J.1 Statement of Objectives (SOO).pdf

ATTACHMENT J.1

SECTION C – STATEMENT OF OBJECTIVES

C.1 PURPOSE OF THE STATEMENT OF OBJECTIVES (SOO)

This Statement of Objectives (SOO) provides the objectives of the contract and is included in this Promoviendo la integridad y la transparencia en los negocios (ProIntegridad) Request for Proposal in lieu of a Statement of Work (SOW). Contractors must propose a realistic and cost-effective technical approach to maximize the results described herein. This SOO will not become part of the final contract, but will be replaced by the final negotiated Performance Work Statement (PWS)/Technical Proposal submitted by the successful Contractor.

The purpose of this SOO is to implement a transparency activity, ProIntegridad, that will strengthen Mexico’s business and investment environment through improved governance and business practices, increased citizen engagement and enhanced coalitions that drive transparency and integrity and promote open business1.

C.2 SCOPE

This Activity, with an overall estimated cost of $15 million, will be for a base period of four years and a one year option period. The Activity will work with select federal GOM institutions, national private sector associations and civil society organizations and/or networks, and in four to five priority states. The contractor must propose a minimum of four states to focus its efforts, using an analytic framework that will consider opportunities to coordinate with and leverage other USAID and USG efforts (including programs in the justice and sustainable landscapes), level of/potential for U.S. business investment opportunities (including specific sectors), and demonstrated political will by government counterparts to champion issues of transparency and open business. While proposed states and a framework for analysis must be included in the PWS, final state selection will be negotiated with USAID post-award. USAID expects the majority of the work will take place at the state level.

C.3 BACKGROUND

C.3.a GENERAL BACKGROUND AND COUNTRY CONTEXT

With a nominal GDP of $1.27 trillion, Mexico has the 15th largest economy2 in the world and the second largest economy in Latin America after Brazil. Corruption continues to be one of the most pressing challenges the country faces, impacting Mexicans of all ages, genders, and races, with outsized effects on the poor and vulnerable, including women.

Corruption in Mexico weakens democratic institutions at all levels, impacts the ability of the Government of Mexico (GOM) to respond to citizen needs, and undermines the fairness

1 The term ‘open business’ is used throughout the document to refer to a concrete approach that can be taken on by both the government and the private sector to promote a fair, transparent and competitive business environment in order to drive greater investment and economic growth.

2 World Bank, World Integrated Trade Solution and transparency of the business environment and the prospects for foreign investment.

Mexico’s President Andres Manuel Lopez Obrador (AMLO) has identified the eradication of corruption in the public sector as a priority for his administration, and listed combating corruption as the first milestone in Mexico’s 2019-2024 National Development Plan. The AMLO administration has embraced an approach focused on individual responsibility and collective morality, placing less emphasis on the fledgling National Anti-Corruption System (NAS), which has seen reduced funding and influence. At the state level, corresponding anti-corruption systems continue to receive inadequate funding, suffer from multiple key vacant positions, mixed technical capacity and resources to investigate and audit, and a clear lack of coordination and communication among institutions.

On the business side, efforts have been mixed. On one hand, new laws and requirements have enhanced the framework for business integrity and transparency. The General Law on Administrative Responsibilities passed in July 2016 created new administrative sanctions for businesses involved in corruption and incentives for business integrity policies by holding firms without these policies responsible for the conduct of individual employees. In 2017, the Comisión Nacional de Mejora Regulatoria (CONAMER), with USAID’s support and in conjunction with the private sector, launched the National Observatory for Regulatory Improvement (ONMR), an entity in charge of evaluating the level of regulatory improvement at the national level as well as within states and municipalities. In August 2019, the Secretaría de la Función Pública launched the Integrity Business Register as a positive incentive for companies to commit to fair, transparent practices in public procurement. Yet, while these efforts are important steps forward, there is ample opportunity to expand them.

The recent entry into force of the United States-Mexico-Canada Agreement (USMCA) provides both a promising framework to govern the trade and investment environment in Mexico and a means for USAID to support concrete GOM commitments in the areas of anti-corruption, integrity, and transparency. The agreement commits all parties to combating business sector-related corruption, ensuring public sector integrity, supporting transparency measures, and improving integrity practices in the private sector to ensure a level playing field for U.S., Mexican, and Canadian businesses. The agreement also commits Mexico to seeking opportunities to support and bolster opportunities for small and medium enterprises (SMEs).

These commitments provide important potential openings for the USG to support the efforts made in the otherwise politically problematic and intractable issue of corruption, and a chance to work with new actors at both the national and state levels. This Activity will build off of Mexico’s new USMCA commitments and improve the enabling environment for fair and open business and investment in Mexico.

C.3.b DEVELOPMENT CHALLENGE

Corruption is one of the main obstacles to doing businesses in Mexico. In addition to weakening democratic norms and citizen trust in government, corruption undermines direct foreign investment and commercial linkages and undercuts the financial and business environments.

Increasing transparency in public procurement and contracting, improving government oversight, and streamlining complicated regulations in particular present significant openings to improve opportunities for investment, while limiting space for less discerning competitors that are not held accountable to the same integrity standards.

C.3.c RELATIONSHIP TO OTHER ACTIVITIES

This Activity directly supports USAID/Mexico’s newly approved Cooperative Development Country Strategy, including the following Development Objectives and Intermediate Results:

DO1 - Impunity and Violence Decreased in Targeted Regions and Development

• IR 1.1: More Effective, Responsive and Accountable Government Institutions

• IR 1.3: Expanded dialogue and engagement with non-governmental actors.

DO2 -Expanded Bilateral Economic Ties through Improved Competitive Business Climate

• IR 2.1: Developed, Sustainable and Integrated supply chains

• IR 2.2: Improved Business Transparency and Integrity Practices

This activity requires the Contractor to undertake close collaboration with host governments, other donors, and other counterparts. The Contractor will seek opportunities to collaborate with other donors working in the same geographic area to create synergies and complementarity.

Similarly, the Contractor will coordinate with other relevant USG activities with which this Activity will need to work in tandem.

USAID Activities This Activity will build upon USAID/Mexico’s past investments in promoting business integrity and transparency through the Mexico Economic Policy Project (MEPP), and complement various ongoing activities to promote open government, greater business ethical standards and compliance, and citizen oversight. Specifically, it will complement efforts to promote business integrity by partners such as the United Nations Development Program (UNDP), the United Nations Office of Drugs and Crime (UNODC), Instituto Mexicano para la Competitividad (IMCO), and Mexicanos contra la Corrupción y la Impunidad (MCCI), which include extensive integrity guides and model codes of ethics and conduct, training modules and innovative initiatives such as firm-to-firm mentoring mechanisms. The Activity may also build on and expand subnational Open Government initiatives by UNDP and Ciudadan@s por la Transparencia (CxT). Finally, the Activity will leverage existing programming, expertise and reputation/contacts of local civil society organizations like Plan Estrategico de Juarez and Karewa, as well as national partners such as Ethos Laboratorio de Políticas Públicas, IMCO, and MCCI to promote exchange of integrity tools and skills and establish, expand and strengthen multi-stakeholder partnerships. The Activity, through its grants under contract component, will also build upon the efforts of the Anti-corruption Network that was established under a previous UNDP award, and expand efforts under the current Ethos agreement that has strengthened the anti-corruption strategies of local organizations in different states.

The Activity will also complement future civil society strengthening programming and support to new organizations to strengthen organizational capacities and network development, by providing specialized technical assistance tailored to open government and business integrity.

Potential synergies with USAID/Mexico’s justice and sustainable landscape activities will be a criteria for state selection, and the Activity will seek to contribute to promote sustainable and integrity-based supply chains.

https://www.usaid.gov/mexico/cdcs https://www.usaid.gov/mexico/cdcs

Other USG and Donor Coordination

The Activity will complement and coordinate with the State Department’s Bureau of International Narcotics and Law Enforcement (INL) support to strengthen internal affairs units within prosecutors offices, police forces and prisons. The Activity will closely coordinate with other Embassy Sections to ensure that US business priorities are sufficiently factored into the design and implementation, either by targeting specific industries, regions and/or business associations.

The donor community has supported an array of programming aimed at addressing the complex and multi-layered issues of corruption and business integrity in Mexico. The German Agency for International Cooperation Agency (GIZ), for example, has supported a business-driven, multi-stakeholder initiative seeking to promote transparency and integrity within the business community called the Alliance for Integrity. This network brings together multinational companies, SMEs, business associations, civil society, public actors and international organizations to foster business integrity. The Embassy of the United Kingdom’s integrity programming has developed various corporate integrity tools and focused on specific geographies relevant to UK investment. This Activity will complement and leverage the aforementioned efforts.

C.4 DEVELOPMENT HYPOTHESIS

IF government oversight, transparency, and regulatory processes affecting the business sector are improved, AND integrity practices in the private sector are strengthened and expanded WHILE civil society capacity is enhanced and multi-stakeholder coalitions are bolstered to promote citizen engagement, THEN the environment for fair and open business and investment in Mexico will improve.

C.5 CONTRACT OBJECTIVES

This Activity will strengthen Mexico’s business and investment environment through improved governance and business practices and enhanced coalitions that drive transparency and integrity.

The Activity will use a cross-cutting open business approach - in line with the stated resolutions and purposes of the USMCA3- to strengthen the GOM, private sector and civil society’s capacity and commitment to promote a fair, transparent and competitive business environment that attracts greater investment and drives economic growth. The Activity aims to create multi-stakeholder connections, coalitions and practices that can help cement open business norms and improve the business and investment ecosystem in Mexico. This will be done through three interrelated objectives:

3 See Agreement Between the United States of America, the United Mexican States, and Canada, Preamble, Office of the United States Trade Representative, available at https://ustr.gov/sites/default/files/files/agreements/FTA/USMCA/Text/00_Preamble.pdf (noting, in relevant part, that the parties commit to “enhance and promote... conditions of fair competition in the region”; “establish a clear, transparent, and predictable legal and commercial framework for business planning, that supports further expansion of trade and investment”; “facilitate trade in goods and services between the Parties by preventing, identifying, and eliminating unnecessary technical barriers to trade, enhancing transparency, and promoting good regulatory practices”; and “promote transparency, good governance and the rule of law, and eliminate bribery and corruption in trade and investment”) https://ustr.gov/sites/default/files/files/agreements/FTA/USMCA/Text/00_Preamble.pdf

Objective 1 - Oversight, regulatory, and procurement processes of GOM improved Objective 2 - Private sector integrity practices strengthened and expanded Objective 3 - Multi-stakeholder partnerships and constructive citizen engagement expanded

C.6 RESULTS AND INDICATORS

USAID expects this activity to strengthen Mexico’s business and investment environment through improved governance and business practices, increased citizen engagement and enhanced coalitions that drive transparency and integrity and promote open business. This requires implementation and institutionalization of more effective internal processes within and across GOM institutions, particularly at the subnational level. This also requires expanding the base of private sector stakeholders committed to improving open and ethical business practices, and enhancing the capacity of civil society to engage in audit, public financial management oversight, and open business processes. USMCA provides a unique opening to advance these objectives, and offerors should propose specific industry sectors and/or regional focus that align with U.S. business interests.

The Activity will primarily be seeking results across all objectives at the subnational level in four to five priority states, however, select engagement with key GOM national institutions critical to meeting the objectives of this Activity is expected.

While the potential Contractor may propose additional indicators linked to their proposed approach, at minimum they must present sufficient indicators to measure the following results:

Objective 1: Oversight, regulatory, and procurement processes of GOM improved

● Strengthened national-level institutions whose functions contribute to ensuring a fair and transparent business environment, including the Auditoría Superior de la Federación (ASF), the Comisión Federal de Competencia Económica (COFECE) and Comisión Nacional de Mejora Regulatoria (CONAMER).

● Enhanced GOM efforts aimed at combating opacity in the business ecosystem.

● Improved capacity of state-level institutions tasked with ensuring a fair and transparent business environment, including regulatory commissions, auditors, and internal control offices to oversee public procurement, contracting, and business practices.

● Improved state-level public financial management systems and processes, including more open and transparent public procurement.

● Improved inter-agency coordination at the state level to strengthen the use of actionable audit data by prosecutors.

● Enhanced open government processes at the state and municipal levels, including open contracting, open ownership, and participation in the Open Government Partnership (OGP) Local program.

Objective 2: Private sector integrity practices strengthened and expanded

● Expanded company integrity initiatives in the areas of internal compliance, ethics, fraud/waste/abuse reporting, and transparency.

● Diversified private sector partnership base with expanded integrity practices to SMEs in specific industry sectors.

● Active and engaged private sector coalitions to promote sustainable and integrity-based supply chains.

● Partnerships between U.S. and Mexican firms established to advance implementation of key USMCA anti-corruption articles.

Objective 3: Multi-stakeholder partnerships and constructive citizen engagement expanded

● Improved technical capacity of civil society to understand and engage in audit, public financial management oversight, and open business processes.

● Diversification of civil society organizations involved in social accountability mechanisms.

● Enhanced multi-stakeholder coalitions and platforms aimed at ensuring a fair and transparent business environment.

● Joint advocacy initiatives launched by the civil and private sector on policy reform in the areas of open government and open business.

● Open business-related investment strategies developed with the public sector.

● Increased public awareness of open business.

A list of illustrative indicators, derived from past and ongoing USAID activities is included in Attachment J.11. The Contractor will develop final baselines and targets in consultation with USAID, but must indicate proposed baselines and targets where available or appropriate. In addition, the Contractor is required to include at least one standardized “F” indicator from the Bureau for Foreign Assistance (F).

C.7 ACTIVITY PARAMETERS

C.7.a Gender and Marginalized Populations

Per ADS Chapter 205, all USAID activities are required to take into account not only the different roles of men and women, but also the relationship between and among men and women, as well as the broader institutional and social structures that support them. The analysis must not focus only on numbers but how interventions are likely to impact individuals differently based on their gender roles and cultural norms. The Contractor must consider how and where it could support the implementation of a differential approach, and track reliable gender-disaggregated data to inform more effective anti-corruption approaches. The findings of this analysis should be incorporated across proposed interventions.

C.7.b Local Systems

To increase the likelihood of sustainability, the Contractor must support the local system4 in the contexts in which it works. Local system refers to those interconnected sets of actors -governments, civil society, the private sector, universities, individual citizens and others - that

4 https://www.usaid.gov/sites/default/files/documents/1870/LocalSystemsFramework.pdf https://www.usaid.gov/sites/default/files/documents/1870/LocalSystemsFramework.pdf jointly produce a particular development outcome. The Activity’s focus on strengthening the individual capacities of the GOM (national- and state-level), the private sector, and civil society, while promoting multi-stakeholder partnerships is a recognition of the critical importance of the local system to enhancing the overall ecosystem for business openness and integrity in Mexico.

Whether the local system will own the outcomes produced under this contract after it is finished must be a key consideration for planned activities. The Contractor must set aside a minimum of 10 percent of its total budget to provide Grants Under Contracts (GUCs), most of which will go to entities within the local system.

C.7.c Flexibility

The Contractor must ensure technical and programmatic flexibility within and across program components to respond to changing circumstances in the area of anti-corruption and business integrity within the scope of this contract. The Contractor will outline its approach to keep abreast of changes in the situation on the ground, such as a political economy analysis or other assessments, and how it will maintain the flexibility to accommodate changes. The Contractor must include such situational analyses and scenarios as part of its regular reporting and engage with USAID to make appropriate programmatic adjustments.

C.7.d Innovation

This Activity offers fertile terrain for innovation. Innovation refers to new technologies, new ways of delivering or financing goods and services, more cost-effective adaptations to existing solutions, new ways of increasing implementation of existing proven solutions, policy changes, shifts, or nudges based on insights from behavioral economics, social or behavioral innovations.

The Contractor must address and weave innovation into its approach.

C.7.e Collaborating, Learning and Adapting (CLA)

The Contractor must incorporate a collaborating, learning, and adapting (CLA) approach that: a) generates, captures, shares, and applies information and knowledge to support and improve development outcomes; b) promotes collaborative learning and exchanges with relevant institutions, stakeholders, and development partners; and c) uses information to improve the cost-effectiveness of interventions over the life of the activity. The Contractor must build on lessons learned from previous and current/existing transparency and business integrity activities, including those of other donors that have demonstrated successful approaches to achieve the objectives described in this SOO.

C.7.f Private Sector Engagement

Private sector engagement is central to the achievement of the Activity’s outcomes. The Activity is designed to align and leverage US and Mexican business interests to promote open business and transparency. The Contractor must address the potential role(s) that the private sector can play to produce and sustain a development outcome. Offerors are strongly encouraged to seek ways to leverage private sector resources in order to advance the Activity’s objectives. See

USAID’s Private Sector Engagement Policy:

https://www.usaid.gov/sites/default/files/documents/1865/usaid_psepolicy_final.pdf

C.7.g Security

The security of beneficiaries and the contractor’s staff is of utmost concern to USAID/Mexico.

Given the escalation of violence in Mexico, it is imperative that the Contractor develop a security plan that ensures institutionalized processes to track the security context in different states, evaluates the risks to beneficiaries and the Contractor’s staff, and implements steps to mitigate risks.

C.7.h INTEGRATION OF ACTIVITY COMPONENTS

The Activity’s three objectives are mutually reinforcing and necessary to achieve the highest-level goal. The Contractor shall look for opportunities to connect thematic areas throughout the three components.

[END OF ATTACHMENT J.1]

https://www.usaid.gov/sites/default/files/documents/1865/usaid_psepolicy_final.pdf