RFI No. 72049719RFI00004.pdf

REQUEST FOR INFORMATION

Date of Issuance: January 24, 2020 Activity Title: Local Governance Enabling Environment (L-GEE)

Deadline to Submit Responses: February 11, 2020; 5:00 pm, Jakarta local time Submit Responses to: proposals-indo@usaid.gov

This is a Request for Information (RFI). This is not a Request for Proposals (RFP) and is not to be construed as a commitment by the U.S Government to issue any solicitation or ultimately award a contract on the basis of this RFI, or to pay for any cost incurred in the preparation and submission of comments on this RFI.

USAID/Indonesia is contemplating the award of one Cost Plus Award Fee contract valued at approximately $30 - $39 million, to perform the work described in Attachment No. 1. This is the second RFI issued for this anticipated activity, which had a preliminary title of “Improving Local Governance and Service Delivery.”

USAID is seeking input regarding a list of inquiries contained in Attachment 6. USAID values concise, issue-specific responses. Please ensure submitted comments make specific reference to section and page numbers. Responses to the RFI must be written in English and should be no more than 5 (five) pages in length.

It is the potential offeror’s responsibility to monitor this site for the release of any solicitation or synopsis. Any information submitted in response to this notice is voluntary. It should be noted that responding to this RFI will not give any advantage to any firm or organization in the subsequent procurement. Responses will be held confidential. Proprietary information should not be sent. Respondents are advised that USAID is under no obligation to acknowledge receipt of the information, answer questions, or provide feedback to respondents with respect to any information provided.

Standard Clause: FAR 52.215-3 Request for Information or Solicitation for Planning Purposes

(OCT 1997)

(a) The Government does not intend to award a contract on the basis of this solicitation or to otherwise pay for the information solicited except as an allowable cost under other contracts as provided in subsection 31.205-18 Bid and Proposal Costs, of the Federal Acquisition Regulation.

(b) Although “proposal” and “offeror” are used in this Request for Information, your response will be treated as information only. It shall not be used as a proposal.

(c) This solicitation is issued for the purpose of obtaining information about the interests, capabilities, reasonable prices, and market information related to the enclosed draft statement of objectives.

mailto:proposals-indo@usaid.gov

Thank you for your interest in USAID/Indonesia’s programs.

Sincerely, /s/ Alexis McGinness

Alexis McGinness Contracting Officer USAID/Indonesia

Attachments:

1. Draft Section C - Statement of Work

2. Draft Section F - Deliveries or Performance

3. Draft Section L - Instructions, Conditions, and Notices to Bidders

4. Draft Section M - Evaluation Criteria for Award

5. Draft Award Fee Plan

6. Response Form (with questions)

DRAFT Section C – Page 1

SECTION C - STATEMENT OF WORK (DRAFT dated 1.24.2020)

C.1. Purpose and Theory of Change

The goal of the Local Governance Enabling Environment activity (L-GEE) is for the citizens of Indonesia to benefit from effective local government by increasing the quality of policy implementation and service delivery at the subnational level.

The activity will achieve this goal through three interrelated intermediate results (IR):

IR 1: Coherence between national and subnational policies strengthened IR 2: Performance of local service delivery enhanced IR 3: Local budget allocation and execution improved

L-GEE’s Theory of Change is that if the linkages between policy, planning, performance, and budgeting are strengthened, so that national and subnational policies are complementarily aligned and planning and budgeting are grounded in accurate performance data, then subnational governments will serve their citizens effectively and with accountability. The Theory of Change assumes that the Government of Indonesia (GOI) continues to support decentralization as a key principle of democratic governance, that stakeholders at all levels engage in ongoing reform efforts, and that citizens increasingly exercise their rights to demand responsive government and receive quality public services.

L-GEE will be implemented via four components:

Component 1: Intervention Refinement and Prioritization takes place in Year One via political economy analyses and a co-design process that ensures the activity capitalizes on concrete opportunities for reform where counterparts own and can sustain interventions and outcomes.

Component 2: Implementation takes place in Years Two through Five through the provision of technical assistance and capacity-building support to national and subnational partners to address the needs and priorities identified through Component 1.

Component 3: Short-term technical assistance (STTA) provides USAID technical offices with opportunities to request and receive targeted technical assistance within L-GEE’s parameters to meet specific needs that arise in the design or implementation of their own programs.

Component 4: Opportunity Response Fund (ORF) (currently unfunded) provides the flexibility for L-GEE to respond to unanticipated needs or initiatives that may arise at any time over the period of performance should additional funding become available.

Expected outcomes by the end of L-GEE include:

● Institutionalized mechanisms for policy communication, coordination, and collaboration between and among various levels of government.

● Stronger policy clarity and implementation towards strengthening local governance and improving service delivery.

● More effective use of data on government performance in planning and evaluation.

● Improved use of citizen input in planning and providing service delivery.

Attachment 1

DRAFT Section C - Page 2

● Deeper responsiveness to gender equality and social inclusion in policy making, service provision, and resource decisions.

● Wider dissemination, adoption, and institutionalization of effective innovation, best practices, and replicable models for strengthening local governance and improving service delivery.

● Greater quality of spending at the subnational level.

C.2. Context/Background

C.2.1. Background

In 1999, Indonesia embarked on an ambitious process of decentralization as part of wide sweeping reforms following the end of the Suharto regime. The country currently consists of 34 provinces (provinsi) divided into 514 regencies (kabupaten) and cities (kota), which are in turn subdivided into districts (kecamatan) and then further divided into subunits such as desa (villages) or kelurahan (urban communities). Decentralization’s ongoing evolution continues to be shaped through a series of laws, regulations, and revisions, including Law 25/2009 on Public Services, which defined local government responsibilities in the areas of education, employment and business, housing, communication and information, environment, health, social security, energy, banking, transportation, natural resources, tourism, and others. Foreign policy, defense, legal affairs, and monetary policy remain in the hands of the central government. The intermediary provincial level primarily serves as an extension of the central government, providing oversight and mediating on matters of overlapping jurisdiction at the district level, though Law 23/2014 also entrusted it with new authorities in areas such as coastal management, mining, and high school education.

In its first 20 years, decentralization has seen numerous successes, including an increase in access to basic services from 48.8 percent in 2001 to 70.9 in 2015. Annual evaluations by the Ministry of Home Affairs have found increasingly positive improvements, with 93 percent of local governments rated high or very high that same year.1 Individual locations have also been lauded for their improvements, from environmental management to the resettlement of street vendors.2 USAID, through activities such as Kinerja,3 has supported a range of positive changes in health, education, business licensing, and other areas, including service charters, customer satisfaction surveys, multi-stakeholder forums, and one-stop shops.

Despite achievements, effective local governance continues to face multiple challenges, including:

Lack of coherence between national and subnational policies: Uneven implementation of national-level policies at the subnational level has revealed a lack of clarity in the delineation of authorities between different levels of government and has resulted in inconsistencies in approach and impact. Poor harmonization has led to the cancellation of thousands of local-level regulations4 and increasing calls for deregulation, particularly in the name of economic

1 http://pubdocs.worldbank.org/en/657051513163708686/IEQ-Dec-2017-ENG.pdf.

2 https://profile.nus.edu.sg/fass/geotgb/bunnell%20et%20al%20prepublication.pdf 3 For more on Kinerja, see https://oig.usaid.gov/sites/default/files/2018-06/5-497-14-001-p_0.pdf, https://pdf.usaid.gov/pdf_docs/PA00JZ25.pdf, https://pdf.usaid.gov/pdf_docs/PA00KRBN.pdf, and https://pdf.usaid.gov/pdf_docs/PA00MKSN.pdf.

4 https://www.abacademies.org/articles/some-key-issues-in-the-cancellation-of-local-regulations-in-indonesia-7948.html, https://www.shs-conferences.org/articles/shsconf/pdf/2018/15/shsconf_icolgas2018_01005.pdf http://pubdocs.worldbank.org/en/657051513163708686/IEQ-Dec-2017-ENG.pdf https://profile.nus.edu.sg/fass/geotgb/bunnell%20et%20al%20prepublication.pdf https://oig.usaid.gov/sites/default/files/2018-06/5-497-14-001-p_0.pdf https://pdf.usaid.gov/pdf_docs/PA00JZ25.pdf https://pdf.usaid.gov/pdf_docs/PA00KRBN.pdf https://pdf.usaid.gov/pdf_docs/PA00MKSN.pdf https://www.abacademies.org/articles/some-key-issues-in-the-cancellation-of-local-regulations-in-indonesia-7948.html https://www.shs-conferences.org/articles/shsconf/pdf/2018/15/shsconf_icolgas2018_01005.pdf

DRAFT Section C - Page 3 development.5 Anecdotal input from subnational stakeholders suggests a wide range of challenges in meeting expectations for the implementation of national policies, including a desire for local contextualization, uncertainty over conflicting or rapidly changing national policies, and limited access to clear guidance on how to concretely operationalize technical directives. While platforms such as the Regional Leadership Coordination Forum (Forkopimda)6 do exist, there are no institutionalized mechanisms for follow-up. Instead, communication between the national and subnational levels often relies on either formal correspondence or informal meetings that are commonly ad hoc, one-way, and/or Jakarta-focused.

Disconnect between policy, planning, and performance: Key stages within the policy cycle operate in relative isolation from one another. Planning and budgeting are regulated by different laws, fall under the responsibility of different ministries, and take place at different times.7 This disconnect is reflected in the system for evaluating local government performance, which includes the Ministry of Home Affairs (MOHA) and its Evaluation of Local Government Implementation (EKPPD); the Ministry of Administrative and Bureaucratic Reforms (KemenPAN-RB) and its Evaluation of Government Institution Performance Accountability System (SAKIP); the Ministry of National Development Planning/National Development Planning Agency (Bappenas), and its Regional Development Performance Evaluation (EKPD);

and the Ministry of Finance (MOF) and its Regional Finance Information System (SIKD). Each ministry requires a separate annual report, follows different requirements, measures different indicators, and establishes different ranks for top performers. Furthermore, disaggregated information from each of the reports remains unavailable, undermining the ability to use data to understand or address strengths or weaknesses in specific areas. Moreover, the results are insufficiently reincorporated back into the local level for use in planning, budgeting, staffing, or other decisions.

Low rates of budget utilization: Decentralization has resulted in a significant increase in spending at the subnational level, nearly doubling in real terms since the process first began.

By 2015, the World Bank estimated that subnational governments accounted for approximately 53% of government spending, including 38 percent at the district level and 15 percent at the provincial level. However, it also found that “additional spending per capita does not always commensurate with improvement in access to services, and at some point, increases in spending result in lower increases in access to services.”8 Stakeholder consultations indicate that the size of subnational budgets is not necessarily the key barrier to quality service provision, but rather the opaqueness of the budget process (including a lack of access to public information), a low rate of absorption (in part due to the late arrival of funding, condensed timelines, inadequate planning, and procurement challenges), a tendency towards cut-and-paste forecasting, and vulnerability to rent-seeking behaviors. Tying incentives and disincentives to fiscal transfers increasingly appears an inadequate approach to encouraging performance, rewarding districts that already benefit from higher capacity and penalizing those which continue to struggle.

Persistent inequalities: Indonesia’s rich diversity includes hundreds of ethnic groups, a wide variety of religious practices, and a growing youth segment dispersed throughout a distinct archipelago landscape. This diversity, however, also includes disparate experiences in the

5 https://jakartaglobe.id/business/for-every-new-regulation-cull-ten-jokowi-tells-ministers-and-regional-heads.

6 https://journal.uir.ac.id/index.php/JKP/article/download/2169/1312/ 7 For an in-depth discussion, see: https://www.ksi-indonesia.org/file_upload/Critical-Study-on- Development-Planning-and-Budgeti-06Feb2018150821.pdf 8 http://pubdocs.worldbank.org/en/657051513163708686/IEQ-Dec-2017-ENG.pdf.

https://jakartaglobe.id/business/for-every-new-regulation-cull-ten-jokowi-tells-ministers-and-regional-heads https://journal.uir.ac.id/index.php/JKP/article/download/2169/1312/ https://www.ksi-indonesia.org/file_upload/Critical-Study-on-Development-Planning-and-Budgeti-06Feb2018150821.pdf https://www.ksi-indonesia.org/file_upload/Critical-Study-on-Development-Planning-and-Budgeti-06Feb2018150821.pdf http://pubdocs.worldbank.org/en/657051513163708686/IEQ-Dec-2017-ENG.pdf

DRAFT Section C - Page 4 ability of various communities to participate in local governance processes and benefit from both access to and the quality of public services. Such exclusion takes various forms, resulting from geographical remoteness, societal prejudices, institutional discrimination, and/or patriarchal traditions; affecting groups as varied as people living in poverty, people living with HIV/AIDS, migrant workers, and the elderly; and impacting issues such as legal documentation, vulnerability to violence, and the prospects for health, education, and employment. Inclusion efforts, however, commonly remain limited, with a tendency towards “box-checking” requirements rather than a nuanced understanding of the challenges, conceptualization of the variety of affected communities, or substantive measures to ensure equitable outcomes. For example, while candidacy quotas have helped women to make leadership gains, their numbers in government remain relatively low: only 92 women serve as either a mayor, regent, or governor out of a total of 548 provinces, districts, and cities, with only one elected as governor.

Groups that fall outside the common understanding of social inclusion, such as members of the LGBTI community, face even greater vulnerabilities, particularly when combined with layered exclusion not just from public participation, but from society and often families.

Unsustainable results: Shortcomings notwithstanding, good practices do exist. There are both numerous awards to recognize champions as well as efforts to document and disseminate new ideas.9 The success of such initiatives, however, remains limited, dependent on the personalities of individual leaders, and commonly overturned when new officials assume power.

There is little in place to institutionalize achievements and thus sustain, scale, or replicate them.

Furthermore, stakeholder consultations reveal misunderstandings about the purpose of and potential for creative solutions, including a tendency to pursue innovation for its high-profile benefit, rather than its appropriateness or effectiveness in addressing needs or challenges.

There is high political interest in the Smart Cities movement, for example, but inconsistent understanding of how technology can and should improve service provision and good governance and where its limitations may lie. At the same time, many stakeholders express reluctance to take risks in their leadership, fearing that deviating from conventional approaches leaves them vulnerable to investigation for perceived financial impropriety.

The L-GEE activity responds to these challenges. It does so, however, in a highly fluid environment, which includes the GOI’s new national mid-term development plan, a new USAID Country Development Cooperation Strategy (CDCS), and the anticipated end of several relevant donor-funded efforts. The second term of Indonesian president Joko Widodo (Jokowi), which began in October 2019, has also ushered in a number of new and proposed initiatives, including potential changes to the powers and authorities of the Corruption Eradication Commission (KPK), reduction of the upper two echelons of civil servants, and discussions on the cancellation of direct elections for provincial leaders. Separately, elections in more than 200 cities/districts are expected in 2020, in an environment in which governmental offices already experience unusually high turnover. Lastly, Indonesia faces numerous potential risks, including vulnerabilities to a global economic slowdown, political backsliding, religious extremism, growing cultural intolerance, social unrest, and frequent natural disasters. All of these factors require

9 See, for example, the Innovative Government Award by the Ministry of Home Affairs (http://indeks.inovasi.otda.go.id/layanan/), the Information System for Public Service Innovation by the Ministry of Administrative and Bureaucratic reform. (https://www.menpan.go.id/site/berita-terkini/kementerian-panrb-tetapkan-top-40-inovasi-pelayanan-publik-2018), the Village Innovation Documentation System (https://inovasidesa.kemendesa.go.id/), and the provincial knowledge hubs supported by the GIZ-funded TRANSFORMASI (http://jipp.sulselprov.go.id/, http://jipp.sumselprov.go.id/, https://jipp.jatimprov.go.id/).

http://indeks.inovasi.otda.go.id/layanan/ https://www.menpan.go.id/site/berita-terkini/kementerian-panrb-tetapkan-top-40-inovasi-pelayanan-publik-2018 https://www.menpan.go.id/site/berita-terkini/kementerian-panrb-tetapkan-top-40-inovasi-pelayanan-publik-2018 https://inovasidesa.kemendesa.go.id/ http://jipp.sulselprov.go.id/ http://jipp.sumselprov.go.id/ https://jipp.jatimprov.go.id/

DRAFT Section C - Page 5 sensitivity and flexibility, including a do-no-harm approach that ensures the activity does not inadvertently contribute to potential tensions.

C.2.2. Relationship to USAID’s strategy and other priorities

L-GEE builds on previous USAID efforts to advance local governance and improve public service delivery in Indonesia, including the Local Government Support Program (LGSP, 2005- 2009) and the Kinerja Local Governance Service Improvement Program (2010-2016). The activity particularly incorporates lessons learned by Kinerja that sustainability requires several key factors, including local government commitment, support by local champions, the complementarity of local regulations with the national regulatory framework, and alignment with national policies and programs.

These lessons resonate with USAID’s support for Indonesia’s journey to self-reliance (J2SR) by building the country’s capacity to plan, finance, and implement solutions to local development challenges and strengthening the GOI’s ability to see those solutions through effectively, inclusively, and with accountability. L-GEE’s strong focus on J2SR encourages local stakeholders to determine their own priorities for strengthening local governance and service delivery and ensures that stakeholders remain actively engaged throughout the activity’s design, implementation, monitoring, and evaluation. The approach reflects USAID’s shift to serving as a strategic advisor to the GOI, with a primary role as a facilitator that supports local ownership, innovation, replication, and sustainability. This includes support for private sector engagement and identifying potential roles for market-based solutions.

Under USAID/Indonesia’s CDCS for 2014-2020, L-GEE falls under the Development Objective of Democratic Governance and Security Strengthened and responds to cross-cutting themes of governance at all levels; private sector engagement and partnerships; science, technology, and innovation; civil society and non-governmental organizations; and poor and vulnerable populations, with a focus on gender equality. Throughout implementation, L-GEE must remain a flexible mechanism that can nimbly respond to priorities emerging from a new CDCS. This will require close coordination with USAID/Indonesia technical offices to ensure that activity outcomes contribute to the impact of other USAID investments.

Furthermore, the L-GEE activity aligns with the governance pillar of the U.S. Indo-Pacific Vision (IPV) and the IPV objective of Strengthening Governance Systems, including alignment with the Indo-Pacific Transparency Initiative (IPTI). Specifically, the activity will contribute to Goal 1 of IPTI, Institutional and Fiscal Integrity Strengthened, by ensuring that public resources are used for public benefit; increasing transparency and accountability across policy, planning, budgeting, and execution; modernizing legal and regulatory standards in line with international best practices; and enhancing access to information on public resource decision-making and expenditure. The activity will also contribute to IPTI Goal 2, Political and Electoral System Integrity Strengthened, by addressing government institutions’ capacity and commitment to enable public participation.

In addition, the L-GEE activity contributes to GoI national policies and programs, such as the Long-Term National Development Plan (RPJPN) (2005-2025) and the draft National Mid-Term Development Plan (RPJMN) (2020-2024). In particular, the activity will contribute to the RPJPN objectives of “(a) supporting coordination among development actors in the attainment of the national goal, (b) ensuring the created integration, synchronization and synergy among regions, among spatial units, between time, among functions of the Government as well as between the Central and Regional Governments, (c) ensuring linkage and consistency among planning, budgeting, implementation and supervision, (d) ensuring the realization of the efficient, effective, DRAFT Section C - Page 6 just and sustainable use of funding resources, and (e) optimising community participation.” Under the draft RPJMN (2020-2024), the activity will contribute to the goal to Develop Regions for Reducing Inequality and Ensuring Equity as well as the goal to Strengthen Stability of Politics, Law, Defence and Security and Public Services Transformation. The activity also aligns with priorities established by President Jokowi at the beginning of his second term in office, specifically bureaucracy reform, human capacity, and budget efficiency.

Indonesia has committed to achieving the United Nations Sustainable Development Goals (SDGs) and has incorporated SDG targets into its mid-term development plan. Regulations such as Presidential Decree number 59/2017 have established related national mechanisms and have mandated the integration of SDG goals, targets, and indicators into subnational mid-term development plans. L-GEE aligns with a number of SDG targets and indicators, particularly target 16.6 (Develop effective, accountable, and transparent institutions at all levels), and indicator 16.6.2 (Proportion of the population satisfied with their last experience of public services), as well as others such as target 16.7(Responsive, inclusive, participatory, and representative decision-making at all levels), and indicator 16.10.2 (Public access to information). In supporting public services (and reflecting the integrated nature of the SDGs), the activity may also contribute to Goal 3 (Health and well-being); Goal 6 (Water and sanitation);

Goal 8 (Economic development); and Goal 11 (Sustainability and resilience), among others.

C. 3. Scope of Work

C.3.1. Geographic Targeting

USAID envisions that L-GEE will be implemented in six provinces, currently expected to be East Java, East Kalimantan, Banten, South Sulawesi, East Nusa Tenggara, and West Kalimantan.

Final geographic targeting will maximize USAID’s investment in its Health and Environment portfolios and reinforce activities in other portfolios, such as Human Capacity and Partnerships and Democratic Resilience and Governance. Based on requests for STTA from the Mission’s other portfolios, the activity may potentially work in additional provinces, including but not limited to, North Sumatra, West Java, Central Java, Bali, the Special Region (Daerah Istimewa, or DI) of Yogyakarta, Central Sulawesi, Central Kalimantan, North Maluku, and Maluku.

The L-GEE activity must work in a mix of “leading” and “emerging” areas, with approximately one leading district per province and approximately four emerging districts per province (two medium and two low), for an estimated total of 30.

Final selection of the targeted provinces, and further selection of targeted districts, will be based on 1) finalization of the Mission’s new CDCS; 2) political economy analyses (PEAs) in Year One of the activity; and 3) co-design efforts following completion of the PEAs. Considerations for geographic targeting will include the following:

● Opportunities to support other USAID investments, particularly within the Health and Environment portfolios, including the possibilities for co-location.

● Opportunities to leverage other USAID investments, such as those supporting civil society strengthening and private sector engagement.

● GOI recommendations.

DRAFT Section C - Page 7

● Capacity and commitment of the district government to cooperate, including rankings in existing governance indicators.10

● Coordination with other donors, such as the World Bank, the Australian Government’s Department of Foreign Affairs and Trade (DFAT), and the German Gesellschaft für Internationale Zusammenarbeit (GIZ).

● Status of district leaders in the election cycle, with preference for districts that have recently completed elections, rather than those in which elections are anticipated in the near future.

C.4. Activity Components

C..4.1. Introduction of Components

The L-GEE activity will be implemented via four components:

Component 1: Intervention Refinement and Prioritization will take place in Year One and is foreseen to comprise approximately 15% of the level of effort for the overall activity.

Component 1 consists of PEA and co-design at the national and subnational levels, to ensure that the activity remains contextually grounded, responds to local needs as defined by Indonesian actors, and supports long-term ownership and sustainability. The PEA and co-design will culminate in implementation plans at the national and subnational level, which will identify the targeted districts and the tailored technical interventions and methodologies for achieving L-GEE’s intermediate results and expected outcomes.

Component 2: Implementation will take place in Years Two through Five and is foreseen to comprise 75% of the level of effort for the overall activity. Component 2 implements the plans emerging from Component 1 and will provide dedicated technical assistance to national, provincial, and district partners to strengthen policy coherence, enhance local service delivery, and improve local budget allocation and execution. This includes a particular focus on ensuring that outcomes will be locally owned and sustained following the end of the activity.

Component 3: On-demand STTA provides a dedicated mechanism for USAID technical offices, such as Health or Environment, to request specific and targeted L-GEE assistance to support the design and/or implementation of other USAID activities and to meet discrete technical needs within their sectoral expertise. Potential areas for STTA may be identified during the co-design or be requested by USAID technical offices at any time over the period of performance. The STTA component is anticipated to comprise 10% level of effort of the L-GEE activity.

Component 4: The Opportunity Response Fund provides a mechanism through which the activity can take advantage of opportunities for strengthening subnational governance that occur due to unforeseen changes in the political, economic, social, and/or cultural environment, within the constraints of resource availability and consistent with this SOW. Initially, this will be an unfunded mechanism.

10 For example, the Ministry of Home Affairs (MoHA) Regional Government Performance Evaluation (EKPPD); the Government Performance Accountability System (SAKIP) and Innovation in Public Service Awards of the Ministry of State Administrative and Bureaucratic Reforms (KemenPAN- RB); reports from the Corruption Eradication Commission (Komisi Pemberantasan Korupsi, or KPK);

Financial Report audits by the State Audit Agency (Badan Pemeriksa Keuangan, BPK); Bappenas’ Indonesian Democracy Index; and indicators under MSS and the SDGs.

DRAFT Section C - Page 8

All four components contribute to the achievement of L-GEE’s intermediate results.

C.4.2. Component Description/Parameters

C.4.2.1 Component 1: Intervention Refinement and Prioritization

Component 1: Intervention Refinement and Prioritization will take place during Year One and will consist of two main tasks: 1) political economy analysis and 2) co-design. In addition to setting a locally owned, contextually responsive foundation for the provision of technical assistance during Years Two through Five, Component 1 includes a focus on building relationships and trust with stakeholders, including building their capacity to participate in and benefit from co-design.

i. Task 1 - Political Economy Analysis (PEA): PEA is a structured approach to examining the power dynamics and economic and social forces that influence the implementation of the activity. PEA investigates the root causes of challenges, where locally driven opportunities for change may emerge, and where constraints to such change may need to be addressed.

The Contractor must conduct PEA at multiple levels: at the national level, as it relates specifically to local governance and service delivery; in each of the targeted provinces to facilitate the selection of target districts; and in the targeted districts. The PEAs must identify the relevant frameworks, institutions, interest groups, financial flows, and incentives (political and otherwise) that shape the capacity and commitment of stakeholders in advancing effective local governance and quality service provision. The PEAs must identify the authorities of different levels of government, different agencies within the different levels, and different branches of government, including the role of legislative bodies and political parties, as well as map the influence and interests of non-state actors, such as civil society and faith-based organizations, religious leaders, academia, the media, and the private sector. This must include attention to the dynamics of gender equality and social inclusion. Identification of potential champions will be key to the PEA process, along with pinpointing the levers that can motivate and sustain constructive change.

The Contractor must consider any other prior PEAs conducted by USAID or its implementing partners prior to commencing. The L-GEE PEAs must be completed by no later than Month 5 of Year One and must inform the approach to co-design (see below). Findings must include recommended stakeholders to participate in the co-design, including proposed districts and proposed actors within each district; suggested locations in which co-design should take place;

and a proposed co-design methodology that will deliver the most effective approach and results, including how the Contractor will ensure the participation of relevant and appropriate stakeholders with the requisite authorities.

Throughout the remainder of L-GEE, the Contractor must continue to use iterative PEA to ensure ongoing understanding of the operational context and its implications for activity implementation as power dynamics change, policies are introduced, or new information becomes available. Iterative PEA must form a key element of the activity’s approach to Adaptive Management (see section C.6), including building the capacity of local partners to conduct PEAs themselves.

ii. Task 2 - Co-design: The co-design process reflects the evolution of USAID/Indonesia’s role as a strategic advisor and its approach to facilitating Indonesia’s journey to self-reliance by cultivating local ownership from the outset of the activity. Co-design with the GOI and other stakeholders will also enable interventions to appropriately reflect the diversity of local contexts

DRAFT Section C - Page 9 and be tailored accordingly, rather than assuming a one-size-fits-all approach will suit all circumstances.

Starting by Month 6, the Contractor must lead co-design efforts that bring together key stakeholders in a methodological process to finalize geographic targeting for the activity and determine its priority interventions. Building on the PEAs, co-design must include relevant government representatives at all levels, USAID technical offices, and USAID implementing partners. The Contractor must ensure not only the equitable participation of women and groups at risk of social exclusion, but also take measures to ensure their voices are heard, respected, and incorporated. The process must also engage with other relevant donors, private sector stakeholders, and civil society organizations, including organizations advocating for gender equality and social inclusion.

The Contractor must propose the methodology for the co-design, facilitate dialogue and consensus among stakeholders, and provide outcome recommendations to USAID. The final results of the co-design must:

● Identify existing government mechanisms for policy communication, coordination, and collaboration and the opportunities for strengthening them, as well as propose potential additional measures.

● Clarify efforts by various ministries to review and refine systems for evaluating local governance performance, with recommendations for targeted areas of technical assistance.

● Clarify efforts to review and refine Minimum Service Standards, including projected timelines for their achievement.

● Map existing subnational practices for gathering and incorporating citizen input and feedback and identify areas for technical assistance in scaling and strengthening their use in improving planning and performance.

● Map the current state of innovation (including, but not limited to, the use of technology) in local governance and service delivery and existing mechanisms for disseminating best practices and propose areas of technical assistance replication and sustainability.

● Ensure substantive attention to the dynamics of gender equality and social inclusion.

● Develop a dedicated sustainability strategy so that all L-GEE efforts are locally owned by

Year Five.

L-GEE’s overall theory of change aims to cultivate systemic mechanisms, processes, methodologies, tools, and skills that benefit, cut across, and/or can be replicated through multiple sectors, in line with a local systems approach that recognizes that achieving and sustaining development outcomes depends on the contributions of multiple and interconnected actors. However, USAID also recognizes that the co-design process may indicate the potential need to select particular issues as pilot areas for demonstrating proof of concept. The possibilities for and value of such targeting must include consideration of the following:

● Priorities of the GOI, at both the national and subnational levels.

● Common challenges across targeted local governance units.

● Conformity with the USAID/Indonesia CDCS.

● Coordination with USAID/Indonesia technical offices and specific technical activities.

● Cooperation with other USAID/Indonesia DRG programs.

● Collaboration with other donors.

● Opportunities for private sector engagement.

● Attention to strengthening gender equality and social inclusion.

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The results of the co-design, including proposed interventions, methodologies, sequencing, and indicators, must be completed by the end of Year One and produce life-of-activity implementation plans covering each targeted district. The implementation plans will be submitted to the Contracting Officer’s Representative for concurrence and to the Contracting Officer for approval prior to commencing Component 2. Annual work plans will provide the year-to-year basis for executing the implementation plans.

L-GEE's approach to adaptive management must include ongoing engagement with stakeholders and dedicated opportunities to review and reflect on whether co-design assumptions still hold and what adjustments to the implementation plans may be required over the course of the activity.

C.4.2.2 Component 2: Implementation

Component 2: Implementation comprises approximately 75% of the work effort performed during Years Two through Five. Interventions must build on the outcomes of Component 1 in executing the approved life-of-activity implementation plans and the subsequent work plans.

While L-GEE overall aims to achieve the activity’s three intermediate results, the highest level of effort will take place under Component 2, as follows:

IR 1. Coherence between national and subnational policies strengthened.

(estimated 25% of Component 2)

IR 1 aims to strengthen harmonization between national and subnational policies towards improving policy clarity and promoting policy implementation. Interventions strive for a “whole-of-government” approach to communication and coordination that can be applied across sectors; however, Component 1 may identify specific initiatives on which to focus in accordance with USAID and GOI priorities. L-GEE must remain sufficiently flexible to respond to such priorities. To the degree possible, interventions must build on existing mechanisms where they exist and focus on the ability to replicate and sustain interventions following the activity’s end.

Illustrative examples of interventions include:

● Facilitating how national policies are communicated to the subnational level and how subnational experience is communicated to the national level, e.g., through dialogue fora, online platforms, help desks, and other mechanisms.

● Building subnational capacity for policy review, analysis, revision, and drafting, e.g., harmonization standards, regulatory impact assessments, and gender integration and social inclusion strategies, including the role of central and provincial stakeholders.

● Promoting cross-sector collaboration for strategic planning and problem-solving to ensure comprehensive (rather than siloed) approaches to complicated challenges facing local governance and service delivery.

● Supporting the operationalization of policies (e.g., the drafting of implementing regulations, standard operating procedures, staffing and training plans, and accompanying budgets).

Required interventions include:

● Providing technical assistance for strengthening policy communication, coordination, and collaboration at and between all levels.

● Developing models and tools for policy review, analysis, revision, and drafting, and supporting their dissemination for adoption, replication, and institutionalization.

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● Ensuring engagement with/participation by civil society, the private sector, and marginalized communities in policy processes.

● Coordinating with other USAID activities and other donor programs to leverage existing investments and maximize support.

IR 2. Performance of local service delivery enhanced. (estimated 50% of Component 2)

IR 2 aims to enhance the performance of local service delivery through strengthening political accountability and feedback mechanisms, with an emphasis on the effective use of data in planning, programming, monitoring, and evaluation. Specific areas of focus will be determined via co-design during Component 1.

Under IR 2, the Contractor will work with the Ministry of Home Affairs and other national government actors to improve the processes by which they measure local government performance and encourage innovation. Flowing from the results of Component 1, this may include:

● Streamlining the system of performance evaluation and aligning reporting among multiple ministries.

● Strengthening the system through which evaluation data is analyzed and used for improving local government performance, including implementation of the One Data policy.

● Refining the use and implementation of Minimum Service Standards, e.g., the potential for localization and greater attention to gender sensitivity.

● Developing Smart Cities guidelines, to ensure technology solutions and related approaches appropriately and effectively improve public services and meet the needs of diverse communities, including vulnerable populations, socially excluded groups, and others with limited connectivity.

In addition, under Component 2 the Contractor will work with subnational partners to strengthen responsiveness to citizen needs and concerns by ensuring that local governments can effectively collect and act upon input from feedback loops, such as needs assessments, participatory planning/multi-stakeholder forums, citizen report cards, and complaint mechanisms. In doing so, the Contractor must cooperate closely with USAID and other donor initiatives that support civil society and social accountability. This includes providing a supply-side counterpart to USAID’s Madani activity and its efforts to cultivate citizen demand for accountable local governance and building on the support of CEGAH (and other programs) to develop and socialize the complaint mechanism LAPOR and strengthen the role of district-level Ombudsman offices in overseeing the quality of public services.

Illustrative examples of interventions include:

● Providing technical assistance to subnational partners to create receptivity to citizen input through dedicated mechanisms and systemic procedures for gathering, analyzing, and responding to feedback.

● Improving the targeting of service delivery, including the use and accuracy of data.

● Promoting implementation of public access to information to provide all citizens with clear information on where and how they can exercise their rights to quality public services.

● Developing and rolling-out training curricula/online modules in areas such as leadership; data collection, analysis, and protection; evidence-based planning; gender equality and social inclusion; private sector engagement; customer service; and complaint handling/follow-up.

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● Collating and disseminating innovation and best practices, via knowledge management platforms, cultivation of champions, mentoring opportunities, and/or other mechanisms for peer-to-peer sharing.

● Exploring additional opportunities to mitigate the impact of staff turnover and institutionalize the transfer of knowledge and skills, including ensuring that local counterparts invest cost-share in capacity-building efforts.

Required interventions include:

● With USAID and GOI approval, providing technical assistance to national ministries to improve the processes by which they measure local government performance and encourage innovation.

● Working with local counterparts to develop, roll-out, and sustain capacity-building initiatives that improve the planning and performance of public services.

● Partnering with subnational actors and relevant donors to support the adaptability, relevance, replication, and sustainability of innovation and best practices.

● Ensuring that all processes include meaningful attention to social inclusion and gender equality, with specific pathways for women, youth, people with disabilities, minority groups, and others to make their voices heard and reflected in planning, decision-making, and implementation.

IR 3. Local budget allocation and execution improved. (estimated 25% of Component 2)

IR 3 closely links with IR 2 in strengthening the relationship between budgeting, planning, and performance. Interventions will particularly focus on enhancing the quality of spending at the subnational level and may examine related issues, such as decisions on human and other resources.

Illustrative examples of interventions include:

● Building the capacity of targeted districts, including local parliaments, to align planning, budgeting, and performance.

● Providing skills development in data-driven budgeting, budget negotiation, budget forecasting, budget optimization, cost-benefit analysis, cost efficiency, and gender-sensitive and inclusive budgeting.

● Offering technical assistance in the applicability of Minimum Service Standards, including attention to the quality of human resources and appropriate facilities.

● Promoting best practices in ensuring obligatory public access to budget information, including more effective and meaningful use of participatory budgeting, public budget hearings, and publication of budget data.

● Cooperating with civil society and media support initiatives to encourage the ability of citizens, activists, and journalists to understand and use budget data in oversight and advocacy.

● Examining frameworks or developing models for the financing of self-reliance at the local level (e.g., regulations for public-private partnerships, methodologies for tax impact assessments), provided that partner districts first demonstrate their existing resources are effectively and efficiently managed.

Interventions under IR 3 must coordinate closely with related efforts, including

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● USAID’s CEGAH and other activities that focus on financial integrity and anti-corruption measures;

● USAID’s Madani, and its work with civil society on budget monitoring;

● USAID’s Health Financing Activity, and its work on district-level health costing and strategic purchasing of health under the National Health Insurance (JKN);

● USAID’s Economic Growth Support Activity (EGSA), and its exploration of technical assistance in the area of public financial management (PFM), and other USAID activities in the field of economic growth;

● Other donor efforts, such as the Public Financial Management Multi-Donor Trust Fund (PFM-MDTF), managed by the World Bank, and work by DFAT in the areas of PFM and the use of special allocation funds (Dana Alokasi Khusus/DAK).

While IR 3 will primarily take place at the subnational level, the Contractor must engage in ongoing dialogue with the GOI and other donors to examine the need and opportunities for technical assistance at the national level, e.g., to increase the effectiveness of financial incentive and disincentive mechanisms and their relationship to budget spending and performance outcomes.

Required interventions under IR 3 include:

● Conducting capacity assessments among relevant staff in partner districts to identify skill gaps and other technical needs.

● Developing and roll-outing targeted capacity-building initiatives for improving related skills, including mechanisms for their institutionalization and replication.

● Providing technical assistance to partner districts to strengthen best practices in ensuring obligatory public access to budget information.

● Integrating gender-sensitive and inclusive practices throughout all inventions.

C.4.2.3 Component 3: On-Demand STTA

Under Component 3, USAID technical offices can request dedicated technical assistance from L-GEE to address targeted local governance and/or service delivery needs as they emerge during the implementation of their own sectoral activities, including in the design of new activities. These needs may be identified by USAID technical offices, the L-GEE Contractor, or other USAID implementing partners. However, only USAID technical offices request assistance; the request must be submitted through the L-GEE Contracting Officer’s Representative and demonstrate the following:

● The specific need to be addressed

● Why L-GEE is the appropriate mechanism for doing so

● How the assistance will contribute to the achievement of the goals of both L-GEE and the requesting program, including indicators for measurement

● Where the assistance will take place, with a justification for assistance that occurs outside of L-GEE partner districts

● Alignment with the priorities of the targeted district(s), including demonstration of their commitment to the assistance

● How the assistance will integrate gender equality and social inclusion

● Whether there are opportunities for private sector engagement.

● What financial and other resources the requesting technical office will contribute.

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STTA requests may include, inter alia, the review and/or drafting of specific regulations or standard operating procedures; the facilitation of cross-sectoral working groups on specific issues; and/or the adaptation of specific innovations to address a concretely identified need within a specific…