Pre-solicitation notice - Economic Modernization.pdf

Pre-solicitation Notice USAID/Sri Lanka Economic Modernization Activity

Synopsis/Solicitation Number: 72038324R00001 Release Date: March 22, 2024

The purpose of this notice is to comply with the synopses and pre-solicitation notice requirements of FAR 5.2, Synopses of Proposed Contract Actions. Any solicitation resulting from this notice will be handled in accordance with FAR 5.102(d); therefore, availability of any resulting solicitation package will be limited to this electronic medium. Accordingly, interested vendors, are encouraged to register themselves as an interested vendor.

The United States Agency for International Development, Sri Lanka and Maldives (USAID/Sri Lanka & Maldives) intends to release a solicitation for a project titled “USAID/Sri Lanka Economic Modernization Activity”. The purpose of this activity is to provide a broad range of technical assistance, consulting, and professional services to implement activities that contribute to the overall objective of increased economic competitiveness and inclusive growth in Sri Lanka, focusing on the following two components:

1. Improved Enabling Environment: Provide support to GoSL and other relevant partners to create favorable conditions, including regulatory and policy frameworks and improved economic governance institutions, to facilitate the establishment, growth, and success of businesses in Sri Lanka and increase total Foreign Direct Investment (FDI).

2. Enhanced Export Competitiveness & Growth for SMEs: Provide support to SMEs to compete in international markets, expand their export capabilities, overcome barriers and take advantage of opportunities in the global marketplace.

The Mission intends to award the Economic Modernization Activity as an IDIQ, and simultaneously award the first task order for the Modernizing the Agricultural Sector in Sri Lanka Activity. The Modernizing the Agricultural Sector in Sri Lanka Activity will provide technical assistance and other support to modernize the agriculture sector through partnerships with the government, the private sector and other stakeholders. The main objective of the agriculture-related task order is to promote inclusive and sustainable agriculture-led economic growth, as advanced by the following objectives:

1. Strengthen inclusive food and agricultural systems that are productive and profitable;

2. Strengthen and expand access to markets and trade;

3. Increase employment and entrepreneurship by women, youth, and other marginalized populations in value added agriculture and adjacent/related sectors.

The anticipated solicitation date is on or about April 2024.

A draft Statement of Work (SOW) for IDIQ (Attachment 1) and first task order (Attachment 2) are attached solely for information and planning purposes. This is not a Request for Proposals (RFP) and no additional information regarding the planned RFP is available at this time. All necessary information will be supplied at the time the RFP is posted at https://sam.gov/. Questions/requests for https://beta.sam.gov/

72038324R00001

USAID/Sri Lanka Economic Modernization Activity information will not be responded to until RFP issuance. Interested parties are advised to periodically monitor the above website for updates concerning this procurement. No proposals for funding should be submitted until after the RFP is issued.

This notice does not obligate USAID to release a solicitation or award a contract nor does it commit the Government to pay for costs incurred in the preparation and submission of a proposal. In addition, final award cannot be made until funds have been fully appropriated, allocated, and committed and internal USAID procedures have been completed.

Sincerely, Julie Ota Contracting Officer, USAID/Sri Lanka & Maldives

ATTACHMENT 1 – DRAFT DESCRIPTION/SPECIFICATIONS/STATEMENT OF WORK FOR

IDIQ

C1. TITLE OF THE ACTIVITY

USAID/Sri Lanka Economic Modernization Activity.

C2. BACKGROUND

Sri Lanka faces several challenges, including economic disparities, political instability, infrastructure deficiencies, and natural disasters. These issues hinder sustained economic growth and inclusive development. In this context, enhancing economic competitiveness through improving the enabling environment and bolstering small and medium-sized enterprises (SMEs) plays a pivotal role.

By fostering a conducive business environment, Sri Lanka can attract investments, stimulate innovation, and create job opportunities. SMEs, especially in the agriculture sector, are vital for inclusive growth as they contribute significantly to employment and rural development. Empowering these enterprises through access to finance, technology, and skills can amplify their productivity and competitiveness, catalyzing broader economic advancement.

Efforts aimed at enhancing the performance of SMEs, coupled with structural reforms to improve the overall economic climate, can pave the way for sustainable growth, poverty reduction, and the creation of a more resilient economy in Sri Lanka.

C3. OBJECTIVE

The contractor will provide USAID/Sri Lanka with a broad range of technical assistance and support services to support the Government of Sri Lanka (GoSL), small and medium scale enterprises (SMEs) and other stakeholders to improve the business enabling environment and the performance of small and medium businesses that contribute to economic competitiveness and inclusive growth of Sri Lanka.

C4. STATEMENT OF WORK

The contractor will provide services at USAID’s direction to implement activities that contribute to the overall objective of increased economic competitiveness and inclusive growth in Sri Lanka, focusing on the following two components:

1. Improved Enabling Environment: Provide support to GoSL and other relevant partners to create favorable conditions, including regulatory and policy frameworks and improved economic governance institutions, to facilitate the establishment, growth, and success of businesses in Sri Lanka and increase total Foreign Direct Investment (FDI).

2. Enhanced Export Competitiveness & Growth for SMEs: Provide support to SMEs to compete in international markets, expand their export capabilities, overcome barriers and take advantage of opportunities in the global marketplace.

C4.1 Improved Enabling Environment (Component One)

The primary objective of this component is to improve economic governance institutions, policies, and practices in Sri Lanka to facilitate a conducive business environment and promote inclusive economic growth.

Improving the enabling environment includes achieving inclusive and accountable economic institutions, promoting trade, attracting investments, creating jobs, enhancing regional competitiveness, and stimulating economic growth. The contractor will provide technical assistance to improve the clarity and transparency of regulations, laws, and policies governing export businesses and foreign investments. This may include streamlining approval processes for obtaining licenses and permits, simplifying regulatory compliance, and building investor confidence in economic governance institutions. The contractor will also work on facilitating access to finance, building a skilled workforce, improving market access, and promoting strong supportive institutions. The contractor will also work on creating favorable conditions and support for the agriculture sector, including policy reforms, access to finance, infrastructure development, research and development, capacity building, market access, climate resilience, and innovation and technology development.

By addressing regulatory challenges, facilitating access to finance and infrastructure, developing a skilled workforce, improving market access, strengthening economic governance institutions, and enhancing financial management and transparency, the activity will incentivize economic growth, attract investments, and promote inclusive development.

C4.2 Enhanced Export Competitiveness & Growth for SMEs (Component Two)

The objective of Component Two is to enhance the export competitiveness and growth of SMEs by helping them tap into international markets, reach a wider customer base, and increase revenue. By empowering SMEs to expand their export activities, Sri Lanka can help businesses reach their entrepreneurial potential and achieve sustainable growth.

The contractor will support SME development by:

• conducting market research and identifying potential export markets suitable as targets for Sri Lankan products and services;

• supporting businesses in making their workplaces more accessible and inclusive to employees, including commonly underemployed and excluded groups and diaspora returnees;

• collaborating between vocational and academic institutions and the private sector to ensure effective and fair job matching, and that prospective employees receive the training required for future jobs, particularly in soft skills and personal initiative;

• providing training and educational resources to help small businesses understand and comply with trade rules and procedures, and to follow international best practices to facilitate the smooth movement of goods and services across borders;

• facilitating access to finance to cover the costs associated with entering and expanding in international markets including marketing, product development, logistics and distribution;

• supporting various forms of management consulting or mentoring, including peer mentoring from adjacent industries, and/or insourcing and outsourcing marketing and accounting; and

• leveraging digital technologies and e-commerce platforms to reach global customers, overcome geographical barriers and streamline export operations.

Interventions under this component may also include support to trade promotion agencies and business associations that support small businesses, e.g., by organizing trade missions, exhibitions and networking events to connect them with potential partners, buyers, and distributors. Support would be in sectors of high growth. These interventions would also foster inclusive employment opportunities and entrepreneurship by removing barriers and biases that prevent marginalized individuals and groups from fully participating in employment and entrepreneurship activities.

The contractor is encouraged and expected to leverage and mobilize local resources with the public/private sector when possible, in order to secure commitment and promote the sustainability of the activities.

C5. CROSS CUTTING THEMES

C5.1 PRIVATE SECTOR ENGAGEMENT (PSE)

PSE is a strategic approach to planning and programming through which each USAID activity consults, strategizes, and collaborates with the private sector for greater scale, sustainability, and effectiveness of development. The PSE umbrella concept includes public-private partnerships (PPPs). Private sector partners bring special resources, expertise, technologies, capabilities, and other resources to the table that can augment the impact of USAID interventions when strategically aligned. PSE is key for designing market-driven solutions and sustainable investments that go beyond the life of the activity. The contractor must identify strategic long-lasting engagement with the private sector throughout the activity’s components. The contractor will ensure the COR and/or their designee will be present at high level meetings with potential private sector partners. The contractor will also seek partnerships related to digital tools and technology to support implementation of all activity components. Private sector actors engaged in this activity may include micro and small businesses, in addition to larger companies.

C5.2 COMMUNITY PARTICIPATION

To promote self-reliance and long-term sustainability, the contractor must work with community, public, and private Sri Lankan organizations to the maximum extent possible. The Contractor must engage communities in design processes which will improve community ownership and sustainability of interventions. Increased communication and collaboration between community, public, and private actors will also contribute to leveraging public and private funding to complement USAID’s efforts.

C5.3 GENDER, EQUITY AND SOCIAL INCLUSION CONSIDERATIONS

Gender: USAID policy requires that gender issues be addressed as appropriate in all USAID-funded activities. USAID/Sri Lanka conducted a Gender and Social Inclusion Analysis in 2020 to inform the Country Development Cooperation Strategy 2020-2025. According to the Analysis, Sri Lanka has made notable strides towards achieving gender equality in education and health indicators; but women’s participation in the labor force and political representation remains relatively low. Women make up one third of the labor force but experience double the unemployment rate of men. They are more likely to work in the informal sector, particularly in the agriculture sector, with a lack of social protection. Women face significant barriers to employment, lacking safe transport, flexible working hours, part time work, onsite day care and accommodation. Gender disparities exist in terms of occupational segregation, wage gaps, and leadership roles. Female entrepreneurs have limited access to markets and credit and they are more likely to own SMEs. Social norms and practices disadvantage women and girls in Sri Lanka. Violence against women remains a significant concern.

Efforts are being made by the government, civil society organizations and international development partners to address these challenges and promote gender equality. Continued efforts and collaboration between various stakeholders are necessary to achieve gender equality and empowerment in Sri Lanka.

Equity: Sri Lanka experiences disparities in terms of regional development, income distribution and access to basic services. The Northern and Eastern provinces, which were affected by the Civil War, and the Estate Sector continue to face development challenges. Income inequality exists, with a significant proportion of the population living below the poverty line especially after the economic crisis. Ethnic and religious minorities including Tamils and Muslims, face discrimination and marginalization in certain contexts.

Social Inclusion: Sri Lanka is a diverse country with various ethnic, and religious communities.

Ensuring social inclusion involves recognizing and addressing the needs of all communities and ensuring their participation in the decision making processes. Efforts are needed to promote inter-ethnic and inter-religious harmony, reduce discrimination and address historical grievances. Persons with disabilities face accessibility and social barriers that hinder their full participation in society.

The contractor will take into account gender, equity and social inclusion implications of its activity and develop approaches to address clearly defined gaps, such as in wage rates or labor force participation rates, and promote gender mainstreaming, equity and social inclusion in activity results.

C.5.4 ADAPTIVE MANAGEMENT

The contractor must manage adaptively and adjust to changes in emphasis under the overall scope.

The contractor will adapt its management and implementation strategy to the changing political, economic, and security context. To this end, the Contractor will continuously monitor the security situation and will coordinate with the local authorities, communities, and the USAID Security Liaison Specialist to increase or decrease the number or intensity of its interventions in target regions as needed.

C.5.5 SUSTAINABILITY AND LOCALIZATION

Sustainability of activities supported under the Economic Modernization Activity is important.

Supported work should continue to meet the needs of target beneficiaries beyond the life of the program. Local ownership of the activities from the time of conception, participatory approaches in identifying activities and local partners and consideration of long term financial viability of the activities can contribute to sustainability.

Task orders under this IDIQ may require localization plans that describe how local partners will be utilized (e.g., via subcontracts, subgrants, and public-private partnerships) and a detailed and realistic approach to preparing local partners to receive direct USAID awards.

C.5.6 GRANTS UNDER CONTRACT

The Contractor may utilize grants under contract (GUC) to issue grants to non-governmental partners as part of program implementation, where appropriate and as defined at the task order level.

Grants under this contract will be made to carry out activities that are consistent with the activity objectives. A key pillar of the GUC component is also to provide technical and capacity building support to relevant local organizations. Specifically, under the New Partners Initiative and to support self-reliance, the contractor will work with the local entity to build their capacity toward managing direct partnerships with USAID in the future, to increase the pool of local partners for future USAID programming.

All applicable regulations for sub-recipients and ADS 302 apply. USAID will retain the ability to terminate unilaterally any grant activities under extraordinary circumstances.

C5.7 COMMUNICATION AND OUTREACH

Communication and outreach will form an integral part of the activity's success. Stakeholders and beneficiaries of the activity will be properly informed and engaged with the project activities. The successes and achievements of the activity will be widely disseminated by the Contractor. The Contractor will have adequate resources and capabilities to ensure effective communication with relevant stakeholders and the general public. Communications with high ranking government officials must be coordinated in advance with USAID, and may not occur without the prior approval of USAID. The activity’s communication is bound by USAID’s branding strategy requirements.

The Contractor must develop an overall Communication and Outreach Plan for individual Task Orders. The plan details the Contractor’s approach towards communication with the project's audience and promotion of its impact and achievements. The plan must include the Contractor’s proposed communication protocol with USAID and other stakeholders, a list of proposed communication and outreach activities and required resources for implementation.

[END OF SECTION C]

ATTACHMENT 2– DRAFT DESCRIPTION/SPECIFICATIONS/STATEMENT OF WORK FOR

TASK ORDER 1

C1. TITLE:

USAID/Sri Lanka Modernizing the Agriculture Sector in Sri Lanka Activity.

C2. OBJECTIVE

This task order aims to modernize the agriculture sector in Sri Lanka by promoting inclusive and sustainable agriculture-led economic growth. The task order will be implemented under Components 1 (Improved Enabling Environment) and 2 (Enhanced Export Competitiveness & Growth for SMEs) of the Sri Lanka Economic Modernization Activity IDIQ.

C3. BACKGROUND

The agricultural sector plays a vital role in Sri Lanka’s economy, employment, and food and nutrition security. It is estimated that agriculture contributed 9% of the country’s Gross Domestic Product (GDP) in 2021, providing livelihoods and income for a significant portion of the population.

Accounting for 27% of the labor force, the agriculture sector is the largest employer in the country, especially in rural areas where 82% of the population lives. Half of the workforce in rural areas is employed in agriculture. Agriculture also plays a critical role in ensuring food security for the nation, and this has been heightened since COVID-19 and the economic crisis. Additionally, the sector constitutes 21% of total exports. Agriculture is closely linked to rural development, playing an important role in reducing poverty, improving living standards and narrowing the urban-rural gap.

Agriculture encompasses a wide range of sub-sectors, including crop cultivation, livestock farming, fisheries, and forestry. Crop cultivation, consisting of plantation and non-plantation crops, is a prominent sub-sector in Sri Lanka. Rice is the staple crop and paddy cultivation occupies a substantial part of arable land. The country’s self-sufficiency in rice production became strained by global price inflation for agricultural goods and inputs resulting from the pandemic and the Russian invasion of Ukraine. President Gotabaya Rajapaksa’s untimely and poorly executed ban on the import and usage of chemical fertilizers disrupted national rice production, leading to an acute food security crisis. Political incentives to court agrarian voters are at odds with the need for Sri Lanka to create a sustainable market-based system for rice paddy production, and to diversify both production and consumption towards a more sustainable and nutritious set of crops.

Other major crops for domestic consumption include vegetables, fruits and grains. The three traditional export crops are tea, rubber and coconut. Cinnamon and other spices are also grown as cash crops. While the agriculture sector’s share of GDP diminishes over time, the sector needs both immediate and long-term improvements to strengthen its contribution to the economy and to reduce the likelihood of a relapse into food insecurity. The sector faces several challenges that impact sector profitability and sustainability. These challenges include:

Low productivity - The agricultural sector in Sri Lanka faces the challenges of low productivity due insecure land tenure, fragmented land holdings, small farm sizes, limited access to modern technology and inputs, inefficient farming practices and climate change impacts. Low productivity is one of the causes of poor performance and weak global competitiveness in the agricultural sector.

Water management - Though Sri Lanka has a complex irrigation network, with major reservoirs, tanks, there are challenges related to irrigation infrastructure, water scarcity and uneven distribution of water resources. Changes in the frequency and severity of droughts and floods could pose challenges for the agriculture sector in the coming years. Enhancing water management practices, improving irrigation systems and promoting water saving techniques can address this challenge.

Knowledge and skills gap - There are gaps in the knowledge and skills amongst farmers, reach of the extension and training programmes, affecting adoption of new techniques and sustainable farming practices. Currently, research and development is ineffective, uncoordinated and unfocused while the outputs are often inaccessible and irrelevant to the needs of farmers.

Low participation of women and youth: While women and youth constitute the largest segments of the population, they are underrepresented in the economic sphere including agriculture. Economic participation of women in the labor market remains low at 35% while youth unemployment has increased to 26%. Poor income prospects have made it difficult for the agricultural sector to attract youth.

Land constraints - Sri Lanka has limited arable land, and available land is fragmented due to a complex legal and titling regime that deters consolidation of plots. The small landholdings make it difficult to implement mechanization and large scale production. Small landholders also often lack sufficient resources to acquire additional landholdings to gain economies of scale.

Pests, diseases and post-harvest losses - Sri Lanka also faces issues related to pests, diseases and post harvest management. Inadequate pest and disease management practices, and poor post-harvest handling and storage facilities contribute to crop losses, reduced yields and increase in production costs. Effectively addressing this challenge requires adoption of integrated pest management strategies, access to quality inputs, technical expertise and infrastructure.

Access to Finance and Technology - Smallholders face challenges in accessing finance and modern technologies. Limited access to credit and capital affects adoption of improved farming practices, mechanization and technology driven solutions which could improve their productivity and profitability.

Market access and value chains - Farmers have limited access to information and markets; they are not effectively integrated into value chains, and suffer from price fluctuations and post-harvest losses. Poor transportation and inadequate storage and processing facilities, results in post-harvest losses, price variations and low profitability.

Lack of policy coherence and implementation capacity - Achieving policy coherence and effective implementation of policies across different government departments and agencies responsible for the sector has been a challenge. In this regard, strengthening institutional capacity, coordination and monitoring are important for successful policy implementation.

Sri Lanka’s agricultural sector presents many opportunities for growth, innovation, and sustainability, such as through product diversification, agro-processing and value addition, or technology adoption. These opportunities include:

Diversification of agricultural products: Sri Lanka has a favorable climate and diverse agro-ecological zones, allowing for cultivation of a wide range of crops year-round to foreign markets much larger than its own. There are opportunities to introduce new high value crops, expand the cultivation of non-traditional crops for export markets, and promote organic farming practices.

Export market expansion: Sri Lanka has a strong potential to export agricultural products like tea, spices, fruits, vegetables and seafood. Expanding export opportunities through value addition, product differentiation and market diversification can increase foreign exchange earnings and economic growth.

Agro-processing and Value Addition: Investing in agro-food processing facilities and promoting value addition can enhance the competitiveness of the Sri Lankan agriculture sector. Processing fruits and vegetables, spices, and other commodities can create additional employment opportunities, reduce post-harvest losses, and generate higher returns for farmers.

Technology adoption: The adoption of modern agricultural technologies like precision farming, smart irrigation systems, and digital technologies can improve productivity, resource efficiency, and farm management.

Organic farming: Sri Lanka has the potential to further promote sustainable organic farming practices. Global demand for organic products is increasing, offering emerging market opportunities.

Supporting farmers in obtaining organic certifications, providing technical support, and creating market linkages for organic produce can open opportunities for new and niche markets.

Strengthening Agriculture Research and Development: Investing in research institutions, promoting public-private partnerships, and supporting innovation in areas such as crop management, pest management, and post-harvest technologies can help productivity and competitiveness.

Sustainable fisheries and aquaculture: Sri Lanka's coastal location provides opportunities for the development of sustainable fisheries and aquaculture. Promoting responsible fishing practices, improving post-harvest handling, and investing in sustainable agriculture can enhance seafood production, create employment, and support coastal communities.

Harnessing these opportunities and addressing challenges in agriculture requires coordinated efforts by government, agricultural institutions, farmers, and other stakeholders.

C4. THEORY OF CHANGE

If the productivity and profitability of the food and agriculture system are improved, and If access to markets and trade opportunities is expanded, and If employment and entrepreneurship for women, youth, and marginalized groups is promoted, Then inclusive and sustainable agriculture-led economic growth will be increased.

C5. REQUIREMENTS

This Activity will promote inclusive and sustainable agriculture-led economic growth. Sri Lanka’s

1.65 million smallholder farmers produce nearly 80% of the country’s total agricultural output, making this group most likely to benefit from the types of interventions planned for this activity.

Target beneficiaries will primarily include smallholder farmers (less than 2 hectares of land) and small and medium enterprises and service providers working on crops with the most potential for agriculture-led economic growth. The Activity will engage with smallholders through farmer producer organizations, cooperatives, and agribusiness associations given they offer several advantages and benefits (ie, collective bargaining power, market access, risk mitigation, access to finance, knowledge and skill sharing, economies of scale). These collective structures can play a crucial role in enhancing the overall efficiency, productivity, and sustainability of smallholder agriculture.

Using market-based approaches, the Contractor will work to fulfill this purpose through three complementary outcomes (detailed below). These approaches recognize the role of markets as powerful mechanisms for allocating resources, promoting efficiency, and driving innovation. Some examples of market-based approaches include: aligning incentives and leverage profit motives to drive desired outcomes; collaborating with the private sector as a key player in achieving the outcomes; utilizing market mechanisms, such as supply and demand, competition, and pricing, to achieve desired outcomes; facilitating access to finance through innovative financial instruments;

focusing on strengthening entire value chains to improve efficiency and competitiveness; influencing consumer choices and behaviors through market-based strategies; gathering and utilizing market data to inform decision-making; facilitating collaborative efforts between the public and private sectors to achieve shared goals.

It's important to acknowledge that any significant transformation in an industry can bring about shifts in employment patterns. The adoption of modern agricultural technologies and mechanization may lead to increased efficiency and productivity, but it can also result in a decreased demand for manual labor in certain traditional farming practices. Improvements in market infrastructure and logistics can streamline the supply chain, potentially reducing the need for certain intermediary roles or informal channels. While promoting value addition and processing can create new job opportunities, it might also change the nature of employment, with a shift from primary production to more industrial and processing-oriented roles. The focus on inclusive employment and entrepreneurship is intended to create opportunities, especially for women, youth, and marginalized populations. However, it might also bring about changes in the distribution of roles and responsibilities within the sector. Overall efficiency gains in the agricultural sector could lead to increased productivity, which may have implications for the overall demand for labor. Efforts would be made to address potential job displacements by implementing training and reskilling programs, ensuring a smooth transition for those affected by changes in the industry.

Outcome 1. Strengthened and inclusive food and agricultural systems that are modern, productive and profitable.

Illustrative interventions may include:

Adopting and scaling modern agricultural technologies: Encourage farmers and service providers to adopt and scale modern/digital agricultural technologies and practices like precision agriculture, protected agriculture, smart irrigation systems, mechanization, tools and platforms for accessing market information and extension services. Targeted and tailored training and awareness programs in support of these improvements can help farmers understand the benefits of technology adoption.

Training should be paired with access to finance initiatives. Promoting technology adoption improves efficiency and yield, leading to increased productivity. Technologies and practices adopted must be sustainable and climate smart, minimizing environmental impacts and enhancing climate resilience, while improving productivity.

Strengthening extension services: Strengthen private sector based extension services to provide farmers, especially smallholders, with technical support, farmer field schools, and knowledge dissemination, complementing and supplementing the existing government interventions. Extension officers can offer valuable guidance on farming techniques, best practices, and the latest research findings. This facilitates the adoption of modern farming practices, improves productivity, and promotes sustainable agricultural practices.

Enhancing access to finance and resources: Facilitate access to affordable and timely finance for farmers and agricultural entrepreneurs, especially small-scale and resource-limited individuals (particularly women and youth); help them adopt modern farming technologies and apply international best practices. This can be accomplished by reducing information asymmetries, specialized agricultural financing schemes and simplified loan processes, collaborating with smallholders through farmer producer organizations, cooperatives, and agribusiness associations, which is a holistic approach that addresses various challenges faced by individual farmers. Financial literacy and training/consulting services can also help farmers make informed financial decisions.

Pairing financing mechanisms with risk reduction approaches (e.g., crop insurance) can reduce costs for both borrowers and lenders.

Strengthening policy support and coordination: Develop and implement policies that support the growth and profitability of the agricultural sector. This includes creating an enabling policy environment, reducing subsidies, ensuring coherence and coordination among different government agencies, and actively engaging with stakeholders to address their needs and concerns.

Outcome 2. Strengthened and expanded access to markets and trade.

Illustrative interventions may include:

Improving market infrastructure and logistics: Invest in the development of market infrastructure, including storage facilities, transport networks and market centers. These enable efficient movement of agricultural produce from farmers to markets, reducing postharvest losses and improving market access for farmers.

Increase value addition and product diversification through processing, packaging, and branding.

Support the establishment of processing units, provide technical assistance on product diversification and quality improvement, and promote the branding and marketing of processed agricultural products. This opens up opportunities for higher-value markets and increases farmers' profitability.

Strengthen value-chain linkages: Strengthen farmer producer organizations, cooperatives, and agribusiness associations (or form such groupings if they do not exist) that can collectively negotiate better prices, access bulk buyers, and fulfill market requirements, etc. Interventions can focus on maximizing the potential benefits of formalization through providing business development services and access to finance training. In addition, market linkages may be facilitated by ensuring compliance with quality standards and certifications required by international markets as well as providing farmers with reliable and timely market information and intelligence to make informed decisions. The use of digital tools has been shown to be effective for establishing market linkages for rural/smaller farmers/SMEs.

Outcome 3. Increased employment and entrepreneurship by women, youth, and other marginalized populations.

Illustrative interventions may include:

Improve inclusive employment and entrepreneurship: Promote the active participation of women, youth, and other marginalized populations in value added agricultural and agriculture-adjacent employment and entrepreneurship. Provide targeted and tailored training (non-classroom based training on general entrepreneurship), mentoring by non-competitive peers, and access to resources for women and aspiring/young entrepreneurs to focus on agribusiness development, value addition and innovative farming practices. Address gender and generational gaps with supportive policies that encourage their involvement in the agriculture sector.

C6. GRANTS UNDER CONTRACT

Local organizations will be supported to the greatest extent practicable under this contract, in order to carry out program interventions and ensure sustainability. This includes and is not limited to producer associations and other similar organizations, local private sector micro, small and medium sized enterprises (MSMEs), and technical assistance to local providers, including those that have not previously worked with USAID or who have had limited interaction with USAID activities.

When appropriate, the Contractor will also support commercial shared value partnerships with private sector companies that play a key role achieving the components of the Agriculture activity.

USAID particularly seeks private sector companies that connect growers to markets for products certified to have been produced without causing deforestation or using low-emissions practices.

The Contractor will develop and implement a localization plan to utilize local partners (e.g., via subcontracts, subgrants, and public-private partnerships) and prepare local partners to receive direct USAID awards. When considering local organizations or companies for a subaward, the Contractor is required to: a) develop differentiated criteria to identify and vet a sub-awardee for different types of partners (i.e. producers associations/other organizations vs. large or small commercial supply chain entities); b) develop procedures for making and monitoring the sub-award; and c) establish a timeframe, when applicable, to develop the local organization’s capacity. Note that subawards made to commercial entities should include co- or multi-party investment and leverage.

The Contractor may utilize grants under Contract (GUC) to issue grants to non-governmental organizations as part of program implementation, where appropriate. The total estimated amount of grants made under this provision will not exceed $650,000. Grants under this contract will be made to carry out activities that are consistent with the activity objectives. All applicable regulations for sub-recipients, ADS 303 and ADS 302 apply. USAID must be involved in establishing the selection criteria and prior written approval of the grant recipients per ADS 302.3.5.6(a)(2)(b).USAID retains the ability to terminate unilaterally any grant activities under extraordinary circumstances.

C7. RELATIONSHIP TO USAID, DONOR PROGRAMS AND GOVERNMENT

POLICY/STRATEGY

This Task Order under the Economic Modernization IDIQ will support USAID Sri Lanka Country Development Cooperation Strategy (CDCS) development objective (DO) 2 Inclusive Market-Driven Growth Increased, More specifically, intermediate results (IR) 2.2, “Private Sector-led Growth Promoted,” and IR2.3, “Human Capital Development Advanced.”

The Task Order will also support two US Government (USG)-wide policies. The Task Order supports the USG Global Food Security Strategy Objective 1 Inclusive and Sustainable agriculture-led economic growth, IR 1 Strengthened inclusive food and agriculture systems that are productive and profitable, IR 2 Strengthened and expanded access to markets and trade, and IR 3 Increased employment and entrepreneurship. The Task Order also supports Indo-Pacific Vision Priorities 1 Advance a free and open Indo-Pacific and 2 Drive regional prosperity.

Successful implementation of this Task Order will require close coordination with the Government of Sri Lanka (GoSL) namely the Ministry of Agriculture (MoA), Ministry of Plantation Industries (MPI) and affiliated Institutions , other USG funded activities, and other donor led initiatives in the agriculture sector in Sri Lanka. The establishment of a steering committee of key stakeholders is anticipated.

Relevant activities working in the same space include -

USAID/Sri Lanka activities:

1. Climate Change Adaptation Activity (implemented by TetraTech);

2. Ocean Plastics Reduction Activity (implemented by RTI International); and

3. Fertilizer Assistance to Sri Lanka Activity (implemented by the Food and Agricultural

Organization (FAO))

U.S. Department of Agriculture activities:

1.Market-Oriented Dairy (MOD) Project

Other donor activities:

• World Bank’s Agriculture Sector Modernization Project (ASMP), which aims to increase agricultural productivity, improve market access and enhance value addition of smallholder farmers and agri businesses; Climate Smart Irrigation Agriculture Project (CSIAP) under World Bank aims to improve climate change resilience and irrigation agricultural productivity of smallholder farming communities in selected climate-vulnerable zones of Sri Lanka.

• IFAD’s Smallholder Agribusiness Partnership (SAPP) Program to sustainably increase the income and diet of small householders involved in commercially oriented production and marketing systems by forming and building capacity of producer groups and organizations and strengthening partnerships with the private sector.

• European Union aims contribute to a more productive, diversified, climate resilient, market oriented and equitable agriculture in Sri Lanka; and

• KOICA under Modernization of Plant National Plant Quarantine Service aims to improve the status of certifying quality of plant production, import and export for National Plant Quarantine Service. Also, JICA plans for repair and procurement of equipment for National Plant Quarantine Service

• UN-funded activities. For example, FAO has collaborated on various initiatives to strengthen the agricultural sector. These initiatives have included policy support, capacity building for farmers, promoting agricultural diversification, and addressing challenges related to pests and diseases.

The Task Order will complement/supplement the experience of a number of these current and previous donor-funded initiatives that sought to modernize the agriculture sector. The contractor will collaborate and partner with other stakeholders including the private sector working in the relevant areas to efficiently and effectively meet the outcomes of the Task Order.

The GoSL’s agriculture policy in Sri Lanka is guided by national priorities to address economic, social, and environmental challenges while promoting sustainable development. The various sectoral and sub-sectoral agriculture policies recognize the need to improve crop, fishery, and livestock production; strengthen markets and value chains; address connectivity and logistics issues; and enhance private sector engagement and service delivery. These policies also acknowledge the challenges associated with sustainability, changing weather patterns, labor shortages, land fragmentation, and land degradation, which must be overcome to enhance food production and establish economically viable agricultural production. They also note the welfare of those connected to the sector and the role of the sector in human development, poverty eradication, and improved quality of life.

Key policy documents include the Overarching Agricultural Policy (2019), which focuses on creating an efficient, diversified, sustainable, market-oriented and inclusive agriculture sector. The policy identifies core areas for strategic policy action which include: increasing farm productivity;

improving domestic farm-market linkages and the rural economy; increasing export earnings; and mainstreaming gender and youth.

More recently, the GoSL drafted the National Agriculture Policy (2021) for Food and Feed Crops which aims to transform and modernize the agriculture sector while safeguarding the interests of both producers and consumers. Other key policy documents cover areas such as land use, plantation industries, livestock, the rubber industry, fisheries and aquaculture, cleaner production in the agriculture sector, and agricultural research. While some of these policy documents may require updating, they still provide valuable guidance for government interventions in the sector and relevant sub-sectors.

In addition to agriculture-specific policies, several national policy and strategy documents encompass agricultural activities. These include the New Trade Policy, the National Policy on Sustainable Consumption and Development, and the National Export Strategy. While some of these policy documents similarly require updating, they also provide valuable guidance for government interventions in the sector and relevant sub-sectors.

Government interventions in agriculture focus on areas such as irrigation, research and development, training, and knowledge dissemination. Subsidy schemes were implemented to support productivity and the adoption of modern farming practices. Investments were made in tree crops, food crops, livestock, poultry, aquaculture, and fisheries to enhance production and improve infrastructure.

Agricultural producers have been provided access to credit and insurance schemes, while other programs aimed at improving market efficiency and stability. The Government also uses import tariffs to ensure food security and support farm incomes.

C8. PUBLIC OUTREACH

Communication and outreach will form an integral part of the activity's success. Stakeholders and beneficiaries of the activity will be properly informed and engaged with the project activities. The successes and achievements of the activity will be widely disseminated by the Contractor. The Contractor will have adequate resources and capabilities to ensure effective communication with relevant stakeholders and the general public. Communications with high ranking government officials must be coordinated in advance with USAID, and may not occur without the prior approval of USAID.

The Contractor must develop an overall Communication and Outreach Plan bound by USAID’s branding strategy requirements. The plan details the Contractor’s approach towards communication with the activity’s audience and promotion of its impact and achievements. The plan must include the Contractor’s proposed communication protocol with USAID and other stakeholders, a list of proposed communication and outreach activities, and required resources for implementation.

C9. GENDER EQUALITY AND SOCIAL INCLUSION ANALYSIS

In Sri Lanka's agriculture sector, gender roles are deeply ingrained, with women predominantly engaged in unpaid/low paid and informal agricultural activities, while men often have greater access to formal employment and commercial farming. Gender norms influence the division of labor, limiting women's access to resources and decision-making power. Access to land and water remains a significant challenge for women in Sri Lanka's agriculture sector. Traditional norms and discriminatory inheritance practices favor male land ownership, limiting women's ability to own, control, and inherit land. This restricts their access to credit, agricultural services, and decision-making processes.

Limited financial literacy, discriminatory lending practices, and cultural biases further hinder women's access to financial services. Women's access to agricultural extension services and training programs is often limited. Extension services tend to be male-centric and fail to address the specific needs and constraints faced by women farmers. Women's representation and participation in decision-making processes related to agriculture, such as farmer organizations, agricultural cooperatives, and policy-making bodies, is low. Limited access to information, cultural norms, and gender biases hinder women's participation and influence in shaping agricultural policies and programs. Women farmers in Sri Lanka often face challenges in accessing agricultural technologies and mechanization. Addressing these gender inequalities is crucial for achieving sustainable agriculture development, women’s empowerment, and gender equality.

In addition, certain social groups such as ethnic minorities and persons with disabilities face discrimination and limited opportunities in the agriculture sector. They have limited access to land, agricultural extension services, training, financial services and market information which can perpetuate disparities in income levels and lead to conflict/violence.

In alignment with USAID’s Gender Equality and Female Empowerment Policy, USAID/Sri Lanka seeks to promote gender equality and female empowerment through its activities. The Contractor must ensure that all beneficiaries are benefiting from the activities administered under this activity without discrimination based on sex assigned at birth, sexual orientation, gender identities, or disabilities. Results for all people-level indicators reporting must be disaggregated by sex and disability as applicable. The Contractor must document unintended gender and social inclusion-related consequences of activity implementation as part of its regular reporting. The Contractor must identify development areas that indicate gender and social inclusion-specific gaps or issues that exacerbate gender inequalities, and must implement measures to address these issues as appropriate.

The Contractor will ensure that plans to establish an enabling environment in which women, men, and traditionally disadvantaged groups can equally access, contribute, and benefit from activities are integrated into the work plan and regular reporting. The plans will include specific approaches or strategies that are tailored to the needs of each group. The Contractor should consider gender balance in its key personnel and staffing plan, and the gender sensitivity of its staff to enhance staffing capacity and knowledge and improve program implementation for women and other disadvantaged groups.

[END OF SECTION C]