DEMI_Draft_SOW.pdf

REQUEST FOR COMMENTS

Date: July 24, 2013

Subject: USAID/Armenia Democratic and Effective Municipalities Initiative

Draft Statement of Work for Comment

Dear Sir/Madam:

The United States Government, represented by the U.S. Agency for International Development (USAID), Armenia, is seeking comments and/or questions on the attached Democratic and Effective

Municipalities Initiative (DEMI) Statement of Work (SOW). These comments will be helpful as we finalize this project’s scope.

Responses to this request for comment 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.

The deadline for receipt of comments and/or questions is August 9, 2013 at 15:00, Yerevan time, and shall be submitted to Narine Sarkisian, Acquisition and Assistance Specialist, at nsarkisian@usaid.gov

Thank you for your interest in USAID activities.

Sincerely, Jonathan Chappell

Regional Contracting Officer

USAID/Armenia Democratic and Effective Municipalities Initiative

DESCRIPTION/SPECIFICATIONS/STATEMENT OF WORK

Introduction:

“The only purely popular government is local, and founded on local knowledge.”

G.K. Chesterton

More accountable, participatory and effective governance is critical to ensuring a well‐governed

Armenia in which progress, stability and more equitable prosperity are sustained over a long term.

Based on the premise that a decentralized system of governance is more likely to result in enhanced efficiency and accountability, part of USAID/Armenia’s democratic governance strategy is to support reforms which strengthen municipal capacity, service delivery and participatory decision‐making.

With this rationale, the United States Agency for International Development Mission in Armenia

(USAID/Armenia) intends to support a democratic local governance project to: (a) assist the Government of Armenia’s (GoAm) Ministry of Territorial Administration (MTA) in successfully implementing decentralization reforms, and (b) develop the institutional capacity of municipal governments to effectively administer their new level of authority within a decentralized system.

Overview:

USAID/Armenia and the donor community have supported several local governance projects over the past decade. While local governments receiving assistance have progressed in comparison with those excluded from donor support, the overall local government sector has shown marginal progress.1

Overall, local governments lack the authority and the revenue sources to administer their respective area effectively. Heavy reliance on funding from the central government contributes to the weakness of local governments and allows the regional governors or “marzpets”, who are appointed by the central government, to exercise significant control over them.

Government of Armenia efforts: The Government of Armenia (GoAm) plans to launch a comprehensive decentralization reform to improve the viability and administration of the system. The GoAm is planning to consolidate 914 communities into approximately 250 between 2013 and 2016.

The consolidation model will be based on the GIZ studies in five marzes: Syunik, Vayots Dzor, Ararat, Aragatsotn, and Kotayk. Of the total 10 marzes, the reform will launch one pilot in each marz, except the above noted five, in which more than one pilot will be introduced. If successfully tested, the process will result in systemic change.

USAID Assistance: USAID has provided technical and material assistance to GoAm in local governance.

USAID’s Local Government Program, Phase Three (LGP 3, 2005 ‐2010) worked directly with 38 urban communities to improve service delivery and institutional capacity and provided expert advice to the

MTA on policy formulation. USAID’s current Civil Society and Local Government Support Program

1 Freedom House Nations in Transit 2013-Armenia, http://www.refworld.org/docid/51c1681718.html

(CSLGSP, 2010‐2014) is assisting 43 rural and urban communities to foster more participatory, decentralized and accountable local government. The project also supports the existing Intercommunity

Organizations (ICOs) which provide shared services to member‐communities on a voluntary basis.

Through the Civil Society and Local Government Support Program (CSLGSP), a coalition of CSOs to developed key policy papers on decentralization entitled: Strategic Approaches for the Further

Development of Local Self‐Government and the Decentralization of Power” (2012) or “SAP” for short.2

USAID has developed a Development Objective Cooperative Agreement (DOAG) with the GoAm to support key areas of public sector reform which is pending finalization. Part of this agreement obligates the GoAm to increase the capacities of local governments by passing a package of legislation relevant to decentralization. To respond to GoAm’s request in supporting reform in decentralization, USAID designed the Democratic and Effective Municipalities Initiative

(DEMI) project to increase the Ministry of Territorial Administration’s (MTA) capacity to formulate decentralization plans and policies, as well as implement them and strengthen municipal governments and ICOs to effectively and transparently administer resources using participatory approaches.

Donor Assistance: Overall, donor support varies from small to large‐scale assistance, primarily targeting a select area of decentralization. The Council of Europe (CoE) is involved in monitoring the GoAm’s compliance with the Charter on Local Self‐Governance. Armenia will be chairing the CoE in 2013 and will likely introduce citizen participation as their priority. The Danish government may provide some

1.7million euros in addition to the CoE’s 3million euros for a local authority capacity‐building program focusing on benchmarking and human resources.

The European Union (EU) may implement regional development projects in which they will work to improve the linkages between ministries and the regional level. The EU would also work with regional development councils to promote a regional development fund. The EU’s plans, however, are on hold because the GoAm does not currently meet certain criteria requiring the existence of regional development plans linked to a national development action plan.

The World Bank is currently creating a new strategy that will focus on job creation with sub‐areas of competiveness, human development and governance. They may also launch a regional development plan in which they would focus on developing, for example, all necessary tourism‐related infrastructures in a particular region of Armenia. The GoAm has reportedly requested the Armenia Social Investment

Fund (funded by the World Bank and known as ASIF) to assist with the renovation and/or construction of new administrative buildings which may be needed for consolidated communities.

German Development Agency (GIZ: Gesellschaft fuer Internationale Zusammenarbeit) has provided technical assistance to the MTA to develop a methodological review and analysis of piloting the

2 http://program.counterpart.org/Armenia/wp‐content/uploads/2012/11/Decentralization‐strategy‐final‐Eng‐ exec‐summary.pdf consolidation in five marzes. Additionally, GIZ has helped establish service centers or one‐window shops in a number of communities.

III. SCOPE OF WORK

A. Objective

Through the DEMI project, USAID/Armenia will provide assistance to the Government of Armenia on the national and sub‐national level to strengthen more democratic, decentralized and responsive local governance. As a result the DEMI project’s efforts through a five‐year period, municipal governance will be more capable, financially viable, and responsive to citizens’ interests.

This Statement of Work (SOW) is based on GoAm’s expression of interest in USAID assistance for (a) assisting the MTA in formulating decentralization policies associated with the selected consolidation model; (b) improving the MTA’s institutional capacity to implement transparent and effective national policies and regulations for decentralization using participatory approaches; and (c) developing selected local governments’ capacity to assume responsibility for expanded functions. While the formulation and implementation of the national policies ((a) and (b) above) are important, USAID expects the majority of assistance to be delivered.

While the initial work will be focused on pilots in10 marzes, DEMI is eventually expected to roll‐out to other communities.

WORK REQUIREMENTS

The Contractor shall work with the government to strengthen the capabilities of the national government to formulate and implement decentralization and local democratic governance, and of sub‐ national governments to adapt to decentralization reforms and improve the effectiveness and responsiveness to citizens’ interests.

DEMI will assist the MTA to develop the legal framework on decentralization as mandated by DOAG throughout the reform implementation process. Policies and regulations related to decentralization are expected to be developed through participatory processes with stakeholder engagement.

Simultaneously, the Contractor will assist and prepare local governments for a decentralized system.

The DEMI Contractor shall track the GoAm’s compliance with the DOAG, as well as assist the GoAm to manage the Government‐to‐Government funding that USAID plans to provide to achieve its goals.

The DEMI Contractor’s assistance should aim to enable the GoAm to undertake major policy and legislative reforms on its own. As this process occurs, the Contractor’s emphasis will increasingly focus on local government assistance.

The three results areas detailed below target assistance to MTA and selected local governments to support the process of community consolidation and promote systems of more open and responsive policymaking and implementation.

Result Area One: MTA’s policy processes for decentralization are more accountable, transparent, and participatory.

DEMI will support the MTA in the use of mechanisms which enhance transparency and accountability, and participation in the formulation of policies related to decentralization. Stakeholder engagement and buy‐in is essential to successfully implementing the decentralization reform. The decentralization policy must effectively link local financing and fiscal authority to service provision and functions of local governments.

The Contractor shall facilitate technical assistance with the following outcomes:

MTA develops the expertise to produce laws in line with commitments outlined in the DOAG and European Charter on Local Self Government.

MTA develops a national public awareness campaign through regions to educate the public about the implications of the consolidation.

MTA establishes a clear model of political, administrative and fiscal decentralization in Armenia.

MTA develops sustainable and transparent data collection, monitoring and reporting systems.

Result Area Two: MTA’s technical and institutional capacity developed to implement and monitor decentralization and consolidation reforms.

Given the expanding effort to further decentralization, there is a clear need to institutionally strengthen

MTA. DEMI will help the MTA to manage its operations vis‐a‐vis implementation of the reforms. For a number of technical activities, including pursuing the formulation of the GoAm’s policy agenda on decentralization, facilitating the coordination of different reform efforts, and coordinating oversight of local government finances. Such a mechanism will connect GoAm’s policy development process with the implementation of programs.

The Contractor shall assist the GoAm to formulate and pilot its plans to consolidate the number of municipalities down to 250 communities. Implementation of this scenario will be staged with the end goal of reforming the entire governance system. Consolidation and decentralization will be piloted in order to gain lessons learned in consolidating municipalities and decentralizing authority across the country.

The Contractor shall facilitate technical assistance with the following outcomes:

MTA establishes internal management systems to implement the decentralization reform.

MTA develops staff capacity to oversee the community consolidation process effectively.

MTA produces a work plan and an action plan with timelines and indicators to monitor progress.

MTA establishes a mechanism(s) of coordination as well as transparent rules of engagement with civil society, government agencies, and other stakeholders in the decentralization process.

MTA establishes a mechanism of collaboration with the Civil Society Consortium vis‐à‐vis policy development, implementation, and monitoring of the reform.

Result Area Three: Selected municipalities’ administrative capacity, service delivery, and participatory decision‐making strengthened.

To become responsive and effective institutions, local governments have to be able to conduct mid‐ and long‐term planning, generate revenue, and provide quality services. Local governments will also follow internal policies mandating citizen input into local government decision making. DEMI will support the consolidated local governments to build these capacities. Fiscal decentralization capacity‐building initiatives and properly functioning reporting framework remain essential to ensure transparency and accountability of these entities.

Formation of intercommunity unions (ICU) formation will be important for the overall decentralization process, since a number of communities will stay outside the boundaries of the consolidated communities, and will thus have to form an alliance to regulate functions typically assigned to local governments. The Contractor shall select a number of existing intercommunity organizations (ICO), which are currently voluntary organizations, to transition them into ICUs, if the MTA decides to introduce new regulations specific to ICUs’ functional role.

The Contractor shall facilitate technical assistance with the following outcomes:

Local governments introduce and adopt systems of effective and efficient asset management and service provision.

Local governments develop a system of reporting and accountability to the national government and to corresponding communities.

Local Governments regulatory mechanisms mandate local officials to make transparent decisions based on community input.

Local governments develop and apply regulatory systems ensuring citizen inclusiveness into the policy reform process.

Local Governments develop mechanisms allowing to increase own source revenues.

Local Councils are able to exercise their oversight, regulatory and representative functions.

Local Councils develop their capacity to make informed decisions.

ICUs develop administrative and functional capacity in line with their assigned functions.

ICUs provide quality services to member communities and generate revenues.

Collaboration with the Civil Society Consortium for Decentralization.

The Contractor shall assist the GoAm in developing a mechanism for collaborating with the Civil Society

Consortium for decentralization supported through another USAID program. The Consortium will support civil society’s input into legislation development, implementation, and oversight of the decentralization reform and local government performance. The CSO Consortium will provide technical expertise in the process of bill drafting, review and analysis and, at the same time, ensure that decentralization policies and legislation that the MTA and other GoAm entities draft reflect the issues and concerns of civil society. Finally, the Consortium, as well as the Contractor, will also establish mechanisms to monitor the GoAm’s progress on implementing reforms related to the strengthening of local governments.

Cooperation with International Donor Organizations and USAID implementing partners.

From the beginning of the program, the Contractor shall coordinate with donors and USAID implementers across relevant sectors to ensure specific synergies at the national and local levels. Later in the process of implementation, the MTA will assume the coordination function.

Among all donor organizations, USAID and GIZ are the two major assistance donors in the decentralization sector. If the cluster consolidation with five marzes is introduced, the Contractor shall work with GIZ to define areas of cooperation.

USAID programs have implications on decentralization in almost every sector. The Contractor shall be required to coordinate with all USAID projects that are active at the national and local level in areas germane to DEMI. Summaries of these activities are contained in the Annexes to this Request for

Proposals. These include but may not be limited to:

• Civil Society and Local Government Support (CSLGS)

• Partnerships for Rural Prosperity (PRP)

• Tax Reform Project (TRP)

• Support to the National Assembly Program (SANAP)

• The Enterprise Development and Market Competiveness Project (EDMC)

• Clean Water and Energy Project (CEW)

Building on previous programs. The Contractor shall build on the results and lessons learned from

USAID’s previous and current projects, including analytical resources, produced by USAID partner projects. The Contractor will work with the MTA to follow up on the directions and recommendations highlighted in the Discussion Paper on Municipal Borrowing (Local Government Program Three), the SAP and the cost‐benefit analysis (CSLGSP) in close collaboration with the MTA and local governments.

Building on CSLGSP’s assistance to communities involves further development of ICOs which are non‐ profit, voluntary organizations providing different municipal services to communities. The ICOs could eventually transition into more functional intercommunity unions (ICUs). ICUs are mentioned in the

Constitution and in the Local Government Law and would allow municipalities to cooperate together in the delivery of services through a specific law.

Coordination with Host Country Counterparts. The Contractor shall coordinate all activities with the

GoAm, in particular, the MTA. Other bodies that the Contractor shall coordinate could include, but may not be limited to, the National Assembly, the Ministry of Justice, the Ministry of Finance and certain line ministries.

Gender Considerations. All USAID projects and activities must consider gender issues in their design.

Gender is defined as “economic, political, and cultural attributes and opportunities associated with being male and female.” Project design should address (1) how the different roles of men and women will affect the work to be undertaken and (2) how the expected results of the activity will affect men and women differently (ADS 201.3.9.3).

The Contractor shall design specific interventions to overcome barriers that women may face in relation to DEMI as promoting local governance efforts to meet the needs of men and women as well as other disadvantaged groups. For example, women should be included in policy planning and decision‐making at the national and local government level. The Contractor shall promote training and assistance benefit both men and women.