72049220-OEDGRFI-00001, Amendment 1 (Attachment A).pdf

Attachment A

Better Access and Connectivity (BEACON) Project Revised Draft Program Design

1. INTRODUCTION

This Statement of Objectives (SOO) is for the Contractor to provide technical services to implement the

Better Access and Connectivity (BEACON) activity. This activity will engage a contractor that can effectively and efficiently provide technical advisory services and commodities support that will improve access and connectivity by lowering logistics and communication costs in the Philippines.

Improvements in access and connectivity is undoubtedly critical for the country’s long‐term economic growth and competitiveness as it directly impacts economic activities by increasing productivity, facilitating trade, and promoting innovation. Building the country’s ICT and logistics infrastructure is fundamental to improving competitiveness needed to achieve higher levels of trade and investment and hence employment and income generation. This project seeks to address gaps in access and connectivity, particularly where it reduces the cost of doing business, improves productivity of private enterprise and increases the benefits of the digital economy. Improvements in logistics and communications infrastructure will also enable the efficient delivery of public services, connect the underserved and remote regions and expand economic opportunity. This activity will support technological developments, particularly where it advances education, expands access to social services, improves transparency and governance, and promotes inclusive economic growth. The project also seeks to improve citizen participation and customer satisfaction through digital services and minimize cyber threats.

This SOO invites potential offerors to develop cost effective solutions and innovative approaches to meet the stated objectives. It also presents USAID/Philippines with an opportunity to assess potential offerors’ understanding of all aspects of the effort to be performed by eliminating detailed instructions on how to accomplish the stated objectives.

Offerors are invited to provide responses that include information, evidence‐based and data‐informed analyses, strategies, and recommendations that demonstrate approaches for the implementation of a technical assistance activity that will help address the problem of weak competitiveness and non‐ inclusivity of economic growth in the Philippines.

For purposes of this RFP, the words “activity”, “program”, or “project” are used interchangeably to refer to BEACON.

2. PURPOSE

This activity is an integral part of the USAID/Philippines project “Economic Growth, Democracy and

Governance with Equity” which seeks to assist the Philippines to strengthen its path to self‐reliance, improve democratic practices, and become a stable, middle‐income country by 2040. Specifically, it supports the EGDGE Program’s goal of “economic development is made more inclusive” and the sub‐ objectives of “environment for trade and investment is made more open and competitive” and

“domestic resources mobilized and public financial management improved”.

More broadly, BEACON contributes to the USAID/Philippines’ Country Development and Cooperation

Strategy (CDCS) 2012‐2018’s goal of a “more stable, prosperous, well‐governed nation”. Specifically, this project supports Development Objective (DO) 1, Broad‐Based and Inclusive Growth Accelerated and

Sustained, and Intermediate Result (IR) 1.1, Economic Competitiveness Enhanced. This project is expected to extend beyond the current CDCS and will be developed in line with USAID’s new CDCS.

This activity supports the U.S. government’s Indo‐Pacific vision which aims to promote “a free and open

Indo‐Pacific in which independent nations with diverse cultures and different aspirations can prosper side‐by‐side in freedom and in peace.” BEACON also supports the Asia Reassurance Initiative Act of 2018

(ARIA) that seeks “to pursue high‐quality and transparent infrastructure projects” and “maintain unimpeded commerce…and communication” with countries in the Indo‐Pacific region. Both IPS and

ARIA seek to provide an alternative to state‐dominated infrastructure investments that are predatory, financially unsustainable, or otherwise harmful and promote free market competition, transparency, local capacity building, sustainable financing arrangements, environmental and social safeguards, and open and fair market access. This activity is also aligned with USAID’s Clear Choice framework’s emphasis on strategic partnership and free, open and enterprise‐driven development, and citizen‐ responsive governance that advances democratic norms and institutions.

BEACON aligns with the economic pillar of Indo‐Pacific vision, including the Digital Connectivity and

Cybersecurity Partnership (DCCP) initiative, the Infrastructure Transaction and Assistance Network

(ITAN), and Trade and Competitiveness. The DCCP is focused on communications infrastructure, cybersecurity, and advancing the digital economy. It supports communications infrastructure development through private enterprise‐led partnerships; promotes transparent regulatory policies for open, competitive markets; and, builds partners’ cybersecurity capacity to address shared security threats. DCCP seeks to promote open, interoperable, reliable and secure communications infrastructure and internet connectivity. This initiative will support programs and activities that assist partner countries expand their broadband and digital connectivity in a commercially sustainable way; promote trade and investment in information and communications technologies (ICTs) and ensure that these expanded ICT connections are secure and trusted. In addition, work on e‐payments systems, support for fintech and e‐commerce activities and achieving inclusive finance through technology platforms will be incorporated in USAID’s assistance. This activity also implements USAID’s Digital Strategy which seeks to improve

USAID development assistance outcomes through responsible use of digital technology and seeks to strengthen openness, inclusiveness, and security of the country’s digital ecosystems.

The Infrastructure Transaction and Assistance Network (ITAN) is also a priority IPS program. ITAN aims to accelerate U.S. private sector exports and investment and bolster Indo‐Pacific countries’ ability to implement sustainable, transparent, and high‐quality infrastructure projects. ITAN will support capacity‐ building programs to improve partner countries' project evaluation processes, regulatory and procurement environments, and project preparation and financing capabilities. One option for transaction assistance is through the Transaction Advisory Fund (TAF) that provides transaction‐specific advisory services, such as legal services for contract negotiation and bid/proposal evaluation, on key projects already under consideration or development. This activity will support the development of a pipeline of projects eligible for TAF support.

This activity also lines up with the overall IPS goal on trade and competitiveness of broad‐based, sustained, free and fair trade and competitiveness increased. In particular, this activity will seek to improve trade facilitation and customs processes and improve the ease of doing business by seeking improvements in the country’s logistics supply chain, lowering the costs of digital connectivity, and reducing transaction costs through technology platforms for traders and investors.

This activity is also consistent with the objectives of the 2018 Better Utilization of Investments Leading to Development (BUILD) Act that establishes the Development Finance Corporation (DFC) and will facilitate private sector investment in infrastructure development through loan or loan guarantees, equity investment, insurance and other assistance. Finally, this activity supports private sector‐led efforts in line with USAID’s Private Sector Engagement (PSE) policy. The PSE Policy pursues market‐ based approaches and investment as a means to increase the sustainability of outcomes and accelerate countries’ progress on the Journey to Self‐Reliance.

This activity supports the Build, Build, Build (BBB) program of President Duterte. Under the strategy to accelerate public spending on infrastructure, which the government said is targeted to reach between

US$157 billion and US$177 billion from 2017 to 2022. This project is also aligned with the priority transport and ICT development projects as identified in the 2018‐2022 Philippine Development Plan.

3. BACKGROUND AND CONTEXT

Given the archipelagic character of the Philippines, the country relies heavily on logistics and communication networks to connect its various islands and regions. Mobility within the country depends on safe, reliable and efficient maritime, air and land transport linkages. Shipping services, for instance, account for 80% of passenger and goods movement within the country. ICT infrastructure, with its potential for bridging wide distances, also contributes to the speed and efficiency of the movement of goods and services and lessens the effect of information asymmetries. The quality of interconnecting networks that allow the movement of people, goods and commerce impact directly on the country’s overall competitiveness and its ability to achieve inclusive growth. Better access and connection to markets expand economic opportunity and improves the quality of life across all levels.

Overall, the Philippines lags behind its peers in the Southeast Asian region in access and connectivity. In the World Bank’s 2018 Logistics Performance Index, the Philippines ranked 60th behind Vietnam (39), Thailand (31) and Indonesia (43). In terms of overall quality of infrastructure, the Philippines placed 113 out of 137 countries, according to the WEF 2017‐2018 Global Competitiveness Index, behind Malaysia, Indonesia, Thailand, and Vietnam. The country also trailed in measures of ICT development and readiness. According to the International Telecommunication Union’s (ITU) ICT Development Index of

2017, the Philippines ranked 101st behind Thailand (78) and Malaysia (63). The Philippines was only slightly ahead of Vietnam but behind Indonesia, Thailand and Malaysia in the World Economic Forum’s

2016 Networked Readiness Index (see table below).

Overall Quality of Infrastructure

Logistics Performance

Index

ICT Development Index

Network Readiness Index

Indonesia 68 46 111 73

Malaysia 21 41 63 31

Philippines 113 60 101 77

Thailand 67 32 78 62

Vietnam 89 39 108 79 Sources: 2017‐2018 WEF Global Competitive Index, WB 2018 Logistics Performance Index, ITU 2017 ICT Development Index, WEF 2016 Networked Readiness Index

Inadequate supply of infrastructure was cited as the second most problematic factor for doing business in the Philippines, according to the World Economic Forum’s Executive Opinion Survey of 2017. The most recent constraints analysis on the Philippines undertaken by the Millennium Challenge Corporation and USAID’s 2017 Job’s diagnostics both found infrastructure to be a binding constraint to economic growth in the country.

Poor logistics and weak digital connectivity hamper the country’s economic growth and weakens its overall competitiveness. This translates to billions of dollars in lost productivity, reduced competitiveness, less foreign direct investment, and slower growth. On the other hand, better access and connectivity generates jobs, improves the country’s attractiveness for private investment and creates income opportunities. Higher spending in logistics and ICT infrastructure will have backward and forward linkages further stimulating the local economy and boosting productivity growth. The cost of moving goods and services to market as well as accessing production inputs crucially depend on the quality of logistics and communications infrastructure. This also supports the growth of the digital economy that can transform industries and societies and promises to deliver long‐term and broad‐based gains. Lower costs and increased efficiency, in turn, will advance economic growth and hence further improve employment opportunities. There is general agreement that better access and connectivity improves long‐term production, raises incomes, and reduces poverty levels.1

1 For a good survey of the literature, see Y. Sawada. 2015. “The Impacts of Infrastructure in Development: A Selective Survey”. Asian Development Bank Institute Working Paper Series No. 511. Also see N.W. Ismail and J.M.

Mahyideen. 2015. “The Impact of Infrastructure on Trade and Economic Growth in Selected Economies in Asia” ADBI Working Paper Series No. 553.

Theory of Change

The overall goal of this activity is to improve the country’s access and connectivity by lowering logistics and communication costs thereby enabling a more competitive and productive economy.

This activity aligns with the objectives of DCCP, ITAN, and trade and competitiveness by expanding opportunities for private sector participation in the logistics supply chain and ICT infrastructure development in the Philippine government.

4. OBJECTIVES

The primary goal of this activity is to promote better access and connectivity in the Philippines by (a) improving the quality of its ICT infrastructure and (b) improving trade logistics performance.

Results framework

Objective 1: Quality of ICT infrastructure improved

The country’s ability to take advantage of the growth of the digital economy is hampered by poor access, the lack of quality infrastructure and the high cost of internet connectivity. In the WEF

Networked Readiness Index, the Philippines ranked high in terms of business usage, capacity for innovation and overall skills but scored poorly in regulatory environment, infrastructure, and affordability. About 45% of the country’ population is not connected to the Internet. Broadband penetration is low compared to countries of similar economic size. According to the International

Telecommunication Union, the Philippines ranked 104th and 97th in terms of mobile and fixed broadband respectively, significantly behind Malaysia (82, 32), Thailand (93, 36), and Vietnam (66, 73). In the WEF

Global Competitiveness Index, the country fell behind its ASEAN peers in mobile‐cellular telephone

Access and connectivity improved

Quality of ICT infrastructure improved

Enabling environment improved

Digital skills and systems enhanced

Cybersecurity strengthened

Trade logistics performance improved

Logistics infrastructure improved

Quality of logistics services improved

Trade facilitation improved subscriptions, fixed broadband internet subscriptions, and mobile broadband subscriptions despite having more internet users. In the WEF’s 2016 Global Enabling Trade Index, the Philippines was ahead of

Indonesia but significantly behind Malaysia, Thailand and Vietnam in the availability and use of ICTs.

Average internet speed is the lowest in the Asia Pacific region at just 5.5 Mbps. The Philippines posted the slowest connection speed and the slowest 4G LTE (long‐term evolution standard) speed among the

ASEAN62 according to both the Akamai 2017 Internet‐Connectivity Report and OpenSignal’s State of LTE

Report3. The country had the poorest overall mobile video experience among 69 countries in

OpenSignal’s 2018 State of Mobile Video report.

Concentration of computer ownership and usage is high in urban areas and among middle‐to‐upper income classes but poor in rural areas and among lower income groups. Areas far from urban centers lack strong ICT infrastructure and suffer from slow and unreliable internet connections. Only about 26% of public schools across the country have Internet connections. The Philippines also has one of the lowest cell site densities in the region, with only 20,000 towers compared to Vietnam’s 70,000 and

Indonesia’s 90,000 towers. Vietnam has 170% more fiber connections than the Philippines4.

Prices of ICT services in the Philippines are among the highest in ASEAN. According to the WEF

Networked Readiness Index, the country scored 107 out of 139 countries in terms of affordability. Fixed telephone services are priced at USD36.2 per month, the highest in ASEAN. Moreover, the price of mobile cellular services placed as the second highest (USD22.2 per month) while the price of fixed broadband services ranked as the third highest (USD51.6 per month) in ASEAN. The Philippines ranks

126th out of 182 countries measured by the ITU with entry‐level fixed broadband prices at 7.53 percent level of GNI per capita behind Malaysia, Thailand and Vietnam. Despite services being poor, local consumers face high prices. Fixed broadband speed is way below the global average and yet is more expensive above the ITU’s recommended affordability threshold.

Limited competition and barriers to entry have contributed to high prices and low quality ICT infrastructure. Foreign ownership of telecommunication services, which is mainly used for Internet service provision, is capped at 40 percent. Telecommunications is considered a public utility under current law and requires providers to secure a franchise or certificate of public convenience (CPC) to be able to operate domestically. There are only two main telco providers since the enactment of Republic

Act 7925 (1995) or the Public Telecommunications Policy Act which opened up private sector participation in the sector5.

The Philippines is also vulnerable to cybersecurity threats. Awareness of cybersecurity issues is low across the country despite the high potential for on‐line scams, data phishing, hacking or theft. A Frost

& Sullivan study commissioned by Microsoft found that local organizations frequently encountered data

2 Singapore, Thailand, Vietnam, Malaysia, Indonesia and the Philippines.

3 Akamai (2017), a cloud data network that monitors internet traffic, reports that the Philippines’ average internet speed stands at the lowest in the Asia Pacific with only 5.5 Mbps in 2017.

4 See Mary Grace Mirandilla‐Santos, Jonathan Brewer and Jaime Faustino (2018). “From Analog to Digital:

Philippine Policy and Emerging Internet Technologies”. The Asia Foundation.

5 The Duterte administration has taken moves to invite a third telco into the market.

exfiltration and data corruption. The Philippines moved up to fifth place from ninth a year earlier in

Kaspersky Lab’s global list of countries with most online threats detected6. The 2016 Symantec Internet

Threat Report still ranked the Philippines 6th in the world when it comes to web attack origins. In 2016, the government reported at least 68 government websites were subjected to attacks including hacking, defacement, and denial of service. The Microsoft study revealed that the potential economic loss in the

Philippines due to cybersecurity incidents can hit a staggering US$3.5 billion or about 1.1 percent of

GDP.

The Philippines currently is ranked 37th in the 2017 Global Cybersecurity Index (GCI) of the United

Nations‐International Telecommunications Union7. The country ranked behind Thailand and Malaysia and 24th out of 60 least cyber‐secure countries in the Comparitech’s rankings8. The Philippines has relatively new legal frameworks in place to secure electronic transactions, data protection and privacy, and for consumer protection. This activity will support the Philippine government’s implementation of the National Cybersecurity Plan 2022 and the enforcement of R.A. 10175 or the Cybercrime Prevention

Act.

This activity seeks to promote the growth of open, interoperable, reliable, and secure communication networks and the cybersecurity capacity of the Philippines. This activity will engage the policymakers, regulators and the private sector to shape the way 5G and future networks are deployed and to ensure that these networks are secure, use open international standards, and follow best cybersecurity practices particularly in data protection and privacy, and advance and strengthen advocacy for next‐ generation network security. Increased competition in the provision of digital services in also essential.

The Philippines will need to undertake significant reforms to prepare itself for the growth of the digital economy (see table below).9 The policy environment, primarily made up of laws based on analog and voice‐based services from the 1930s to 1990s, needs to be updated to adapt to new emerging technologies10. The country needs to step up measures that enable businesses to take advantage of transformative technologies such as cloud‐based computing, the internet of things, and data analytics.

The Philippines will need to boost its capacity to, for instance, increase adoption of digital platforms, enable e‐commerce and the delivery of financial services using digital technologies through e‐payments system and growth of Fintech market, and increase automation of production processes across various supply chains to lower logistics costs. According to the APEC e‐Payment Index, which assesses the level of readiness and potential to engage in adopt, and reap the broad range of economic and societal

6 Its Global Q2 2019 Security Bulletin, which compiles data from the Kaspersky Security Network (KSN), found that almost 7 million or 37.4% of Kaspersky users in the Philippines were attacked by online threats.

7 The GCI measures a country’s cybersecurity maturity through the following criteria: legal, technical, organizational, capacity‐building and international cooperation.

8 The Comparitech study evaluated 60 countries across various categories from malware rates, attacks to cybersecurity‐related legislation.

9 See F.M. Quimba and S. Calizo, Jr. (2018) “Going Digital: From Innovation to Inclusive Growth in the Philippines” Philippine Institute for Development Studies Discussion Paper Series No. 2018‐19. Also refer to World Bank (2019)”The Digital Economy in Southeast Asia: Strengthening the Foundations for Future Growth”.

10 Mirandilla‐Santos, et al. Op cit.

benefits that e‐payments hold, the Philippines ranked 17th behind Singapore (2), Malaysia (10), Thailand

(15), and Indonesia (16).11

This activity will support the newly established Department of Information and Communications

Technology (DICT) whose mandate is to “plan, develop, and promote the national ICT agenda.” This activity will support the DICT and other agencies, such as the National Telecommunications Commission, with their policy and program initiatives. This activity will also support the Philippine government priorities under the National Broadband Plan, the National Digital Strategy, and the National

Cybersecurity Plan. The Offeror is expected to proposed interventions to:

Sub‐objectives:

1. Promote universal, reliable and affordable access to the Internet;

2. Enhance digital skills and systems that support growth of the digital economy; and

3. Strengthen cybersecurity safeguards and preparedness.

Illustrative results:

Total public and private dollars leveraged by USG for ICT infrastructure projects

Number of beneficiaries receiving improved ICT services due to USG assistance

Share of digital payments in total payment transactions, in volume and $ value

Number of central‐bank‐supervised financial institutions compliant with international standards for cybersecurity resilience

Number of government agencies with systems that are compliant with global standards for information security management

Number of new USG supported public private partnerships (PPPs) formed

Amount of new revenue generated for the private sector partner as a result of USG‐supported public private partnerships (PPP).

Objective 2: Trade logistics performance improved

According to a Google report, the internet economy in Southeast Asia is projected to hit $300 billion by

2025 with the Philippines expected to grow between 20‐30 percent annually.12 The World Bank also noted that the rapid growth of e‐commerce will lead to a dramatic increase in logistics services13. The spread of e‐commerce and use of digital payments is creating a higher demand for more efficient delivery services, both within and across borders. As transactions in such platforms as Amazon and

11 The Index measures countries’ (1) policy and regulatory environments, (2) infrastructure, (3) demand, and (4) innovative products and services.

12 See Google. 2019. E‐Conomy in SEA 2019. Apart from spending more time on the mobile Internet, many are also spending money on online services and products. The Internet economy now involves 180 million people in Southeast Asia, or about one in two Internet users.

13 World Bank. 2019. The Digital Economy in Southeast Asia: Strengthening the Foundations for Future Growth

Lazada increase, there will be a greater demand for efficient shipping and delivery services. The more businesses use digital platforms for connecting buyers to sellers, the more important logistics will be in the competitiveness and growth of enterprises particularly where distance and remoteness presents a challenge.

The quality and competence of logistics services is an important feature of the supply chain in a growing digital economy. The Philippines currently has the highest logistics cost in the ASEAN region mainly due to its archipelagic character but also because of poor provision of transportation infrastructure and bad regulation. The country ranked 60th well behind its ASEAN peers in the World Bank’s 2018 Logistics

Performance Index (LPI). Complying with Customs and other border procedures is a major challenge.

Lead times for export and import efficiency in the Philippines significantly lag behind the regional average of 2‐3 days. The Philippines fell behind Malaysia, Indonesia, Thailand and Vietnam in customs as well as logistics competence and timeliness in the latest LPI report. The Philippines also ranked last relative to its regional neighbors in the quality of postal services14.

Logistics infrastructure is also weak. According to the LPI 2018 report, the country scored poorly compared to its ASEAN neighbors in logistics infrastructure. This is validated by the WEF 2017‐2018

Global Competitiveness Index where the Philippines placed 113 out of 137 countries behind Malaysia, Indonesia, Thailand, and Vietnam in terms of quality of overall infrastructure. Similarly, the Philippines ranked a far last among its ASEAN peers in availability and quality of transport infrastructure pillar and the availability and quality of transport services pillar of the WEF’s 2016 Global Enabling Trade Index. In the World Bank’s 2015 Enterprise Survey, 21.7 percent of local firms identified transport infrastructure as a major constraint significantly higher compared to Thailand (5.1 percent) as well as neighboring

Indonesia (15.8 percent) and Vietnam (8 percent).

Domestic supply chains heavily depend on sea‐borne transport and access to sea ports. According to the Philippine Statistical Authority (PSA), 99.8 percent of domestic commodities trade transits over water.15 The Maritime Industry Authority found that the high logistics cost in the Philippines is due to the limited cargo base (lack of economies of scale), inadequate port infrastructure, lack of competition in the coastal shipping market due to cabotage, inadequate road transport networks and regulations that lead to excessive road congestion, high cost of port operations, and inadequate investments from the private sector16. Growing domestic and international market demand, particularly in passenger traffic, has also placed increasing demand on the country’s airports. The NAIA, the primary international gateway of the country, receives about 64% of passenger traffic annually. As demand grows, passenger

14 According to the Universal Postal Union’s 2019 Index of Postal Development, the Philippines ranked 72 out 170 countries, behind Indonesia (59), Malaysia (33), Thailand (29) and Vietnam (45).

15 Based on the published report on commodity flow by Philippine Statistics Authority. Commodity flow refers to the flow of commodities through the water, air and rail transport systems in the country. For more information, visit this site: http://psa.gov.ph/content/commodity‐flow‐philippines‐2013‐final‐results 16 J. Tongzon (2018). “Regulatory challenges in the Philippine logistics industry” PIDS Policy Notes No. 2018‐01. The agricultural sector and agribusiness are highly dependent on logistics infrastructure. An IFC (2012) study noted that transport infrastructure “affects all segments of the (agriculture) value chain from the sourcing of inputs to the delivery of the final product to end‐users”. Citing JBIC data, the World Bank reported that logistics costs account for 24 to 53 percent of wholesale price in the country, compared to less than 20 percent in the region.

utilization for airports exceeds their structural capacity. Congestion in key domestic airports has led to new airport developments, particularly in secondary gateways, and in improving air traffic management efficiency. In terms of air cargo transport, deficiencies in the terminal facilities have been highlighted, such as lack of scanning machines, cargo terminals and warehouses, particularly cold storage facilities.

Limited runway capacity has also deterred cargo planes from flying into the country’s airports, making air cargo shipping more expensive for exporters and importers.

Poor logistics translates to billions of dollars in lost productivity, reduced regional competitiveness, less foreign direct investment, and reduced employment opportunities. Logistics performance is a critical determinant of productivity, growth and employment. A competitive logistics sector is essential to achieve industrial and manufacturing development and promote the competitiveness of the SME sector.

Better logistics would make travel and the transport of goods easier, faster, more convenient and less expensive. This activity seeks to strengthen the management and implementation of sustainable, transparent and high‐quality logistics infrastructure projects in the Philippines. The activity will support the government’s National Transport Plan and National Logistics Plan. The Offeror is expected to proposed interventions to:

Sub‐objectives:

1. Improve logistics infrastructure;

2. Improve quality and timeliness of logistics services; and

3. Trade facilitation improved

Illustrative Results:

Total public and private dollars leveraged by USG for logistics infrastructure projects

Number of beneficiaries receiving improved logistics services due to USG assistance

Number of days of USG funded technical assistance in logistics services provided to counterparts or stakeholders

Number of new USG supported public private partnerships (PPPs) formed

Number of days of USG funded technical assistance in logistics technical fields provided to counterparts or stakeholders

Amount of new revenue generated for the private sector partner as a result of USG‐supported public private partnerships (PPP).

5. ADDITIONAL CONSIDERATIONS

5.a. Strategic Approach

DCCP, ITAN and trade and competitiveness are priority initiatives under the Indo Pacific vision. This activity will work with other government entities, including State, Commerce and the new Development

Finance Corporation in identifying and supporting infrastructure and connectivity projects in the country. This activity will work directly with the inter‐agency Global Infrastructure Coordinating

Committee (GICC) and its steering committee under ITAN.

This activity will leverage resources and expertise from other development partners, particularly the

World Bank, the Asian Development Bank, the Japan International Cooperation Agency (JICA), the

Korean International Cooperation Agency (KOICA), Australia’s Department of Foreign Affairs and Trade

(DFAT), the European Union and other donors extending assistance in infrastructure development in the

Philippines. Several large‐scale priority infrastructure projects in the Philippines have been financed through loans from ADB, World Bank, and JICA.

This activity will also closely coordinate with other USAID‐supported projects including those under

ITAN’s Asia Enhancing Development and Growth through Energy (Asia EDGE) initiative. In particular, this project will work closely with the Regulatory Reform Support for National Development (RESPOND) activity that ease barriers to entry, reduce regulatory burdens and transactions costs for business, strengthen regulatory oversight, and promote transparent and accountability. It will likewise coordinate efforts with the Delivering Effective Government for Competitiveness and Inclusive Growth (DELIVER) activity, which has an infrastructure‐focused component. DELIVER seeks to (1) increase the absorptive capacity and technical capability of line agencies to plan, design and implement projects; (2) effectively utilize public‐private partnerships (PPP) as a mode of financing and implementing priority infrastructure projects; and (3) improve inter‐agency coordination in the planning, management, implementation and monitoring of infrastructure projects.

5.b. Gender

The Offeror is expected to take proactive steps to ensure that its technical assistance activities are gender‐sensitive. A comprehensive gender analysis will enable the Offeror to propose appropriate measures that will both address the economic development and gender issues. Gender equality and female empowerment are essential for achieving USAID’s development goals.

The different roles and needs of women and men who use public infrastructure have to be taken into consideration and addressed. The division of roles in the labor market and division of time spent on domestic tasks can have an impact on the way in which women and men use or need certain types of infrastructure. For instance, improved urban infrastructure with a gender perspective would demand public lighting, safe public spaces, and safe public transport to help mitigate safety‐related risks that women face in their everyday life. Women are often also more important users of and contributors to social infrastructure such as education, health, childcare centers, and other social services, as well as public spaces such as parks and recreation centers. This often arises from women’s traditional role in children and elderly care and the employment patterns in these sectors. The location of these services, the design of public transport grids and the frequency of transport must therefore be thought with a gender lens in mind.

There is also a need to address risks that arise in a digital environment, such as girls’ and women’s exposure to cyberbullying, sexual harassment and other forms of violence against women facilitated by online services. Technological advancement also creates new forms of work and can transform the employment landscape providing women with new opportunities. This activity should ensure that women can also reap the benefits of the digital economy. Women should have access to basic ICT and cognitive skills as well as advanced digital and analytical skills for other types of ICT jobs in the private and public sectors. A gender assessment of the existing levels of demand for skills and work opportunities can identify opportunities for women.

This activity will consider an integrated approach to address the specific gender aspects of infrastructure strategies, policies and projects. Given infrastructure’s potential to bring about massive improvements in the well‐being of girls and women, this approach will identify women’s needs and preferences and how they are impacted by infrastructure development. This activity will ensure the engagement of women in the design of infrastructure strategies and plans and in implementation, as well as due consideration of the well‐being of female employees along infrastructure supply chains. This also involves reviewing the presence of women in decision‐making positions in both the public and private sectors, and their participation in consultation processes that engage women from different socio‐ economic backgrounds.

5.c. Sustainability

Sustainability and scalability are central to the objectives and design of the activity and is reflected in the considerations for city selection. The Offeror must identify the elements of sustainability and scalability considered essential to achieve the activity purpose and describe how sustainability objectives will be integrated and how benefits and results will continue and be scaled up beyond USAID funding. The

Offeror must identify key sustainability issues and considerations around a host of issues, as necessary, including economic, financial, social soundness, institutional capacity, political economy, technical/sectoral, and environmental (including climate change vulnerability). The Offeror’s

Performance Work Statement must propose interventions on these issues that will be considered to more sustainable outcomes for the activity as a whole and for specific city engagements.

The Offeror will review the financial costs of the activity, its recurrent costs, and its maintenance capability and costs, as well as ensure that future revenues will be adequate. The Offeror will also assess the institutional capacities that need to be in place or developed, including systems, policies and skills.

The Offeror must identify and demonstrate an understanding of the key stakeholders in the activity in order to help ensure project “buy‐in” and the long‐term sustainability of the effort. Stakeholders will include the concerned GPH agencies, local governments, civil society and private sector organizations, other donors and universities.

5.d. Environmental Guidelines and Climate Risk Management

The Offeror will perform the work in accordance with the approved programmatic Initial Environmental

Examination (IEE) and its subsequent amendment(s), USAID’s environmental regulations at 22 CFR 216, and in accordance with application local environmental laws and regulations. BEACON’s activities will largely entail technical assistance and capacity building initiatives and is not expected to be directly carrying out construction activities. As such, the initial environmental assessment may recommend a

Categorical Exclusion threshold decision. Activities under the Categorical Exclusion do not require an

Environmental Assessment because the actions do not impact the natural or physical environment.

However, some activities may be recommended for Negative Determination with Conditions to capture the nature of some tasks that may have a potential harmful environmental impact. All activities recommended for a Negative Determination with Conditions are subjected to further environmental review for approval by the project’s COR and the MEO using the Environmental Screening Report (ESR) prior to implementation.

As reported in USAID’s Climate Change Risk Profile for the Philippines in 2017, the country is highly vulnerable to the impacts of climate change, sea level rise, increased frequency of extreme weather events, rising temperatures and extreme rainfall. The country lies in the world’s most cyclone‐prone region, averaging 19‐20 cyclones each year, of which 7 to 9 make landfall. These guarantee the high possibility of extreme weather events to happen. The Philippines’ vulnerability to typhoons is worsened by sea‐level rise that affects its vast coastline and by its dependence on climate‐sensitive natural resources.

The ADS 201 puts in place the new Climate Risk Management guidance for USAID activities. This requires the Offeror will develop climate risk management measures to ensure that the BEACON Activity is more climate resilient and avoids maladaptation.

5.e. Private Sector Engagement

USAID recognizes that achieving sustainable solutions to development challenges requires collaboration across the public, private and philanthropic sectors. USAID seeks to collaborate with companies and business associations where there is strong alignment between business interests and development objectives. The Offeror will undertake efforts to engage companies and investors to explore opportunities for collaboration and work with the private sector to create new solutions and approaches that achieve project outcomes. The Offeror should articulate a strategy that actively engages the private sector and develops partnerships with business firms and associations to leverage resources, bring solutions to scale, ensure sustainability, promote innovation, and achieve efficient outcomes.

The Offeror is expected to propose effective means to expand foreign investor participation. A study by the Philippine Competition Commission noted that the Philippine construction industry attracted FDI barely one percent of GDP, compared to Indonesia and Thailand which received about 10 percent of

GDP. Vietnam, Malaysia, Cambodia and Singapore, where entry barriers are lower, attracted higher levels of FDI17. Moreover, professional services such as project development, transaction advice and technical feasibility studies are not readily available locally. The Offeror may develop arrangements that allow for greater private participation in state and ODA funded projects. Similarly, proposals to expand partnerships with local firms, either through standard PPP tenders or unsolicited projects, may be likewise developed. Local firms need seasoned construction and infrastructure professionals in master planning, transport planning, engineering consulting, architectural design and financial modelling, with several years of experience in managing and maintaining large scale infra projects. The Offeror will

17 See “Anti‐Competitive Effects of Regulatory Restrictions: The Case of the Construction Sector” PCC Policy Note No. 1, Series 2017.

identify and create entry points where foreign firms can gain access and obtain viable returns while contributing to the development goals of the Philippine government. The Offeror is tasked to facilitate partnerships and deals between government and the private sector as well as between private sector parties. The Offeror will also support government efforts to attract greater foreign investment to support the BBB program and increase market awareness of the investment and partnership opportunities in the sector. This activity will assist the PPP Center in marketing the pipeline of PPP projects to foreign investors and finance providers.

5.f. Monitoring, Evaluation and Learning

Collaborative Learning and Adaptive Management will be key to the success of BEACON, given its broad and cross‐cutting approach. Adaptive management refers to making adjustments in intervention tactics or design based on iterative learning, thereby customizing the intervention. As such, establishing implementation decision points/milestones will be necessary during the life of the activity. While

BEACON may need to test an array of approaches, to ensure results, it will need to learn from its experiments and quickly hone in on those that are getting results, drop those that are not, and adapt approaches where indicated. Such an approach will also require a flexible monitoring system, across intervention components, private sector and public sector actors, and development partners.

The Offeror is also expected to develop a monitoring, evaluation and learning plan. As stated in ADS

201, the project MEL Plan serves to measure progress towards planned results and to identify the cause of any delays or impediments during implementation. The MEL Plan for the project provides a framework for monitoring, evaluation and learning that pulls together performance information from all activities contributing to a project. Evaluations will provide opportunities to learn by doing and generate knowledge for agency. Lessons from the monitoring, evaluations and budget analysis will be integrated into the project cycle to improve efficiency and effectiveness of the interventions.

USAID expects the Offeror to propose a data collection and analysis plan. This activity will rely on data and evidence to inform its decisions and directs its interventions. The project will aim for data‐driven decision‐making and use a multidisciplinary approach to improve regulatory quality and governance.

The plan should identify data requirements, metrics and illustrative data templates that will be used in the activity. The Offeror is expected to set up a data analytics system to support project activities, identify milestones and achieve outcomes. This system should define data‐gathering techniques, analytical methodologies, predictive modeling and technology applications that will be utilized in this activity. Data quality, consistency, accuracy and completeness should be ensured. Data disaggregation by gender should be followed. Once data is analyzed, the system should also allow the visualization of results using infographics.