EG IQC Microeconomic SOW DRAFT.doc

Microeconomic 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 arrangements 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 macroeconomic reform, agriculture, business improvement, the environment, energy and trade facilitation.

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 microeconomic reform, strengthening businesses, infrastructure, and trade facilitation through a structured procurement process. The new IQC will build on previous USAID-funded efforts in addressing these areas.

USAID’s program objectives focus on implementing robust activities that promote 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 microeconomic reform, business improvement, and trade facilitation.

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 Asian 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. Unemployment 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 possess characteristics of failed states which complicate the implementation of economic reforms.

C.4 PRIOR DEMAND FOR USAID/CENTRAL ASIA ECONOMIC GROWTH ACTIVITIES

C.5 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, whether Mission-funded or centrally-funded. 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.6 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.6.A CORE TASKS

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

1) Management of the IQC, and

2) Knowledge Management.

C.6.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) Private firm

b) Public or private institution

c) Government ministry

d) 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.6.A.2 KNOWLEDGE MANAGEMENT

Knowledge Management (KM) is a significant part of the Microeconomic Foundations for Growth IQC. The contractor shall:

1) Capture, provide custodianship for and, as directed, disseminate 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.6.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.

IQC technical assistance covers a wide range of potential activities necessary to address Central Asia’s growth, productivity and output. USAID intends the task orders issued under this IQC to coordinate closely with the other USAID contract mechanisms to avoid overlap of mandate and ensure effective use of resources.

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

Within the Microeconomic Foundations for Growth area, services will cover both developing and implementing:

1) Small and medium enterprise development,

2) Micro-enterprise development,

3) Support to agro-business and agro-producers, and

4) Addressing exogenous shocks, measures to assist supply chains, sectors, and individual firms in the event of exogenous economic and financial shocks which cause local business and financial dislocations, structural changes in the local economy, capital and labor dislocations, and decreases in output and employment.

Below are represented a range of potential illustrative tasks that USAID could require under Task Orders.

C.6.B.1 MICRO-ECONOMIC FOUNDATIONS FOR GROWTH

The objective is to remove impediments to entrepreneurial initiative, output, productivity, and trade with a focus on private enterprise growth and small and medium sized enterprises as well as micro-enterprise development and expansion. The Contractor shall undertake targeted interventions to address these constraints and to create conditions for sustained productivity and growth at the enterprise, value chain, industry, and sector levels. Illustrative activities include:

1) Small and medium enterprise development initiatives that address:

a) Support for entrepreneurship and risk taking

b) Incentives schemes for risk-taking behavior in pursuit of profit

i) Access to risk-sharing/mitigation vehicles

ii) Business insurance

iii) Appraisal and valuation

iv) Business strategy and market tactics v)Organization management, finance, marketing, and operations

c) Governance

d) Linkages to buyers and/or suppliers

e) Value chain strengthening and optimizing

f) Innovation in product and service markets

g) Integration with local, regional and global markets

h) Linkages to foreign brokers, buyers, and suppliers

i) New business formation

i) Facilitating new entry ii)Decreasing time, cost, complexity of operations and access to services

j) Business support and promotion services

k) Increased access to improved factor conditions:

i) Seed capital, later-stage equity, debt financing

ii) Reduction in labor rigidity

iii) Land markets formalized l)Infrastructure: physical, technological, informational, administrative, natural resources

m) Professional education and certification

n) Transition from informal to formal operations

o) Domestic and foreign business promotion and support organizations

p) Improving institutional support

ii) Association development

iii) Other strategic working groups

2) Micro-enterprise initiatives that address:

a) Fostering entrepreneurial initiative

b) New business formation

c) Institutional support development

d) Business development services

e) Policy and regulatory reform

f) Training

g) Development of market linkages

h) Assessments, evaluations, and analyses

i) Credit and other financial support

3) Support to agro-business and agro-producers

a) agro-financing

b) cooperative development organizations and other member-owned businesses

c) modernizing on-farm technologies

d) crop diversification

4) Exogenous shocks that decrease economic activity and require rapid, corrective intervention.

C.6.C ILLUSTRATIVE TASK ORDER DELIVERABLES OF CORE AND TECHNICAL TASKS

Since identification and specification of task orders is not possible 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 micro-economic productivity, institutional capacity and other functions that support private-sector-led growth,

2) Competitiveness and business productivity initiatives at the national, sub-national, regional, value chain, cluster, and enterprise levels,

3) Trade expansion and promotion efforts at the national, regional, and global levels, and facilitation of trade organization membership,

4) Public/private dialog and partnerships on business, trade, investment, entrepreneurship, and productivity,

5) Private investment encouragement initiatives at the regional, national, sub-national, sector, and firm levels,

6) Knowledge management and dissemination activities,

7) Initiatives that expand SMEs capacity to meet local content requirements.

8) Initiatives that seek to increase SMEs use of new technology and ability to innovate.

9) Initiatives that provide technical assistance to government programs to promote SME development.

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

C.6.D IMPLEMENTATION AND PROGRAM MANAGEMENT

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

C.6.E GRANTS MANAGEMENT

The Contractor may be requested to award and administer a grants program to support indigenous NGOs in pilot or experimental activities. Funds may be made available on a grant basis. 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.7 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 not calculated twice for 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.8 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.9 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 Microeconomic Foundations for 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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