EG IQC Macroeconomic SOW DRAFT.doc

Macroeconomic Foundations for Growth

SECTION C - DESCRIPTION/SPECIFICATIONS/STATEMENT OF WORK

C.1 BACKGROUND

The Central Asian countries of the Former Soviet Union (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan-the “CARs”) are a disparate group across a range of measures: their natural resource endowments, the degree of economic reform and liberalization completed since the Soviet Union’s dissolution, economic diversification, extent of economic and political pluralism, development of civil society, effectiveness of government, and standards of living among their populations. Despite these differences, sustainable economic development in the region is contingent upon greater economic integration and cooperation among countries. A wealthier, healthier and more stable Central Asia will be characterized by increasing trade and investment between countries among which economic interests are aligned. It will also be characterized by the establishment of mutually beneficial commercial ties with neighboring countries such as Russia and China. If the CARs are to succeed economically they will increasingly implement best practices in public management, take measures to improve their business environment and subscribe to international and regional agreements that mitigate conflict and enhance economic growth. This will attract foreign investment, open markets to trade, spur economic growth and create jobs for Central Asians.

USAID/Central Asia is dedicated to reducing poverty and promoting prosperity in Central Asia. The Mission’s Office of Economic Growth addresses development problems in economic policy reform macroeconomic reform, agriculture, business improvement, and environment, energy and trade facilitation.

USAID has contributed to improving the business environment and building public sector capacity.

USAID has been one of the most important contributors to development of the microfinance sector in the Central Asian Region.

USAID is helping to introduce modern agricultural technologies to increase productivity.

USAID/Central Asia also funds activities aimed at reforming national power industries, facilitating regional trade in energy, water basin management.

C.2 OBJECTIVES

The objective of this IQC is to facilitate USAID/Central Asia’s continued engagement in macroeconomic reform, improving the business environment and public sector capacity, and trade facilitation through a structured procurement process. The new IQC will build on previous USAID-funded efforts in addressing these areas.

USAID’s primary program objectives focus on devising and implementing robust activities that promote real economic growth, reduce poverty, graduate transitional countries from aid to trade, promote open competitive markets, develop the private sector, and mobilize private financing sources to supplement and eventually replace development assistance. These activities should seek to enhance regional economic integration where it is mutually beneficial to Central Asian nations. IQC contractors will provide a full range of services to USAID/Central Asia in macroeconomic reform, business improvement, and trade facilitation.

Macroeconomic refers to the complex of government strategies, objectives, and actions intended to affect aggregate or sectoral economic variables. Macroeconomic and sectoral policies encompass (non-exclusively) the areas of:

1. Money and banking policy, including the operations of the central bank and any other monetary authorities.

2. Fiscal policy, including all aspects of public revenue generation and expenditure; and encompassing planning, budgeting, and fiscal operations at national and subnational levels.

3. The trade/exchange rate policy, including tariffs, non-tariff barriers to trade, capital transfers, anti-dumping/countervailing duties, foreign debt, free trade areas, customs unions, World Trade Organization accession, and trade openness.

4. National income accounting, measurement and analysis of economic data, and national development strategy and macro- level economic planning.

5. Policy-related studies of key economic sectors--including policy and regulatory frameworks, key pricing and investment issues, planning and analysis. Labor, energy, telecommunications, transportation and other key sectors are of particular concern owing to their importance to aggregate economic performance. Economic aspects of environmental policies are also included.

6. Analysis and recommendations on poverty, income distribution, regional disparities, safety nets, and equity concerns, and their relation to macroeconomic and/or sectoral policy(ies), aggregate economic performance, and design and implementation of pro-poor economic growth strategies.

7. Other areas of economics are also relevant, at the aggregate or sectoral level, to the extent they affect employment, productivity, production, consumption, savings, and living standards.

The objective of this contract is to provide USAID entities and host government counterpart organizations with the ability to task leading thinkers, practitioners, and research organizations across the full range of macroeconomic and sectoral policy issues.

Macroeconomic and other economic expertise under this contract will:

1. Position USAID to provide sound developmental policy advice and take a leadership role in fostering a better understanding of macroeconomic and sectoral policy issues.

2. Support USAID efforts to assist host countries in the design and implementation of economic and structural reform programs, and the elements of such programs.

This Macroeconomic IQCs goals will result in these outputs:

(1) Research on technical, policy and strategic issues, and applied research to meet specific, contextually defined requirements of countries, regions or sub-regions.

(2) Information dissemination through seminars, workshops, conferences, and working papers, and other means;

(3) Customized strategic and tactical development approaches;

(4) Technical advice and implementation support to USAID/CAR, CAR Country Offices, and host country officials on all aspects of relevant macroeconomic and sectoral policies;

(5) Training of USAID and host-country decision-makers and technical personnel in the design and implementation of economic policy and institutional reforms; and,

(6) Long-term, in-country coordination and management of field activities under the IQC mechanism.

C.3 CHALLENGES

Despite the progress that has been made towards sustainable economic development, particularly in Kazakhstan, challenges exist. While regional economic integration and cooperation is a long-term and iterative process mandatory for sustainable economic growth, it is not viewed as a priority by decision-markers in Central Asia. Uzbekistan’s economy is heavily oriented towards import substitution and relatively unattractive to foreign investors. For Tajikistan and Kyrgyzstan, a sustainable increase in living standards will not occur without increased regional economic integration and cooperation, but engagement with their neighbors toward this outcome has had poor results. Tajikistan’s trade with other countries is hampered by poor relations with Uzbekistan, the easiest route by which to import or export.

With respect to domestic economic policy and its implementation, political expediency frequently results in decisions ill-suited for sustainable economic growth. Economic reform is beset by entrenched interests, and in some cases corruption, that serve as an obstacle to economic development.

In all Central Asia countries, private sector activity is dominated by extractive industries and/or the production of agricultural commodities with public functions, economic strategies and structures that relate to businesses focused on these sectors. Micro, small and medium sized enterprises account for an inadequate percentage of GDP while accounting for increasing large amount of employment. Employment in the region ranges from levels considered high in Kazakhstan to catastrophic in Kyrgyzstan and Tajikistan where significant percentages of the workforce emigrate to take unskilled jobs in Russia and Kazakhstan. As a result of this migration, women in these countries are taking on larger roles in small business and agro-business, and they need increased programmatic and policy support.

Finally, Tajikistan and Kyrgyzstan both possess characteristics of failed states which complicate the implementation of economic reforms in those countries.

C.4 ANTICIPATED DEMAND FOR THE CENTRAL ASIA ECONOMIC GROWTH IQC

This IQC will have ceiling of $50,000,000 and remain open to new task orders for five years from award. It is anticipated that the ceiling level reflects anticipated demand. Grants may be made under any Task Order. There will be a small business set-aside to ensure open access for local partners and other organizations that have not dealt extensively with USAID in the past. No single grant shall exceed $30,000,000.

C.5 SCOPE OF WORK (SOW)

Anticipated contractor duties include provision of technical and advisory services, training, research, and other services to USAID/Central Asia, associated country offices and any newly created USAID missions in Central Asia. Contractors shall provide these services through the execution of task orders with specified performance bench-marks for achievement of objectives. These contractor duties are described below as Core Tasks and as Technical Tasks.

C.5.A CORE TASKS

The contractor shall perform or manage performance of two core tasks:

1) Management of the IQC, and

2) Knowledge Management.

C.5.A.1 MANAGEMENT OF THE IQC, TASK ORDER DEVELOPMENT AND

INPLEMENTATION

Contractors shall undertake preparation of task order proposals that may include:

1) Problem diagnostics and analytics

2) Problem identification

3) Program/project/task design

4) Analysis and assessment

5) Program/task recommendations

6) Strategic planning at the level of the:

a) Public or private institution

b) Government ministry

c) Regional trade organization

7) Implementation in:

a) Program management

b) Transactions facilitation

c) Commodity procurement

d) Management of local non-US institutions

e) Grant management

f) Monitoring and evaluation and assessment

8) Evaluation

a) Metrics development

b) Performance targeting and monitoring

9) Assessments and analysis

a) Applied research on development challenges

b) Data generation

10) Provide logistical support for task implementation teams

11) Supervise task implementation teams

12) Collaborate in resolving IQC and Task Order issues

13) Manage contract resources cost effectively

14) Provide technical and advisory services that:

a) Assist USAID/Central Asia, associated country offices and any newly created USAID missions in Central Asia to accomplish task order objectives

b) Offer training and research services

15) Work closely with representatives of other development assistance institutions to coordinate programs and policies

16) Partner, subcontract, or prepare and administer grants with local, non-US organizations when necessary to accomplish Task Order objectives

17) Work closely with government, private sector, non-government, and private voluntary organizations, and use local expertise

18) Work with institutional partners of USAID/Central Asia, associated country offices and any newly created USAID missions in Central Asia to:

a) Achieve USAID/Central Asia and any newly created USAID missions in Central Asia Strategic Objectives

b) Establish relationships with local businesses, banks, professional associations, local consulting firms, and non-governmental organizations

19) Subcontract and partner with local organizations within the scope of work of Task Orders

20) Design, preparation, management and administration of USAID grants to local organizations and institutions

C .5.A.2 KNOWLEDGE MANAGEMENT

Knowledge Management (KM) is a significant part of the Central Asia Economic growth IQC. The contractor shall:

1) Capture, provide custodianship, and perform taxonomy of all information, data, analyses, and any other written material produced under the IQC,

2) Create a standard framework for knowledge creation, sharing, and vetting,

3) Disseminate lessons learned, best-practices, and professional training in appropriate multimedia format,

4) Provide marketing and technical-support outreach to USAID/Central Asia, associated country offices and any newly created USAID missions in Central Asia, client country decision-makers, and other domestic US and international development and support organizations,

5) Coordinate donor and KM linkages,

6) Create and support "Communities-of-Practice," and

7) Market "branding" of USAID as a technical leader in solving business, trade, and investment issues.

C.5.B TECHNICAL TASKS

This section describes the technical task areas that the Contractor shall perform, either as an individual firm or in a prime-subcontractor consortium arrangement. These task areas are illustrative and should not be considered all-inclusive.

Potential Central Asia Economic Growth IQC technical assistance broadly covers a wide range of potential activities that are necessary to address the problems and impediments constraining Central Asia’s growth, productivity and output. USAID intends the Central Asia Economic Growth IQC to coordinate closely with the other USAID contract mechanisms to avoid overlap of mandate and to ensure effective use of contract resources and services financed.

Services provided under the Central Asia Economic Growth IQC will fall within the following functional area, divided into a broad set of technical tasks defined as: Macroeconomic Foundations for Growth.

Within the Macroeconomic Foundations for Growth area, the Central Asia Economic Growth IQC services will improve the macro environment for business enterprise formation and growth, trade, and domestic and foreign investment through:

1) Legal and institutional reform,

2) Financial sector reform and expansion,

3) Economic policy and institutions development,

4) Trade and investment, and

5) Addressing exogenous shocks, assistance to ease the adjustment to exogenous economic and financial shocks that cause short and medium-term development problems affecting the national business environment and potential to generate economic growth.

6) Stabilization – Crisis Assistance Projects

The above area of macro-economic interventions is shown below in expanded form. It represents a range of potential illustrative tasks that USAID could require under Task Orders.

C .5.B.1 MACRO-ECONOMIC FOUNDATIONS FOR GROWTH

The objective is to identify economy-wide impediments to increased national productivity, to undertake targeted interventions to address them, and to create conditions that facilitate increased economic growth. Illustrative activities include:

1) Legal and institutional reform, comprising:

a) Competition policy

i) Policy, laws, institutions, enforcement

ii) Trade-related laws

iii) WTO accession and compliance

iv) Regional trade association(s)

v) Control of and enforcement against private anti-competitive behavior.

vi) Antitrust provisions, monopolies, cartel issues, other general restrictions on competition.

b) Commercial code(s)

i) Company law, registries

ii) New business entry - policy and process

iii) Incentives for small and micro-enterprise

c) Intellectual property.

i) Protection and patent processes

ii) Copyrights, trademarks, enforcement

d) Contracts enforcement, dispute resolution method s

i) Petition rights and private rights to assert complaints seeking enforceable redress .

ii) Arbitration and mediation

e) Transparency of public sector procedure and process.

f) Bankruptcy and methods to allow redeployment of business assets in alternative functions.

2) Financial sector reform and expansion, comprising:

a) Capital and credit market sources of funds for business growth and municipal finance availabilities

b) Foreign direct investment flows

c) Development credit programs supplied by international donors

d) Other financial sector functions and institutions that support entrepreneurial drive, initiative, and risk-taking such as liquidity funds, investment funds, "enterprise" funds, seed-level venture capital funds and structures, and alternative financing media for small, medium and micro-enterprises

e) Pension funds and insurance funds

f) Monetary and tax policies that affect business growth

g) Tracking funds and money flows for financial system integrity and security

h) Alternative financial instruments, such as convertible bonds, asset-backed securities, basic hedge options, and other risk management instruments.

3) Economic policy and institutions development:

a) Reform of policies, regulations, and support institutions in order to identify and address barriers to business formation, operation, growth, change, and dissolution

(b) Monetary policy, banking and central bank operation

(c) Fiscal policy, and tax and customs administration

(d) Trade and exchange rate policy

(e) National income accounting and strategic development planning

(f) Macroeconomic policy coordination/integration (g Poverty reduction programs

(h) Labor analysis and policy

(i) Sectoral policy analysis

j) Privatization of public sector functions and infrastructure to increase efficiency

k) Transparency of government procedures and processes

l) Communication and linkage between government entities and between government entities and the private sector

m) Capacity Building for State Officials – Human Institutional Capacity Development

n) Development of think tanks and NGOS focused on government policies and transparency

4) Trade and investment, comprising:

a) Financial and investment support institutions

b) Policy and regulatory reform

c) Pro-poor growth intervention s

d) Trade and investment related infrastructure

e) Business policy and incentives:

i) Intra-country, regional, and international trade

ii) WTO accession assistance

iii) Customs capacity building

iv) Foreign direct investment

v) Facilitating absorption and exploitation of foreign technology

vi) Domestic investment expansion incentives

vii) Incentives for private risk-taking and innovation

viii) Risk sharing and risk-mitigation methods

14) Exogenous shocks

C .5.C ILLUSTRATIVE TASK ORDER DELIVERABLES FOR CORE AND TECHNICAL TASKS

Since identification and specification of task orders is not possible, a priori, for an IQC mechanism, the following represent general categories of illustrative generic deliverables that contractors shall be capable of producing during the period-of-performance of the IQC :

1) Strategies, assessments, and analyses for macro-economic growth, institutional capacity, regulatory reform, and other support functions that support private-sector-led growth,

2) Business environment changes that provide positive support for private sector led trade, investment, and entrepreneurial initiative,

3) Changes in fiscal and monetary regime conditions that increase the flow of funds to the private sector for business expansion, increased trade, and investment,

4) Institutional development and regulatory policies that support new business formation and operation, trade, and investment,

5) Government, private business, and higher education partnerships

6) Fostering access to and active membership in regional and international organizations

7) Assessing macroeconomic context of CARs and designing strategies and implementing programs of technical assistance to address that context

8) Stabilization and Crisis Assistance Projects,

9) Knowledge management and dissemination activities, such as websites, databases, publications and other documentation,

10) Initiatives which, in conjunction with (1) to (11) above, assist in poverty reduction at the national, sub-national, and sector levels and increase the participation of the poor in the national political economy,

11) Rapid responses to exogenous shocks that slow or stop growth.

C.5.D IMPLEMENTATION AND PROGRAM MANAGEMENT

The Contractor shall provide contract management necessary to fulfill the requirements of this Contract. This includes cost and quality control of all tasks orders.

C.5.E GRANTS MANAGEMENT

The Contractor may be requested to award and administer grants programs to support indigenous NGOs in pilot or experimental activities. Funds may be made available on a grant basis. The Contractor shall administer these funds. Grantees may be expected to provide a portion of their costs from their own resources. The Contractor may be required to execute and/or administer grants under awarded task orders.

C.6 KEY PERSONNEL

IQC Project Manager: The Contractor shall designate, for USAID approval, a principal point of contact, the IQC Project Manager that USAID may contact for procedural and substantive matters. In addition to the technical leadership role and responsibilities vested in this person, the IQC Project Manager shall be responsible for preparing and responding to task order proposals.

The IQC Project Manager shall also be responsible for ensuring quality control and for the overall responsiveness of technical assistance provided under the Contract. Substitution of the IQC Project Manager shall be subject to the approval of USAID. The individual can be directly charged to task orders, subject to the prior written approval of the IQC Contracting Officer’s Technical Representative (COTR), when the individual is not serving in the capacity of IQC Project Manager. This assumes that the individual is proposed under a labor category for particular technical services under a Task Order. The individual may perform work on task orders up to a total of 150 days per year when the above conditions are met:

1) The Contractor shall assure that there is always an IQC Project Manager and the costs for that function are included in the loaded rates and multiplier, taking into the account the billed labor anticipated for the position (i.e. Bidders are not to double calculate the costs of this position)

2) The IQC Project Manager shall select, prepare, place, and support all technical experts carrying out technical requirements;

3) The IQC Project Manager shall report to USAID/Central Asia technical and contract personnel in accordance with USAID reporting requirements and as detailed in each task order;

4) The IQC Project Manager shall ensure quality control methods in a consistent and transparent manner for all contracted tasks and functions; and,

5) The IQC Project Manager shall participate, as may be selected, in the technical work through Task Orders. This work shall not exceed 150 days per annum.

C.7 TECHNICAL SKILL REQUIREMENTS

The Contractor shall furnish the services of individuals with the necessary education and/or relevant experience as required in each task order.

C.8 STANDARDS OF PERFORMANCE

This section defines the performance requirements to which the Contractor shall be held, establishes the performance levels or standards, and defines how these performance standards will be measured.

A. Performance Standards

Measurable performance standards will be established in individual task orders. These performance standards will be consistent with the objectives for the Central Asia Economic Growth IQC and with the following general performance standards:

1) Technical competence: Performance may be measured by the Contractor's effectiveness on the assignment. Effective technical assistance will produce reports that contain actionable recommendations that can be successfully implemented by the client organization.

Ineffective technical assistance is marked by superficial or theoretical findings and recommendations, which are irrelevant or cannot be implemented.

2) Ability to assemble or prepare effective expertise: Performance may be measured in several different ways. For example, superior contractor recruitment ability goes beyond a simple review of candidate's resumes before submission to USAID. Some candidates might appear qualified on paper, but may lack effectiveness in action. Superior recruitment processes shall be based on references and first-hand contacts with the technical expert proposed. Similarly, in team building, superior contractor performance will be demonstrated by assembling teams that function smoothly in accomplishing the required task. Superior contractor performance shall take into consideration how each individual will contribute to create positive group chemistry when assembling teams. Inferior performance is marked by disruptive team relations, notwithstanding the sometimes stellar reputation of individual members on the team.

3) Contractor responsiveness: Performance may be measured by the Contractor's ability to maintain open, direct, and responsive communications channels with USAID/Central Asia, country offices, any newly created USAID missions in Central Asia and its clients. Superior contractor performance is marked by a rapid, helpful response to clients without undue delays.

4) Client satisfaction with the finished product: Performance may be measured in many ways. Superior contractor performance is distinguished by the high quality of the final deliverable. High quality deliverables should be clear, concise, accurate, well-structured, and easily comprehended. Advisory services may be measured by the results from recommendations followed.

5) Proficiency of the client: Performance may be measured based on the increased ability of the client (USAID Mission and/or host country government) to understand and act on the technical subject matter subsequent to Contractor's provision of services.

6) Adherence to the proposed subcontracting plan: This relates to the Contractor's ability to assemble or prepare effective expertise (noted above). USAID expects to be able to benefit from access to the full range of experience and expertise available through an IQC-holder consortium. The Contractor's adherence to the proposed sub-contracting plan constitutes part of the basis for the evaluation of contractor performance.

END OF SECTION C

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