72016820R00001-01.pdf

(x)

72016820R00001 x x

1 copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted ; or (c) By separate letter or electronic communication which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE

RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR

OFFER. If by virtue of this amendment you desire to change an offer already submitted , such change may be made by letter or electronic communication, provided each letter or electronic communication makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.

x

720168

Washington DC 20521-7130 7130 Sarajevo Place USAID/Bosnia/Herz

03/19/20200001

13. THIS ITEM ONLY APPLIES TO MODIFICATION OF CONTRACTS/ORDERS. IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14.

12. ACCOUNTING AND APPROPRIATION DATA (If required) is not extended.is extended, Items 8 and 15, and returning

Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended , by one of the following methods: (a) By completing

The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offers

11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS

FACILITY CODE CODE

10B. DATED (SEE ITEM 13)

10A. MODIFICATION OF CONTRACT/ORDER NO.

9B. DATED (SEE ITEM 11)

9A. AMENDMENT OF SOLICITATION NO.

CODE

8. NAME AND ADDRESS OF CONTRACTOR (No., street, county, State and ZIP Code)

7. ADMINISTERED BY (If other than Item 6)CODE 6. ISSUED BY

PAGE OF PAGES

4. REQUISITION/PURCHASE REQ. NO.3. EFFECTIVE DATE2. AMENDMENT/MODIFICATION NO. 5. PROJECT NO. (If applicable)

1. CONTRACT ID CODE

AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT

03/19/2020

CHECK ONE A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT

B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF:

D. OTHER (Specify type of modification and authority) appropriation data, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b).

E. IMPORTANT: Contractor is not is required to sign this document and return __________________ copies to the issuing office.

ORDER NO. IN ITEM 10A.

14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where feasible.)

The purpose of this amendment is to update and revise sections of the RFP # 72016820R00001.

Changes are made in the RFP body and highlighted. Deleted text is indicated as strikethrough. Please also note new submission deadline. Offers are due on May 11, 2020, 9:00 a.m. CEST (local Sarajevo time).

16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print)15A. NAME AND TITLE OF SIGNER (Type or print)

15C. DATE SIGNED 16B. UNITED STATES OF AMERICA 15B. CONTRACTOR/OFFEROR 16C. DATE SIGNED

(Signature of person authorized to sign) (Signature of Contracting Officer)

Patrick E. Robison

STANDARD FORM 30 (REV. 11/2016)

Prescribed by GSA FAR (48 CFR) 53.243

Previous edition unusable

Except as provided herein, all terms and conditions of the document referenced in Item 9 A or 10A, as heretofore changed, remains unchanged and in full force and effect .

March 19, April 17, 2020

Reference: 72016820R00001 Financial Reform Activity in Bosnia-Herzegovina:

Greater fiscal accountability and transparency in Bosnia-Herzegovina Due date and time: May 4, May 11, 2020, 9:00 a.m. CEST Questions Due date and time: March 30, 2020, 15:00 CET Geographic Code: 935; NAICS Code: 541519 Amendment 01 of the RFP

Dear Sir/Madam:

The United States Agency for International Development (USAID), through the Mission in Bosnia and Herzegovina (BiH) contemplates award of a five-year Cost-Plus-Fixed Fee Completion contract to implement the Financial Reform Activity in Bosnia-Herzegovina.

The anticipated award date is September 2020.

USAID anticipates awarding one contract conducted under full and open competition procedures, pursuant to Part 15 of the FAR (48 CFR Chapter 1). USAID encourages offerors to express interest in this solicitation by submitting a proposal in accordance with the instructions set forth in Section L, “Instructions to Offerors.” USAID will evaluate the responsive proposals in accordance with the evaluation factors provided in Section M, “Evaluation Factors for Award” hereunder.

USAID encourages the participation to the maximum extent possible of U.S. small businesses (SB) in this activity as prime or subcontractors in accordance with Part 19 of the FAR. Also, please note that the geographic code is 935, which allows participation in this procurement from any area or country except from prohibited sources.

Electronic responses to this RFP are mandatory (See Section L). Please submit your proposals to the email address below by May 4, May 11, 2020, 9:00 a.m. CEST (Sarajevo Bosnia time.) Receipt time is when the proposal is received by AID/Washington internet server. The address for the receipt of proposals is:

sarajevooaa@usaid.gov. Hand delivered proposals (including commercial courier) and facsimile transmission will not be accepted.

The Technical Proposal has a strict page limit of 30 pages. Pages exceeding this limit will not be evaluated. Offerors are reminded that evaluators have to be able to read the proposals, so presentation and legibility are crucial.

This RFP can be viewed and downloaded from the official U.S. government website https://beta.sam.gov/. USAID bears no responsibility for data errors resulting from transmission or conversion processes. Further be aware that amendments to solicitations mailto:sarajevooaa@usaid.gov https://beta.sam.gov/ 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 or to create an account for https://beta.sam.gov/ to save searches, add your entity to an opportunity's Interested Vendors List, and receive automatic updates when the opportunity changes.

This RFP does not obligate the United States Government to award a contract nor does it commit USAID to pay any cost incurred in preparing and submitting of a proposal.

Award of a contract under this RFP is subject to availability of funds and other internal USAID approvals.

Sincerely yours, /s/

Patrick E. Robison Contracting Officer USAID/Bosnia and Herzegovina https://beta.sam.gov/

PART I—THE SCHEDULE

SECTION B – Supplies or services and prices/costs B.1 Purpose B.2 Contract Type B.3 Estimated Cost, Ceiling Price, Fixed Fee, and Obligated Amount B.4 Price Schedule B.5 Option to Extend Services B.6 Indirect Costs B.7 Ceiling on Indirect Cost Rates (if applicable) B.8 Multi-year contract and cancellation ceiling B.9 Cost Reimbursable B.10 Payment of Fixed Fee SECTION C - Description/Specifications Statement of Work for Financial Reform Activity in Bosnia-Herzegovina C.1 Objective C.2 Scope of the activity C.3 Executive Summary and Development context C.4 Relationship to the CDCS, and applicable agency policies C.5 USAID Achievements in the Fiscal Sector to date C.6 Other Donors in the Fiscal Sector C.7 Planned activities C.8 Monitoring, Evaluation, and Learning (MEL) C.9 Sustainability Analysis C.9 Environmental Analysis C.10 Gender Analysis C.11 Gender and Disability Considerations C.12 Critical Assumptions and Risks SECTION D - Packaging and Marking

D.1 Marking D.2 Branding D.3 Branding and marking policy

SECTION E - Inspection and Acceptance E.1 Notice Listing Contract Clauses Incorporated by Reference E.2 Inspection and acceptance

SECTION F - DELIVERIES OR PERFORMANCE

F.1 Notice Listing Contract Clauses Incorporated by Reference F.2 Period of Performance F.3 Place of Performance F.4 Performance Standards F.5 Key Personnel F.6 Authorized Work Day/Week F.7 Periodic Progress Reports F.8 Reports

SECTION G – CONTRACT ADMINISTRATION DATA

G.1 Administrative Contracting Office

G.2 Contracting Officer’s Authority G.3 Contracting Officer’s Representative G.4 Technical Direction/Limitations of Contracting Officer’s Representative G.5 Acceptance and Approval G.6 Paying Office G.7 Documentation for payment G.8 Invoicing Instructions G.9 Accounting and Appropriation Data

SECTION H - Special Contract Requirements H.1 Notice Listing Contract Clauses Incorporated by Reference H.2 Language requirements H.3 752.222-70 USAID disability policy (DEC 2004) H.4 752.222-71 Nondiscrimination (JUN 2012) H.5 752.225-70 Source and nationality requirements (FEB 2012) H.6 Authorized geographic code H.7 752.228-3 Worker’s compensation insurance (Defense Base Act) (DEC 1991) ... 70 H.8 752.231-72 Conference planning and required approvals (AUG 2013) H.9 752.7005 Submission requirements for development experience documents (SEP 2013) H.10 752.7007 Personnel compensation (JUL 2007) H.11 Additional requirements for personnel compensation H.12 752.7019 Participant training (JAN 1999) H.13 302.3.5.22 Submission of datasets to the Development Data Library (DDL) H.14 Nonexpendable property purchases H.15 Government furnished facilities or property H.16 Logistic support H.17 Disclosure of information H.18 Organizational conflicts of interest H.19 Executive order on terrorism financing H.20 Foreign government delegations to international conferences H.21 Environmental compliance H.22 Subcontracting plan and the SF294-Subcontracting report for individual contracts, and SF295-Summary contracting report H.23 Consent to subcontract H.24 USAID-financed third-party web sites (AUG 2013) H.25 Electronic payment system

PART II—CONTRACT CLAUSES

SECTION I - Contract Clauses

I.1 52.252-2 Clauses incorporated by reference (FEB 1998) I.2 Notice listing contract clauses incorporated by reference I.3 52.204-1 Approval of contract (DEC 1989) I.4 52.217-8 Option to extend services (NOV 1999) I.6 52.222-35 Equal opportunity for veterans (OCT 2015) I.7 52.222-36 Equal opportunity for workers with disabilities (JUL 2014) I.8 52.222-50 Combating trafficking in persons (MAR 2015)

I.9 52.232-40 Providing accelerated payments to small business subcontractors (DEC 2013) I.10 752.227-14 Rights in data - General (OCT 2007) I.11 752.229-71 Reporting of foreign taxes (JUL 2007) I.12 752.231-71 Salary supplements for host government employees (MAR 2015) . 107 I.13 752.7036 USAID implementing partner notices (IPN) portal for acquisition (JUL 2014) I.14 752.7037 Child safeguarding standards (AUG 2016) I.15 752.7038 Nondiscrimination against end-users of supplies or services (OCT 2016)

PART III—LIST OF DOCUMENTS, EXHIBITS, AND OTHER ATTACHMENTS

SECTION J—LIST OF EXHIBITS AND ATTACHMENTS

SECTION K - REPRESENTATIONS, CERTIFICATIONS, AND OTHER

STATEMENTS OF OFFERORS

K.1 Notice listing contract clauses incorporated by reference K.2 52.204-8 Annual representations and certifications (JAN 2017) K.3 52.204-20 Predecessor of offeror (JUL 2016) K.4 52.209-5 Certification regarding responsibility matters (OCT 2015) K.6 52.209-7 Information regarding responsibility matters (JUL 2013) K.7 52.209-11 Representation by corporations regarding delinquent tax liability or a felony conviction under any federal law (FEB 2016) K.8 52.222-22 Previous contracts and compliance reports (FEB 1999) K.9 52.222-25 Affirmative action compliance (APR 1984) K.10 52.225-20 Prohibition on conducting restricted business operations in Sudan -- Certification (AUG 2009) K.11 Agreement on, or exceptions to, terms and conditions K.12 Authorized negotiators K.13 Signature

SECTION L - INSTRUCTIONS, CONDITIONS, AND NOTICES TO OFFERORS . 129

L.1 52.252-1 Solicitation Provisions Incorporated by Reference (FEB 1998) L.2 Notice Listing Contract Clauses Incorporated by Reference L.3 52.215-1 Instructions to offerors – Competitive acquisition (JAN 2017) L.4 52.216-1 Type of Contract (APR 1984) L.5 52.233-2 Service of protest (SEP 2006) L.6 Explanation to prospective offerors L.7 Proposal preparation and submission – Special Instructions L.8. Instructions for the preparation of the cost/business proposal L.9 Branding implementation strategy and marking plan

SECTION M - Evaluation Factors for Award M.1 Notice listing solicitation provisions incorporated by reference M.2 General information M.3 Method of evaluation M.4 Evaluation factors M.5 Determination of competitive range

M.6 Cost/price evaluation M. 7 Cost Realism M.8 Source Selection M.9 Contracting with small business concerns

ABBREVIATIONS

AAPD Acquisition & Assistance Policy Directive ADS Automated Directives System AIDAR Agency for International Development Acquisition Regulation BEO Bureau Environmental Officer BiH Bosnia and Herzegovina BS Branding Strategy BIP Branding Implementation Plan CDCS Country Development Cooperation Strategy CCN Cooperating Country National CAS Cost Accounting Standards CFR Code of Federal Regulation CO Contracting Officer COP Chief of Party COR Contracting Officer’s Representative CPAR Contractor Performance Assessment Reporting CPARs Contractor Performance Assessment Reporting System CPFF Cost-Plus-Fixed-Fee CPI Contractor Performance Information.

CPII Contractor Performance and Integrity Information CPR Contractor Performance Report CSO Civil Society Organization D&B Dun and Bradstreet, Inc DBA Defense Base Act DDL Development Data Library DEC Development Experience Clearinghouse DO Development Objective DOC Development Outreach Coordinator EA Environmental Assessment EDO Economic Development Office EFT Electronic Funds Transfer EU European Union E.O. Executive Order eSRS Electronic Subcontracting Reporting System FAPIIS Federal Awardee Performance and Integrity Information System FAR Federal Acquisition Regulation FOIA Freedom of Information Act FPRA Forward Pricing Rate Agreement FY Fiscal Year GAAS Generally Accepted Auditing Standards GAO General Accounting Office GSM Graphic Standards Manual

IEE Initial Environmental Examination IPN Implementing Partner Notices IR Intermediate Result IT Information Technology LOE Level of Effort MEL Monitoring, Evaluation and Learning MEDEVAC Medical Evacuation MOU Memorandum of Understanding MP Marking Plan NAICS North American Industry Classification System OAA Office of Acquisition and Assistance OFAC Office of Foreign Assets Control ORCA Online Representations and Certifications Application PAD Project Appraisal Document PDF Portable Document Format RCE Request for Categorical Exclusion RFP Request for Proposals RS Republika Srpska SAM System for Award Management SDN Specially Designated Nationals SIGMA Support for Improvement in Governance and Management SMEs Small and Medium Enterprises SOW Statement of Work TBD To be determined TIN Taxpayer Identification Number TCN Third Country National US United States of America USAID United States Agency for International Development USAID/W USAID Washington USG United States Government

PART I—THE SCHEDULE

SECTION B – Supplies or services and prices/costs

B.1 Purpose

The purpose of this activity is to implement a set of fiscal reforms that will be supported by Information Technology (IT) interventions, with the goal of greater fiscal accountability and transparency in both BiH entities and enhanced services for citizens and private sector. The activity has two main purposes: First to improve fiscal discipline and fiscal regulatory framework conducive to business in BiH; and second, to improve overall public financial management through enhanced fiscal planning, tax compliance, control of spending, and debt management.

B.2 Contract Type

A Cost-Plus-Fixed-Fee Completion Contract is being contemplated. For the consideration set forth in the contract, the contractor must provide the deliverables and results described in Section C and Section F (to be incorporated at contract award). The contractor must also comply with all other contract requirements.

B.3 Estimated Cost, Ceiling Price, Fixed Fee, and Obligated Amount

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

b) Within the estimated cost plus fixed fee 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 $TBD. The contractor cannot exceed the aforesaid obligated amount.

c) Funds obligated hereunder are anticipated to be sufficient through TBD.

B.4 Price Schedule

Item Total Estimate US$

Salaries and Wages Fringe Benefits

Travel, Transportation and Per Diem

Equipment Supplies Contractual Other Direct Costs Total Direct Costs Indirect Costs Total Fixed Fee

TOTAL ESTIMATED COST & FIXED FEE

(a)

Cost Category Total

1) Direct Costs TBD

2) Indirect Costs TBD

Total Estimated Cost TBD Fixed Fee TBD Total Estimated Cost Plus Fixed Fee TBD

Table 1

[USAID will insert the final total estimates of each cost category provided by the contractor in its budget at award; see SECTION J, ATTACHMENT J.2 - BUDGET TEMPLATE that informs the development of the budget]

(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 will not bill any amounts against this contract in excess of the amounts specified for each line item.

(c) The contractor agrees to furnish data that the contracting officer may request on costs expended or accrued under this contract in support of the budget information provided herein.

B.5 Option to Extend Services

Pursuant to FAR 37.111 and to the FAR clause incorporated by full text in Section I entitled “52.217-8 OPTION TO EXTEND SERVICES (NOV 1999)”, the Contractor hereby grants to the U.S. Government option to extend services under the contract for six additional one month periods. Such extension options are to be exercisable by issuance of a unilateral modification prior to the expiration of the contract. The six one-month extension options may be combined or exercised individually. Upon exercise of such options by the Government, the costs and fees evaluated at contract award will be increased by the amounts specified below for each option month to extend. TBD

Cost Category 1st Option 2nd Option 3rd Option 4th Option 5th Option 6th Option

To Extend To Extend To Extend To Extend To Extend To Extend

(1 month) (1 month) (1 month) (1 month) (1 month) (1 month)

Total Estimated Cost

Fixed Fee

Total Estimated Cost

Plus Fixed Fee

B.6 Indirect Costs

(a) Pending establishment of revised provisional or final indirect cost rates, USAID will reimburse allowable indirect costs on the basis of the following negotiated provisional or predetermined rates and the appropriate bases pursuant to the contractor’s current executed Forward Pricing Rate Agreement (FPRA):

Description Rate Base Type Period % 1/ 1/ 1/

1/Base of Application:

Type of Rate:

Period:

(b) The contractor will make no change in its established method of classifying or allocating indirect costs without the prior written approval of the contracting officer.

B.7 Ceiling on Indirect Cost Rates (if applicable)

(a) Reimbursement for indirect costs will be at the lower of the negotiated final (or predetermined) rates or the following ceiling rates:

Description Rate Base Type Period % 1/ 1/ 1/

1/Base of Application:

Type of Rate:

Period:

(b) The Government will not be obligated to pay any additional amount should the final indirect cost rates exceed the negotiated ceiling rates. If the final indirect cost rates are less than the negotiated ceiling rates, the negotiated rates will be reduced to conform to the lower rates.

(c) This understanding will not change any monetary ceiling, obligation, or specific cost allowance or disallowance. Any changes in classifying or allocating indirect costs require the prior written approval of the Contracting Officer.

B.8 Multi-year contract and cancellation ceiling

This contract is subject to the requirements of FAR 17.106.

(a) Performance under this contract during the second and subsequent program years is contingent upon the appropriation of funds. All program years except the first are subject to cancellation. Cancellation shall occur by the dates specified below if the Contracting Officer:

1. Notifies the Contractor that funds are not available for contract performance for any subsequent program year, or

2. Fails to notify the Contractor that funds are available for performance of the succeeding program year.

(b) If cancellation under the clause at FAR 52.217-2, “CANCELLATION UNDER

MULTI-YEAR CONTRACTS (OCT 1997)” occurs, the contractor will be paid a cancellation charge not over the cancellation ceiling defined as follows:

Program Year

Cancellation Date

Cancellation Ceiling

Year 2 September, 2021

Year 3 September, 2022

Year 4 September, 2023

Year 5 September, 2024 Table 2

The Government’s liability for cancellation charges shall not exceed $TBD. This amount will be reduced accordance with FAR 17.106-1 (c)(1) at the conclusion of each program year as follows:

The cancellation ceiling shall be the amount allotted to this contract under the Limitation of Funds clause (FAR 52.232-22(b)) at the time the cancellation notice is issued by the Contracting Officer.

(c) In accordance with the Cancellation under Multi-year Contracts clause, the cancellation charge will cover only:

1. Costs:

− Incurred by the contractor and/or subcontractor;

− Reasonably necessary for performance of the contract; and − That would have been equitably amortized over the entire multi-year contract period but, because of the cancellation, are not so amortized; and

2. A reasonable profit or fee on the costs.

B.9 Cost Reimbursable

(a) The U.S. dollar costs allowable will 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,” and FAR § 52-232-22, “Limitation of Funds,” if applicable, and AIDAR 752.7003, “Documentation for Payment.”

B.10 Payment of Fixed Fee

Pursuant to FAR 52.216-8 and upon receipt of a proper invoice, USAID will pay a portion of the fixed fee in accordance with the following delivery schedule:

Identifier Performance Objective/Deliverable /Output ** Contractor to propose meaningful deliverables

Reference Section

Submission Date Means of Verification

$ Amount

A B C And others as proposed.

Table 3

Pursuant to FAR 52.216-8 payment of the fixed fee shall be made as specified in the Schedule above; provided that the Contracting Officer withholds a reserve not to exceed 15 percent of the total fixed fee or $100,000, whichever is less, to protect the Government's interest. The Contracting Officer shall release 75 percent of all fee withholds under this contract after receipt of an adequate certified final indirect cost rate proposal covering the year of physical completion of this contract, provided the Contractor has satisfied all other contract terms and conditions, including the submission of the final patent and royalty reports, and is not delinquent in submitting final vouchers on prior years' settlements. The Contracting Officer may release up to 90 percent of the fee withholds under this contract based on the Contractor's past performance related to the submission and settlement of final indirect cost rate proposals.

Nothing in the preceding paragraph precludes the possibility of both parties agreeing to quick- closeout procedure in accordance with FAR 42.708.

END OF SECTION B

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SECTION C - Description/Specifications

Statement of Work for Financial Reform Activity in Bosnia-Herzegovina

C.1 Objective

The fiscal sector is one of the key components of every country’s economic condition, which can be described as finding a balance between a government’s financial position and its ability to meet its financial obligations and service commitments on an ongoing basis. Hence, accountability and accessibility of the fiscal sector is of extreme importance for the sustainability of every country/society.

The purpose of this SOW is to recommend the set of fiscal reforms that will be supported by the Information Technology (IT) interventions, with the goal of greater fiscal accountability and transparency in both BiH entities, and enhanced services for citizens and private sector. The activity has two main purposes: first to improve fiscal discipline and fiscal regulatory framework conducive to business in BiH; and second, to improve overall public financial management through enhanced fiscal planning, tax compliance, control of spending, and debt management.

The activity purpose will be measured by two result outcome indicators of which one will be a score card developed by the implementer in close collaboration with MEL project, while the other indicator will record the number of financial stability management requirements significantly advanced with the Financial Reform Activity in Bosnia- Herzegovina assistance. The second indicator will be measured through a self-assessment questionnaire with stakeholders and targeted government institutions.

This activity design document provides rational for such assistance and argues that the fiscal sustainability will be achieved through greater fiscal discipline – through a set of measures designed to enhance and rational the taxation systems, increase transparency, and achieve greater accountability and transparency through improved management of public expenditures at different levels of the economic governance. Since modern fiscal systems depend heavily on quality and efficiency of IT platforms used to improve its functionality, the proposed activity leans heavily on the ICT technology to improve quality of public spending, improve compliance, and enhance business environment through number of e-services.

C.2 Scope of the activity

The project will be implemented for five years, starting in fall of 2020. The overreaching theme of the activity is a fiscal discipline as a remedy for the country’s primary fiscal balance. To improve fiscal discipline this activity will entail multiple initiatives to rationalize and enhance the taxation system and improve control over the pubic funds, both at revenue and expenditure side. All fiscal activities approved under this project will have strong IT component rooted in their scopes, for added benefits such as transparency and accountability fraud prevention, fair business environment and enhanced interaction between governance and end-users (citizens and businesses).

The main activity goals are:

- Enhanced modern taxation system that corresponds to the best practices in taxation of EU member countries

- Increased tax compliance and reduce tax evasions

- Better control over the public expenditures

- Improved fiscal discipline and public financial management

- Improved business environment through further reduction of burden on private sector

C.3 Executive Summary and Development context

BiH’s public finances is a focus area for the EU that has been continuously reviewed and evaluated by the EC. The Public Administration Reform, which entails public finance reform in Bosnia and Herzegovina, is necessary for establishing effective, accountable and financially efficient services for businesses and citizens. This reform is a precondition for integration into the EU. There are the four major chapters in the acquis that evaluate BiH’s fiscal capacity to join the EU:

1. Chapter 17 of the EU acquis, concerning macroeconomic policy (fiscal and monetary policy), requires mid-term fiscal programming, and monitoring and evaluation of budgetary system results according to the Support for Improvement in Governance and Management (SIGMA) approach.

2. Chapter 22 of the EU acquis, for reducing socio-economic disparities between the regions, and implementation of general regulations and specific regulations related to Structural Funds and Cohesion Fund.

3. Chapter 32 of the acquis relates to the adoption of internationally agreed upon and EU-compliant principles, standards and methods of public internal financial control (PIFC), which essentially need to be in place to ensure transparent use of public funds.

4. Chapter 33 of the EU acquis, concerning the financial resources made up mainly from contributions from Member States, necessary for the funding of the EU budget.

Although USAID does not contribute to all four Chapters (USAID mainly focuses its assistance on Chapters 17 and 32), USAID’s assistance is often indirectly enhancing systems that operate and are reviewed and scrutinized by the EC under different Chapters.

C.4 Relationship to the CDCS, and applicable agency policies

USAID Mission Strategic Plan. The 2012-2016 CDCS (which was extended throughout the FY20) for the USAID Mission in BiH identified economic growth and the strengthening of economic aspects of governance relevant to the business environment and private sector development as key foreign policy priorities for the United States Government (USG) in the country.

Development Objective and Crosscutting Linkages. The proposed Financial Reform Activity in Bosnia-Herzegovina which will be implemented under the PAD 2.2, Improving Economic Governance (IEG) Project, and in close cooperation with other USAID-funded projects, is designed to address critical needs identified in BiH’s CDCS.

The overarching objective of this economic development project will indirectly address several crosscutting initiatives: 1) anti-corruption measures by simplifying procedures for businesses and citizens and by reducing opportunities for regulatory abuse that deter private sector development; 2) improved business enabling environment; and 3) creation of the single economic space in ethnically divided BiH

Linkages with the Results Framework. The following hypothesis designed by EG office is applicable to this activity:

The fiscal sustainability will be achieved through greater fiscal discipline – through measures designed to enhance the taxation systems, increase transparency, and achieve greater accountability through improved management of public expenditures at different levels of the economic governance. Since modern fiscal systems depend heavily on quality and efficiency of IT platforms, deployment of such systems will improve efficiency and transparency of the government spending by increasing scrutiny over the government’s transactions, while minimizing discretion of public officials. The proposed activity will benefit the local business environment through reducing cost of doing business in BiH and by introducing greater scrutiny over illicit funding flows, which decrease competitiveness and disadvantage compliant businesses.

For this hypothesis to hold the businesses community, Civil Society Organizations (CSOs), media and governments at different levels must be willing and engaged in the reform and the necessary regulatory framework must be developed and implemented.

The planned project falls under and it will be implemented and accounted for under the DO2: Economic Growth/Economic Opportunity, as identified in the 2012-2016 USAID/BiH Country Development Cooperation Strategy. The activities that will be implemented under this project will directly support Intermediate Result (IR) 2.2 “Improved economic aspects of governance relevant to business activity”, with a focus on Sub IR 2.2.1 “Regulations and policies which foster a single economic space and private sector development and investment”.

This IR was envisioned to improve business-relevant strategies and policies that will stimulate economic growth and attract investment by improving the economic governance while reducing corruption and improving the overall image of the country.

C.5 USAID Achievements in the Fiscal Sector to date

This section provides a brief overview of USAID funded activities related to the fiscal sector.

1. FAR Project (2014-present): Established the Registers of the Para-fiscal fees in both entities and Brcko District. Introduced umbrella Laws on Fiscal systems that codify the Registers effectively preventing chaotic introduction of new para-fiscal fees by different levels of the government. Reduce, consolidate or terminate number of unjust fees. Introduced e-filing in Respublika Srpska and developed number of IT tools that enhance communication between the government and citizens. Assisted Tax administrations in both entities to digitize and improve their processes and procedures.

Provide IT tools for different levels of government to forecaster revenues and microsimulations to predict revenue implications due to policy changes (for Personal Income Tax (PIT), Corporate Income Tax (CIT), social contributions, and property tax). Enhance risk-based audit system in FBiH. Provide solutions for increased compliance of providers of games of chance.

2. TAF Project (2010-2013): Completed the efforts for the Unified Collection System (UCS) in FBiH and RS. Implemented regulations and IT solutions for detecting stop-fillers and non-fillers of direct taxes. Introduced a simplified payroll processing IT system by reducing the number of payment orders for the average of 10 orders down to five. Harmonization of Direct Taxation within Bosnia and Herzegovina by focusing on Brcko District as the direct taxation differed there from the entities. New Personal and Corporation Income tax laws drafted and enacted in Brcko District. Development and Implementation of Audit software to automate the taxpayer audit processes and to avoid discretion among tax administration staff in the selection of returns for audit.

Developed the Fiscal Analyses Capacity in the RS and the FBiH by providing training on micro-simulation models using internationally recognized STATA software.

3. ELMO Project (2006-2010): Introduction of the Unified Collection System (UCS) in Republika Srpska and FBiH for simplified, one-stop-shop registration/deregistration of employees for taxes and social contributions.

4. TARA Project (2006-2010): Reform of direct taxation in both entities. Harmonization of direct taxes by introduction of the Personal Income Tax (PIT) and Corporate Income Tax (CIT) in RS and FBiH, at unified/identical rates. Modernized TAX administration systems. Introduction of the Property Tax in RS, and Brcko District (FBiH delayed the implementation).

5. TAMP Project (2001-2006): The reform that modernized tax structures in both entities and Brcko District. During this project, a work on Personal Income Tax and Corporate Income Tax commenced in both entities.

C.6 Other Donors in the Fiscal Sector

In addition to the USAID’s efforts in the fiscal sector, other donors recognized the importance of the sound fiscal management for the country’s economic and political stability.

European Commission

Given that the economic criteria for integration with the EU is prescribed in the SAA agreement, it is logical that the EU Delegation to BiH is one of the major donors in the reform of BiH’s public administration, including public finances and the fiscal system. In 2013, the European Commission allocated approximately 47 million Euros for IPA’s Component 1, focusing on Transition Assistance and Institution Building. Of that, approximately 1.6 million Euros will be provided for assistance in public procurement reform. IPA projects funded in previous years are listed below:

• IPA 2007 project “Development and implementation of overall BiH PIFC strategy” designed to strengthen the financial control environment of public administration.

It ended in April 2012.

• IPA 2009 project “Capacity building for the compilation of accounting data within the General Government and statistics of public finance.” Its purpose is to support the Ministries of Finance of the State and the Entities and the Brcko District Directorate in providing sound and inter-institutional harmonized data on public finance on the basis of accrual accounting in accordance with international, especially EU principles, standards and practices. It will end in early 2014.

• IPA 2010 project “Coordination of policy making capacities and public financial management” with the purpose of improving the quality of fiscal policy and the links between policy makers and budgeting procedures.

• IPA 2011 fund: EC allocated approximately 4 million Euros for public finance restructuring, and financial management in compliance with EU standards.

Component I of the project is related to the strengthening of treasury operations at the level of the state and the entities and is currently in the drafting phase of terms of reference.

• IPA II Fund: IPA II sets a new framework for providing pre-accession assistance for the period 2014-2020. Bilateral IPA II allocations in the period 2014-2020 amount to €552.1 million (including funds for the Civil Society Facility (€ 9.1 million), Regional Housing Program (€ 10 million) and special measures following 2014 floods (€ 51 million). The most relevant key focus area for the Financial Reform Activity in Bosnia-Herzegovina is Democracy and Government which focuses on improving economic governance, public financial management, public service delivery, and anti-corruption.

PARCO (Public Administration Reform Coordinator’s Office)

The Government of BiH, through the Council of Ministers (CoM) and the Public Administration Reform Coordinator’s Office (PARCO), is tasked with implementation of the public administration reform projects. Under PARCO, a Public Administration Reform Fund (PAR Fund) has been established as a source of financing for technical assistance in the implementation of the projects that were defined in the Action Plan (later modified and referred to as the Revised Action Plan – RAP 1). Main contributors to the Fund are international donors and foreign governments: Delegation of the European Union in BiH, Ministry of Foreign Affairs of Great Britain, Swedish International Development Agency (SIDA), The Royal Netherlands Embassy, and Ministry of Foreign Affairs of the Kingdom of Norway. However, the reforms under PARCO are often implemented at a very slow pace and do not meet the expectations of the entity ministries. Although PARCO still formally exists, most of the international donors (as well as the entity governments) have refused to extend financial support to PARCO, which was in the past became notorious for its inefficiency.

IMF (International Monetary Fund)

The IMF Mission is a strong supporter of fiscal sector reform. IMF and USAID coordinated their activities in the fiscal arena in past years: USAID’s ELMO and TAF activities (Unified Collection System and Payroll Processing System) were recognized by the IMF as highly important reforms and were included in the negotiations for the Stand – By – Arrangement with BiH authorities. IMF also strongly supports work of all four three Tax Administrations (TAs) in BiH, and conditions further monetary assistance for the country with direct assistance to the TAs. USAID traditionally has excellent relationship with IMS, as in the past many reforms made it into SBA agreements with the entity governments.

GIZ (German Government)

There is ongoing cooperation between the Governments of BiH and the German GIZ project for technical assistance for public administration reform. This project will introduce electronic processing in the public procurement system of Bosnia and Herzegovina. GIZ also supports the Public Procurement Agency (PPA).

DFID (ended in 2010)

The Project for Strengthening Public Expenditure Management in BiH addressed the process of budget planning and preparation at all levels and has introduced the process of “Budget Planning in 10 Steps” representing basic concepts of program budgeting and strengthened medium term budget planning and preparation. In 2013, DFID initiated basic education on program budgeting for budget users and MOF employees.

C.7 Planned activities

A.1. Assistance for improved fiscal planning and analysis

Beneficiary: State (Indirect taxes), FBiH, RSBiH, Brcko District BD, Parliament members, non-governmental groups

Focus of assistance: Fiscal policy/ fiscal discipline

The capacity for static macroeconomic modeling and forecasting is still insufficient at all levels of government. Forecasting of expenditures is weak while analysis and forecasting of tax gaps is non-existent. Further, static micro-simulations are not inclusive of indirect taxes which represent approximately 70% of all tax-related revenues. The static micro-simulation models need to be expanded to include Cantons (so far only Sarajevo Canton was covered by USAID assistance), as social welfare/benefits/revenues are at the level of Cantons in the FBiH. As currently there is no modeling analytical unit in the Ministry of Finance, in order to expand the capabilities for fiscal accountability and fiscal oversight in BiH, this activity should train non-profit professionals in statistical modeling. Also, governments must learn other modelling technics such as dynamic modeling, an exercise that considers the corresponding "dynamic effects"--changes to the economy that are caused by the tax changes themselves. This modeling which includes the impact of population age(ing) and demographic changes are highly relevant for the current economic and development moment of BiH. And lastly, current modelling does not include behavioral elements that can be incorporated into static and dynamic models, to help us understand the possible changes in behavior as a result of reforms.

Activities will include:

- Analyze the current level of static (macro and micro) modeling and identified future needs for each level of government

- Provide analysis of IT requirements required for continued interventions on static forecasting through follow-up training and routine training in institutions (licenses, etc.)

- Further expand the knowledge and training on static macroeconomic forecasting, to include forecasting of expenditures and forecasting of tax-gaps as information provider for the ministries of finance on possible maximum tax revenues (State, Entities, Brcko District, Cantons)

- Continue and further expand the knowledge and training on static micro-simulations through follow-up and routine training. Expand the current versions of micro simulations which are static in time to include time dimension for multi-year simulations

- Further expand the knowledge and training on static micro-simulations to include simulations of indirect revenues

- Further expand the knowledge and training on static micro-simulations to include direct revenues and social benefits (for Cantons)

- Further expand the knowledge and training on static micro-simulations to include direct revenues and social benefits (for Parliamentary specialized working groups and non-government stakeholders)

- Procure software and licenses for dynamic modelling (State, Entities, Brcko District)

- Provide training on developing dynamic models, enabling development of dynamic models with static ageing where ageing is carried out through individual weights which are recalculated in line with demographic changes

- Provide training on static and dynamic modeling that is inclusive of behavioral elements

- Expand models to enable additional modules, which require the multi-year simulations (pension module, health-care module, long-term care module)

- Provide education on fiscal analysis to enable interpretation of the results, particularly on a follow-up steps that include setting reform goals, measuring inequality and progressivity, vertical and horizontal equity, redistributive effects, simplicity, costs of reforms, potential influence on the deadweight loss, etc.

Expected Results:

Result 1: Analytical capacity of the Fiscal Council (FC), Federation of BiH Ministry of Finance (FBIH) and Republika Srpska Ministry of Finance (RS MoF) strengthened, resulting in enhanced fiscal analysis, forecasting and policies, planning and reporting

Result 2: Macro-econometric and micro models implemented at State and the level of the entities.

Result 3: Dynamic and behavioral models introduced in economic forecasting in BIH, at different levels of the government. Better forecasting of changes to the economy resulting in progressive policies.

A.2 Strengthening of the FBiH and Republika Srpska Health Sector Treasury Systems

Beneficiary: Federation of BiH (Cantons and municipalities)

Republika Srpska (Health Sector Institutions)

Focus of assistance: Public revenue/expenditure, fiscal discipline

Entering of transactions for budget users for health sector institutions in both entities, which are currently outside the system, is done by filling in paper forms. This is a slow, non-transparent process of reporting, open to mistakes and delays, particularly when preparing consolidated statements. Therefore, it is necessary to expand the treasury business operation and the real-time IT system to all budget users of the FBiH and RS Health Institutions to offer them a more efficient and transparent management of public funds.

In Republika Srpska, the government is taking the phased approach to inclusion of the health sector (HS) into the Treasury System (TS). In the Federation of BiH, USAID will select the pilot Cantons for inclusion of the health sector into the treasury operations.

- Updated analysis and inventory of the present state of the TS system at the lower levels of governance in FBiH, identifying issues and weaknesses and focusing on effective solutions for Health sector in FBIH (focus on inclusion of HS into Cantonal TS)

- Detail analysis of the present financial and technical capacity and condition of FBiH HS and the arrears in FBiH HS

- Select 3 pilot Cantons for inclusion of the Health Sector into TS operations

- Implementation of the most viable solution for inclusion of selected cantonal

Health sector institutions into Treasury operation

- Further advancing of the TS system in RS Health Sector (coordination and technical assistance for phased integration of health institutions into the RS TS)

Expected Results:

Result 1: Analysis produced, recommending the most viable solution for FBIH health sector TS system Result 2: Upgrades to the TS system(s) for number of Cantons in the FBiH (if required) Result 3: Number of health sector institutions in the FBiH included in a real-time treasury system.

Result 4: Additional health sector budget users in RS included in the RS Treasury

System

A.3 Strengthening of the business environment in BiH

Beneficiary: Federation of BiH (FBiH)/Cantons, Republika Srpska (RS), Brcko District (BD)

Focus of assistance: Business environment/parafiscal fees

There is excessive number of parafiscal fees and charges that are imposed on businesses and citizens at all levels of the government. In order to keep the momentum for further abolition of unjust fees and charges, USAID will continue with the adoption of the Law in FBiH, as well as on orchestrated work for elimination /consolidation/reduction of charges in both entities and BD. The continuation of these works is fundamental for creation of better business environment.

- Adopt innovative technical approach to address the issue of para-fiscal taxes;

Draft legislative amendments to improve the relevant legislation and eliminate burdensome fees.

- Assist all levels of the government in identifying parafiscal fees and charges;

promote efficient reduction or abolition of parafiscal fees.

- Assist different levels of local government to replace the lost revenues by identifying other more productive and investor-friendly sources of revenue.

Expected Results:

Result 1: # of nuisance fees eliminated /reduced in both entities and BD Result 2: Fiscal stability of different levels of local government preserved Result 3: Cost and time for business operations in BiH reduced

A.4 Strengthening Public Debt Management

Beneficiary: State, FBiH, RS, Brcko District (BD)

Focus of assistance: Fiscal Sustainability – Debt Management

Bosnia and Herzegovina does not have an overreaching system for public debt management. The State, two entities and Brcko district are using old Access databases to record and trace the external debt, while internal debt is recorded in Excel files. Risk management and analyses are very poor and random.