RFI USAID_Ukraine_STRONG-RFI092024.pdf

SUBJECT: Request for Information (RFI): Private Sector Development- STRONG UA

Dear Interested Parties:

The United States Agency for International Development (USAID) seeks information for potential upcoming programming in Ukraine. Interested parties should submit their responses electronically to Ms.

Maria Rosario Arenas at marenas@usaid.gov with the subject title “USAID/Ukraine RFI Private Sector Development-STRONG UA” by the deadline above. Responses to this RFI should be in English.

This RFI is open to all qualified firms. Local Ukrainian organizations/firms as well as US Small Businesses are strongly encouraged to respond. You may receive an electronic confirmation acknowledging receipt of your response but will not receive individualized feedback. We may reach out to individual respondents for further clarifications.

USAID/Ukraine envisions a new Request for Proposal (RFP) within the coming months, entitled the “Support for Trade, Recovery Opportunities, and National Growth in Ukraine (STRONG UA) Activity”.

Attached to this RFI, you will find a proposed Statement of Work (SOW) for this Activity. The Mission is interested in receiving general feedback on the proposed SOW as well as on specific questions about the activity (Attachment 1).

Per FAR 52.215-3, this is not a full solicitation and should not be construed as a commitment by the U.S.

Government to issue any solicitation or ultimately award based on this RFI or to pay for any cost incurred in the preparation and submission in responses to this RFI. Responding to this RFI will not give any advantage in a subsequent procurement. Responses will be used for internal purposes and will be held confidentially.

/S/

Brian R. Ellis Contracting Officer USAID/Ukraine

Request for Information (RFI) Number:

Issuance Date:

USAID_Ukraine_STRONG-RFI092024

September 30, 2024

RFI Response Deadline: October 11, 2024 at 15:00 Ukraine Local Time mailto:marenas@usaid.gov

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Attachment 1

Part I. DRAFT STATEMENT OF WORK (SOW)

C.1 PURPOSE

The purpose of the Support for Trade, Recovery Opportunities, and National Growth in Ukraine (STRONG UA) activity is to support Ukrainian small and medium enterprises (SMEs) at scale to: i) invest in their recovery and growth; ii) to develop new market linkages; iii) enhance their innovation and competitiveness, and iv) support a more conducive enabling environment to accelerate private sector growth during and after the war.

The overarching objective is a significant increase in employment and revenues in partner SMEs, resulting in economic growth broadly and increased tax revenues.

The activity will undertake five lines of action / focus areas:

● Enable access to finance for investment and working capital, with particular focus on SMEs which otherwise would not obtain financing.

● Mobilize new co-investments of SMEs.

● Support new market linkages, both domestic and cross-border.

● Support innovation and competitiveness within Ukrainian SMEs.

● Provide technical assistance for advocacy and transformation within the legal, policy, regulatory, and enabling environment to support private-sector development.

C.2 BACKGROUND

Ukraine has many advantages – abundant natural resources, a skilled and competitively priced workforce, and access to European markets. But it also faces a host of challenges. The war with Russia has destroyed infrastructure and disrupted markets and supply chains with devastating consequences for Ukrainian SMEs. Over 90% of all Ukrainian businesses experienced losses averaging $227,000.1 Beyond the war, Ukraine has long suffered from widespread corruption, substantial tax and customs leakages, uncertain property rights, unreliable rule-of-law, and State control of a significant portion of the economy.

Access to finance is a particular constraint. Domestic credit to the private sector as a percentage of GDP is extremely low – less than 17% in 2023,2 (less than half that of other lower-middle income countries and a quarter of the Eurozone). The Center for Economic Policy Research estimates the overall level of SME demand for financing at $73 billion3, while the actual amount of credit provided to Ukrainian SMEs is only $12.1 billion, according to the National Bank of Ukraine statistics, indicating a substantial gap in financing for Ukrainian SMEs. In a 2022 study, the SME Finance Forum estimated an SME financing gap (unmet need) of $29 billion.

Additionally, a recent Ministry of Economy survey reported that 58% of Ukrainian enterprises cited access to finance as their primary challenge. The war has further exacerbated this issue, 3 Rebuilding Ukraine: Principles and policies

2 International Monetary fund data (see p. 66) https://www.imf.org/-/media/Files/Publications/CR/2023/English/1UKREA2023001.ashx

1 Assessment of the Impact of War on Micro, Small, and Medium Enterprises in Ukraine https://cepr.org/system/files/publication-files/178114-paris_report_1_rebuilding_ukraine_principles_and_policies.pdf https://www.imf.org/-/media/Files/Publications/CR/2023/English/1UKREA2023001.ashx https://www.undp.org/sites/g/files/zskgke326/files/2024-02/UNDP-UA-assessment-war-impact-enterprises-ukraine-summary.pdf

T making SMEs more reluctant to borrow and finance providers more hesitant to extend credit, especially to new borrowers. Consequently, businesses lacking access to finance for working capital and capital expenditures struggle to survive and are unable to invest to accelerate growth and recovery.

Loss of markets is another significant obstacle to growth. The war disrupted traditional markets and supply chains, causing GDP to fall precipitously. As a result, Ukrainian businesses are struggling to find new market opportunities and need support in developing new customers, including meeting the standards required in some new markets.

Meeting the demands of new markets, along with new labor and skills constraints, requires that businesses become more efficient, innovative, and competitive. Europe is a potential source of new opportunities, but it is a competitive market with high standards. Ukrainian businesses and industries can compete but need to develop and implement competitiveness strategies. Despite Ukraine's strong foundation for innovation, ranking 3rd among lower-middle-income countries according to the Global Innovation Index 2023, it still places 34th out of 37 European nations.

The country's lowest scores are in market sophistication, institutions, and infrastructure, hindering its ability to fully leverage its innovative potential.

Businesses face challenges such as inconsistent enforcement of laws, complex licensing procedures, and burdensome regulations, all of which impede business growth and private investment. Corruption remains a pervasive issue, further complicating the regulatory environment and business interactions with the government. The Contractor must prioritize advocacy and transformation efforts to facilitate legal and regulatory reforms that encourage firm-level investment and growth, with a particular focus on addressing corruption. While Ukraine has made commendable strides in anti-corruption reforms, its recent ranking of 104 out of 180 countries in Transparency International's annual survey underscores the need for further progress. To fully modernize Ukraine's business enabling environment and to align with European Union (EU) rules and directives, additional reforms are critical in areas such as licensing, standards, and the financial sector.

C.3 Relationship to Other Activities

a. USAID Strategy Alignment

STRONG UA will support USAID/Ukraine’s Country Development Cooperation Strategy “DO 4: Inclusive, Sustainable Market-Driven Economic Growth” and “IR 4.1 Strengthened SME competitiveness,” “IR 4.4 Inclusive, innovative finance expanded.”

b. USAID Activities

USAID and other donors are currently providing direct support to Ukrainian firms and the banking sector, largely through grants and liquidity facilities in addition to supporting a range of other areas including trade facilitation and investment promotion, as well as reforms in the enabling environment and the financial sector.

The Investment in Business Resilience (IBR) activity is a five-year, $93M activity which expires in 2027 and is focused on unlocking capital for Ukrainian businesses. It largely works with and https://www.usaid.gov/sites/default/files/2023-06/Ukraine_CDCS%202019-2026_EXTERNAL.pdf

T provides grants to private sector finance providers, as well as co-investment grants to Ukrainian businesses to facilitate new investments.

The Competitive Economy Program (CEP) is a $170M activity which expires in October 2025.

CEP supports the competitiveness of Ukrainian businesses through: i) firm level assistance and

ii) the advancement of open and efficient cross-border trade. CEP operates through four components: i) a better business enabling environment; ii) support for emerging industries; iii) trade facilitation and export promotion; and iv) private sector-led recovery through enhanced access to investment and finance (primarily focused on facilitating investments in Ukrainian enterprises).

The State-Owned Enterprise Reform Activity (SOERA) is a $100 million activity focused on privatization of state-owned enterprises ending in 2028.

The Agriculture Growing Rural Opportunities (AGRO) activity is a $205 million activity focused on restoring Ukrainian agricultural sector performance through increasing market access for agricultural producers, supporting small- and medium-sized agricultural enterprises through transparent land markets, irrigation policy reforms, and anti-corruption within the agricultural sector. AGRO ends in November 2026.

U.S. Development Finance Corporation (DFC) - Loan Portfolio Guarantees - The Development Finance Corporation, together with USAID, is providing Loan Portfolio Guarantees to Ukrainian commercial banks. As of June 2024, DFC has guarantees with Raiffeisen Bank Ukraine, Bank Lviv, and ProCredit Bank.

The Economic Resilience Activity (ERA) activity is a $325 million activity which runs through August 2026 and is focused on strengthening public and private sector export logistics and infrastructure in order to increase the country’s overall agricultural exports. ERA achieves its goals by leveraging public and private sector investment to increase Ukraine’s grain shipment capacity and by upgrading Ukraine’s border crossing points to reduce export costs and increase export efficiency.

The GROW Activity is an $10.0 million 4-year activity through the World Council of Credit Unions and works with Ukrainian credit unions to improve their ability to meet demand for credit by building a better regulatory and legislative environment, strengthening the regulatory capacity of the National Bank of Ukraine, and providing liquidity for and building the capacity of credit unions to provide finance to agricultural producers and SMEs. This activity follows the Credit for Agriculture Producers (CAP) activity, an 8-year, $11.9 million project with the same implementing partner, aimed at providing agricultural finance primarily in rural areas through credit unions. CAP concluded in September 2024.

c. Other USG and Donor Coordination

Ukraine is receiving abundant support from numerous bilateral and multilateral donor partners to win the war against Russia and improve Euro-Atlantic integration. Donors and international financial institutions (IFIs) globally are committed to supporting an independent and prosperous Ukraine. In the financial sector, there are a number of partial guarantee programs as well as liquidity facilities from the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD), in addition to the DFC guarantee programs noted earlier.

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C.4 THEORY OF CHANGE

The development hypothesis for STRONG UA states:

● IF Ukrainian financial institutions can facilitate a significant amount of additional credit to Ukrainian SMEs AND support them to establish new market linkages,

● AND IF SMEs can innovate and adapt to meet the demands of new markets, while developing new sources of investment capital,

● AND IF the Government of Ukraine adopts enabling environment reforms to address legal and regulatory constraints to private sector development and investment ,

● THEN Ukrainian SMEs will be able to both recover faster and mobilize more investment, which will lead to increased export growth, increased public revenues, improved labor outcomes, and broader-based economic growth for Ukraine.

C.5 SCOPE & RESULTS

STRONG UA will achieve its results aligned with its overarching objective through the following five focus areas:

Capital Mobilization for SMEs. Encourage local financial institutions to provide market-rate and market-based credit to SMEs by reducing their own risks (e.g., buying down bank and non-bank risks rather than subsidizing interest rates of borrowers). These credit transactions would not occur without USG support.

Mobilization Co-Investments of SMEs. Help SMEs access de-risking opportunities that require them to invest their own capital, measured by their co-investments.

Creation of New Market Linkages. Facilitate connections between Ukrainian firms and buyers domestically and globally, measured by increased sales and exports that would not be possible without US Government (USG) support and prepare SMEs to innovate to take advantage of those opportunities.

Enhancing Innovation and Competitiveness of SMEs. Provide consultancy services to help SMEs improve their performance, adopt labor saving technologies and innovations, and support new ventures that will attract private sector investments into SMEs.

Expediting Business Competitiveness Reforms. Support reforms to improve business performance, reduce transaction costs, and expand SMEs' access to finance. The Government of Ukraine (GoU) should be an active part of this and prioritize reforms that focus on development needs rather than current political demands.

Outlined below are the anticipated aspirational results under STRONG UA which apply to the two (2) year base period (and option years, if extended) and to the total life of the Activity. These results are intended to be indicative and are designed to provide a magnitude of the intended results with the understanding that targets will shift - either up or down - over the life of the activity based on the conditions on the ground.

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C.5.1 Focus Area One - Performance Objectives for Capital Mobilization for SMEs:

Transaction Origination and Risk-Sharing Grants.

Financing for SMEs will be mobilized through transaction origination and risk mitigating grants to finance providers of market-rate and market-based credit. Projections for the targets are presented below.

Transactions are defined as the following: either a) funds disbursed, or b) funds committed (as evidenced by a signed offer agreement from a finance provider and a written acceptance by the finance seeker). Assumptions are based on average transaction size of $50,000, an estimated 1,000 transactions in year one, and estimated average transaction origination costs of 5% and risk mitigation (to finance providers of 6% (against the amount of financing mobilized and over the five-year life of the award)).

Indicator Year One Year Two Year Three Year Four Year Five

Total

Number of Transactions 1,000 3,200 TBD TBD TBD 20,000

Amount Mobilized (millions)

$50.0 $160.0 TBD TBD TBD $1,000

The Contractor will be responsible for providing evidence of completed transactions (evidenced by disbursement or commitment letters signed by the finance provider and SME) as well as demonstrating the additionality of the transactions.

C.5.2 Focus Area Two - Performance Objectives for Mobilize co-investments of SMEs:

SME Cost-Sharing and Co-investment Grants.

The Contractor must work with SMEs to mobilize their own resource investments by originating transactions that involve de-risking their investment financing through Cost-sharing and co-investment grants. Projections assume no less than 5:1 leverage ($10 in cost-sharing grants will result in at least $50 in co-investment (contributions by the enterprise supported) and assuming average grant size of $10,000:

Indicator Year One Year Two Year Three Year Four Year Five Total

Number of grants 200 400 TBD TBD TBD 1,000

Amount Mobilized (millions) $10.0 $20.0 TBD TBD TBD $50.0

While transaction advisors should be paid through a pay for results model primarily, (at least 60% of compensation) based on completed transactions (disbursements or commitments signed by finance provider and SME), the Contractor may experiment with compensation up-front (for example through a six-month grant and/or sub-contract) with follow-on grants and/or sub-contracts provided based on satisfactory performance against targets.

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C.5.3 Focus Area Three - Performance Objectives for the Creation of New Market Linkages:

The Contractor must establish new market linkages that lead to increased sales for SMEs, both domestically and in foreign markets. Projections assume a value per new market linkage of $50,000 (new additional revenues achieved).

Indicator Year One Year Two Year Three Year Four Year

Five Total

Number of new market linkages established

300 420 TBD TBD TBD 2,000

Value of new market linkages (millions)

$15.0 $21.0 TBD TBD TBD $100.0

While new market linkages advisors should be paid primarily (at least 60% of compensation) on evidence of completed new market arrangements (new sales or purchase agreements), the Contractor may experiment with compensation up front (for example through a six-month grant) with an additional grant provided based on satisfactory performance. The Contractor may wish to engage individual new market linkages advisors or firms with relevant capacity, as well as provide some level of training and certification.

C.5.4 Focus Area Four - Performance Objectives for Enhancing Innovation and Competitiveness of SMEs:

Projections assume 1,100 advisory support engagements over the life of the activity with an average cost per SME supported of $5,000. Performance targets have not been established but the Contractor should be able to demonstrate a reasonable impact arising from services provided (which could include cost-sharing for services provided). The Contractor is expected to facilitate new venture investment funds (at least four) over the life of the award, with an estimated amount of finance mobilized on average $80M and with support of $8M in catalytic funding.

Indicator Year One Year Two

Year Three Year Four Year Five Total

Number of consulting engagements provided

100 250 TBD TBD TBD 2,000

New Venture/Invest Funds supported 0 1 TBD TBD TBD 4

Value of new funds supported (millions) 0 $20 TBD TBD TBD $80

C.5.5. Focus Area Five - Performance Objectives for Expediting Business Competitiveness Reforms:

No specific aspirational targets are set for this focus area. Instead, the Contractor shall propose actions and advocacy, legal, and regulatory reforms, along with problem-solving initiatives, to address urgent needs for reducing the cost of doing business, facilitating trade and investment, T and ensuring competitiveness. This reform “package” should complement other USAID and donor activities.

Effective engagement between the business community and the GoU is vital for fostering economic growth. Establishing regular communication will enable both parties to identify and prioritize essential reforms - new regulations and amendments to existing ones - that improve the business environment and support growth.

RESULTS SUMMARY: Collectively these five focus areas will work in harmony, creating more profitable, and thus more bankable, enterprises while building new market linkages and fostering innovation and competitiveness. Supporting market linkages, innovation, and competitiveness, in turn will make enterprises more bankable. In the process of engaging with both the business community and the financial sector, the Contractor will identify the enabling environment and systemic constraints and advocate for reforms.

The proposed approach depends on three key drivers:

● Development of large networks of service providers (primarily paid on a success fee basis) which will: i) identify SMEs and facilitate them in obtaining first time financing or financing at significantly improved terms and conditions and/or obtain cost-share grants;

ii) support them in identifying new markets; and iii) support them in innovation and competitiveness.

● Strategic use of grants and/or sub-contracts to buy-down risk and incentivize financing from Ukrainian finance providers.

● Cooperation between businesses and public authorities, fostered by STRONGUA to identify and address regulatory/legal constraints that hinder investments in Ukrainian SMEs.

STRONG UA represents a departure from traditional long-term development models.

Development in a war-torn country requires a constant, adaptive stance. This activity will follow a pause and reflect model to assist Ukraine in constantly shifting priorities. All parties (both USAID and Contractor) will meet 30 days after the award and thereafter at least bi-annually to agree upon the six-month aspirational targets for each of the focus areas above. All parties will continue every six-month with a pause and reflection strategy meeting, whereas the focus area objectives/targets will be looked at in detail to see what is working and what needs improvement or adjustment. As needed, new aspirational targets will be agreed upon collaboratively and noted within the Annual Workplan.

C.6 TASKS

The following three tasks are anticipated under the STRONG UA Activity, which encompasses the five focus areas outlined in C.5. and the overarching objective outlined in C.1.

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C.6.1 TASK One: Access to Finance & Investment Mobilization for SMEs

Risks and transaction costs are high in Ukraine. SMEs are understandably reluctant to borrow given the high uncertainty, and finance providers are reluctant to extend financing, particularly to businesses they don’t know well. Risk will be addressed in two ways: 1) through grants and/ or subcontracts to banks and other finance providers to buy-down their risk and build the provisions (reserves) against loan loss reserves, and 2) cost-sharing/co-investment grants to SMEs.

A transaction origination network (individuals and/or firms paid on a success-fee basis) will facilitate the interface between SMEs and finance providers, reduce transaction costs, and identify and shepherd through financing. The transaction network will facilitate SME cost-share grants with a finance provider network, or a broad and diverse group of finance providers, with an appetite to consider new opportunities.

Thus, STRONG UA shall:

● Develop a large network of transaction originators to identify unfinanced or underfinanced SMEs and create a pipeline of financing opportunities/requirements.

● Develop a network of finance providers (banks, venture capital, leasing companies, etc.)

with appetite to consider new opportunities.

● Facilitate financing for this pipeline through grants to Ukrainian finance providers to buy-down their risk and build loan-loss provisions (increasing appetite for this financing).

● Provide, when needed, cost-sharing and co-investment grants to Ukrainian SMEs to encourage their own investment contribution.

C.6.2 TASK Two: New Market Linkages, Innovation and Competitiveness The war has disrupted traditional markets and supply chains, and Ukrainian SMEs need support broadening their customer-base, including meeting the standards and demands required in some new markets. STRONG UA will substantially increase new market linkages with particular attention to cross-border transactions into the EU. It will accomplish this through a network of market linkage advisors (individuals and/or firms paid on a success fee basis) who will work with enterprises to identify and close new market opportunities.

In addition to this, facing increasing difficulty finding skilled labor, Ukrainian enterprises and industries need to innovate and become more competitive, as they seek new markets, particularly as they enter new markets in the EU. In addition, new financing channels (venture and investment capital) need to be available. This requires a network of innovation and competitiveness consultants to provide advisory and business development support to SMEs and encourage innovative new financing and investment instruments appropriate for different phases of SME growth.

Thus, STRONG UA shall:

● Engage a network of market linkage advisors who will work with SMEs to identify and close new market opportunities and directly advise SMEs on product, process, and material innovations to improve their ability to fully benefit from new market linkages and enhance their competitiveness.

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● Engage a network of innovation and competitiveness consultants considerate of gender equality and inclusion who will provide advisory service to these SMEs to help them become more innovative and competitive.

● Work directly with partner financial institutions to review and advise on improvements to systems that reduce the transaction costs for working with SMEs.

● Support the launch of new venture/investment growth funds if there is market demand.

C.6.3 TASK Three: Reforms and Advocacy for Transformation STRONG UA will improve the enabling environment to reduce the cost of doing business, facilitate trade and investment, and bring Ukraine closer to European integration. This can be achieved by directly supporting regulatory and policy reforms, institutional strengthening, public-private dialogues, enhancing legal frameworks, policy advocacy etc. This approach aims to maximize the involvement and engagement of representatives from the Government of Ukraine in the reform process, working with the Government to implement reforms and enhancing its accountability. The approach should be evidence-based, targeted and prioritized, identifying and advocating for reforms which have the greatest potential to impact the business enabling environment.

Thus, STRONG UA shall:

● Propose a set of advocacy, legal, and regulatory reforms, along with problem-solving actions, to address the most timely needs for reducing the cost of doing business, facilitating trade and investments, and ensuring competitiveness. This reform package should complement other USAID and donor activities.

● Maximize the involvement of the GoU in the reform process and enhance its accountability.

● Support other legal and regulatory result-oriented reforms as directed.

Below is an illustrative timeline and order of events for this effort beginning with the development, submission and approval of the Year One work plan:

1. Within 60 days: First round of solicitations for Transaction Origination and Finance Provider networks issued.

2. Within 120 days: Awards finalized and made to Transaction Originators and Finance Providers and solicitations for the New Market Linkage and Innovation and Competitiveness networks issued.

3. Within 180 days: Awards finalized and made to New Market Linkage and Innovation and Competitiveness providers. Solicitations for cost-sharing/co-investment grants initiated/issued.

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C.7 OPERATING CONSTRAINTS AND CONTRACT PARAMETERS

In addition to addressing the development challenges and achieving performance objectives, the Contractor must address and integrate each of the following cross-cutting requirements and key principles below:

a. Collaboration and Flexibility: Collaboration with USAID and other USAID funded activities as well as setting performance metrics will be required, as USAID and the Contractor learn and adapt. STRONG UA must incorporate a collaborating, learning, and adapting 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; c) coordinates efforts to increase synergies and encourage innovations and sound resource management; d) supports sharing lessons learned, best practices and using innovative methods to reach stakeholders; e) describes collaboration with other USAID activities.

b. Additionality: STRONG UA must ensure additionality and that results would not have occurred without input from this activity.

i. In the access to finance line of action, the Contractor must ensure that financing either would not have occurred (first time borrowers) or occurred on substantially improved and market-based terms and conditions.

ii. In the new market linkage line of action, the Contractor must ensure minimal market distortion (that the activity has a ‘nudging’ and not distortive effect) and must seek to maximize leverage in addition to near term impact at a large scale. The Contractor must ensure avoidance of rent seeking and/or collusion and ensure a basic level of quality in service delivery.

c. Local Capacity/Sustainability: USAID emphasizes the importance of the utilization of local systems. Accomplishing the STRONG UA objectives, which cover a broad range of financing targets in terms of transaction size, sector, purpose, and tenor, will require the engagement of local Ukrainian actors, both from the demand and the supply side. Sustainability must be considered a top priority. Host country partners and beneficiaries must be empowered and have the capacity to take ownership of development processes and maintain the activity’s results and impacts beyond its life.

d. Non-Exclusivity: USAID requires that Contractors not stipulate exclusive arrangements with local partners.

e. Integration of Portfolio: USAID expects the Contractor to heavily integrate and coordinate with other USAID implementing partners focused in the targeted technical areas, where appropriate and as directed by USAID, potentially including but not limited to collaborative work planning.

f. Developmental Impact and Leverage: STRONG UA will use public funds to facilitate private investment. As such, it is incumbent upon the Contractor to ensure that transactions facilitated are necessary to accomplish USAID developmental impacts, that the cost of

T transactions facilitated is minimized and that the amount of funds used to facilitate transactions achieves maximum impact.

g. Adaptive Management: Throughout the performance of this contract, the Contractor will utilize the principles of adaptive management. Activities performed under this contract are understood to be evolving in nature (meaning that the best efforts of the Contractor may not achieve desired results because of unknown factors) and therefore will include continuous monitoring to assess effectiveness and performance. The Contractor will establish frequent milestones at reasonable intervals to review each focus area.

i. Due to the ongoing conflict as a result of Russia’s full-scale invasion of Ukraine, and the speed with which conditions can change, adaptive management and flexibility are key to the success of this activity. The STRONG UA activity must be able to adapt to changing circumstances on the ground. Adaptive management will be required from the implementer to maintain, sustain, or expand development gains achieved through activity implementation. The Contractor must anticipate the need to adapt to changing conditions on the ground either of a positive or negative nature to achieve the contract's objectives.

Thus, this activity operates under the foundation of adaptive management.

ii. Findings and lessons-learned from the continued monitoring of the award will inform the development and adjustment of work plans and implementation approaches to ensure the achievement of results. Every six months, the Contractor shall conduct pause and reflect sessions with USAID and others to inform these adjustments.

h. Pay-for-results Performance: A key driver of the STRONG UA initiative is “pay-for-results” compensation to agents (sub-contractors and grantees) based upon tangible realized results rather than best-efforts. It is understood that compensation agreements may include progress (milestone) payments but at least 60% of total compensation must be based on accomplishment of tangible results.

i. Gender mainstreaming: USAID has an explicit commitment to gender equality in all its development activities. The Activity must ensure that gender issues are suitably addressed throughout and identify opportunities to bring women into structures that control access to finance. Interventions and approaches must be adapted to ensure women’s equitable access to resources and increase women’s participation in financial sector institutions.

j. Communication Strategy: The Contractor must develop a comprehensive communication strategy that will shape the internal and external environment and atmosphere in which the Activity will operate and be culturally appropriate and effective to ensure that the target audience can easily understand the message. The strategy must enable the sharing of information and ideas, support interaction, and create cohesion among the stakeholders.

k. Environmental Best Practices and Climate Change: In order to identify any potential negative impacts and ensure compliance with USAID and USG environmental procedures, the Contractor will be required to develop procedures to assess the environmental impact of proposed assistance and develop mechanisms to address the relevant assessment requirements.

The environmental compliance of the activity will be guided by the approved Initial Environmental Examination (IEE).

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l. Gender stereotypes and discrimination: Persistent gender stereotypes and discrimination undermine the recognition and support of women as competent entrepreneurs.

More than half of women entrepreneurs faced at least one form of gender discrimination.

Overall, women entrepreneurs are still over-represented in low value-added sectors, tend to operate on a smaller scale, and rarely engage in international trade. In addition, the lack of affordable credit impacts women particularly because they are more likely to be resource-poor and lack access to necessary collateral. As a result, access to finance is a particular challenge for women and marginalized groups.

C.8 MANAGEMENT OF GRANTS UNDER CONTRACT (GUC)

The Contractor must implement, monitor, and evaluate Grants Under Contract (GUCs) to achieve activity targets. The Contractor must make grants in accordance with Section H (to be updated).

- END of Part I -

Part II: SPECIFIC QUESTIONS FOR FEEDBACK:

(Note: Responses are limited to one page (single spaced, 12 point font, 1 inch margins). An additional cover-page is permitted but not required.)

1. USAID is considering using a CPFF Term LOE (Level of Effort) contract for this scope (which will include a significant Grants Under Contract - GUCs - element). Given the SOW proposed, the Government is interested in roughly what partners feel an adequate LOE total for this effort would be?

2. Given the proposed SOW, what elements of this effort are still confusing? Are there any areas which partners feel need to be clarified?

3. What risks (not presented) do the partners feel may need to be addressed in order for this effort to succeed?

- End of Part II -

- End of Attachment 1 -