Amendment_03.combined.pdf

SOL-117-15-000003 Page 3 of 101

Table of Contents

PART I – THE SCHEDULE

SECTION B ‐ SERVICES AND PRICE/COSTS

B.1. PURPOSE

B.2. CONTRACT TYPE

B.3. ESTIMATED FIRM FIXED PRICE, AND OBLIGATED AMOUNT

B.4. LEVEL OF EFFORT (LOE)

B.5. PAYMENT SCHEDULE

SECTION C ‐ STATEMENT OF WORK

SECTION D – PACKAGING AND MARKING

D.1. AIDAR 752.7009 MARKING

D.2. BRANDING STRATEGY AND MARKING PLAN

D.3. BRANDING STRATEGY

D.4. BRANDING IMPLEMENTATION PLAN (BIP) AND MARKING PLAN (MP) .. 28

SECTION E – INSPECTION AND ACCEPTANCE

E.1. NOTICE LISTING CONTRACT CLAUSES INCORPORATED BY REF

E.2. INSPECTION AND ACCEPTANCE

E.3. CONTRACTOR PERFORMANCE EVALUATION

SECTION F– DELIVERIES OR PERFORMANCE

F.1. NOTICE LISTING CONTRACT CLAUSES INCORPORATED BY REF

F.2. PERIOD OF PERFORMANCE

F.3. PLACE OF PERFORMANCE

F4. KEY PERSONNEL

F.5. REPORTS AND DELIVERABLES OR OUTPUTS

F.6. ENVIRONMENTAL COMPLIANCE

F.7. LANGUAGE OF REPORTS AND OTHER OUTPUTS

F.8. AIDAR 752.7005, SUBMISSION REQUIREMENTS FOR DEVELOPMENT

EXPERIENCE DOCUMENTS

SECTION G - CONTRACT ADMINISTRATION DATA

G.1. CONTRACTING OFFICER’S AUTHORITY

G.2. CONTRACTING OFFICER’S REPRESENTATIVE

G.3. PAYING OFFICE

G.4 ACCOUNTING AND APPROPRIATION DATA

G.5. TECHNICAL DIRECTIONS/RELATIONSHIP WITH USAID

SECTION H - SPECIAL CONTRACT REQUIREMENTS

H.1. NOTICE LISTING CONTRACT CLAUSES INCORPORATED BY REF

H.2. AUTHORIZED GEOGRAPHIC CODE

H.3. 752.225-70 SOURCE AND NATIONALITY REQUIREMENTS

H.4. VALUE ADDED TAX (VAT) AND CUSTOMS DUTIES

H.5. REPORTING OF FOREIGN TAXES

H.6. LOGISTICAL SUPPORT

H.7. 752.211-70 LANGUAGE AND MEASUREMENT

H.8. GOVERNMENT FURNISHED FACILITIES OR PROPERTY

H.9. PERSONNEL COMPENSATION

H.10. ELECTRONIC PAYMENTS SYSTEM

H.11. INSURANCE AND SERVICES

H.12. EXECUTIVE ORDER ON TERRORISM FINANCING

H.13. USAID DISABILITY POLICY - ACQUISITION

H.14. AIDAR 752.7032 INTERNATIONAL TRAVEL APPROVAL AND NOTIFICATION

REQUIREMENTS (APR 2014) AND AIDAR 752.7027 PERSONNEL

H.15. FOREIGN GOVERNMENT DELEGATIONS TO INTERNATIONAL

CONFERENCES

H.16. CONFIDENTIALITY AND OWNERSHIP OF INTELLECTUAL PROPERTY... 46

H.17. DISCLOSURE OF INFORMATION

H.18. BUSINESS CLASS TRAVEL

H.19. NEWS RELEASE

H.20. TITLE TO PROPERTY

H.21. PRESS RELATIONS

H.22. NON DISCRIMINATION

H.23. LIMITATION ON SUBCONTRACTING TO NON LOCAL ENTITIES

H.24. USAID FINANCED THIRD PARTY WEB SITES

H.25. CONFERENCE PLANNING AND REQUIRED APPROVALS

H.26. USAID IMPLEMENTING PARTNER NOTICES (IPN) PORTAL FOR

ACQUISITION

H.27. SUBMISSION OF DATASETS TO THE DEVELOPMENT DATA LIBRARY

H.28. ACKNOWLEDGEMENT AND DISCLAIMER (DEC 1991)

H.29. ORGANIZATIONAL CONFLICT OF INTEREST

H.30. PROHIBITION AGAINST DISCRIMINATION (OCT 2011)

H.31. AIDAR 752.228-70 MEDICAL EVACUATION (MEDEVAC) SERVICES

(JUL 2007)

H.32. SUBCONTRACTING PLAN AND THE SF 294 – SUBCONTRACTING REPORT

FOR INDIVIDUAL CONTRACTS AND SF 295 – SUMMARY CONTRACTING

REPORT

H.33. CONFLICTS OF INTEREST

H.34. PROHIBITION ON THE USE OF FEDERAL FUNDS TO PROMOTE,

SUPPORT, OR ADVOCATE THE LEGALIZATION OR PRACTICE OF

PROSTITUTION– TIP ACQUISITION (MAY 2007)

H.35. SUBCONTRACTING CONSENT

H.36. PROCURING INFORMATION TECHNOLOGY (IT) RESOURCES

H.37. GRANTS UNDER CONTRACT (GUC)

H.38. USAID IMPLEMENTATION OF SECTION 508 OF THE REHABILITATION ACT

OF 1973 AND FEDERAL ACQUISITION CIRCULAR (FAC) 97-27 "ELECTRONIC

AND INFORMATION TECHNOLOGY ACCESSIBILITY

H.39. CONTRACTOR’S PERSONNEL INTEGRITY IN FOREIGN ASSISTANCE

H.40. USAID PERSONNEL APPROVALS

H.41. THIRD COUNTRY TRAINING

PART II - CONTRACT CLAUSES.................................................................................……59

SECTION I - CONTRACT CLAUSES ...........................................................................……59

I.1. NOTICE LISTING CONTRACT CLAUSES INCORPORATED BY REF

I.2. FAR 52.252-2 CLAUSES INCORPORATED BY REF

I.3. FAR 52.204-1 APPROVAL OF CONTRACT

I.4. FAR 52.216-24 LIMITATION OF GOVERNMENT LIABILITY

I.5 FAR 52.222.50 COMBATING TRAFFICKING IN PERSONS

I.6. AIDAR 752.209-71 ORGANIZATIONAL CONFLICTS OF INTEREST

DISCOVERED AFTER AWARD

I.7 FAR 52.217-9 OPTION TO EXTEND THE TERM OF THE CONTRACT

(MAR 2000)

I.8 FAR 52.222-2 PAYMENT FOR OVERTIME PREMIUMS (JUL 1990)

I.9 FAR 52.229-8 TAXES – FOREIGN COST REIMBURSEMENT CONTRACTS (MAR

1990)

I.10 FAR 52.247-67 SUBMISSION OF TRANSPORTATION DOCUMENTS FOR AUDIT

(FEB 2006)

I.11 AIDAR 752.7101 VOLUNTARY POPULATION PLANNING

ACTIVITIES (JUN 2008)

PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACHMENTS …… …67

SECTION J - ATTACHMENTS....................................................................................…….67

ATTACHMENT J.1 – CONTRACTOR BIOGRAPHICAL DATA SHEET ................…….68

ATTACHMENT J.2 – LLL - DISCLOSURE OF LOBBYING ACTIVITIES…

ATTACHMENT J.3 – GUIDANCE FOR SYSTEM FOR AWARD MANAGEMENT (SAM)

REGISTRATION)

PART IV - REPRESENTATIONS AND INSTRUCTIONS ......................................……..73

SECTION K - REPRESENTATIONS, CERTIFICATIONS AND OTHER STATEMENTS

OF OFFERORS ............................................................................................................……..73

K.1. NOTICE LISTING SOLICITATION PROVISIONS INCORPORATED BY REF

K.2. 52.204-3 TAXPAYER IDENTIFICATION (OCT 1998)

K.3. 52.204-6 DATA UNIVERSAL NUMBERING SYSTEM (DUNS) NUMBER

K.4. 52.204-8 ANNUAL REPRESENTATIONS AND CERTIFICATIONS

K.5. 52.225-25 PROHIBITION ON CONTRACTING WITH ENTITIES ENGAGING

IN CERTAIN ACTIVITIES OR TRANSACTIONS RELATING TO IRAN—

REPRESENTATION AND CERTIFICATIONS

K.6. INSURANCE - IMMUNITY FROM TORT LIABILITY

K.7. AGREEMENT ON, OR EXCEPTIONS TO, TERMS AND CONDITIONS

K.8. AUTHORIZED NEGOTIATORS

K.9 52.209-5 – CERTIFICATION REGARDING RESPONSIBILITY MATTERS

(MAY 2008)

K.10 SIGNATURE

SECTION L - INSTRUCTIONS, CONDITIONS, AND NOTICES TO OFFERORS…

L.1. NOTICE LISTING SOLICITATION PROVISIONS INCORPORATED BY

REFERENCE

L.2. FAR 52.233-2 SERVICE OF PROTEST

L.3. GENERAL INSTRUCTIONS TO OFFERORS

L.4. RESPONSIVENESS TO RFP

L.5. OFFEROR’S RESPONSIBILITIES

L.6. INSTRUCTIONS FOR PREPARATION OF TECHNICAL PROPOSAL

L.7. INSTRUCTIONS FOR THE PREPARATION OF THE COST PROPOSAL

L.8. INSTRUCTIONS FOR THE PREPARATION OF BRANDING

IMPLEMENTATION AND MARKING PLAN

L.9. GOVERNMENT OBLIGATION

SECTION M – EVALUATION FACTORS FOR AWARD.......................................…….96

M.1. GENERAL INFORMATION

M.2. TECHNICAL EVALUATION CRITERIA

M.3. PAST PERFORMANCE

M.4. COST/BUSINESS EVALUATION

M.5. DETERMINATION OF THE COMPETITIVE RANGE AND CONTRACT

AWARD

ANNEXES

ANNEXES 1 - MANDATORY BUDGET FORMAT

ANNEXES 2 - INITIAL ENVIRONMENTAL EXAMINATION (IEE) 2015-MOL-001

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PART I – THE SCHEDULE

SECTION B - SERVICES AND PRICE/COSTS

B.1. PURPOSE

The purpose of this contract is to provide technical assistance and services as described in detail in

Section C - Statement of Work for the implementation of USAID/Moldova Competitiveness

Enhancement through Workforce Development and Innovation (CE-WIN).

B.2. CONTRACT TYPE

This is a Cost-Plus-Fixed-Fee (CPFF) Term, Level of Effort type contract. For the consideration set forth below, the Contractor shall achieve the results and perform the tasks in Section C in accordance with the performance standards specified herein.

B.3. ESTIMATED COST, FIXED FEE, AND OBLIGATED AMOUNT

TBD

B.4. LEVEL OF EFFORT (LOE)

The level of effort for this Contract is as follows [note to Contractors: the labor categories below are illustrative and are not meant to be a statement of contract requirements – labor categories for the actual mix of labor negotiated with the successful contractor will be included in the resulting contract: Long-

Term and Short-Term Technical Assistance LOE does not include non-professional support staff (e.g., accountants, interpreters/translators, office managers/administrative assistants, secretaries/receptionists, drivers, janitors, guards, etc., which are considered under Long-term Local Support staff and Home

Office Support staff)]

LABOR CATEGORY TOTAL (work days)

Long-Term Technical Assistance - Key personnel(Chief of Party and Deputy Chief of Party)

[ 2600 ]

Long-Term Technical Assistance

(Expatriate) [12220]

Short-Term Technical Assistance

(Expatriate) [2900]

Long/Short-Term Technical Assistance

(CCN)

[3300]

Home Office Support [234]

Long-term Local Support [4940]

TOTAL [26,194 ]

The above chart defines the required level of effort to be delivered in the performance of Section C of this contract. Once the required level of effort has been provided, the contract will be completed;

however, the Contractor may, with the written approval of the Contracting Officer (CO), reallocate level of effort between labor categories as a matter within the general scope of the contract. No

SOL-117-15-000003 Page 6 of 101 reallocation of LOE can result in an increase in the total estimated cost of the contract without a contract modification executed by the CO. No reallocation of level of effort authorizes the

Contractor to exceed the obligated amount in the contract without a contract modification executed by the CO.

B.5 PAYMENT SCHEDULE

The Contractor shall submit, to the USAID Office of Financial Management (OFM), invoices

(SF 1034) which shall not exceed the total award amount. Payment shall be made within 30 days after submission of a proper invoice and acceptance by the Contracting Officer

Representative (COR) of the invoice. Payment shall be made per the following schedule:

TBD

[END OF SECTION B]

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SECTION C ‐ STATEMENT OF WORK

A. EXECUTIVE SUMMARY

Since 2005, USAID has assisted the Republic of Moldova to promote a strong, diverse and export-oriented economy by increasing competitiveness and efficiency in key Moldovan industries. This assistance was provided through the Competitiveness Enhancement and Enterprise Development activities (CEED and CEED II).

The Competitiveness Enhancement through Workforce Development and Innovation (CE-WIN)

Activity will build upon the success and momentum of USAID’s previous work and support the

Government of Moldova’s strategy of export- and investment – driven growth by focusing on:

Increased productivity and quality;

Expanded market linkages; and

Improved sector-enabling environment.

This new five (5) year activity will build on past achievements and add new emphases on workforce development, innovation, and industry- and country-level interventions. In addition, there will be a

Sector Engagement, Enhancement, and Development (SEED) Fund to allow CE-WIN to invest in targeted activities to enhance local capacity.

Targeted industries under the CEED II activity will remain the USAID focus for assistance under this new award. These industries are: Information and Communications Technology (ICT); wine production and export clustered with the tourism sector; and light industry (clustered textiles and apparel with footwear sectors).

The development hypothesis underlying the current activity remains valid for CE-WIN: that “helping

Moldovan enterprises in targeted industries to compete successfully at home and abroad will lead to increased sales and investment”. Workforce development and innovation will be central to improve the market diversification needed to successfully compete internationally in the targeted industries. The

Contractor shall conduct a skills gap analysis for targeted sectors to identify critical workforce development needs. CE-WIN activities are not restricted to the three industry clusters listed above and the Contractor will propose additional industry clusters to be supported, and the interventions that are needed to further grow the competitiveness of targeted industries. However, it is expected that the sectors currently being assisted will remain the USAID focus for assistance in a more clustered manner

(for example, pairing wine with tourism efforts). CE-WIN will also provide technical assistance to

Moldovan banks for Development Credit Guarantee mechanisms that support the targeted industries, including various existing loan portfolio guarantees for the targeted industries and for energy efficiency improvements.

Workforce development and innovation will lead to improvements such as the increased adoption of new technologies and industry best practices in the targeted industries Planned CE-WIN interventions should lead to increased productivity, improved product quality, more streamlined business practices, and more modern management practices in the targeted industries. Expanded market linkages created through CE-WIN engagement will lead to increased value of exports and domestic sales in the targeted industries. Increased technical skills in the labor force will contribute to targeted industries’ efforts to expand and develop new investments.

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B. BACKGROUND

CE-WIN is an activity within the Moldova Economic Growth Project – an overarching project that encompasses competition and regulatory reform.

Stakeholder consultations during USAID’s Country Development and Cooperation Strategy (CDCS) development process and in preparation for the CE-WIN design challenged the long-held notion that

Moldova has a ready and skilled workforce in place to respond to increased employment opportunities.

On the contrary, employers and industry associations in Moldova agree that their primary challenge, outside of Moldova’s need for business regulatory reforms, is to find sufficient skilled workers.

Moldova’s high level of out-migration, with up to 25% of the active labor force already outside the country, coupled with a lack of coordination between the public and private sectors with regard to technical and vocational education perpetuates this lack of skilled workforce issue. By focusing on job skills development through CE-WIN, USAID will help create connections between the private sector and the labor force. At the same time, this effort will respond to the problem of out-migration by increasing the economic opportunities available to Moldovan citizens.

CE-WIN will therefore build on existing relationships with private sector firms and associations in targeted sectors to expand the focus of cooperation to incorporate workforce development activities providing support to targeted sectors, such as industry-specific job skills training activities, support for job fairs, and support for the development of career training and preparation of students. Inputs for CE-

WIN will include activities to promote technology transfer in targeted industries, including study tours, Twinning projects, and expert technical assistance (TA). In addition, training and mentoring will improve business leaders’ management skills based on international best practices. CE-WIN will improve firms’ abilities to implement quality standards required for expanded trade, particularly with the EU. CE-WIN will also increase and strengthen export market linkages by, for example, sector branding campaigns, participation in trade promotion events, and inward-directed buyers’ tours.

1. Competitiveness Enhancement and Enterprise Development Activities – CEED and CEED II

CEED II’s development hypothesis was that helping Moldovan enterprises in targeted industries compete successfully at home and abroad will lead to increased sales and investment. CEED II, which ended in July 2015, complements and supports the Government of Moldova’s strategy of export- and investment- driven growth. The project aimed to increase competitiveness in six targeted industries through activities in three components:

Component 1: Increased productivity

Component 2: Increased trade and investment

Component 3: Improved public-private dialogue for a better business environment.

CEED II targeted six industries – apparel and textile, fashion accessories, home furnishings, information technology (IT), tourism (as an emerging industry), and wine. The project supported these industries so that they reach a maturity level that promotes sustainable improvements in sector competitiveness and that provides well-paying and desirable jobs, thereby increasing incomes, alleviating poverty, and reducing emigration. Below is a short description of these industries:

Wine. Since the Russian ban in 2006 and financial crisis in 2008, the Moldovan wine industry has undertaken many necessary and positive structural reforms. The wine industry remains one of the most

SOL-117-15-000003 Page 9 of 101 important sources of foreign exchange earnings for Moldova. Wine exports account for around 10 percent of all exports, and provide income to about 50,000 grape producers and 7,000 processors.

Furthermore, wine export destinations have become more diverse; exports to the Commonwealth of

Independent States (CIS) markets decreased in favor of European markets, the latter now account for 18 percent of total exports of bottled wines. The main accomplishments related to the wine sector include the following:

Implemented a dramatic reform of wine legislation, by liberalizing the wine business environment and harmonizing quality requirements with European Union (EU) and international standards;

Strengthened public-private dialogue and created a sustainable executive institution to ensure wine industry management, the National Office of Wine and Vine (ONVV), as well as a Wine

Fund;

Developed the wine country brand ‘Wine of Moldova’.

Apparel & Textiles. The apparel and textiles industry is a key exporter, contributing to roughly 20 percent of Moldova’s exports. Most of Moldova’s apparel industry supplies apparel manufacturing services to

Europe. With labor costs on the rise, the industry’s key advantages are location, order flexibility and fast delivery. The industry has 300 companies, employing more than 20,000 people, mainly women. To maintain competitiveness for European customers, Moldova must continue to move from stitching services to full product, and develop design, pattern making, and raw material sourcing skills. Own product and label are the highest value added production schemes.

The fashion accessory industry is dominated by the production of shoes and leather accessories (handbags and suitcases) by about 60 companies. Statistics show modest, but steady increases in sales pre-crisis, but the crisis reversed this trend, but a recovery continues. The sector accounts for four percent of Moldova’s total exports, mainly as manufacturing services to European customers. It is also an important employer, providing on average 4,000 jobs to people outside of Chisinau and in Transnistria.

The main accomplishments related to the apparel & textile and fashion accessories sectors include the following:

Catalyzed a transformation from cut-and-make production schemes (services) to full-package or own-brand production schemes (products); from low-value to high-value production;

Encouraged active marketing and promotion by enterprises in target markets, especially the EU

(for contract manufacturing) and Russia (for own products and brands);

Assisted development of own-brands through improved branding, marketing, sales, merchandising;

Organized a unique and successful “buy Moldovan” campaign, called Din Inima Branduri de

Moldova that dramatically enhanced the image of local brands and expanded the domestic market;

Consolidated the industry through an industry association (APIUS).

Information Technology. The Information and Communication Technology (ICT) sector accounts for 7% of

Moldova’s GDP and has been identified by the government as one of the country’s priority economic sectors.

According to International Data Corporation0F

, during the past eight years, Moldova has become known as a near-shoring location in Southeastern Europe. During this period, Information

Technology (IT) exports increased tenfold; and Moldova is expected to continue to be an attractive

Full study can be found at http://www.mtic.gov.md/img/d2011/promovarea/CEMA17850_Final.pdf http://www.mtic.gov.md/img/d2011/promovarea/CEMA17850_Final.pdf

SOL-117-15-000003 Page 10 of 101 destination in the future due to its advantages in terms of costs, location, and skills. As exports have grown, so has the domestic IT market. The Government is committed to using IT to increase competitiveness and jobs and improve governance. This agenda also creates opportunities for the IT industry through public procurements. The ICT industry employs over 20,000 people, of which IT constitutes 7,000, and pays some of the highest salaries. The main accomplishments related to the ICT sector include the following:

Helped define Moldova’s IT offerings and built awareness of Moldova as an IT destination and a reliable partner for subcontracting and relocation in IT services;

Facilitated the development of a private sector and Government vision, strategy and plan for IT industry;

Focused attention on the workforce gap faced by the IT industry;

Inception of an IT Center of Excellence.

Home Furnishings. Home furnishings mainly consist of furniture manufacturing, largely for the domestic market with little export. It has been estimated that annual domestic furniture production is valued at

$65-70 million, while total furniture consumption in Moldova is twice that. This leaves an untapped domestic market, currently supplied by imports. However, there is also a significant gray economy both in production and trade in this sector; as such the sector is larger than it appears. There are approximately

400 companies and over 4,400 employees in this industry. Most production is done by small companies, with a few large manufacturers. Achievements include:

Supported launch of MOBIMALL- the first furniture shopping center in Moldova for local producers;

Helped establish the furniture producers’ association;

Stimulated increased investments in marketing, promotion and advertising;

Helped producers develop new furniture designs and promote furniture Made in Moldova.

These strides made it possible to phase out of this sector in order to concentrate on other emerging sectors that are not as well-organized.

Tourism. Although Moldova started to make strong progress in supporting the inbound tourism industry, this industry is still emerging. The recorded number of tourists visiting Moldova is small, but steadily increasing, reaching nearly 99 thousand in 2012. The industry has over 440 companies but only about a dozen promote inbound tourism. Moldova was rated1F the number one undiscovered part of Europe and the second in the world. Moldova’s tourism is niche, focusing on rural, wine, cultural, gastronomic and adventure tourism. The following advances have made it possible to cluster the tourism and wine sectors so that these industries can combine efforts to have a multiplier effect. The main accomplishments include:

• Helped to develop a common vision among private sector and government counterparts on

Moldova’s tourism offerings and positioning;

Developed new tourism products and strengthened existing ones;

• Supported generic country branding and marketing through new tourism website www.moldovaholiday.com, Moldova Holiday brand, promotion video;

Fostered the establishment of a private sector inbound tourism association.

2. Continued Niche for USAID Assistance

Despite the progress achieved so far, continued and focused USAID assistance will lead to exponential gains for Moldova’s competitiveness, especially in European markets. Moldovan enterprise and industries are still not as strong as they need to be to withstand external economic shocks and face tough global competition. Additionally, the current regional crisis adds political barriers to improving economic performance. The current pace of changes underscores the fact that change takes time; enterprise and industry stakeholders need time to appreciate the need for change and then to begin adopting http://www.lonelyplanet.com/europe/travel-tips-and-articles/77774 http://www.moldovaholiday.com/ http://www.lonelyplanet.com/europe/travel-tips-and-articles/77774

SOL-117-15-000003 Page 11 of 101 recommendations. The best examples of this are the accelerating pace of own-branded production in the apparel industry (and increasingly in the fashion accessories industry) and the passage of wine industry reforms in November 2012. These results were the outcome of several years of work, and with continued assistance from USAID will become irreversible.

It should be mentioned that Moldova has signed and ratified an Association Agreement (AA), as well as a

Deep and Comprehensive Free Trade Area (DCFTA) with the EU. One of the main targets of the DCFTA is to help the Moldovan economy to “diversify production, [and] expand trade and investment to enhance productivity and competitiveness”. CE-WIN will contribute directly to the achievement of this DCFTA goal.

The industries to be targeted in the first year through CE-WIN will be ICT; wine production and export clustered with the tourism sector; and light industry (clustered textiles and apparel with footwear sectors).

In the ICT industry, prolonged support is paying off. Currently, public sector stakeholders, with input from the private sector, have developed a comprehensive ICT development strategy with a dedicated implementing institution based on international best practices. However, more work is required to obtain the necessary Government of Moldova (GOM) approval and then to implement it. The Contractor should be familiar with USAID’s Memorandum of Understanding with the GOM, IBM and Microsoft that established the IT Center of Excellence. In parallel, the GOM is beginning to seriously examine weaknesses in the country’s education system. These initiatives will be supported by CE-WIN. The Contractor will devise appropriate modes of working with the industry association (ATIC) to leverage other means of developing the ICT workforce.

The same is true for the wine sector. More work is required to build on very important but yet extremely fragile accomplishments in reforming and managing the industry. This includes strengthening the institutional capacity of the ONVV, as well as assistance in implementation of the Wine of Moldova country brand and marketing program. The Moldovan wine sector should continue strengthening the sector through deeper reforms, reposition to a higher price niche, diversify export markets, and expand their brand as one of quality and tradition. Finally, the Contractor shall develop wine tourism as a key component of

Moldova’s tourism options.

Concerning the Moldovan tourism industry, a new national brand and strategy was recently launched which defines a stronger positioning of Moldova as a tourist destination, key markets and a promotion plan.

Sustained efforts must be made to assist the coherent and professional implementation of the strategy, and to safeguard the fragile public-private dialogue between the Tourism Agency and industry businesses. The

Contractor shall support the advancement of tourism attractions and services to correspond to the country positioning and requirements of the key markets.

Also, the Contractor shall support the transition of light industry to higher value-added business models, such as original designs from the apparel industry instead of the current cut and make practices, which provide minimal added value. The successfully-built Din Inima umbrella brand and campaign should be broadened to include more companies. The industry association, APIUS, has had an increasing role in managing the brand. However, APIUS should be assisted to fully take over ownership of this very important industry brand. The emergent 70 Moldovan brands should be further consolidated and assisted to identify export markets. Likewise, export of manufacturing services should focus on value-added production schemes. The Contractor shall address productivity and product development industry-wide. To address the industry skills gap, the Center for Education and Acceleration of Design and Technology is underway at the Technical University of Moldova, in partnership with APIUS. The development of this

Centre shall be supported by the Contractor.

SOL-117-15-000003 Page 12 of 101

As we emphasize higher level work with sector associations, two types of institutions are worth mentioning: traditional industry associations and public or public-private implementing bodies, i.e.

institutions responsible for implementing public policies in the relevant industry. In the apparel and fashion accessories industries, APIUS, the light industry association, has begun to show maturity and leadership.

In the ICT industry, the sector association, ATIC, is sustainable, but vulnerable. It has reached a plateau in its development. Continued support is needed to help it take the next steps in its evolution as the ICT industry’s premier association. In the wine sector, traditional associations are very weak, but with CEED II support four regional associations were established, in line with the geographic indications zones. These associations also constitute the board of the newly set up ONVV, and have a critical role in providing strategic and operational guidance to the Office regarding further development of the wine industry. The newest sector association, in the tourism industry, is developing well; but it is very new and will require continued support to mature to the point where it is sustainable without USAID assistance.

Two counterpart institutions that were supported by CEED II will stay relevant under CE-WIN. First, the

ONVV, which was created in 2013 as called for by the wine reforms adopted by Parliament in late-2012, is responsible for implementing public policies in the wine sector, including for wine promotion and for the implementation of the system of Geographical Indication and Protected Denomination of Origin. USAID’s vision is to also consider providing Government to Government (G2G)/Public Private Partnership (PPP) assistance to the ONVV as a follow-on activity, to ensure the sustainability of current efforts. This activity will follow the creation of the wine and vine registry; this registry serves as a quality control for wine standards and exports. CEED II was instrumental in helping to design its governance and executive structure, define its mandate, and structure a financing mechanism.

Second, CEED II was advising the Ministry of Information Technology and Communication concerning the creation of an ICT Development Agency that will implement public policy in the ICT industry. Depending on success achieved during CE-WIN, this could be another candidate for direct support from USAID. Both institutions incorporate international best practices; however, their effectiveness will depend upon how they are implemented. Here CE-WIN will continue to play a vital role in their development.

Finally, workforce development is a common challenge for all industries, and USAID has worked with government and private partners to identify and design sustainable solutions for the development of relevant skills. In the IT sector, USAID is aiding the start-up of an IT Center of Excellence to bridge the skills gap. To build on the shift to value-added and own-brand manufacturing in apparel and footwear, USAID has looked into the possibility of launching a fashion accelerator that would help build up necessary design and pattern making skills, but also boost creativity and entrepreneurship. The most relevant models from the region were studied, and adapted to the Moldovan context. All mentioned actions need special attention under CE-WIN.

D. STRATEGIC LINKAGE

CE-WIN will be implemented in accordance with USAID’s program objective for economic growth. The program is aligned with the USAID/Moldova CDCS2F as follows:

Development Objective 2: Increased Investment and Trade in Targeted Sectors

Intermediate Result (IR 2.1): Improved Economic Foundation for Growth

Sub-IR 2.1.2: Increased Access to Finance

IR 2.2: Improved Private Sector Competitiveness in Selected Industries http://www.usaid.gov/sites/default/files/documents/1863/moldova-CDCS-FY13-17.pdf http://www.usaid.gov/sites/default/files/documents/1863/moldova-CDCS-FY13-17.pdf

SOL-117-15-000003 Page 13 of 101

Sub-IR 2.2.1: Increased productivity

Sub-IR 2.2.2: Expanded market linkages

As mentioned above, the purpose of CE-WIN is to continue growing and expanding key competitive industries in Moldova and to intensify USAID’s efforts to build local sustainability and partnerships that will support the Agency’s Forward initiative. It is also an opportunity to build upon success already achieved. Workforce development is a major issue, clearly identified by the last USAID Economic Growth

Assessment and the CDCS, will be addressed as a cross cutting problem. Finally, trade promotion initiatives will be expanded helping to further grow market linkages and thus sales in target industries. As such, the

Contractor shall:

Increase Access to Finance (Sub-IR 2.1.2)

Build local institutional capacity among private sector associations and public policy implementing bodies (IR. 2.2)

Build management and labor force capacity in assisted industries (sub-IR 2.2.1)

Increase assistance to enterprises in assisted industries to expand market linkages (sub-IR 2.2.2)

Increase assistance to target industries by continuing to invest in activities that are directly helping to increase investment and trade in target industries or that are directly addressing critical constraints to investment and trade (DO 2)

Increase Access to Finance (Sub-IR 2.1.2): The Contractor shall increase access to finance as a cross-cutting issue, exploring various financial instruments, as well as complementing and leveraging existing mechanisms and credit lines available from USAID, the EU, European Investment Bank (EIB), European

Bank for Reconstruction and Development (EBRD), the World Bank (WB) and other donors, for key economic sectors supported by CE-WIN. Existing Development Credit Authorities (DCAs) with several financial institutions are available to improve access to finance in supported economic sectors and for energy efficiency investments. Various credit and grant mechanisms are currently available under the

World Bank, EIB, and EBRD and are likely to remain available during the life of CE-WIN. In addition, the

Contractor shall explore leveraging regionally-funded investments and venture capital funds in the ICT industry, to support the IT Centre of Excellence project underway.

Build local institutional capacity among private sector associations and public policy implementing bodies (IR. 2.2): The Contractor shall assist industry associations, to grow their institutional capacity. An effort will be made to increase the role of associations in activities, and their ability to manage activities on their own beyond the life of this activity. In addition, the Contractor shall strengthen the ONVV, which is still a new institution, with a complex mission and has great expectations from both the private sector and

Government. The Office will need support for its establishment, internal processes and implementation of an ambitious activity plan. Finally, the Contractor shall further develop the IT Center of Excellence, which is a multi-partner initiative to bridge the skills gap and grow entrepreneurship. CE-WIN will play a central role (to catalyze this important initiative, including the development of partnerships with various stakeholders, concepts, operational and funding models, legal and institutional frameworks, design and other support as necessary. Special attention will be placed on finding opportunities to collaborate with the

Moldovan Investment and Export Promotion Organization (MIEPO) and the Chamber of Commerce and

Industry of Moldova (CCIM). Assistance should always be provided with the objective of enabling organizations to graduate to either complete independent sustainability or to a level where they can receive direct funding from USAID to complete the process of building sustainability. While the Contractor will screen each institution separately to ensure that the board of directors, or equivalent body, and the executive team are ready and willing to partner with CE-WIN to develop a performance improvement plan – assisting only those that demonstrate their commitment to performance improvements – the following institutions should be considered for mentoring, grants under contract and/or transition award preparation. Not all organizations listed below will receive grants under contract or transition award

SOL-117-15-000003 Page 14 of 101 preparation. Those deemed to have adequate business plans may go on to receive a grant under contract and those deemed ready through monitoring activities in years one to four, may receive a transition award:

Light Industry Employers' Association (APIUS)

Association of Private ICT Companies (ATIC)

Small Winemakers Association (ASW) and regional GI wine associations

National Association for Inbound Tourism (ANTRIM), National Association of Travel

Agencies of Moldova (ANAT) or other

National Office for Wine and Vine (ONVV)

Moldovan Investment and Export Promotion Organization (MIEPO)

Chamber of Commerce and Industry of Moldova (CCIM)

IT Center of Excellence

ICT Development Center (if established)

Apparel Sector Excellence Center (if established)

Wine sector Excellence Center (if established)

Transition Award:

In support of USAID Forward, the Contractor shall develop the capacity of at least two targeted sub-grantees so that they will become eligible to receive a direct award from USAID or other donors in the near future. In consultation with USAID, the Contractor shall identify the sub-grantee(s) for potential direct award(s) based on the ability of sub-grantee(s) to support USAID's strategic objectives in the targeted sectors. Potential sub-grantee(s) will meet the standards required by a USAID pre-award survey. Direct award(s) to the selected sub-grantee(s) will be considered during year five of the contract and USAID will follow standard procedures for such direct award(s).

Build management and labor force capacity within enterprises in assisted industries (sub-IR 2.2.1):

The Contractor shall support workforce development as a cross-cutting issue. It will provide assistance for the development of a high-quality workforce in target industries, including working with the private sector to help increase and retain adequate skilled workers through industry-specific trainings, work with government, industry associations and academia to help address the need for up-to-date skills at various educational levels and within the industry. The Contractor shall evaluate sustainable and systemic solutions, such as the IT Center of Excellence and a similar center for the apparel and footwear industries.

The Contractor shall then develop partnerships with other interested stakeholders, in order to prepare the grounds for future implementation.

Increase assistance to enterprises in assisted industries to expand market linkages (sub-IR 2.2.2):

While consolidating domestic markets is important, building exports is even more so for the prosperity of

Moldova. The Contractor shall identify specific markets and projects that could yield increased trade and exports, and tackle these in a comprehensive manner. Within target industries, enterprises should be supported to participate in appropriate local or regional trade shows or to organize business-to-business

(B2B) events that can reasonably be expected to expand market linkages and boost trade. Whenever possible, trade show attendance or B2B events should be organized in partnership with a relevant local institution, such as an industry association or policy implementing body, in order to raise the institution’s capacity to organize trade promotion events, prepare participants for them in advance and to follow-up on leads after the trade shows. The Contractor shall continue to build awareness at the country level in key markets, as well as enhance promotion of country image, branding and positioning.

Increase assistance to target industries by investing in activities that are directly helping to increase investment and trade in target industries or that are directly addressing critical constraints to investment and trade (DO 2): Selected successful activities or initiatives within target industries – those with strong linkages to the results framework – shall be continued when there are clear and compelling

SOL-117-15-000003 Page 15 of 101 reasons to do so, when the beneficiaries are committed. This particularly concerns continuation of legal and regulatory improvements, as well as increasing public-private dialogue, particularly in the wine industry, but also in the other target industries as appropriate. While the Business, Regulatory, Investment, and Trade

Environment Program (BRITE), another USAID activity, will focus on needed interventions at the macro level, CE-WIN will focus on industry specific interventions. Close coordination between CE-WIN and

BRITE is encouraged.

E. ECONOMIC CONTEXT

Despite a sharp decline in poverty in the 2000s, Moldova remains one of the poorest countries in Europe, with per capita income of $2,038 in 2012. Moldova’s economy has grown at an average annual rate of 5 percent over the past decade. The economy has recovered from the global financial crisis of 2008-2009, with growth stopping in 2012. Moldova experienced better than expected economic growth in 2013 due to increased agriculture production, new economic policies adopted by the Moldovan government since 2009, and receipt of EU trade preferences. In 2014 however, the growth rate has decelerated due to the Russian ban, the regional conflict in Ukraine, lack of alternative export markets, slow-down of remittances, and the lack of economic investments. The WB expects growth to decelerate to 2% in 2014 and stabilize at 4-

4.5% during 2015-2017. Over the longer term, Moldova's economy remains vulnerable to political uncertainty, weak administrative capacity, vested bureaucratic interests, corruption, higher fuel prices, Russian pressure, and the illegal separatist regime in Moldova's Transnistria region. Moldova has made significant strides in its economic and political transition, but much remains to be done.

Over the past five years, Moldova’s economy has gone through significant structural changes, evolving from a traditional agrarian economy to an economy with emerging services and industries. The service sector, mainly trade, transport and communications, has been the largest contributor to economic growth, while agriculture and manufacturing, have stagnated. Agriculture and industry as a share of Gross

Domestic Product (GDP) have been on a steady decline, falling from 56 percent in 1995 to 25 percent in

2012. Moldova’s economic growth has been driven by remittances, and GDP increases are attributed to

“jobless” growth. The country suffers from massive outflows of labor migrants to the EU and Russian

Federation, caused by low salaries. Labor productivity remains low, and perceived productivity gains are due to labor outflows from low-productivity sectors, especially agriculture.

A concerted effort to change this development paradigm is needed. The Moldova 2020 strategy states that, “...the economic development paradigm would imply attracting investment, developing export industries, promoting a knowledge-based society, including strengthening research and development activities, innovations and technological transfer geared towards efficiency and competitiveness”.

Aggregate exports have grown substantially in the past decade, however, since 2004 the annual growth rate of exports slowed to under five percent. This pace was slower than overall GDP growth, and slower http://data.worldbank.org/indicator/NY.GDP.PCAP.CD http://particip.gov.md/public/files/Moldova_2020_ENG1.pdf http://data.worldbank.org/indicator/NY.GDP.PCAP.CD http://particip.gov.md/public/files/Moldova_2020_ENG1.pdf

SOL-117-15-000003 Page 16 of 101 than the growth of exports in many other CIS countries and average export growth in other regions of the developing world.

Moldova continues to lose competitiveness in its traditional CIS export markets, which have been geared towards low-quality wine, fruits and vegetables, and some industrial products. Russia dominates this market and has repeatedly disrupted trade with Moldova through politically motivated – though sometimes justifiable – food safety concerns. However, the recent introduction of trade preferences by the EU suggests an opportunity for export-driven growth. Besides relatively low labor costs, Moldova’s comparative advantages in this market include its educated and multilingual population and geographic proximity. While these factors facilitate rapid market entry in a number of sectors, they are easily overtaken if Moldova cannot offer the quality and quantity demanded by higher- value markets.

F. GOM STRATEGY AND OTHER DONOR PROGRAMS OF ASSISTANCE

The Moldova 2020 National Development Strategy , adopted in July 2012, presents the GOM vision of cohesive long-term sustainable economic development. The GOM is seeking to change the development paradigm and build an export-oriented economy characterized by investment, innovation and competitiveness. Improving the business environment, adapting education to business needs, and facilitating access to finance are the strategy’s central pillars. Moldova initialed in November 2013 and recently signed an AA, as well as a DCFTA with the EU. The EU is already Moldova’s main trading partner and over half of Foreign Direct Investments (FDIs) come from EU member states. In the future, the country will benefit greatly from the European Union DCFTA and AA. However, Moldova will also be exposed to fiercer competition from European firms in its internal market. To be able to take advantage of the increased market opportunities, Moldovan businesses need to improve competitiveness.

The Ministries of Economy, Finance, and Agriculture and relevant operating units will be the main government counterparts in host country coordination. The Moldovan Investment and Export Promotion

Organization (MIEPO) , has recently been given a renewed focus and mandate to coordinate activities in the area of competitiveness, investment, and export promotion within the GOM and donor community. There is potential for MIEPO to be a key partner in coordinating efforts on promoting sustainability of results envisioned under CE-WIN. It should also be noted that upcoming elections and a particularly mercurial political climate will require constant monitoring to ensure that alignment with host country strategies is maintained where feasible.

Relevant donor assistance is listed below:

Donor Project Areas of focus Linkages with CE-WIN

World Bank

Competitiveness

Enhancement Project

III [currently being designed, upcoming in 2014]

Credit line for SMEs, support to regulatory reform, consolidation of capacities of MIEPO and

ODIMM, private sector grants for consulting services

Synergy should be achieved in the area of improved access of private enterprise to credit; market development for target industries; and improved business competitiveness

5 World Bank, 2013, “Republic of Moldova Policy Priorities for Private Sector Development” http://www.gov.md/public/files/Moldova_2020_ENG.pdf http://www.miepo.md/?q=en http://documents.worldbank.org/curated/en/2014/06/19706556/moldova-second-competitiveness-enhancement-roject http://www.gov.md/public/files/Moldova_2020_ENG.pdf http://www.miepo.md/?q=en http://documents.worldbank.org/curated/en/2014/06/19706556/moldova-second-competitiveness-enhancement-

SOL-117-15-000003 Page 17 of 101 through access to consulting services

World Bank

Governance

E-

Transformati on

Project

(GET)

Transformation of selected public services using

Information and

Communications Technologies

(ICT).

Increased ICT usage in government supports proposed New Activity efforts to strengthen the ICT industry through domestic demand for ICT services, as well as increases the efficiency of government interactions with firms.

Also, GET has a small component related to ICT industry competitiveness, where synergies can be achieved with the CE-WIN

Internationa l Monetary Fund

(IMF)

Structural reforms leading to a balanced budget

Reducing the role of the state in the economy will support development of all sectors assisted

Deutsche Gesellschaft für Internationale Zusammenarbei t (GIZ)

GmbH

Support to

Investment

Attraction Team under Prime

Minister

Foreign investment attraction through country image building, investment generation, investment aftercare, and policy advocacy for investment climate.

CEED II has collaborated on investment attraction activities in target industries, and similar collaboration is envisioned with the CE-WIN

EBRD

TAM-BAS Program

Improving access of SMEs to business development services through grants

Synergies could be achieved in improved business competitiveness through access to consulting services

EIB

Credit line to wine industry of 75 million

Euro

Provides credit for upgrade of wineries, mainly related to production of wines with geographic indication (GI) and controlled origin.

Facilitating access to finance http://www.worldbank.org/en/news/loans-credits/2011/06/09/moldova-governance-e-transformation-project http://www.imf.md/imf-activ.html http://www.germania.mfa.md/img/docs/investmen-attraction-team-newsletter-april.pdf http://www.ebrd.com/downloads/tambas/country/Moldova_WiB_LF_EN.pdf https://www.mobiasbanca.md/en/credite_eib http://www.worldbank.org/en/news/loans-credits/2011/06/09/moldova-governance-e-transformation-project http://www.imf.md/imf-activ.html http://www.germania.mfa.md/img/docs/investmen-attraction-team-newsletter-april.pdf http://www.ebrd.com/downloads/tambas/country/Moldova_WiB_LF_EN.pdf http://www.mobiasbanca.md/en/credite_eib

SOL-117-15-000003 Page 18 of 101

G. GUIDING PRINCIPLES FOR IMPLEMENTATION OF CE-WIN

The purpose of CE-WIN is to develop key competitive and growth ready industries in Moldova. The primary thrust of CE-WIN is to support industry clusters and value chain initiatives. The cluster approach focuses on the linkages and interdependence between entities in the network of production and innovation; and, the development of supporting institutions which are responsive to the specialized needs of existing and emerging clusters and member entities. The aim is to develop

"collaborative advantage” (i.e., a successful market - buyers and suppliers…