obligations, and a judicial system that impartially protects the property rights of investors and the users of financial products from fraud and abuse.

b. Independence: Financial regulators should be competent, independent (financially and institutionally), empowered to implement and enforce robust regulations, and to deal effectively with failed institutions.

c. Competition: Market reforms should aim to achieve a competitive, level playing field among financial institutions. Reforming one sector while ignoring the others creates unfair competition and opens opportunities for fraud and abuse, resulting in unstable markets.

d. Inclusion: Ukraine’s financial institutions have for too long served the narrow interests of their owners and the politically connected. Entrepreneurs need capital to grow their businesses but have limited access to finance. Ordinary consumers of financial services are the least protected element within the financial system.

Ukraine needs to continue, but also move beyond, a focus on macro-financial stability and prudential regulation to deal with issues of market conduct.

e. Integrity: Ukrainian financial institutions should act as a barrier to illicit financial flows by promoting the highest standards of integrity, including implementation of global anti-money laundering standards and investment screening procedures to ensure national security, public health, and economic stability.

f. Integration: Financial sector reforms should ensure Ukraine’s performance under a number of its international commitments, including the EU Association Agreement and IMF reform package. Ukraine should strive to achieve not only these “formal” commitments, but also other internationally recognized standards, such as IOSCO standards for securities regulation.

g. Resilience: Repeated economic, financial, and currency crises have negatively impacted affordability of and access to finance in Ukraine. Poor governance, corruption, and limited reforms have intensified these crises and made them more frequent, adding enormous cost to taxpayers and entrepreneurs alike. Financial sector reforms should help Ukraine cultivate a more resilient economy that can absorb, adapt, or transform in the face of internal and external shocks and stresses.

C.7 COMPONENTS

The Contractor must support the transformation of Ukraine’s financial sector into a sophisticated, well-functioning, competitive market aligned with EU standards and integrated into the international financial systems to mobilize private finance for sustained economic growth in Ukraine. This goal must be attained through interlinked interventions in four component areas:

• COMPONENT 1: Market Regulation and Supervision

• COMPONENT 2: Financial Infrastructure

• COMPONENT 3: Private Sector Intermediaries and Facilitators

• COMPONENT 4: Transparency and Communications

Focusing on the supply side of the financial sector, these four components are complementary and reinforce each other. Advances under one component are likely intrinsically linked to another and therefore must inform programming under the others. To the extent possible, feedback loops must be developed to coordinate, learn, and adapt for maximum impact. While these component areas are designed to be complementary, they also complement projects led by other development partners and international financial institutions and align with other USAID activities.

In implementing these four components, the Contractor's approach must take into account the key reform principles and be responsive to the key implementation principles. To promote innovation, leverage additional resources, and create a critical mass of local champions to enhance impact and sustain results, the Contractor must involve the private sector, government, and civil society as a key aspect of the FSR activity. In addition to technical assistance, a Grants under Contract (GUC) mechanism will be used to promote the capacity and sustainability of local associations and organizations. The Contractor must provide assistance, including through GUCs, to engage with the private sector and develop local capacity and maximize the use of local NGOs and associations to support reform efforts.

C.7.1 COMPONENT 1: Market Regulation and Supervision

Since effective and efficient market regulation and supervision is a critical aspect of ensuring rule of law (the assurance that property rights are secure and that contracts will be enforced), Component 1 is a cross-cutting component that supports all the other interventions under this activity. That is, improvements in regulation will sustainably strengthen Ukraine’s financial infrastructure; mobilize private sector market providers, intermediaries, and facilitators; and increase market transparency and accountability. The Contractor must improve the financial sector enabling environment by developing the legal and regulatory framework, government policies, and the capacity of relevant regulators. Improvements to enabling conditions must be oriented towards achieving broad impact and increasing the depth, access, efficiency, and stability of the financial sector.

Under Component 1, the Contractor must focus on those interventions to improve market regulation and oversight using Strategy 2025 as a guiding document. The primary objective of this component is to help put in place strong and independent financial market regulation and financial market supervision to build confidence in the integrity and soundness of the financial marketplace and enable competition.

The Contractor must also strengthen the capacity of financial sector regulators to implement and enforce robust regulations, manage risks in the financial sector, and accelerate the development of capital markets in accordance with international standards. The Contractor’s efforts are intended to promote strong, competent, and independent (financially and institutionally) regulators with adequate authority to deal effectively with failed institutions and illicit activities which will increase integrity in the financial system and reduce opportunities for corruption.

In addition, the Contractor must support the development of laws, regulations, and government policies required to advance structural reforms to the banking and non-banking sectors (e.g.,capital markets, insurance, investment funds), FinTech, and other areas that ultimately contribute to inclusive, sustainable, market-driven economic growth in Ukraine. The Contractor must promote the adoption of reforms across a range of initiatives such as depository activities, securities trading activities, and the operation of stock exchanges and investment funds to give market participants more opportunities to use existing and introduce new financial products and services. At the same time, the Contractor must work to ensure fairness and a level playing field among all financial market participants. The Contractor must ensure a consistent and balanced pace to reform initiatives.

Anticipated results Under Component 1 include, but are not limited to, the following:

• Improved market regulation and supervision for banks and non-bank financial institutions to enable competition and build confidence in the integrity and soundness of the financial marketplace;

• Strengthened institutional capacity, competence and independence of financial sector regulators to implement and enforce new financial regulations and to apply and improve effective regulation and oversight approaches;

• Increased financial sector resilience to challenges and shocks;

• Expanded international cooperation of regulators, and harmonization of regulatory requirements with

Ukraine’s international commitments.

C.7.2 COMPONENT 2: Financial Infrastructure

The Contractor must sustainably strengthen Ukraine’s financial infrastructure, which supports the marketplace by enabling trusted and efficient transactions and reducing associated time, risk, and cost. The Contractor must accelerate the development of efficient functioning of capital and commodities markets that meet international standards, through better access to information, transparent pricing models, new financial instruments, and safe settlements mechanisms for various market participants. This requires an improved legislative and regulatory framework for the capital and commodity markets regarding transparent and liquid financial instruments. This Component is closely interrelated with the activity’s other components.

The Contractor must focus on interventions related to financial infrastructure using Strategy 2025 as a guiding document. The primary objective of this component is to develop a financial infrastructure for capital markets, which provides an efficient and cost-effective source of finance for companies and commodity markets to ensure competitive price formation and price transparency to reduce risks and transaction costs for producers, traders and users. The Contractor must also contribute to the modernization, consolidation, and development of stock exchanges and required depository and settlement and clearing infrastructure in line with international standards.

The Contractor must prioritize the accuracy, availability, and comparability of financial information for financial institutions and consumers of financial products and services. Such information is required for financial market participants to identify potential customers and optimize business processes. The Contractor must contribute to efforts ensuring transparency in the financial sector through appropriate public disclosure of relevant information to the general public by supporting credit bureaus, rating agencies, or similar organizations that aggregate and provide objective financial information.

In addition, the Contractor must enhance the ecosystem for executing financial transactions by developing efficient, secure, and cost-effective trading platforms and facilitating modern payment systems, including digital payments.

Anticipated results Under Component 2 include, but are not limited to, the following:

• Advanced ability of capital markets to fund the government and private companies at scale;

• Strengthened ability of commodities markets and exchanges to promote competitive price formation and price transparency, and reduce risks and transaction costs for producers, traders and users;

• Expanded use of modern payment systems to increase the efficiency of transactions;

• Improved systems and methods of information exchange among financial institutions, businesses, and consumers of financial services;

• Increased integration of Ukraine’s financial market with international financial markets according to internationally recognized standards and alignment with Ukraine’s international commitments.

C.7.3 COMPONENT 3: Private Sector Intermediaries and Facilitators

The Contractor must mobilize private sector finance providers, intermediaries, and facilitators to provide new financial services and instruments to create greater diversity and depth in financial markets. Increasing the number and range of finance providers gives alternatives to sources of financing currently dominated by banks.

Interventions must include engagement with the private sector to accelerate expansion of private sector finance providers and intermediaries and enhance their capacity to enter new markets or expand existing markets.

Under Component 3, the Contractor must focus on those interventions to accelerate expansion of private sector finance providers and intermediaries using Strategy 2025 as a guiding document, including investment banks, leasing companies, investment funds, private pension funds, commercial banks, credit unions, microfinance institutions, and new digital financial services providers such as FinTech companies. Also, the Contractor must support the development of debt and equity investment funds that address business needs and social challenges.

The interventions must promote safe and secure digital financial initiatives to further inclusive growth in the financial sector. This Component is closely interrelated with improved market regulation and oversight under Component 1, as well as with developed effective financial infrastructure in Component 2.

The Contractor must engage with and provide support to financial sector intermediaries and private sector finance providers, as well as facilitators such as research institutions, watchdog groups, and financial technology firms, to introduce new financial products and services and facilitate their implementation. Interventions must promote the development of new financial instruments to foster financial inclusion, including access to finance for SMEs and start-ups. The development of the new financial instruments for savings and retirement, and risks mitigation of financial transactions also must be supported. The Contractor must actively consult, strategize, align, collaborate, and implement with private sector stakeholders for greater scale, sustainability, and effectiveness of nonbank financial services markets.

In addition to supply side interventions, the Contractor must closely coordinate interventions with appropriate existing USAID activities to promote demand-side development of financial services and products. For example, interventions could include coordination with USAID’s agricultural activity to increase access to finance for SMEs in the agricultural sector.

Anticipated results Under Component 3 include, but are not limited to, the following:

• Strengthened capacity of private sector finance providers, intermediaries, and facilitators to introduce new and develop existing financial instruments to foster financial inclusion including access to finance for SMEs and start-ups;

• Expanded use of non-bank financial services; and

• Advanced development of FinTech and innovative technologies in cooperation with traditional financial institutions and according to the needs and preferences of financial services consumers.

C.7.4 COMPONENT 4: Transparency and Communications

The Contractor must increase market transparency and accountability by supporting independent sources of information and data and engaging business associations and civil society as advocates and watchdogs for reform. The Contractor must improve the capacity of the existing non-governmental watchdog organizations as strategic partners for increased transparency, enforcement, advocacy, and education. The Contractor must support the media and journalists to improve their financial reporting skills, in order to strengthen watchdog capacity. Also, the Contractor must promote strategic communication engagements, which are critical with respect to financial sector programs, where the issues are sensitive, highly visible, and complex.

Under Component 4, the Contractor must build the linkages among government, private sector, civil society, and people in all matters related to finance and focus on strengthening the strategic communication activities, particularly the outreach to the key stakeholders and consumers of financial services to keep financial sector reform issues in public discussion. FSR’s communications strategy must aim to explain to the key stakeholders the nature of the problem(s); the rationale for specific reforms; support the rollout and implementation of new legislation, policies, and regulation; and publicize the benefits and success stories of the reform effort. Also, the Contractor must facilitate more informed public debates and discussions of financial issues.

The interventions also must engage with private sector finance providers, business associations, and civil society as the strategic partners for enforcement, advocacy, and educating consumers. The Contractor must enhance their capacity to advocate for institutional, legislative, and regulatory improvements and promote financial education products and services. Also, the interventions must include the targeted promotion of financial literacy in direct relation to and in support of ongoing efforts under the first three components as opposed to broad-based efforts.

This Component interrelates and supports other FSR activity components to build trust and confidence in the financial system in Ukraine.

The Contractor must provide strategic communications support for its own work and serve as a resource for other key stakeholders, the GOU, as well as business associations and civil society. The Contractor must utilize and promote best practices in public outreach and communications and coordinate closely with other related USAID activities and other donors and international organizations.

Anticipated results Under Component 4 include, but are not limited to, the following:

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