RFI Future Technologies Activity Feburary 9 2021.pdf

4 Igor Sikorsky Street, Kyiv 04112, Ukraine; Phone: +380 (44) 521 5000; Fax: 521-5245; http://ukraine.usaid.gov

REQUEST FOR INFORMATION (RFI)

Subject: Request for Information No. RFI-117-21-000001 Issued Date: February 09, 2021 Comments Due Date and Time: February 18, 2021, 9:00 AM Chisinau, Moldova Local Time

Reference: Future Technologies Activity (FTA)

The United States Government, represented by the U.S. Agency for International Development (USAID) in Moldova is designing a new activity entitled Future Technologies. USAID is publishing this Request for Information (RFI) pursuant to FAR 52.215-3 to seek public comments, clarifications, and suggestions on the DRAFT Statement of Objectives (SOO). This announcement is an RFI issued solely for information and planning purposes and does not constitute a Request for Proposals (RFP). Responses to this RFI are not binding on the U.S. Government and do not obligate USAID to issue a solicitation, nor does it commit USAID to pay any cost incurred in the preparation and submission of comments.

Brief Project Description

The Activity will focus on improving the competitiveness of the leading private sector growth sectors, including the light manufacturing, ICT, precision engineering, creative industries, and digital media by facilitating sustainable partnerships between the Moldovan business associations, centers of excellence, and similar institutions and anchor firms, and the regional and international business associations and investors; improving the productivity and export sophistication of local companies; fostering the introduction of green technologies; enhancing the access to affordable finance, and by creating a labor force that is better aligned with the private sector needs, especially for youth, women, and vulnerable populations.

Instructions

In order to inform the design and maximize potential program impact, USAID invites constructive feedback on the proposed SOO. Comments in response to this RFI must be submitted via email to the Regional Contracting Officer, Maria Televantos at mtelevantos@usaid.gov with a copy to the Acquisition and Assistance Specialist, Lucia Sandefur at lsandefur@usaid.gov with the subject entitled: “Request for Information (RFI): Future Technologies Activity” no later than the date and time stated above.

Thank you for your interest in the subject request for information.

Sincerely, ______/s/_______ Maria Televantos Regional Contracting Officer mailto:cbertolin@usaid.gov mailto:lsandefur@usaid.gov

Future Technologies Activity (FTA)

RFI-117-21-000001

DRAFT STATEMENT OF WORK

STATEMENT OF OBJECTIVES (SOO)

C.1 PURPOSE

The purpose of the Future Technologies Activity (FTA) is to enhance the competitiveness of Moldovan transformative sectors, including light manufacturing, Information and Communication Technology (ICT), precision engineering, creative industries, and digital media production, and to improve the country’s integration with Western markets in these sectors.

C.2 BACKGROUND

C.2.a General Background and Country Context Moldova has the second smallest market in Europe with the lowest GDP per capita of $7,300 compared to a regional average of over $14,000, and remains one of the poorest countries on the continent, making it ripe for malign overtures such as predatory lending from the Kremlin and China. Following the signing of the Association Agreement and Deep and Comprehensive Free Trade Agreement (DCFTA) in 2014, the country took proactive steps towards integrating its economy with the European Union. The Government of Moldova carried out extensive reforms of its legal framework and has put in place a comprehensive legislative and regulatory base for the transition to a market economy. Previous positive trends, though, were reversed by the COVID-19 outbreak when the country’s GDP dropped by 14 percent in the second quarter of 2020. According to the World Bank Enterprise survey1, almost one-fifth of enterprises may fold under economic pressure, and there is a 57 percent drop in the sales of business firms, with the smallest firms being the most affected. The labor market has been heavily affected, resulting in a nine percent drop in employment in the same period, while the percent of outward migration of working-age Moldovans, and in particular youth, increased.

The Government of Moldova (GOM) development priorities are outlined in the Government Action Plan (GAP) 2020-2023 and the National Development Strategy (NDS) 2030, which include a durable and inclusive economy, robust human and social capital, honest and efficient institutions, and a healthy and secure environment. However, progress has been inhibited by many factors, including kleptocratic interests, malign influences, corruption, and a lack of government accountability and capacity. Given that these priorities have not yet been realized, USAID has chosen to address on-the-ground roadblocks that prevent the progress. Light manufacturing, Information and Communication Technology (ICT), precision engineering, creative industries, wine, and tourism sectors were identified as being the most competitive internationally. Thus, USAID supported the development of these sectors, each with a different magnitude of technical assistance, by providing firm-level direct support, industry association development, international marketing, international expert short term technical assistance (STTA), workforce development, and the establishment of industry-specific centers of excellence. Below is a summary of each of the sectors, including their strengths and weaknesses, and their relevance to the FTA.

- Light manufacturing, also known as the textile, apparel, footwear, and leather (TAFL) sector has traditionally had production flexibility, good labor conditions, socially responsible producers, and a close proximity to European markets which allows for delivery to manufacturers within 1-2 days. Additionally, TAFL products produced in the country are reasonably priced and of high quality. However, the sector has weaknesses that hinder its competitiveness and development, which include a lack of long-term industry strategy, low productivity, shortage of labor, low online visibility of local producers, and a lack of managers

1 https://www.enterprisesurveys.org/content/dam/enterprisesurveys/documents/covid/country-profile- Moldova_English.pdf with the training and know-how to compete in international markets.

- The ICT sector has been the most dynamically developing sector in the country since 2007, with an average annual growth of about five percent. The internal market for ICT, especially IT services, is small, and most of the IT services are export oriented. Definitive strengths of the ICT sector in the country include a multilingual labor force, government incentives to develop the industry including: the IT park law, a seven percent tax, a developed IT cluster in Chisinau through infrastructure to foster collaboration on a larger scale or multi-purpose projects at Tekwill, and a strong Association of Information and Communications Technology Companies (ATIC), as an important attractor for inward investment. The significant weakness for the sector is its size and the small number of available professionals, which limits the opportunity for the sector’s expansion. The small internal market is also a limitation for development opportunities, and international funding is needed for its sustainability. At the current stage, small and medium enterprises (SMEs) receive limited to no assistance from the existing business associations, which is a significant development constraint.

- Almost 13,000 people are employed in emerging creative industries. Moldova has the potential to become a global hub for creative industries and high value-added IT projects. USAID supports Moldova’s IT and Creative Services sector to support the creation of high-quality jobs and slow the country’s current brain drain crisis. To advance technological innovations, factory automation and digitization, USAID enabled 36 companies to purchase more than 226 units of high precision equipment, printing and embroidery machines.

Weaknesses in this sector are almost the same as those in the light manufacturing sector, including the lack of a long-term strategy, low productivity, and limited number of people willing to work in these industries.

In 2018, creative companies generated sales worth $202 million, while exports of creative services reached $61 million.

- Moldova’s media sector struggles with lack of quality filming pavilions, professional skills, and weak collaboration. The only professional filming facility is Moldova Film, which is state-owned and has a completely outdated pavilion. Select media technologies like color correction are only available in nearby Romania or Ukraine. As a result, the media content in Moldova struggles with low quality and high costs, which make it non-competitive on the international market. The digital media sector, which includes novel digital media technologies, like VR/AR, surround sound design, motion capture, 3D animation, social media, has great potential to compete with traditional media and has untapped potential for youth opportunities.

C.2.b Relationship to the Country Development Cooperation Strategy (CDCS) The goal of the new Country Development Cooperation Strategy (CDCS) 2020-2025 is to advance Moldova along its journey to self-reliance as a competitive and democratic European country that resists Kremlin and other malign influences while being powered by an engaged citizenry and partnerships with the private sector in transformative sectors. FTA will directly contribute to both Development Objective (DO) 2:

Sustainable Economic Growth Rooted in Euro-Atlantic Integration, IR 2.2: Competitiveness in Transformative Sectors Enhanced; and it will support the IR 2.1: Western-Oriented Market Integration Increased; and DO 1: Strengthened Participatory Democracy, specifically IR 1.1.1 Capacity for Diverse Voices for Advocacy, Engagement and Oversight Strengthened, IR 1.2.2 Community prioritized government services and processes strengthened, and IR1.3.1 Resilience of the Information Space Strengthened. Through FTA, USAID’s transition from direct sector support to elevating the role of the private sector and leveraging creative partnerships in transformative sectors will lead the country’s progress towards self-reliance.

To achieve this objective, the Contractor must coordinate with and utilize existing and future USAID-economic growth supported initiatives aimed at increasing the country’s Western-oriented market integration. FTA should also take into consideration the lessons learned and best practices from the previous private sector development activities, especially those related to strengthening and developing business associations, centers of excellence, and similar institutions.

Coordination with Other USG Activities and Donors

In furtherance of its objectives, FTA is expected to partner with other US Government initiatives. In collaboration with the US International Development Finance Corporation (DFC), USAID enables Moldovan financial institutions to improve access to finance for SMEs through loan guarantee mechanisms.

A DFC loan portfolio guarantee allows a financial institution to share the risk associated with long-term loans, allowing local companies to have access to financial resources, difficult otherwise to be accessed. A DFC-supported financial transaction can also create additionality as financial institutions initiate lending into new sectors and to new borrowers, such as start-ups and women- and youth-led enterprises. By encouraging local channels of financing, USAID empowers individuals to improve their lives and Moldovan entrepreneurs to grow their businesses and increase sector competitiveness - a pillar for economic growth.

FTA will coordinate with other ongoing USAID funded democracy and governance activities, with particular focus on media efforts, looking for opportunities where application of new technologies can enhance content to make independent media more competitive and reduce reliance on externally produced news and entertainment programming. Development of media technologies should also seek ways to amplify new voices through use of technology for creative content. Where technology can be used to develop reliable, informative media products to counter disinformation, this is also a desirable outcome.

Finally, the Contractor should apply concepts of effective advocacy and representation when strengthening the role of business associations in advocating for reforms that benefit their member businesses and sectors.

This may involve coordination with other USAID civil society and service delivery activities.

FTA is also expected to closely collaborate with other donors working to improve government effectiveness and facilitate private sector development. Of note, Swedish International Development Agency (SIDA) technical assistance prioritizes economic integration of Moldova into the EU market. The United Kingdom’s Foreign, Commonwealth & Development Office supports interventions in Moldova targeting the financial sector, business climate, and trade policies. The Baltic nations also provide Moldova with regional, tailored expertise and knowledge, and are excellent examples of smaller former Soviet countries successfully fending off Kremlin revanchism while embracing Western values and norms. The Contractor is expected to monitor the donor landscape in Moldova and regionally and engage other donors in coordination with USAID when appropriate to ensure complementarity with FTA.

C.3 CONTRACT OBJECTIVES

C.3.a Description of Objectives The Activity will focus on improving the competitiveness of the leading private sector growth sectors, including the light manufacturing, ICT, precision engineering, creative industries, and digital media by facilitating sustainable partnerships between the Moldovan business associations, centers of excellence, and similar institutions and anchor firms, and the regional and international business associations and investors;

improving the productivity and export sophistication of local companies; fostering the introduction of green technologies; enhancing the access to affordable finance, and by creating a labor force that is better aligned with the private sector needs, especially for youth, women, and vulnerable populations. Through the advocacy and lobbying work of business associations, centers of excellence, and similar institutions, FTA will coordinate with the appropriate government ministries and agencies to create a business-friendly ecosystem, focusing on improved investment and tax policies. FTA will also explore opportunities to partner with the host government on initiatives within the scope of the project that could contribute to achieving the objectives of the GAP and NDS. The Activity will have two interlinked objectives:

Objective 1: Self-sustaining business associations, centers of excellence, and similar institutions, that represent and advocate for the needs of their members, in partnership with regional and international associations and investors, expand integration with existing markets and increase access to new markets.

Objective 2: Companies in targeted sectors improve their competitiveness to compete on the Western markets.

C.3.b Results and Indicators USAID expects the business associations, centers of excellence, and similar institutions to be able to implement their business strategies by integrating Moldovan MSMEs into their membership; lobbying with the GOM for better business regulations; creating sustainable partnerships with the regional and international partners to expand integration with existing and access new markets, and by identifying financial opportunities to fund these partnerships. This will lead to sustainable and self-reliant entities capable of serving their membership to define the problems and to generate development solutions;

successfully representing their voice to the government authorities; and able to fund or co-fund their own strategic priorities through partnerships and/or investments. USAID expects that making associations more sustainable, representative of their membership, and capable of advocating for key reforms in partnership with other civil society actors will be an ancillary and important result to complement the private sector development goals.

The local MSMEs will improve their competitiveness by investing in new and innovative technologies, new product development, new market practices; and partnering with the vocational schools, academia, and local business service providers (BSPs), as appropriate, to create demand driven professionals, especially among youth, and increase workforce development opportunities. Access to affordable finance to implement these initiatives is already available through various USAID supported activities, and their utilization is highly recommended under FTA. Overall, it is expected that the promotion of advanced environmentally friendly (green) technologies that minimize the use of resource inputs and the creation of waste, pollution, and carbon emissions, will have a positive impact on the environment and climate resilience in targeted sectors.

While offerors may propose additional indicators, they must present sufficient indicators to measure the following results:

● Increased value-added exports to foreign markets.

● Improved business ecosystem for investments in local MSMEs in targeted sectors.

● Improved competitiveness (productivity, efficiency, innovation) of the MSMEs.

● Increased capability of the MSMEs to obtain affordable finance to finance their expansion.

● Increased capacity and sustainability of target sector associations and centers of excellence.

● Improved workforce skills and employment opportunities.

● Organizational capacity indicators measuring the financial sustainability and representative and consultative growth of supported associations.

The Offeror will propose baselines and targets in the offer which will then be finalized in consultation with USAID upon signing of the award. In addition, the Contractor is required to adopt a list of assigned and applicable standardized “F” indicators from the Bureau for Foreign Assistance (F).

C.3.c Development Hypothesis IF business associations, centers of excellence, and similar institutions, representing their memberships develop their capacities to find partners for new business initiatives, firms improve their productivity and the skillset of their employees, and financial institutions provide affordable financing, THEN the business associations, centers of excellence, and similar institutions will become leaders, facilitators, and co-implementers of business initiatives together with better-equipped companies that can meet the production and environmentally friendly standards of international buyers, and with satisfied employees, especially among youth, who will remain in-country, which will lead to sustainable economic development and self-reliance of the targeted sectors.

C.4 ACTIVITY PARAMETERS

C.4.a Scope The overall estimated budget for this Activity is between $30 and $34 million over a five-year period. The Contractor must allocate a maximum of 30 percent of the total budget for Grants under Contracts (GUC), most of which will go toward supporting local entities, unless there is an exceptional reason to engage with an international entity. Any grants should have a strong and clear rationale for why they are required, and should have a broad development purpose (e.g., benefitting a sector, as opposed to one or a few firms). All grants should endeavor to provide 1:1 matching. The Contractor must work with the business associations, centers of excellence, and similar institutions and companies in the targeted sectors (light manufacturing, ICT, precision engineering, creative industries, and digital media) that are administratively capable to receive and utilize USAID’s support and are critical value chain elements for sectoral development. There are no limitations on the geographic coverage in the country.

C.4.b Local Systems USAID emphasizes the importance of the utilization of local systems. Accomplishing the FTA objectives will require the engagement of local Moldovan actors, both from the demand and the supply side.

Sustainability and self-reliance must be considered a top priority. Local partners and beneficiaries must be empowered and have the capacity to take ownership of the development processes and maintain the activity’s results and impacts beyond the life of this activity.

C.4.c Private Sector The private sector will have the key role in the implementation of FTA, and as such it will adhere to the principles set by the Agency’s Private Sector Engagement policy. USAID expects that by redefining and elevating the role of the private sector engagement (PSE), by building the capacity and leveraging sustainable partnerships with business associations, centers of excellence, and similar institutions and individual firms, and improving their financial and performance capacities, they will become sustainable partners for the future.

C.4.d Innovation The business sector offers a fertile terrain for innovation. In this context, that includes implementation of new production technologies, business practices, cross-industry initiatives, including wine, agriculture, and tourism, that will improve the competitiveness of the targeted sectors, and will facilitate partnerships with other entities, and the host government as appropriate, for co-creation and co-funding of new business initiatives on foreign markets.

C.4.e Marginalized Populations The Contractor must detail how it will address gender mainstreaming by analyzing how programs should be tailored to maximize gender, youth, and social inclusion, including the LGBTQ community.

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 different approach.

C.4.f Flexibility and Adaptive Management The Contractor must ensure technical and programmatic flexibility within and across program components to respond to different circumstances. The Offeror will outline its approach to keep abreast of changes in the situation on the ground, such as the political situation, efforts to counter malign influences by diversifying Moldova’s economy so that it integrates closer with the EU and is less vulnerable to exploitative economic influences, clear commitment and accountability from the current or any upcoming government, and similar. The Contractor must include such situational analyses and scenarios as part of its regular reporting and engage USAID to make appropriate programmatic adjustments. To ensure sustained impact, the Contractor must leverage adaptive management best practices, building on the tenets of inclusion, collaboration, integration, and evidence-based decision making. The Contractor must pivot and adapt implementation to capture windows of opportunities and address obstacles and complexities as they emerge. Initially, the Contractor must focus its technical assistance on the sectors outlined in this SOO;

however, subject to USAID’s approval, it may need to shift emphasis by identifying and supporting additional sectors and/or sub-sectors or discontinuing support for sectors.

FTA must incorporate a Collaborating, Learning and Adapting (CLA) approach that: i) generates, captures, shares, and applies information and knowledge to support and improve development outcomes; ii) promotes collaborative learning and exchanges with relevant institutions, stakeholders, and development partners;

iii) coordinates efforts to increase synergies and encourage innovations and sound resource management;

iv) supports sharing lessons learned, best practices and using innovative methods to reach stakeholders; and

v) describes collaboration with other USAID activities. The Contractor will be required to collaborate with stakeholders, including USG agencies and sections, bilateral donors and multilateral organizations, local public and private sector entities, and civil society organizations, as appropriate.

C.4.g Integration of Activity Components There is a substantial amount of correlation between the two objectives of the Activity, and, in many cases, they are mutually reinforced. The Contractor shall look for opportunities to connect thematic areas throughout the two objectives. The Contractor must also integrate core democracy and governance principles in focus on association development, considering these are significant non-governmental hubs to advocate for important economic reforms.

C.4.h Sustainable Results FTA aims to achieve its objectives and promote long-term sustainability and resilience through interventions that support local institutional and human capacity development, utilize local technical capacity, draw on and strengthen the resources of private and public sector institutions, and facilitate collaboration among different stakeholders. For long-term impact, FTA should facilitate partnerships with business associations, centers of excellence, and similar institutions, which should define the problems and generate solutions, and identify the best financial opportunities for co-funding or investments. The activity should also foster long-term sustainable partnerships between value chain actors and financial and business development service providers to strengthen business relationships and provide lasting and sustainable results that are locally led. Examples of long-term results include full implementation of the computerized design and computer-aided manufacturing (CAD/CAM) in the light manufacturing sector; development of long-lasting business partnerships between Moldovan ICT and regional ICT associations, centers of excellence, and similar institutions for competing on foreign markets; and developing higher value-added products and services in the emerging creative industries, among others.

C.4.i Environmental Sustainability and Climate Resilience Considerations Per ADS Chapter 204, all USAID activities are required to consider environmental sustainability and climate resilience issues in its design. An initial environmental evaluation (IEE), including a climate risk management section will be prepared for this activity. FTA will support green and environmentally friendly technologies, which will serve as pilot activities for promoting climate resilience, energy saving, cleaner production, and more efficient use of natural resources in targeted sectors of Moldova's economy.

Consideration for and implementation of key elements of the “Circular Economy” approach is highly recommended throughout the FTA implementation, especially in the business planning for FTA beneficiaries, introduction of new (green) technologies, and new product development.

C.4.j Evaluations Mid-term performance evaluation. Consistent with the USAID Evaluation Policy, USAID/Moldova may conduct an independent impact and/or performance evaluation of this Activity to its innovative nature and the need for evidence to inform future private sector development activities. Any evaluation design would be completed in consultation with the Contractor to ensure alignment with the Activity work plan and locations. The mid-term performance evaluation will provide the Contractor and USAID/Moldova with information on the progress for achieving the objectives, and recommendations for adjusting the approach.