S2S_-SOL_72062018R00004.pdf

Issuance Date: November 26, 2018 Due Date for Receipt of Questions: December 7, 2018

Due Time for Receipt of Questions: 4:00 p.m. Nigeria local time Closing Date for Receipt of Proposals: January 8, 2019

Closing Time for Receipt of Proposals: 4:00 p.m. D.C time

Subject: Request for Proposals (RFP)

Solicitation Number 72062018R00004 State Accountability, Transparency and Effectiveness (State2State) Activity

Dear Prospective Offerors:

The U.S. Agency for International Development (USAID) seeks proposals from qualified organizations interested in providing technical services under the State Accountability, Transparency and Effectiveness Activity (henceforth referred to as State2State Activity) for USAID/Nigeria’s Office of Peace and Democratic Governance as described in the attached Request for Proposals (RFP).

This procurement is being conducted through full and open competition for which the procedures described in FAR PART 15 of the Federal Acquisition Regulation (FAR), will apply. USAID encourages participation to the maximum extent possible of small business concerns, small disadvantaged business concerns and women-owned small business concerns in this activity as prime contractor or as a subcontractor, in accordance with Part 19 of the FAR.

USAID/Nigeria intends to award a Cost-Plus-Fixed-Fee (CPFF) completion-type contract for a period of five (5) years from the date of award. The total estimated cost of the award will range from $62 - $72 million for the base (initial services) contract and $74 - $84 million for the base plus all optional services, depending on the number and composition of implementation states.

These funding levels are inclusive of Democracy, Human Rights and Governance (DR), Basic Education, Global Health, and Paul Simon Water for the World Act funds. The North American Industry Classification System (NAICS) code for this acquisition is 541990 - All Other Professional, Scientific and Technical Services. The small business size standard is $15 million.

The authorized geographic code for the prime contractor of this procurement is 937.

U.S. Agency for International Development Office of Acquisition & Assistance

Plot 1075 Diplomatic Drive, US Embassy P.M.B. 519, Garki, Abuja.

Tel: +234-9-4619300 Fax +234-9-4619400 www.usaid.gov/ng http://www.usaid.gov/ng

Solicitation Number: 72062018R00004 State Accountability, Transparency and Effectiveness

(State2State) Activity

ABBREVIATIONS AND ACRONYMS

ADS Automated Directive System AWP Annual Work Plan CBO Community Based Organization CDCS Country Development Cooperation Strategy CO Contracting Officer COP Chief of Party COR Contracting Officer’s Representative CPFF Cost-Plus-Fixed-Fee CSO Civil Society Organization CV Curriculum Vitae DFID Department for International Development/UKAID DUNS Data Universal Numbering System FAF Foreign Assistance Framework FAR Federal Acquisition Regulation FAA FixedAmount Award GON Government of Nigeria GUC Grants under Contract HG Host Government ICT Information and Communication Technology IDP Internally Displaced Person/People IEE Initial Environmental Examination of USAID IOM International Organization for Migration LEAD Leadership, Empowerment, Advocacy and Development activity LGEA Local Government Education Authority M&E Monitoring and Evaluation NGO Non-Governmental Organization NICRA Negotiated Indirect Cost Rate Agreement OMB Office of Management and Budget PII Personally Identifiable Information PIO Public International Organization

PMP Performance Monitoring Plan of USAID RFP Request for Proposals SOW Statement of Work

TEC Technical Evaluation Committee UNDP United Nations Development Programme USAID United States Agency for International Development

PART I - THE SCHEDULE

SECTION B - SUPPLIES OR SERVICES AND PRICE/COSTS

B.1 PURPOSE

The purpose of this Contract is to provide technical services that fall within the scope of work specified in Section C – Description/Specification/Statement of Work for the “State Accountability, Transparency and Effectiveness (State2State) Activity.”

B.2 CONTRACT TYPE AND SERVICES

This is a Cost Plus Fixed Fee (CPFF) completion-type Contract in accordance with FAR 16.306(d). The Contractor must provide the services as described in Section C and the additional requirements and deliverables of Section F and H in accordance with the performance standards described herein.

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

In accordance with FAR Part 52.232-22 - Limitation of Funds:

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

(b) The fixed fee payable under this contract will be tied to the completion of the reports and deliverables specified in Section F.6 of the contract and in accordance with the fixed fee payment schedule below which will be incorporated into the contract.

Report Deliverables Serial

Numbering Year of Performance

Fee Percentage

Frequency

First Year Annual Workplan

1 Year 1 1% One time

Second Year Annual Workplan

2 Year 1 1% One-time

Political Economy Analyses (PEAs) for Sokoto, Bauchi, Ebonyi, Adamawa and Gombe States.

3 Year 1 5% One-time

Updated Quarterly Political Economy Analyses (PEAs) for Sokoto, Bauchi, Ebonyi, 4 Year 1 3% Quarterly (1% each quarter)

Adamawa and Gombe States.

Baseline Public Expenditure and Financial Accountability (PEFA) Assessments for Sokoto, Bauchi, Ebonyi, Adamawa and Gombe States.

5 Year 1 5% One-time

Conflict Analyses for for Sokoto, Bauchi, Ebonyi, Adamawa and Gombe States.

6 Year 1 5% One-time

Updated Quarterly Conflict Analyses for for Sokoto, Bauchi, Ebonyi, Adamawa and Gombe States.

7 Year 1 3% Quarterly (1% each quarter)

Initial Completion of Best Fit Innovations Inventory

8 Year 1 1% One-time

Activity MEL Plan 9 Year 1 1% One-time Environmental Mitigation and Monitoring Plan

(EMMP)

10 Year 1 1% One-time

Grants Manual 11 Year 1 1% One-time Security Plan 12 Year 1 1% One-time Total fee percentage payment for Year 1

28%

Third Year Annual Workplan

1 Year 2 2% One-time

Updated Quarterly Political Economy Analyses (PEAs) for Sokoto, Bauchi, Ebonyi, Adamawa and Gombe States.

2 Year 2 8% Quarterly (2% each quarter)

Updated Quarterly Conflict Analyses for for Sokoto, Bauchi, Ebonyi, Adamawa and Gombe States.

3 Year 2 8% Quarterly (2% each quarter)

Total fee percentage payment for Year 2

18%

Fourth Year Annual

1 Year 3 2% One-time

Updated Quarterly Political Economy Analyses (PEAs) for Sokoto, Bauchi, Ebonyi, Adamawa and Gombe States.

2 Year 3 8% Quarterly (2% each quarter)

Updated Quarterly Conflict Analyses for for Sokoto, Bauchi, Ebonyi, Adamawa and Gombe States.

3 Year 3 8% Quarterly (2% each quarter)

Total fee percentage payment for Year 3

Final Year (5) Annual

1 Year 4 2% One-time

Updated Quarterly Political Economy Analyses (PEAs) for Sokoto, Bauchi, Ebonyi, Adamawa and Gombe States.

2 Year 4 8% Quarterly (2% each quarter)

Updated Quarterly Conflict Analyses for for Sokoto, Bauchi, Ebonyi, Adamawa and Gombe States.

3 Year 4 8% Quarterly (2% each quarter)

Total fee percentage payment for Year 4

Updated Quarterly Political Economy Analyses (PEAs) for Sokoto, Bauchi, Ebonyi, Adamawa and Gombe States.

1 Year 5 4% Quarterly (1% each quarter)

Final Public Expenditure and Financial Accountability (PEFA)

2 Year 5 5% One-time

Assessments for Sokoto, Bauchi, Ebonyi, Adamawa and Gombe States.

Updated Quarterly Conflict Analyses for for Sokoto, Bauchi, Ebonyi, Adamawa and Gombe States.

3 Year 5 4% Quarterly (1% each quarter)

Closeout Plan and Disposition Plan

4 Year 5 4% One-time

First Draft of the Final Report

5 Year 5 1% One-time

Total fee percentage payment for Year 5

For all deliverables, payment of fee is authorized following approval/acceptance of the deliverable by USAID/Nigeria, not simply submission of the deliverable by the Contractor to

USAID.

If applicable, if no EMMP is required, then the Activity MEL plan will earn a 2% fee payment.

(c) Budget

DESCRIPTION

BASIC

PACKAGE

(CLINs 1-7)

OPTIONAL

SERVICES 1

ADDITIONAL

CORE STATE

(CLINs 8-9)

OPTIONAL

SERVICES 2

CONSULTING

FIRM

COMPONENT,

FIRST THREE

STATES

(CLINs10-12)

OPTIONAL

SERVICES 3

CONSULTING

FIRM

COMPONENT,

SECOND THREE

STATES

(CLINs13-15)

TOTAL

US $

Personnel Fringe Benefits

Allowances Consultant Travel, Transportation and Per-diem

Equipment/Su pplies

Subcontract Grants Under Contracts

(GUC)

$8,600,000 $2,200,000 $75,000.00 $75,000.00 $10,950,000

Participant Training

Security Cost Other Direct Cost

Total Direct Costs

Indirect Costs Total Estimated Cost

Fixed Fee Total Estimated Costs plus Fixed Fee

The Government is not obligated to reimburse the Contractor for costs incurred in excess of the total estimated cost specified above nor the total obligated funded amount.

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

(e) Funds obligated hereunder are anticipated to be sufficient through o/a TBD.

(f) This award contains the base services and options for services as described below:

Base Services:

Optional Services: Additional Core State Optional Services: Consulting Firm Component First Three States Optional Services: Consulting Firm Component Second Three States

B.4 BUDGET: CONTRACT LINE ITEM NUMBERS (CLIN)

CLIN

DESCRIPTION

TOTAL

BASIC PACKAGE (CLINs 1-7) 001 Core and Support components: Federal level 002 Core and Support components:

Sokoto State

003 Core and Support components:

Bauchi State

004 Core and Support components: Ebonyi State 005 Core and Support components: Adamawa State 006 Core and Support components: Gombe State 007 Basic Package:

Grants under Contract (GUC) $8,600,000

OPTIONAL SERVICES: ADDITIONAL CORE STATE

(CLINs 8-9)

008 Core and Support components: Akwa Ibom State (to be confirmed)

009 Additional Core State:

Grants under Contract (GUC)

$2,200,000

OPTIONAL SERVICES: CONSULTING FIRM

COMPONENT, FIRST THREE STATES (CLINS 10-12)

010 Consulting firm component:

Kano State (to be confirmed)

011 Consulting firm component: Rivers State (to be confirmed) 012 Consulting firm component: Ondo State (to be confirmed)

OPTIONAL SERVICES: CONSULTING FIRM

COMPONENT, SECOND THREE STATES (CLINS 13-

15)

013 Consulting firm component: Imo State (to be confirmed) 014 Consulting firm component: Bayelsa State (to be confirmed) 015 Consulting firm component: Edo State (to be confirmed) Total Estimated Cost Fixed Fee (if any) Total plus fixed fee (if any)

B.5 MULTI-YEAR CONTRACT

This contract is considered non-severable, and is therefore a multi-year contract as defined in FAR 17.103. Therefore, this contract is subject to the requirements of FAR 17.106.

Cancellation Dates and Ceilings:

Contract Year 2: Date TBD Amount: $ TBD_ Contract Year 3: Date TBD Amount: $ TBD_ Contract Year 4: Date TBD Amount: $ TBD_ Contract Year 5: Date TBD Amount: $ TBD_

This is a CPFF completion type contract where the contractor is authorized to be reimbursed for all costs which are allowable in accordance with FAR 52.216-7, “Allowable Costs and Payment”. Therefore, the contractor is expected not to incur any costs which would have been amortized over the life of the contract should the contract be cancelled in accordance with FAR 52.217-2. Therefore, the cancellation ceiling for each cancellation date is (TBD at time of award). Please note that, this section will be modified if optional services are exercised.

B.6 INDIRECT COSTS

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

For Prime Contractor:

Description Rate Base Type Period 1/ 1/ 1/ 2/ 2/ 2/ 3/ 3/ 3/

1/Base of Application: Type of Rate: Period:

2/Base of Application: Type of Rate: Period:

3/Base of Application: Type of Rate: Period:

Source:

For Major Subcontractors*

2/ 2/ 2/ 3/ 3/ 3/

1/Base of Application: Type of Rate: Period:

2/Base of Application: Type of Rate: Period:

3/Base of Application: Type of Rate: Period:

Source:

Note:

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

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

(c) Reimbursement for indirect costs shall be at final negotiated rates, but not in excess of ceiling rates specified above.

(d) The Government will not be obligated to pay any additional amount associated with indirect costs above the ceiling rates established in the Contract. This advance understanding shall not change any monetary ceiling, cost limitation, or obligation established in the Contract.

(e) *“major subcontractors” are subcontractors whose proposed costs exceed 20% of the Offeror’s proposed total cost or perform a key element of the scope of work.

B.7 ADVANCE UNDERSTANDING ON CEILING INDIRECT COST RATES AND

FINAL REIMBURSEMENT FOR INDIRECT COSTS

(To be filled in at award)

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

For Prime Contractor:

2/ 2/ 2/ 3/ 3/ 3/ 1/Base of Application: Type of Rate: Period:

2/Base of

3/Base of of Rate: Period:

For Major Subcontractors*

2/ 2/ 2/ 3/ 3/ 3/ 1/Base of

2/Base of of Rate: Period:

3/Base of Application: Type

(a) *“major subcontractors” are subcontractors whose proposed costs exceed 20% of the Offeror’s proposed total cost or perform a key element of the scope of work.

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

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

B.8 COST REIMBURSABLE

The U.S. dollar costs allowable will be limited to reasonable, allocable and necessary costs determined in accordance with FAR 31 (Contract Cost Principles), 2 CFR, Part 220 (Cost Principles for Educational Institutions), 2 CFR, Part 230 (Cost Principles for Non-Profit Organizations), FAR 52.216- 7 (Allowable Cost and Payment), FAR 52.216-8 (Fixed Fee) if applicable, and AIDAR 752.7003 (Documentation for Payment), may be reimbursable under this contract.

B.9 PAYMENT OF FIXED FEE – FAR 52.216-8 (JUN 2011)

(a) The Government will pay the Contractor for performing this contract the fixed fee specified in the Schedule.

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

[END OF SECTION B]

SECTION C - DESCRIPTION/SPECIFICATIONS/STATEMENT OF WORK

STATE ACCOUNTABILITY, TRANSPARENCY AND EFFECTIVENESS

(STATE2STATE) ACTIVITY

C.1 PURPOSE

The purpose of the “State Accountability, Transparency and Effectiveness” (“State2State”) Activity is to increase the accountability, transparency and effectiveness of selected state and local governments (LGAs) in Nigeria. This will be achieved by: strengthening governance systems (with a focus on public financial management [PFM] and procurement, as well as monitoring and evaluation) related to the delivery of services in key sectors (basic education, primary health care, and water, sanitation and hygiene [WASH]); increasing government responsiveness to citizen needs and priorities; and improving government and civil society capacity to manage conflict (through work on prevention, mitigation and reconciliation with the same sectoral partners, not stand-alone assistance to the police or judiciary). The Contractor will achieve this purpose by facilitating the strengthening of subnational governance systems in a sustainable manner, supporting the efforts of local reformers and building on locally-derived solutions including, to the extent possible, reforms already working in other parts of Nigeria (https://www.usaid.gov/policy/local-systems-framework).

The core and support components of the contract will be implemented in a minimum of five Nigerian states and a maximum of six, subject to security conditions and the availability of funding. In addition USAID may support a “consulting firm component” for states that show interest. Only a minimal amount of support will be provided to these states participating in the consulting firm component.

State2State is a governance activity, whereby better governance is a means toward the ultimate end of measurably improving delivery of basic services such as primary health care, basic education and WASH, thus reducing extreme poverty in Nigeria – which is one of the highest priorities of both the Nigerian government and the U.S. Mission in Nigeria. As conflict mitigation is a core theme of the USAID/Nigeria Country Development Cooperation Strategy (CDCS, https://www.usaid.gov/nigeria/cdcs), the Mission expects that improved governance and public services coupled with a Do No Harm approach and the incorporation of conflict mitigation strategies and tools will also contribute to reducing the potential for violent conflict and violent extremism in the targeted areas.

C.2 BACKGROUND

C.2.1 Country context

Nigeria is the largest country in Africa both in terms of population (182 million, according to the National Population Commission: http://population.gov.ng/nigerias-population-now-182-https://www.usaid.gov/policy/local-systems-framework http://population.gov.ng/nigerias-population-now-182-million-npc/ million-npc/) and economy (estimated GDP of $480 billion in 2015). The Nigerian economy enjoyed strong growth averaging around six percent annually between 2005 and 2014 and a GDP re-basing exercise suggests a larger and more diverse economy than previous estimates.

Significant new sources of growth include manufacturing (especially food and beverages) and services. Agriculture remains one of the largest sectors of the economy, as well as the largest employer, but its share has been reduced by over half since the 1970s. The reduced share and slower growth of agriculture is consistent with slow gains in poverty reduction in rural areas, especially in the northern parts of the country. Following a recession in 2016, the economy has begun growing again, projected to approximately one percent GDP growth in 2017. World Bank data (http://povertydata.worldbank.org/poverty/country/NGA) indicate that the share of poor people in Nigeria stands at 53.5 percent of the population and that this share is not declining;

regionally, the number of poor in the North is increasing, while the South is capturing an increasing share of national wealth. In addition, income inequality has continued to grow and households have become more concentrated at the upper and lower ends of the income distribution, further accentuating north-south and rural-urban divides. According to the Nigeria Demographic and Health Survey (NDHS 2013), in rural areas 31.3 percent of the population is in the lowest wealth quintile, compared to just three percent of urban dwellers. Structural changes in the economy are pulling large numbers of working age people out of agriculture and into off-and non-farm self-employment. In addition, private sector driven wage employment increases seem to be tailing off, and unemployment, especially among youth, is high.

Nigeria’s rankings on most indices of governance performance remain poor. Freedom House rates Nigeria as “partly free” but noted an upward trend in 2015 following presidential and legislative elections that were competitive and well-conducted, resulting in a peaceful transition of power from a ruling to an opposition party. Other indices are more pessimistic and show either no improvement or a declining trend. The country’s standing on each of the World Bank’s Worldwide Governance Indicators is negative, signifying weak performance, with little discernable improvement over the past five years (with the exception of the quality of the 2015 elections). Nigeria is outranked by Ghana, Kenya, South Africa and Liberia on voice and accountability, political stability, rule of law, and control of corruption measures. Federal budget transparency is “scant” as measured by the Open Budget Index for 2017, with a score of 17 out of 100; only in the area of legislative and audit oversight is performance deemed somewhat acceptable. The Fragile States Index identifies Nigeria as a “high alert” country on a generally downward track. Demographic pressures such as rapid population growth estimated at nearly three percent per year and a huge youth bulge and high youth unemployment, increasing social and economic inequality, and communal and religious conflict all contribute to this negative scenario.

Nigeria has had mixed success in addressing health and education indicators in the near term.

While gains have been seen in reducing child mortality in the past decade, chronic malnutrition as measured by stunting has declined only modestly at the national level. The 2013 national stunting rate as measured in the NDHS is 37 percent; more recently, although based on a smaller sample of children, the 2015 National Health and Nutrition Survey found a 31.5 percent stunting rate. This national average masks high regional disparities; both surveys placed stunting at over http://population.gov.ng/nigerias-population-now-182-million-npc/ http://povertydata.worldbank.org/poverty/country/NGA

54 percent in the North West zone, for example. The maternal mortality ratio, at 576 deaths per 100,000 live births, is among the highest in the world. Both net primary school attendance and adult women’s literacy have stagnated. According to UNICEF, over 10 million Nigerian children do not attend school; according to the NDHS, in the northwestern state of Sokoto, 89 percent of women over the age of 15 have not received a single day of formal education. Malnutrition and illiteracy place enormous burdens on the economy, reducing productivity and competitiveness while disproportionately impacting women and children. Regional disparities in basic indicators of well-being also stoke conflict and are indicative of governance failures at all levels.

C.2.2 Problem statement

Nigeria’s federal constitutional structure is based on three tiers of government: federal, state and local. The majority of basic services, including education, health care and WASH, are the responsibility of state and local governments. These subnational units are confronted by a host of challenges in carrying out their mandate, which are of three fundamental types: governance capacity constraints; financial resource constraints; and sectoral technical capacity constraints.

State2State will address primarily the first type of constraints, with some work also on the second type; other USAID/Nigeria-supported health, education and WASH activities will address the third type of constraints.

Governance capacity constraints are especially strong in the realm of public financial management, and together with the absence of a strong political commitment and low revenues constitute major impediments to a viable and accountable public financial management system.

The capacity of state governments to plan their annual budgets, linking them to revenue projections, medium-term expenditure frameworks and sectoral strategic plans, remains weak.

These governments routinely spend only a fraction of their total budgets. Despite the passage by many states of Fiscal Responsibility Acts to parallel the federal Fiscal Responsibility Act of 2007, these planned and expended state budgets remain highly opaque. A 2015 study (Civil Resource Development and Documentation Centre (CIRDDOC), Nigerian States Budget Transparency Survey 2015 Report, http://cirddoc.org/file.pdf) found the overall condition of state budget transparency in Nigeria to be “deplorable,” with an average state score of 26 on a scale of zero (complete lack of transparency) to 100 (complete transparency). Mirroring the situation regarding fiscal responsibility, despite the passage by many states of Public Procurement Acts to parallel the federal Public Procurement Act of 2007, state procurement processes also lack transparency, are highly susceptible to manipulation, and are a significant source of corruption. Finally, systems of internal financial controls remain weak, and audits either are not conducted at all, are of poor quality, or their findings are manipulated to cover up malfeasance.

Another aspect of state and local governance capacity constraints is regarding the prevention and management of violent conflict. Various types of violent conflict are prevalent across Nigeria, including insurgencies in the Northeast, militancy in the oil-producing Niger Delta region, and clashes between crop farmers and cattle farmers (often nomadic herders) in many parts of the country. Agitators often exacerbate these conflicts by portraying them as having ethnic or http://cirddoc.org/file.pdf religious dimensions, when in fact the root causes are often struggles over control of resources that are aggravated by failures of governance. The Fund for Peace’s 2017 Fragile States Index ranks Nigeria as the 13th most fragile country in the world. A significant contributor to this fragility is that state and local governments lack the capacity to prevent and manage violent conflicts. USAID/Nigeria has activities specifically focusing on conflict mitigation, but also has mandated in its Country Development Cooperation Strategy (CDCS) the integration of conflict mitigation across the Mission portfolio. Thus State2State will include work with its state and local government and civil society partners on increasing their capacity for conflict mitigation, through the integration of conflict mitigation approaches such as the Do No Harm principles in the implementation of project activities. This integration will take place in all states in which State2State operates, but will be particularly important in the most insurgency-affected states of northeastern Nigeria. Together with other Mission activities, State2State is intended to address some of the drivers of violent extremism across the country, which in northeastern Nigeria have produced two insurgencies (Boko Haram and ISIS-West Africa): poor governance, corruption, poverty and relative deprivation, lack of development, political marginalization and inequitable distribution of resources.

Financial resource constraints have become particularly acute since the most recent collapse of global oil prices began in June 2014, combined with production disruptions in 2016. The principal source of funding for government at all levels in Nigeria is transfers from the Federation Account (FA), which is funded primarily by remittances of oil revenues from the Nigerian National Petroleum Corporation. While the right of state and local governments to collect certain taxes, fees and other locally-sourced revenues is enshrined in the Constitution, such resources constitute just a fraction of a given entity’s total budget; for Sokoto State, internally-generated revenue (IGR) totaled just NGN 5.6 billion (about $16 million) in 2014, against a total state budget of NGN 126 billion (about $350 million). Resource allocations from the FA have historically been reliable and regular in execution, although amounts remitted may vary and are dwindling in the face of declining petroleum revenues. To further compound the fiscal problems, over-reliance on oil revenues means government has had limited incentive to increase domestic revenue mobilization through broadening the tax base and more aggressive tax collection. Yet despite the delegation of the responsibility for the delivery of core social services to state and local governments, the largest share of revenue allocations from the FA accrues to the federal level. For example, the December 2015 Federation Account Allocation Committee report shows that 47 percent of the funds allocated went to the Federal Government of Nigeria (FGN), leaving 24 percent for the 36 states, 18 percent for local governments, and the balance shared among the eight oil-producing states as a “derivation fund”. At the state level (not including funds for LGAs), Sokoto’s December 2015 monthly FA allocation of NGN 2.175 billion translates to a paltry $1.25 for each of the state’s 4.8 million people.

State and local government budgets are also dominated by recurrent and overhead costs, leaving little in the way of funding for capital expenditures. Even keeping up with recurrent costs has been a serious challenge for many states. In July 2015, 23 states accepted assistance from the federal government to pay salary arrears for state civil servants and restructure domestic debt.

Additional state “bailout” funding of NGN 90 billion ($250 million) became available in late

2016 to states willing to commit to the implementation of a stringent 22-point Fiscal Sustainability Plan. Accepting such bailouts improves current cash flows, but mortgages a portion of future revenues to debt service and repayment to the federal government. To further compound the problem, many states have large stocks of external debt denominated in dollars or other foreign currencies, fiscal pressure that was exacerbated by a steep depreciation of the naira in 2016-2017.

The fiscal outlook is unlikely to improve in the near future. Nigeria’s overall pace of economic growth began to falter in 2014 as the price of oil, which accounts for more than 90 percent of exports and over two-thirds of government revenues, declined. The World Bank estimates that GDP growth in 2015 slumped to 3.3 percent, and IMF data indicate that Nigeria was in recession with negative growth in 2016 and early 2017 (although the country began to pull out of recession by the second and third quarters of 2017). The FY 2016 budget that President Muhammadu Buhari submitted to the National Assembly in December 2015 included fresh policies and measures to encourage economic diversification by boosting domestic manufacturing and attracting investment in agriculture and mining. However, these policies are coming at a high cost, dramatically increasing the budget deficit and entailing significant domestic and foreign borrowing. Even if fully implemented, anticipated expenditures in the 2016 federal budget amounted to just $120 per Nigerian; and the resources available for public service delivery and core governance functions at state and local levels are even lower.

According to the IMF, the new reality of lower oil prices and low oil revenues means that the nature of all tiers of government needs to fundamentally change. The government should no longer be focusing on how to divide the proceeds of Nigeria’s diminishing oil exports, but rather how to raise revenues via alternative means and deliver public services effectively. With non-oil government revenues at just four percent of GDP and the traditional mainstay of FA resources dwindling, revenue diversification, economic diversification and government performance improvement are critical priorities.

Governance capacity and fiscal woes are only part of the problem. In addition to transparency deficits and not having enough money to carry out their basic functions, other challenges abound related to the structure and mandate of government and the basic competencies of state and local government units and their personnel. The 1999 Nigerian Constitution gives considerable powers to the executive branch at the federal and state levels. Governors have broad authorities and control over federal revenues allocated to the state and local governments and may make decisions that do not support local government priorities. But the same autonomy granted by the federal government to state governments is not afforded by the latter to the LGAs. The structure of government at state level concentrates power in the state executive; LGAs are hamstrung and lack fiscal, political and administrative autonomy or authority. Governors have often dissolved elected local governance structures and replaced them with appointees who owe their loyalty to the state political apparatus, not to the local population. Further, neither state sectoral ministries nor local government authorities, who are dependent on resource transfers from their respective states through a joint account, are in a position to carry out their responsibilities competently. As a result, infrastructure and services are poorly organized or maintained, and local governments are minimally involved in planning their own development.

A USAID assessment of Nigerian local governance conducted in 2010 estimated that LGAs have at least twice as much staff as they need to carry out their basic functions, and that appointing new staff takes up so much time that it interferes with the delivery of public services (http://pdf.usaid.gov/pdf_docs/pnadx221.pdf). Moreover, individuals in public service at state and local levels are not necessarily qualified for the positions that they hold. Political patronage in the form of resource transfers and public employment are pervasive. Governors dispense largesse to reward political fealty and in turn owe their loyalty to other leaders who sponsor candidates with the understanding that they will reap the financial benefits once the candidate takes office. Corruption in local governance also takes the form of abusing a number of government systems such as procurement, LGA transfers, payroll, and more. It is also to a large extent these systems, or their poor performance, which explains why the targeted services operate as poorly as they do. Improving these systems, and thus improving the targeted services that depend on them, will only be possible if governors are truly committed to reform.

USAID/Nigeria has developed Memoranda of Understanding (MOUs) with targeted state governments in key sectors in order to facilitate sustained implementation of commitments.

The chronic lack of resources to fund basic services and other functions, coupled with weak institutional and governance capacity and the practice and a culture of patronage, have combined to compromise transparency and integrity of government operations in states and LGAs, leading to likely misallocation and misappropriation of scarce funds. In sum, LGAs, where most public services are supposed to be provided, lack political autonomy and authority. LGAs are not responsive to the needs of their citizenry and instead seek to please their political patrons. They are starved of resources, and citizens are not empowered to hold them adequately accountable, a “perfect storm” of bad governance which results in poor service delivery and frequent violence as citizens compete for basic resources. Nigeria’s most important indicators for health and education will probably not improve significantly nor will the levels of violent conflict diminish until states and LGAs improve the systems of governance that underpin the provision of basic services, and expand and diversify their resource base.

C.2.3 Opportunities

Despite the challenges described above, USAID believes that there are windows of opportunity in select states for improving certain aspects of governance to foster measurable improvements in service delivery. USAID’s 2013 “Democracy, Human Rights and Governance Assessment of Nigeria” identifies key priorities: working with state-level officials and units to ensure that plans correspond to local needs; establishing and improving monitoring and evaluation and internal accountability systems; increasing the transparency of financial systems; introducing results-based management systems; and implementing regular audit processes and publishing the results.

The assessment also recommends horizontal learning and dissemination among states.

The 2015 presidential election also opened a window. This election marked the first time in Nigeria’s history that an incumbent president conceded the election and congratulated the http://pdf.usaid.gov/pdf_docs/pnadx221.pdf opposition candidate. President Buhari was elected in part because of his anti-corruption platform. Many Nigerians believe the president has set a moral standard, but also now feel empowered to hold him to his commitments. The on-line “Buharimeter” allows the public to track President Buhari’s progress in achievement of 222 campaign promises, and provide input on his performance. In May 2016 President Buhari committed Nigeria to join the Open Government Partnership (OGP) and in December a multistakeholder OGP Nigeria Steering Committee produced the country’s first OGP National Action Plan for January 2017 to June 2019. The Plan includes 14 commitments under the four thematic areas of fiscal transparency, anti-corruption, access to information, and citizen engagement. Although this first Plan only includes specific commitments by the federal government, many of the 14 commitments could also potentially be adopted by state governments, and the Plan describes a process for state government engagement in OGP. Several states – including Kaduna, Kano, Anambra and Ebonyi

– have already joined Nigeria’s OGP process, co-creating State Action Plans and in some cases beginning to implement them. State2State will be well-positioned to help Nigeria implement its OGP commitments, especially any commitments made by state governments. If any of these include states in which State2State operates, then the Contractor must be prepared to help with facilitating multi-stakeholder OGP consultations involving state government, CSOs and the private sector. This process will lead to the implementation of approved state-level commitments; if any of these commitments are relevant to State2State activities, then the Contractor must tailor those activities to assist with implementation of those commitments.

Nigeria’s federal system, with all its flaws discussed above, also poses unique opportunities to improve state and LGA governance. Term limits barred many incumbent governors from running again in 2015, allowing a new generation of leadership that may be more committed to reform to step into office at the state level. The fact that about half of the country’s remittances to the FA have reliably flowed from the federal to the state and local levels for decades is a real achievement. The challenge that government at all levels has increasingly come to recognize is to increase domestic resource mobilization as oil export receipts continue to dwindle.

Several states have already started enacting key reforms. Lagos State has passed and implemented procurement legislation which resulted in the creation of a Procurement Commission which in its first year of operation demonstrated that the increased competition required by the procurement legislation has reduced government costs for goods and services.

Kaduna State has significantly increased its IGR and is establishing a Treasury Single Account (TSA). With support from the World Bank, Kogi and Ondo States have implemented the new national budget classification and chart of accounts. Zamfara State is implementing the medium term expenditure framework and has established a debt management office. Niger State has successfully reduced the gap between planned and actual state budget expenditures in order to improve service delivery. These best fit innovations provide an opportunity to replicate in State2State partner states what is already working in others. These “local solutions” have potential for sustainability and are consistent with the principles of USAID Forward (http://www.usaid.gov/usaidforward).

C.2.4 Evidentiary Basis http://www.usaid.gov/usaidforward

The USAID Nigeria Democracy, Rights and Governance Assessment (2013) highlighted the continued strategic importance of assisting subnational governance reform. The USAID Nigeria Gender Analysis for Strategic Planning (2014, http://pdf.usaid.gov/pdf_docs/PA00K232.pdf) emphasized the ways in which improving key public services, such as education, health care and WASH (which are primarily the responsibility of subnational authorities), can help reduce some of the significant gender disparities in Nigeria. The USAID Nigeria Cross-Sectoral Conflict Assessment (2014, http://pdf.usaid.gov/pdf_docs/pbaab607.pdf) analyzed the various types of conflict endemic to many parts of Nigeria, and the key role of state and local government leaders as well as local CSOs in mitigating those conflicts. The USAID Nigeria Focus States Strategy Assessment (2013, http://pdf.usaid.gov/pdf_docs/PA00JZ7N.pdf) validated the Mission’s approach to co-locating activities in certain states. The USAID Nigeria Local Governance Assessment (2010) revealed the weaknesses of this critical level of government, an analysis that remains relevant in 2017.

State2State builds on and expands the Mission’s currently ongoing “Leadership, Empowerment, Advocacy and Development” (LEAD, 2009-2017) activity. However, note that LEAD has focused more of its effort on the LGA level, whereas the State2State Activity will focus more of its effort on the state level. Through the USAID Nigeria LEAD Midterm Performance Evaluation (2013), and LEAD annual reports, the Mission has learned that governance reforms can only achieve a limited level of success at the LGA level as long as state-level governance systems remain only partially reformed. In part this is due to the imbalance of power between states and LGAs in Nigeria, in which the former are dominant. USAID/Nigeria thus intends State2State to focus more heavily at the state level, both to reform state-level governance and to support LGA-level reforms.

In addition to USAID reports, design of the State2State Activity relied on the wealth of resources produced by other development partners such as DFID Nigeria’s former subnational governance activities (State Partnership for Accountability, Responsiveness and Capability, SPARC, and State Accountability and Voice Initiative, SAVI), DFID’s current PERL (Partnership to Engage, Reform and Learn) family of subnational governance activities (Accountable, Responsive and Capable Government, ARC, Engaged Citizens Pillar, ECP, and Learning, Evidencing and Advocacy Partnership, LEAP), and appraisal reports of the World Bank Nigeria public sector governance reform programs.

C.3 ALIGNMENT OF STATE2STATE ACTIVITY WITH U.S. MISSION

DEVELOPMENT GOALS AND OBJECTIVES

(a) In its 2017-2020 Integrated Country Strategy (ICS), the U.S. Government Mission in Nigeria identified four priority goals – improving governance, furthering economic development, enhancing security, and investing in people. In support of that vision, the USAID Mission has established its 2015-2020 Country Development Cooperation Strategy (CDCS) goal as Reduced Extreme Poverty in a More Stable, Democratic Nigeria. For the CDCS, please see:

http://pdf.usaid.gov/pdf_docs/PA00K232.pdf http://pdf.usaid.gov/pdf_docs/pbaab607.pdf http://pdf.usaid.gov/pdf_docs/PA00JZ7N.pdf

(b) USAID/Nigeria hypothesizes that this goal can be achieved “if the Government of Nigeria can provide services for its citizens, and support a more equitable distribution of economic growth, funded primarily with Nigeria’s own national wealth.” Achievement of the CDCS goal is supported by three Development Objectives (DOs):

DO 1: Broadened and inclusive growth;

DO 2: A healthier, more educated population in targeted states;

DO 3: Strengthened good governance.

(c) The State2State Activity is a governance program, and will contribute directly to the achievement of DO 3 through three of its intermediate results (IRs):

● IR 3.2: Improved responsiveness of targeted government institutions;

● IR 3.3: Increased civic advocacy, monitoring, and engagement;

● IR 3.4: Conflict mitigated among at-risk communities.

Activities contributing to IR 3.3 and IR 3.4 will be carried out by State2State through cross-cutting civil society and conflict mitigation activities.

Specifically, the State2State Activity will be USAID/Nigeria’s principal mechanism for the achievement of IR 3.2, “Improved responsiveness of targeted government institutions,” and two of its sub-Intermediate Results (sub-IRs):

● Sub-IR 3.2.1: Management capacity and transparency of subnational authorities strengthened; and

● Sub-IR 3.2.2: Public financial management and transparency strengthened.

The State2State Activity design is based on the following development hypothesis:

If state and local governments improve their public financial management and increase citizen participation while mitigating potential sources of conflict, then subnational governance in Nigeria will be more accountable, transparent and effective

– and those governments will be better able to provide services that address the priorities of their citizens.

The State2State Activity will collaborate closely with other USAID/Nigeria Peace and Democratic Governance implementing partners to contribute to civil society and conflict mitigation results. The State2State Activity will support civil society organizations at state and local government levels to push for citizen input into financial and procurement management reforms aimed at improving service delivery. Conflict is a cross-cutting issue for the entire USAID portfolio and all activities will be implemented with a conflict sensitivity lens.

State2State activity will also collaborate closely with USAID/Nigeria implementing partners in the health, education and WASH sectors; these partners will address the technical aspects of reform in those sectors, while State2State will address the state and local governance reform aspects.

C.4 SCOPE OF WORK

C.4.1 Geographic Scope

Implementation of the core and support components of the State2State Activity will be in a minimum of five (5) Nigerian states, and possibly an additional state to reach a maximum of six (6). The five states are: Sokoto, Bauchi, Ebonyi, Adamawa and Gombe. Akwa Ibom will be used as the illustrative sixth state. The actual sixth state would be determined at the time of a decision to begin work in a sixth state.

Criteria for state selection include: (1) political commitment to reform of public financial management, basic education, primary health care, and WASH, including by increasing budgetary spending for those three target public service sectors as will be formalized in memoranda of understanding with the state governments; (2) presence of complementary Mission activities in education, health and/or WASH, in order to maximize coordination and cross-sectoral synergies and achieve economies of scale and scope; and (3) level of security and accessibility. Any state receiving technical assistance through State2State must have the political will to demonstrate progress in service delivery, sustainability, responsiveness to the needs of citizens, and conflict mitigation, as established by a Public Expenditure and Financial Accountability (PEFA) assessment, political economy analysis (PEA) and a conflict assessment conducted by the Contractor. During the period of performance for State2State, USAID may request the Contractor to cease operations in some states and/or begin them in others, depending on security considerations, available funds, and/or the state’s implementation of reforms.

Once a state has been selected by USAID, the Contractor will liaise with USAID to structure the adequate logistical arrangements required for the successful implementation of the activity at the state level. USAID in collaboration with the Contractor will also determine the appropriate arrangements for the overall management of State2State, including where the relevant key personnel should be located in order to balance the required level of efforts at federal, state and LGA levels. To ensure operational and cost effectiveness, the Contractor must establish a field office in each core state that will manage implementation and provision of technical assistance to the state; one of these state field offices must also serve as the State2State country office.

Because a relatively small level of effort is planned at the federal level, the Contractor may establish a very small field office in Abuja, both to facilitate coordination with the Mission’s other sectoral activities and to oversee federal-level activities.

C.4.2 Implementation Model

State2State will focus the bulk of its efforts at state government level (approximately 60 percent), with significant effort also at the LGA level (approximately 30 percent). The remaining approximately 10 percent will be invested in key activities at the federal level, through partners who may include the Federal Ministry of Finance, the Accountant General of the Federation, the

Auditor General of the Federation, relevant committees of the National Assembly, and…