Attachment 1 - Statement of work.docx

DFC Client Protection Procedures Implementation & Training

Statement of Work (SOW)

U.S. International Development Finance Corporation (DFC)

Project Title: DFC Client Protection Procedures Implementation & Training

1.0 GENERAL INFORMATION

The U.S. International Development Finance Corporation (DFC) is financing solutions to the most critical challenges facing the developing world today. Working with businesses, we mobilize private capital to invest in projects that create jobs and opportunities in emerging markets, including building critical infrastructure, expanding access to telecommunications, and providing small business financing for women entrepreneurs. Launched in 2019, DFC helps to advance America's foreign policy by partnering with projects that create economic stability, protect sovereignty, and ensure transparency. DFC investments adhere to high U.S. business standards and respect the environment, human rights, and worker rights.

2.0 BACKGROUND

As the U.S. Government's development finance agency, the United States International Development Finance Corporation (DFC) mobilizes U.S. private capital to help solve critical development challenges while advancing U.S. foreign policy interests. DFC works with the U.S. private sector to help gain footholds in emerging markets, catalyzing revenues, jobs, and growth opportunities at home and abroad. DFC achieves its mission by providing investors with financing, loan guarantees, political risk insurance, support for private equity investment funds, and direct equity investments.

Client Protection Standards (CPS) are the minimum standards that end-clients should expect to receive when doing business with a Financial Service Provider (FSP) or embedded finance companies that are providing products to consumers on credit (e.g., off-grid solar companies). The CPS were originally developed by the Center for Financial Inclusion (CFI) Smart Campaign, an independent thinktank at the time, housed at ACCION. In 2020, the Smart Campaign ended. While CFI will maintain the CPS, the development of the subsequent standards and their implementation (including the certification program and community of experts) was transferred to long-time partners Social Performance Task Force (SPTF) and Cerise.

Although the CPS were initially developed for the microfinance industry, the CPS can be applied to all banking and non-banking financial institutions and companies providing finance to natural persons and/or micro-enterprises, including (but not limited to) banking and non-banking financial institutions providing microfinance, consumer finance, micro-leasing, digital credit, and companies selling on credit (e.g., financial intermediary in the off-grid solar sector). DFC has examined CPS best practices and incorporated an internal strategy designed to assess client protection risk, provide a tailored analysis for each financial service provider to determine alignment to best CPS practices, and inform investment committee decisions.

3.0 SCOPE

DFC requires a contractor to recommend and support DFC’s implementation of a comprehensive plan to further incorporate appropriate CPS strategy into DFC’s investment process from origination through underwriting, informed by benchmarking against other development finance institutions. This includes developing guidance documentation, documented through standard operating procedures and other materials, and resources for DFC on CPS. The contractor shall subsequently disseminate this information by providing various virtual and/or hybrid interactive training courses to educate responsible parties at DFC on their roles and responsibilities to include detailed training on the Cerise+SPTF client protection auditing process and interpretation of data submitted in the Cerise+SPTF Client Protection Self-Assessment. The contractor shall provide virtual/hybrid training, develop course material, and conduct participant evaluations.

4.0 REQUIREMENTS

The contractor shall perform the following tasks:

4.1 Task Area 1: Client Protection Procedure Benchmarking and Assessment

a. Kick-off meeting with the Contracting Officer (CO), Contracting Officer’s Representative (COR) and selected personnel from relevant DFC departments.

b. The contractor shall identify and gain understanding of the existing DFC client protection approach including both formal and informal practices throughout the underwriting process through review of documents and targeted stakeholder discussions with DFC staff.

c. The contractor will benchmark other development finance institution (DFI) client protection procedures, including roles and responsibilities, tools and resources supporting the DFI (e.g. in its pre-disbursement client diligence and post-disbursement client monitoring), internal systems, and protocols. The focus is on DFIs that have started the process of assessing for and/or implementing CPS including understanding where DFIs are maturing in certain aspects of CPS and where others are at an earlier stage of scope and implementation. The benchmarking will be guided by the goal of collecting knowledge to improve DFC process and procedures. This will also include examining large private financial institutions that are progressive in applying CPS to understand what DFC can learn from the private sector.

i. DFC will rely on the contractor’s expertise to determine what DFIs to focus benchmarking on but anticipate some examples may include: European Development Finance Institutions, European Bank for Reconstruction and Development, FMO (the Dutch development bank), and the International Finance Corporation, as a starting point. DFC is not looking for benchmarking against an exhaustive list of all DFIs, but rather overall trends and case studies where practices would be the most useful to informing DFC’s internal process improvement.

ii. The contractor will examine aspects such as how DFIs are approaching the implementation of CPS, to which particular borrowers and clients CPS are applied, the DFI’s methodology and decision matrix for the same, how DFIs are assessing the relevant levels of client protection risk, what representative contractual conditions DFIs use, and DFI’s approach to monitoring for CPS performance.

4.2 Task Area 2: DFC CPS Standard Operating Procedures (SOPs) and Guidance Leveraging information from the review of existing DFC client protection practices, the benchmarking against other DFIs and financial institutions, and the contractor’s CPS expertise:

a. Develop standard operating procedures and other guidance documentation regarding CPS for DFC, including:

i. Provide DFC with tailored guidance on enhancing systems and protocols to evaluate the applicability, risks, and appropriate mitigations associated with client protection practices in diligence, finance agreement conditions, monitoring, and, as needed, corrective action.

ii. Recommend internal strategy alignment for roles and responsibilities for different parts of the CPS analysis process, including: credit risk, diligence, environmental and social risk, verification of client protection process and documentation, etc.

b. Support DFC to enhance integration of client protection standards in DFC’s screening, due diligence, and risk assessment processes.

4.3 Task Area 3: Program Delivery, Training, and Implementation Note: training is not the focus of the work in this contract, but rather the next step, once benchmarking and guidance development is complete, to support the dissemination of lessons learned and procedures developed under Task Areas 1 and 2.

a. Support DFC in improving written procedures (i.e. SOPs and any other guidance material developed) for DFC to address client protection as the procedures are implemented and lessons are learned, and support DFC in implementation of procedures and associated systems.

i. This includes supporting DFC in understanding how best to implement the SOPs and in conducting test cases to ensure DFC internally understands how the process should work.

b. Provide training to DFC staff (hybrid or virtual) on outcomes of Task 1 and 2 above, with a focus on review of material, management structures, and systems to support DFC’s assessment of clients’ ability to implement appropriate client protection practices and monitoring of same. The training shall include detailed information on the Cerise+SPTF client protection auditing process and interpretation of data submitted in the Cerise+SPTF Client Protection Self-Assessment. The training will also explain the DFC protocols the contractor enhanced. The contractor shall provide virtual/hybrid training, develop course material, and conduct participant evaluations. The training will be recorded for internal reference. While the content of the training will depend on the benchmarking results and guidance developed, and will be tailored to the roles and responsibilities of the specific audiences, DFC anticipates four hybrid trainings, including:

i. Two trainings for the DFC Social and Environmental staff (~30 people each), who have responsibility to diligence and monitor projects. The first training will be in year one, with a follow-on training in year two based on improvements made to the SOPs and any other guidance developed under Task 3a.

ii. Two trainings for DFC Investment Officers (~100 people each), who originate and monitor transactions from a financial standpoint. This would be an introductory training to CPS and would focus on their roles and responsibilities identified in the client protection SOPs and any other guidance documents.

iii. Trainings will be less than half a day in length.

c. Develop internal and external written guidance materials to support clients in understanding DFC’s requirements for client protection and protocols for assessment and monitoring.

5.0 KEY PERSONNEL

The key personnel specified below are essential to work performance. At least 30 days prior to diverting any of the specified individuals to other programs or contracts (or as soon as possible, if an individual must be replaced, for example, as a result of leaving the employ of the Contractor), the Contractor shall notify the Contracting Officer and shall submit comprehensive justification for the diversion or replacement request (including proposed substitutions for key personnel) to permit evaluation by the Government of the impact on performance under this contract. The Contractor shall provide complete resumes for proposed substitutes, and any additional information requested by the Contracting Officer. Proposed substitutes should have comparable qualifications to those of the persons being replaced.

The Contracting Officer will notify the Contractor within 15 calendar days after receipt of all required information regarding the consent on substitutions. No change in fixed unit prices may occur as a result of key personnel substitution. The Contractor shall not divert or otherwise replace any key personnel without the written consent of the Contracting Officer. The Government may modify the contract to add or delete key personnel at the request of the contractor or Government.

*Alternate labor categories may be proposed by the vendor.

6.0 DELIVERABLES

The contractor shall provide the following deliverables:

Number

Within two weeks of the kick-off meeting.

Within a month of deliverable 2.

No later than one month following deliverable 3 completion.

No later than two weeks after completion of deliverable number 4.

Within two months of completion of deliverable 5.

Within a month of completion of deliverable 6.

As lessons are learned, within six months of deliverable 7.

A month prior to commencing deliverable 11.

Start training within a month following the completion of deliverable 7; training shall continue through the remaining period of performance. Training will be recorded and available to DFC for employees to watch.

To be determined, prior to contract close.

7.0 TRAVEL

Travel will be considered for hybrid trainings to DFC’s headquarters at 1100 New York Avenue Northwest, Washington, DC 20527.

8.0 PLACE OF PERFORMANCE

The place of performance will be either the contractor’s site or the DFC office building located at 1100 New York Ave. NW, Washington, DC 20527.

9.0 HOURS OF OPERATIONS

DFC standard hours of operation:

Monday - Friday, 9:00 AM – 6:00 PM Eastern Time

10.0 PERIOD OF PERFORMANCE

The period of performance shall be for two years from the award date.