Attachment_3_-_Statement_of_Work_-_(FINAL).pdf

Attachment 3 – Statement of Work Page 1 of 8

Attachment 3 - Statement of Work Political Economy Analysis and Governance Support to Threshold Programs

RFQ # 95332419Q0085

A. Introduction.

To assess opportunities and risks associated with reform, MCC Threshold Programs would like to secure the support of an individual consultant to conduct Political Economy Analyses (PEA) and governance-related work during the design and implementation phases of Threshold programs.

B. Background.

MCC’s Threshold Programs. The MCC Threshold Program provides grants to selected countries to support policy and institutional reform. Policy reforms involve changes in laws, regulations, administrative procedures, and other formal and informal rules and practices that govern a given sector or service. Institutional reforms involve improvements to the institutions or the creation of new institutions that provide regulation, oversight, or implementation in a targeted sector. In general, policy and institutional reform involves executing new approaches and implementing changes in behavior to enhance governance in a sector, placing an emphasis on efficiency, transparency, accountability, and beneficiary feedback and participation.

This SOW describes the services and deliverables associated with conducting Political Economy Analysis and governance support to Threshold Programs.

See Annex A for a description of a Political Economy Analysis and why it is important.

C. Scope.

a. Objectives of PEA and Governance Support for MCC Threshold Programs

The PEA consultant will support multiple objectives for PEA and governance support critical for the design and implementation processes of MCC Threshold programs, including:

• Identifying and refining the understanding of the political and economic causes or influences underlying the binding constraints of Threshold programs;

• Defining the challenges and risks associated with the identified sector(s) as well as any capacity strengthening that could address them;

• Identifying and assessing key stakeholders impacting outcomes in the identified sector(s) including formal and informal channels of influence;

• Broadening the scope for dialogue around policy options for the identified sector(s), including proposed actions to strengthen support or mitigate opposition linked to potential threshold program goals;

• Refining an understanding of the political feasibility of significant policy and institutional reforms and capacity strengthening within a 4-year project timeframe;

• Assessing political/economic factors and challenges to various sector interventions;

• Identifying how and where to focus efforts to promote positive change, including through strategic pacing or ordering of threshold program interventions to achieve maximum impact;

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• Proposing critical milestones/checkpoints for MCC to undertake future PEA updates based on program status or potential changes in Threshold country political/economic situations; and

• In close alignment with the PEA, proposing governance strategies to the Threshold country team for both the design and implementation phases of the Threshold program.

b. Methodology

It is recommended that the methodology for developing the PEA include the following elements:

• An initial mapping of stakeholders (public, private, donors, etc.);

• An analysis which provides a more nuanced understanding of the context for policy continuity and change in a given intervention environment, taking into account the array of reform possibilities described in Section B. Background;

• An “influencing analysis” to develop a political strategy for change; strategies for reform, and how a reform strategy might be appropriately sequenced to deliver the best results; and

• Governance approaches to addressing the binding constraints based in “best practices” or with knowledge from similar work on previous projects or related MCC programs.

Details of these recommended elements are included in Annex B. MCC is receptive to other approaches that achieve the objectives described in Section a. Objectives of PEA and Governance Support for MCC Threshold Programs, and requests the consultant to describe any alternative approach.

D. Tasks.

The consultant shall carry out his or her tasks and activities in collaboration with the MCC Threshold Team to ensure that the Political Economy Analysis is well-integrated into the sector analysis, which will vary per country. In addition, the consultant will work with partners from the Government of the countries, including state owned enterprises and various Ministries, as well as with Civil Society Organizations (CSOs), Non-Governmental Organizations (NGOs), media, academia, private sector organizations and other key stakeholders. The consultant shall provide Political Economy Analysis recommendations to MCC Threshold Program design and implementation. Technically, the analysis will be incorporated into the team's Root Cause Analysis, and it will support the team's identification of policy and institutional reform opportunities and continue to be leveraged throughout program implementation.

This analysis can be partially conducted as a desk review, however, it will require routine communication with the MCC Threshold Program team, and participation on team missions to various countries during the term of the contract.

Specific tasks include:

• Initial analysis of political economy factors (desk review) relevant to the targeted sector in the Threshold Program country;

• Development of a first draft that responds to this Scope of Work; and

• Upon completion of comments on the first draft from the MCC Threshold Program team, completion of a final draft of a PEA report;

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• Develop the core governance problems affecting sector in the country, develop recommendations for addressing these core problems and discuss in MCC Threshold Program meetings. Continue to refine the core problems and recommendations in consultation with the Threshold team;

• As needed, contribute to continual revisions of or updates to the PEA report prior key institutional milestones such as Investment Management Committee (IMC) meetings, Board meetings, and selected high level briefings in order to respond to changing circumstances in the country;

• Other tasks as needed and assigned by the MCC Threshold Program team related to the development and implementation of its programs;

• Support Threshold Team in PEA and governance-related program development activities; and

• As needed, support the implementation of Problem Driven Iterative Adaptation (PDIA)-related work performed in MCC Threshold Programs.

E. Conflict of Interest.

The Consultant will be precluded from bidding on work and services (design, assessment, construction and supervision) to be procured by the local Millennium Challenge Account (MCA) accountable entity or using funds advanced under a Compact in the relevant country.

F. Deliverables.

• The consultant should provide one (1) Political Economy Analysis report related to reform in the designated sector in the Threshold Program country requiring this work in conformance with the above referenced methodology outlined in Section (b). The deadlines for initial drafts and final copies will be finalized in collaboration with the Threshold Program team. Updates to these documents, based on changing country circumstances, will be provided on an as needed basis.

The final PEA report will be written in English.

• Provide ongoing governance support related to program design and implementation on an as needed basis to MCC Threshold Program teams.

G. Period of Performance.

All work under this contract will be completed between the effective dates of the contract award, for a maximum five year period. MCC anticipates the following number of hours per year, but these are estimates and may increase or decrease based on MCC’s needs.

Tasks Estimated.

Hours, Year 1

Estimated Hours, Year 2

Estimated Hours, Year 3

Estimated Hours, Year 4

Estimated Hours, Year 5

Implementation Support (home and/or Washington, DC)

400 400 400 400 400

Field Work: Mission Travel 250 250 250 250 250

Follow-up Work* 150 150 150 150 150

TOTAL: 800 800 800 800 800

*Including, but not limited to, mission reports and recommendations for next steps.

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H. Performance Location.

The Consultant shall perform the tasks under this call order in MCC-eligible countries and at his/her own facilities. The consultant will meet at MCC offices in Washington, DC as requested. Collaboration and communication with Threshold Program teams is critical, and such routine communication will also be conducted via conference call, Skype and email. Consultant is expected to join the relevant Threshold Team on missions as required.

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Annex A

What is Political Economy Analysis and Why is it Important?

There is no single conceptual framework for Political Economy Analysis, but the following OECD-DAC definition is useful in capturing some of the main elements:

Political Economy Analysis is concerned with the interaction of political and economic processes in a society: the distribution of power and wealth between different groups and individuals, and the processes that create, sustain and transform these relationships over time.

This definition draws particular attention to politics, understood in terms of contestation and bargaining between interest groups with competing claims over rights and resources. However, it is equally concerned with the economic processes that generate wealth, and that influence how political choices are made. In reality these processes are closely inter-related and part of a unified set of dynamics which influence development outcomes.

Political Economy Analysis is particularly useful for development practitioners since it helps us to understand what drives political behavior, how this shapes particular policies and programs, who are the main “winners” and “losers”, and what the implications are for development strategies and programs.

Specifically, it is concerned with understanding:

• The interests and incentives facing different groups in society (and particularly political elites), and how these generate particular policy outcomes that may encourage or hinder development.

• The role that formal institutions (e.g. rule of law, elections) and informal social, political and cultural norms play in shaping human interaction and political and economic competition.

• The impact of values and ideas, including political ideologies, religion and cultural beliefs, on political behavior and public policy.

In this way, Political Economy Analysis helps us to understand how incentives, institutions and ideas shape political action and development outcomes in a given country. This can be extremely useful when thinking about the feasibility of policy reform and institutional change, the contribution that MCC can realistically make, and the risks involved.

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Annex B

Contents of the Political Economy Analysis

The Political Economy Analysis should include the following elements, tailored to the targeted sector in the chosen Threshold program:

1. An initial mapping of stakeholders associated with the targeted sector. Below is a sample of a stakeholder map.

2. An analysis which provides a more nuanced understanding of the context for policy continuity and change in a given intervention environment. The analysis should identify the most influential actors, their interests and incentives, and how these shape overall dynamics of the sector, including the feasibility of proposed policy reforms. It may be helpful to take into account: a) the wider historical, socio-economic and cultural environment, including the legitimacy of a given political process; b) the immediate pressures coming from groups and interests who influence, but do not make political decisions; c) the processes, both formal and informal, through which decisions are actually made; and d) the continuing politics of implementation that determine the implications, if any, of political decisions.

Specifically, the following key questions below should be answered:

a. Roles and responsibilities: Who are the key stakeholders in the sector? What are the formal/informal roles and mandates of different players? What is the balance between central/local authorities in provision of services?

b. Ownership Structure and Financing: What is the balance between public and private ownership?

How is the sector financed (e.g. public/private partnerships, user fees, taxes, donor support, etc.)?

c. Power Relations: To what extent is power vested in the hands of specific individuals/groups?

What is their relationship to each other?

d. Corruption and rent-seeking: Is there significant corruption and rent-seeking in the sector?

Where is this most prevalent (e.g. at point of delivery; procurement; allocation of jobs)? Who benefits most from this? How is patronage being used?

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e. Service Delivery: Who are the primary beneficiaries of service-delivery? Are particular social, regional or ethnic groups included/excluded? Are subsidies provided, and which groups benefit most from these?

f. Ideologies and Values: What are the dominant ideologies and values which shape views around the sector? To what extent may these serve to constrain change?

g. Decision-Making: How are decisions made within the sector? Who is party to these decision-making processes?

h. Implementation Issues: Once made, are decisions implemented? Where are the key bottlenecks in the system? Is failure to implement due to lack of capacity or other political-economy reasons?

i. Potential for Reform: Who are likely to be the “winners” and “losers” from particular reforms?

Are there any key reform champions within the sector? Who is likely to resist reforms and why?

Are there “second best” reforms which might overcome this opposition?

j. Governance: Who are…What can the Threshold program do over the course of 4 years to put in place reform actions to aid the different political, institutional, and private sector stakeholders to advance reform agendas to address the binding constraints? Who

3. Conduct an “influencing analysis” to develop a political strategy for change.1 The following questions should be addressed for each targeted sector.

a. Has major policy and institutional reform in the targeted sector been tried before?

i. What were the design assumptions and choices?

ii. What were the challenges of implementation?

iii. What were the results of evaluation?

b. Is there demand for the interventions? From whom?

i. Who are the key actors advocating change?

ii. Are there any networks linking donors, practitioners and advocates?

iii. What are the potential political benefits of change?

c. Can we work with those actors opposing or lukewarm about change?

i. Who are the key actors advocating against change (overtly or covertly)?

ii. What incentives motivate those actors?

iii. Are dominant norms supportive of continuity or change?

d. Are there any structural or institutional constraints for change?

i. What are the distributive implications of change?

ii. Are formal rules and regulations compatible with change?

iii. Do underlying informal rules allow for change?

e. What would be a reasonable expectation for reform in the targeted sector?

i. What is a feasible outcome in the short and medium term?

ii. How much control can we exert over the results of our inputs?

iii. How should we design our results frame to account for reasonable expectations?

1 http://www.effective-states.org/bp_12_pea/

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4. Identify strategies for reform, and how a reform strategy might be appropriately sequenced to deliver the best results. This section should include options for working with reform champions or a broader constituency of interest groups outside government.