Amendment_No_01_SOL-391-15-000030.rtf.pdf

SOLICITATION, OFFER AND AWARD

1. THIS CONTRACT IS A RATED

ORDER UNDER DPAS (15 CFR 700)

RATING PAGE OF PAGES

1 182

2. CONTRACT NUMBER 3. SOLICITATION NUMBER

SOL-391-15-000030

4. TYPE OF SOLICITATION

SEALED BID (IFB)

X NEGOTIATED (RFP)

5. DATE ISSUED

TBD

6. REQUISITION/PURCHASE NUMBER

REQ-391-15-000150

7. ISSUED BY CODE 8. ADDRESS OFFER TO (If other than Item 7)

See Item 7USAID/Pakistan

Office of Acquistion and Assistance

U.S. Embassy

Diplomatic Enclave, Ramna 5

Islamabad, 4400, Pakistan

NOTE: In sealed bid solicitations "offer" and "offeror" mean "bid" and "bidder".

SOLICITATION

9. Sealed offers in original and copies for furnishing the supplies or services in the Schedule will be received at the place specified in Item 8, or if hand carried, in the depository located in until TBD (Hour) local time TBD (Date)

CAUTION: LATE Submissions, Modifications, and Withdrawals: See Section L, Provision No. 52.214-7 or 52.215-1. All offers are subject to all terms and conditions contained in this solicitation.

10. FOR

INFORMATION

CALL:

A. NAME

Maria Hassan

B. TELEPHONE (NO COLLECT CALLS ) C. E-MAIL ADDRESS

mhassan@usaid.govAREA CODE

+92

NUMBER

512-0814

EXT .

11. TABLE OF CONTENTS

OFFER (Must be fully completed by offeror)

NOTE: Item 12 does not apply if the solicitation includes the provisions at 52.214-16, Minimum Bid Acceptance Period.

12. In compliance with the above, the undersigned agrees, if this offer is accepted within 180 calendar days (60 calendar days unless a different period is inserted by the offeror) from the date for receipt of offers specified above, to furnish any or all items upon which prices are offered at the price set opposite each item, delivered at the designated point(s), within the time specified in the schedule.

AWARD (To be completed by government)

19. ACCEPTED AS TO ITEMS NUMBERED 20. AMOUNT 21. ACCOUNTING AND APPROPRIATION

TBD

22. AUTHORITY FOR USING OTHER THAN FULL AND OPEN COMPETITION:

10 U.S.C. 2304 (c) ( ) 41 U.S.C. 253 (c) ( )

23. SUBMIT INVOICES TO ADDRESS SHOWN IN

(4 copies unless otherwise specified)

ITEM

24. ADMINISTERED BY (If other than Item 7) CODE 25. PAYMENT WILL BE MADE BY CODE

OFM - USAID/Pakistan

26. NAME OF CONTRACTING OFFICER (Type or print)

M. Kamal Ayub

27. UNITED STATES OF AMERICA

(Signature of Contracting Officer)

28. AWARD DATE

IMPORTANT - Award will be made on this Form, or on Standard Form 26, or by other authorized official written notice.

AUTHORIZED FOR LOCAL REPRODUCTION

Previous edition is unusable

STANDARD FORM 33 (Rev. 9-97)

Prescribed by GSA - FAR (48 CFR) 53.214(c)

(X) SEC. DESCRIPTION PAGE(S) (X) SEC. DESCRIPTION PAGE(S)

PART I - THE SCHEDULE PART II - CONTRACT CLAUSES

x A SOLICITATION/CONTRACT FORM 1 x I CONTRACT CLAUSES 59 x B SUPPLIES OR SERVICES AND PRICES/COSTS 10 PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACH.

x C DESCRIPTION/SPECS./WORK STATEMENT 13 x J LIST OF ATTACHMENTS 82 x D PACKAGING AND MARKING 25 PART IV - REPRESENTATIONS AND INSTRUCTIONS x E INSPECTION AND ACCEPTANCE 26 x K REPRESENTATIONS, CERTIFICATIONS AND

OTHER STATEMENTS OF OFFERORS

x F DELIVERIES OR PERFORMANCE 27 x G CONTRACT ADMINISTRATION DATA 39 x L INSTRS., CONDS., AND NOTICES TO OFFERORS 97 x H SPECIAL CONTRACT REQUIREMENTS 44 x M EVALUATION FACTORS FOR AWARD 112

13. DISCOUNT FOR PROMPT PAYMENT

(See Section I, Clause No. 52.232.8)

10 CALENDAR DAYS (%) 20 CALENDAR DAYS (%) 30 CALENDAR DAYS (%) CALENDAR DAYS (%)

14. ACKNOWLEDGEMENT OF AMENDMENTS

(The offeror acknowledges receipt of amendments to the SOLICITATION for offerors and related documents numbered and dated):

AMENDMENT NO. DATE AMENDMENT NO. DATE

15A. NAME

AND

ADDRESS

OF

OFFEROR

CODE FACILITY

16. NAME AND TITLE OF PERSON AUTHORIZED TO SIGN OFFER

(Type or print)

15B. TELEPHONE NUMBER 15C. CHECK IF REMITTANCE ADDRESS

IS DIFFERENT FROM ABOVE - ENTER

SUCH ADDRESS IN SCHEDULE.

17. SIGNATURE 18. OFFER DATE

AREA CODE NUMBER EXT.

SOL-391-15-000030

SMALL AND MEDIUM ENTERPRISE ACTIVITY (SMEA)

TABLE OF CONTENTS

SECTION B—SUPPLIES OR SERVICES AND PRICES/COSTS………………………

B.1 PURPOSE

B.2 CONTRACT TYPE

B.3 TOTAL ESTIMATED COST AND OBLIGATED AMOUNT

B.4 BUDGET

B.5 INDIRECT COSTS

B.6 REIMBURSABLE COSTS

B.7 PAYMENT OF FIXED FEE

SECTION C—STATEMENT OF WORK

C.1 PURPOSE & SCOPE

C.2 BACKGROUND

C.3 STATEMENT OF WORK

C.4 GEOGRAPHICAL CODE

C.5 GRANTS UNDER CONTRACTS

C.6 END OF ACTIVITY RESULTS

SECTION D—PACKAGING AND MARKING

D.1 AIDAR 752.7009 MARKING (JAN 1993)

D.2 BRANDING

D.3 BRANDING IMPLEMENTATION AND MARKING PLAN

SECTION E—INSPECTION AND ACCEPTANCE

E.1 NOTICE LISTING CONTRACT CLAUSES INCORPORATED BY REFERENCE

E.2 INSPECTION AND ACCEPTANCE

E.3 PERFORMANCE STANDARDS

SECTION F—DELIVERIES OR PERFORMANCE

F.1 NOTICE LISTING CONTRACT CLAUSES INCORPORATED BY REFERENCE

F.2 PERIOD OF PERFORMANCE

F.3 PLACE OF PERFORMANCE

F.4 KEY PERSONNEL

F.5 AUTHORIZED WORK DAY/WEEK

F.6 REPORTS/DELIVERABLES & SUBMISSION SCHEDULE

SECTION G—CONTRACT ADMINISTRATION DATA…………………………………………

G.1 ADMINISTRATIVE CONTRACTING OFFICE

G.2 CONTRACTING OFFICER’S AUTHORITY

G.3 CONTRACTING OFFICER’S REPRESENTATIVE

G.4 TECHNICAL DIRECTION

G.5 PAYMENT & PAYING OFFICE

G.6 AIDAR 752.7003 DOCUMENTATION OF PAYMENT (NOV 1998)

G.7 ACCOUNTING AND APPROPRIATION DATA

SECTION H—SPECIAL CONTRACT REQUIREMENTS

H.1 LANGUAGE REQUIREMENTS

H.2 AUTHORIZED GEOGRAPHIC CODE

H.3 DEFENSE BASE ACT INSURANCE AND SERVICES

H.4 ADS 302.3.5.5 REPORTING OF FOREIGN TAXES (JULY 2007)

H.5 ADS 302.3.5.9 NONDISCRIMINATION (JUNE 2012)

H.6 AIDAR 752.204-72 ACCESS TO USAID FACILITIES AND USAID’S INFORMATION

SYSTEMS (AUGUST 2013)

H.7 ADS 302.3.5.14(A) USAID DISABILITY POLICY - ACQUISITION (DECEMBER 2004) 47

H.8 ADS 302.3.5.19 USAID-FINANCED THIRD-PARTY WEB SITES (AUGUST 2013)

H.9 ADS 302.3.5.20 CONFERENCE PLANNING AND REQUIRED APPROVALS (AUGUST

2013) 48

H.10 ADS 302.3.5.21 USAID IMPLEMENTING PARTNER NOTICES (IPN) PORTAL FOR

ACQUISITION (JULY 2014)

H.11 302.3.5.22 SUBMISSION OF DATASETS TO THE DEVELOPMENT DATA LIBRARY

(DDL) (OCTOBER 2014) 5 0

H.12 ELECTRONIC PAYMENTS SYSTEM

H.13 ANTI-FRAUD HOTLINE

H.14 AMMONIUM NITRATE AND CALCIUM AMMONIUM NITRATE RESTRICTION (SEP

2011) (CLASS DEVIATION OAA-DEV-11-03C, EXPIRATION DATE, SEPTEMBER 8, 2016)

H.15 SECURITY CONDITIONS AND REPORTING

H.16 CONSENT TO SUBCONTRACT

H.17 ENVIRONMENTAL COMPLIANCE

H.18 FOREIGN GOVERNMENT DELEGATION TO INTERNATIONAL CONFERENCES……5 6

H.19 LOGISTIC SUPPORT

H.20 MANAGING INFORMATION TECHNOLOGY RESOURCES

H.21 PROHIBITION OF ASSISTANCE TO DRUG TRAFFICKERS

H.22 AMERICAN CITIZENS SERVICES REGISTRATION

H.23 GRANTS UNDER CONTRACT

H.24 PROHIBITION ON CONTRACTING WITH ENTITIES THAT REQUIRE CERTAIN

INTERNAL CONFIDENTIALITY AGREEMENTS (APR 2015) 58

SECTION I—CONTRACT CLAUSES

SECTION J - LIST OF ATTACHMENTS

SECTION K—REPRESENTATIONS, CERTIFICATIONS, AND OTHER STATEMENTS OF

OFFERORS 83

K.1 NOTICE LISTING CONTRACT CLAUSES INCORPORATED BY REFERENCE

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

K.3 52.204-8 ANNUAL REPRESENTATIONS AND CERTIFICATIONS (JAN 2014)

K.4. 52.209-7 – INFORMATION REGARDING RESPONSIBILITY MATTERS (JUL 2013) …… 88

K.5 52.209-5 CERTIFICATION REGARDING RESPONSIBILITY MATTERS (APR 2010)…… 89

K.6 52.230-1 COST ACCOUNTING STANDARDS NOTICES AND CERTIFICATIONS (MAY

2012) 89

K.7 52.230-7 PROPOSAL DISCLOSURE—COST ACCOUNTING PRACTICE CHANGES (APR

2005) 9 4

K.8 AUTHORIZED NEGOTIATORS

K.9 AGREEMENT ON, OR EXCEPTIONS TO, TERMS AND CONDITIONS

K.10 SIGNATURE

K.11 52.222-22 PREVIOUS CONTRACTS AND COMPLIANCE REPORTS (FEB 1999)

K.12 52.222-56 CERTIFICATION REGARDING TRAFFICKING IN PERSONS COMPLIANCE

PLAN (MAR 2015) 95

K.13 KEY INDIVIDUAL CERTIFICATION

SECTION L—INSTRUCTIONS, CONDITIONS, AND NOTICES TO OFFERORS

L.1 FAR 52.252-1 SOLICITATION PROVISIONS INCORPORATED BY REFERENCE (FEB

1998) 97

L.2 NOTICE LISTING SOLICITATION PROVISIONS INCORPORATED BY REFERENCE 97

L.3 FAR 52.216-1 TYPE OF CONTRACT (APR 1984)

L.4 FAR 52.233-2 SERVICE OF PROTEST (SEP 2006)

L.5 GENERAL INSTRUCTIONS TO OFFERORS

L.6 INSTRUCTIONS FOR THE PREPARATION OF THE TECHNICAL PROPOSAL

L.7 INSTRUCTIONS FOR THE PREPARATION OF COST PROPOSAL

L.8 INSTRUCTIONS FOR THE PREPARATION OF THE BRANDING IMPLEMENTATION

PLAN AND THE MARKING PLAN

L.9 SECURITY PLAN

SECTION M - EVALUATION FACTORS FOR AWARD

M.1 AWARD WITHOUT DISCUSSIONS

M.2 SOURCE SELECTION

M.3 DETERMINATION OF COMPETITIVE RANGE

M.4 TECHNICAL PROPOSAL EVALUATION FACTORS

M.5 EVALUATION OF PAST PERFORMANCE

M.6 EVALUATION SYSTEM

M.7 EVALUATION OF COST PROPOSALS

M.8 CONTRACTING WITH SMALL BUSINESS CONCERNS AND DISADVANTAGED

ENTERPRISES 117

ATTACHMENTS

Acronym List

ADS USAID’s Automated Directives System

AIDAR USAID Acquisition Regulation

BDSP Business Development Service Providers

BEE Business Enabling Environment

BOI Board of Investment Pakistan

CCN Cooperating Country Nationals

CFO Cash Flow from Operations

CFR Code of Federal Regulations

CO Contracting Officer

COP Chief of Party

COR Contracting Officer’s Representative

CPARS

Contractor Performance Assessment Reporting

System

CPFF Cost plus Fixed Fee

CSO Civil Society Organization

DCA Development Credit Authority

DEC USAID’s Development Experience Clearinghouse

DFID U.K. Department for International Development

DO Development Objective

DQA Data Quality Assessment

DUNS Data Universal Numbering System

EBITDA

Earnings before interests, taxes, depreciation and amortization

EGA USAID’s Economic Growth and Agriculture Office

EU European Union

EXO/SSO

USAID’s Executive Office/Security & Security

Office

FAR Federal Acquisition Regulation

FMD Financial Markets Development

GDP Gross Domestic Product

GOP Government of Pakistan

HEC Higher Education Commission of Pakistan

IADB Inter-American Development Bank

ICT Information Communication and Technology

IMF International Monetary Fund

IR Intermediate Results

KfW German Development Bank

LOE Level-of-Effort

MOU Memoranda of Understanding

MTDF Medium-Term Development Framework

NCSME National Committee on SMEs

NGO Non-governmental organization

NICRA Negotiated Indirect Cost Rate Agreement

OAA USAID’s Office of Acquisition and Assistance

OPM Office of Program Management

PCF Pakistan Challenge Fund

PCFTI

Pakistan Challenge Fund for Technology and

Innovation

PII Personally Identifiable Information

PMP Performance management plan

PPII Pakistan Private Investment Initiative

PPP Public Private Partnership

PPP-C Pakistan Private-sector project for Competitiveness

RFP Request for Proposal

SAM System for Award Management

SBP State Bak of Pakistan

SECP Securities and Exchange Commission of Pakistan

SEZ Special Economic Zone

SME Small and Medium Enterprise

SMEA Small and Medium Enterprise Activity

SMEDA

Small and Medium Enterprise Development

Authority

SOW Scope of Work

STTA Short-Term Technical Assistance

TA Technical Assistance

TCN Third Country Nationals

TDAP Trade Development Authority of Pakistan

USAID United States Agency for International Development

USAID CST USAID Contractor Salary Threshold

USG United States Government

VAT Value Added Tax

WB World Bank

WTO World Trade Organization

SECTION B—SUPPLIES OR SERVICES AND PRICES/COSTS

B.1 PURPOSE

The United States Agency for International Development’s (“USAID” or the “Agency”) mission to the

Islamic Republic of Pakistan (“Pakistan,” and, together, “USAID/Pakistan” or the “Mission”) requires technical services to implement the Small and Medium Enterprise Activity (“SMEA”) as described in

Section C.

B.2 CONTRACT TYPE

This is a Cost-Plus-Fixed-Fee (CPFF) Completion contract. For the consideration set forth in the contract, the contractor for SMEA (“Contractor”) must provide the deliverables and outputs described in

Section C and Section F.

B.3 TOTAL ESTIMATED COST AND OBLIGATED AMOUNT

(a) The total estimated cost for the performance of the work required for the contract, exclusive of fixed fee, if any, is $TBD. The fixed fee, if any, is $TBD. The total estimated cost plus fixed fee, if any, is $TBD.

(b) The total obligated amount available for reimbursement of allowable costs incurred by the

Contractor (and payment of fixed fee, if any) for performance under the contract is $TBD. The

Contractor must not exceed the aforesaid obligated amount in accordance with Federal

Acquisition Regulation (“FAR”) § 52.232.22, “Limitation of Funds.”

B.4 BUDGET

Line Item Total

1. Salaries and Other Benefits $

2. Travel and Transportation $

3. Equipment $

4. Other Direct Costs $

5. Subcontracts $

6. Pakistan Challenge Fund $7,500,000

7. Indirect Cost $

Total Estimated Cost (Excluding Fixed Fee) $

Fixed Fee $

Total Cost Plus Fixed Fee $

(a) The inclusion of any costs in the above budget does not obviate the requirement for prior approval by the Contracting Officer of cost items designated as requiring prior approval by any of the terms and conditions of this contract, including the applicable cost principles (see FAR §

52.216-7, “Allowable Cost and Payment”); nor, does it constitute a determination of allowability by the Contracting Officer of any item of cost, unless specifically stated elsewhere in this contract. Also, the Contractor must not adjust these amounts without a written modification signed by the Contracting Officer. The Contractor must not bill any amounts against this contract in excess of the amounts specified for each line item.

(b) The Contractor agrees to furnish data that the Contracting Officer may request on costs expended or accrued under this contract.

(c) Without the prior written approval of the Contracting Officer, the Contractor must not exceed the total estimated cost set forth in the budget or the total obligated amount, whichever is less.

B.5 INDIRECT COSTS

(a) Pending establishment of revised provisional or final indirect cost rates, USAID/Pakistan will reimburse allowable indirect costs on the basis of the following negotiated provisional or predetermined rates and the appropriate bases pursuant to the contractor’s current executed

Negotiated Indirect Cost Rate Agreement (NICRA):

Description Rate Base Type Period

% 1/ 1/ 1/

1/ Base of Application:

Type of Rate:

Period:

(b) The Contractor will make no change in its established method of classifying or allocating indirect costs without the prior written approval of the Contracting Officer.

B.6 REIMBURSABLE COSTS

(a) The U.S. dollar costs allowable will be limited to reasonable, allocable, and necessary costs determined in accordance with FAR 31 (Contract Cost Principles), FAR § 52.216-7, “Allowable

Cost and Payment,” FAR § 52.216-8, “Fixed Fee,” FAR § 52.232-20, “Limitation of Cost,” and

FAR § 52-232-22, “Limitation of Funds,” if applicable, and AIDAR 752.7003, “Documentation for Payment.”

B.7 PAYMENT OF FIXED FEE

(a) Fixed Fee under this Contract is [TBD]. USAID/Pakistan will pay a portion of the contractor’s fixed fee upon the receipt of the deliverables listed in Section F. The portion of fee allocated to each result/deliverable is listed in the table at F.6. In the event the contractor does not fulfill a deliverable/result, then the contractor will not be entitled to the corresponding fee.

(b) In accordance with FAR clause 52.216-8 “Fixed Fee”, USAID reserves the right to withhold a reserve not to exceed $100,000. The Contracting Officer shall release 75 percent of all fee withholds under this contract after receipt of an adequate certified final indirect cost rate proposal covering the year of physical completion of this contract, provided the Contractor has satisfied all other contract terms and conditions, including the submission of the final patent and royalty reports, and is not delinquent in submitting final vouchers on prior years’ settlements.

The Contracting Officer may release up to 90 percent of the fee withholds under this contract based on the Contractor’s past performance related to the submission and settlement of final indirect cost rate proposals.

B.8 MULTI-YEAR CONTRACT AND CANCELLATION CEILING

This contract is considered non-severable, and is therefore a multi-year contract as defined in FAR 17.103.

Therefore, this contract is subject to the requirements of FAR 17.106.

(a) Performance under this contract during the second and subsequent program years is contingent upon the appropriation of funds. All program years except the first are subject to cancellation. Cancellation shall occur by the dates specified below if the Contracting Officer:

1. notifies the Contractor that funds are not available for contract performance for any subsequent program year, or

2. fails to notify the Contractor that funds are available for performance of the succeeding program year.

(b) Cancellation Ceiling:

This is a CPFF type contract where the Contractor is authorized to be reimbursed for all costs which are allowable in accordance with FAR 52.216-7, “Allowable Costs and Payment.” Therefore, the Contractor will not incur any costs which would have been amortized over the life of the contract should the contract be cancelled in accordance with FAR 52.217-2.

The Government's liability for cancellation charges shall not exceed $0. This amount will be reduced in accordance with FAR 17.106-1(c)(1) at the conclusion of each program year, as follows:

Program Year Cancellation Date Cancellation Ceiling

Year 1: 201x/201x N/A N/A

Year 2: 201x/201x TBD $0

Year 3: 201x/201x TBD $0

Year 4: 201x/201x TBD $0

Year 5: 201x/20xx TBD $0

[END OF SECTION B]

SECTION C—STATEMENT OF WORK

The Small and Medium Enterprise Activity (SMEA) of The Pakistan Private-sector Project for

Competitiveness (PPP-C)

C.1 PURPOSE & SCOPE

SMEA’s development hypothesis is that SME-led economic growth will result in poverty reduction, job creation and entrepreneurship development contributing to increased GDP.

SMEA will increase incomes and employment in project-assisted economic sectors and improve the enabling environment for private sector led growth in Pakistan. This activity will contribute to achieving

USAID/Pakistan’s “Development Objective: “Improving economic status of focus populations”.

C.1.1 Objectives

The Contractor will achieve the following objectives and sub-objectives of SMEA:

SMEA Objective 1: Improved Business Enabling Environment (BEE):

Sub Objective 1.1: Improved GOP ability to develop and implement reforms of policies, laws and regulations

Sub Objective 1.2: Strengthened private sector and civil society engagement in policy-making

SMEA Objective 2: Improved Economic Performance of Focus Enterprises:

Sub Objective 2.1: Improved Economic Performance in select sectors

Sub-Objective 2.2: Improved Technological Readiness and Innovation

Sub-Objective 2.3: Increased Access to Markets

Sub-Objective 2.4: Increased Access to Finance

Sub-Objective 2.5: Enabled women SMEs Run Profitable Businesses

Refer to Section J.1 Logical Framework Analysis for performance indicators against each of the above objectives and sub-objectives which the Contractor will pursue during the Activity.

The Contractor will target improvement of the financial and operating performance of at least 6,000 SMEs.

This will be achieved through reductions in key policy, legal and regulatory barriers in selected sectors and for SMEs in general, in addition to productivity enhancement, cost reductions, and operational efficiencies (increased business knowledge, access to finance, markets, technology and best business practices) for SMEs in a maximum of seven selected manufacturing, industrial and service sectors that lead to increased revenues and employment creation. The Contractor will also set up a Pakistan Grand

Challenge Fund for Technology and Innovation to encourage existing businesses and young entrepreneurs to find innovative, sustainable and scalable solutions to address business development challenges.

C.2 BACKGROUND

C.2.1 Pakistan and Project-Specific Context

Recognizing the potential of SMEs in economic growth, job creation, poverty reduction and rural development, the GOP has developed several policies to assist the SME sector. The GOP has instituted legal (SME Ordinance 2002, SME Bill 2010, Prudential Regulation for SMEs Financing), institutional

(SMEDA Small Medium Enterprise Development Authority and SME Bank), and policy (SME Policy

2007) changes to support SMEs. The GOP previously favored selected sectors, but the current regulatory framework will support SMEs in all sectors of economic activity. The GOP’s draft SME Bill entrusted the

National Committee on SMEs (NCSME) with developing a five year roll-out plan for SME sector development that will specify tasks and institutional responsibilities and provide for subsequent monitoring and evaluation.

There are a number of national development frameworks/policy documents that articulate the need for SME development and place the SME Policy of 2007 in the context of the government’s economic development strategy. The Vision 2025 outlines a comprehensive policy framework for continued economic growth and development and the role of SMEs. To implement the PRSP strategies, the government presented a Medium-Term Development Framework (MTDF) which was incorporated in its annual development planning and which replaced existing Five-Year-Plans. The MTDF was envisioned to turn the country into a major industrialized nation with rapid human development and to sustain economic growth for reducing poverty. The Special Economic Zone (SEZ) Act , recently enacted with the technical and financial assistance of USAID, also provides special consideration for SMEs related to zoning and quotas. The Higher Education Commission (HEC) of Pakistan has sent directives to the universities to include entrepreneurship as a subject, the implementation of which, however, remains a challenge.

While SMEs comprise 98% of Pakistan’s 3.2 million businesses, they only account for 35% of total value added and 30% of export earnings of the manufacturing sector including textile/apparel, construction, light engineering, dairy products, sports equipment, surgical products, leather, furniture, and marble.

SMEs contribute 40% to annual GDP and 78% to non-agriculture employment. 53% operate in the wholesale and retail trade including restaurant and hotels; while 27% provide services and 30% contribute to the manufacturing sector, particularly textile/apparel, construction, light engineering, dairy products, sports, surgical products, leather, furniture, and marble. It is difficult for low-productivity SMEs to integrate into global value chains. This and other factors have contributed to a decline in Pakistan’s exports to GDP ratio from 15.69% in January 2005 to 11.9% in January 2011. Exports have increasingly lagged imports - Pakistan’s annual trade deficit for FY12 increased by 36% and stood at USD $21.27 billion (the GOP forecast was USD $17.29 billion) for the year.

A sizeable portion of SMEs operate in the undocumented informal sector. The majority of SMEs operating in the formal sector are either sole proprietorships or partnerships where the owner also serves as a manager of the enterprise.

Fewer enterprises choose to be registered as companies due to cumbersome regulatory procedures and the related documentation requirements . Within the country, SMEs face additional constraints which hinder growth, investment and innovation. Constraints include burdensome regulatory procedures , limited access to financing and restricted access to markets. SME productivity is also impacted by the fact that a sizeable portion of SMEs operate in the undocumented informal sector, suffer from weak management practices, and lack incentives to grow. According to the Small and Medium Enterprise Development Agency (SMEDA), the presence of SMEs in large numbers has not given them any additional bargaining power to influence the policy or regulatory framework to suit their needs.

Moreover, even if SMEs were supported by policies and procedures which increase access to markets and

1 http://pakistan2025.org/wp-content/uploads/2014/08/Pakistan-Vision-2025.pdf 2 http://pc.gov.pk/mtdf/Foreword,%20Preface%20and%20President%20Message/Overview.pdf 3 http://boi.gov.pk/UploadedDocs/Downloads/GazetteNotificationSEZAct.pdf 4Sole proprietorships are not required by law to register, while partnerships have only to register either as a private or public company if the number of partners exceeds 20.

5O.Siddique: Simplification and Promotion of Laws and Procedures for Corporatization of Small and Medium Enterprises, 2005 ( http://www.secp.gov.pk/IACCD/pub_iaccd/LegalRegulatoryReport.pdf) 6 For details see A. Murtaza: Report for Legal Environment, January 2013.

7 For details see A. Murtaza: Report for Legal Environment, January 2013.

http://pakistan2025.org/wp-content/uploads/2014/08/Pakistan-Vision-2025.pdf http://pc.gov.pk/mtdf/Foreword%2C%20Preface%20and%20President%20Message/Overview.pdf http://boi.gov.pk/UploadedDocs/Downloads/GazetteNotificationSEZAct.pdf http://www.secp.gov.pk/IACCD/pub_iaccd/LegalRegulatoryReport.pdf foster a transparent and competitive operating environment, they would continue to face issues related to low competitiveness. SMEs do not have access to productivity-enhancing services and often deal with outdated technology, high waste and cost inefficiencies. Access to markets is constrained by an inability to consistently adhere to standards. The situation is even more difficult for women entrepreneurs. Only

3% of the country’s 3 million SMEs are owned or managed by women.

C.2.2 Development Challenge

Pakistan is a society of ‘employees.’ According to the 2010-2011 Government of Pakistan (GoP) labor survey, employers make up only 1.4% of the workforce. The country does not generate sufficient start-ups partly due to the perceived imbalance between risks and rewards, lack of understanding regarding entrepreneurship, and focus on employment rather than self-employment. Business entrepreneurship is seen as a family legacy and not earned through risk taking and innovation. The educational and social system does not encourage entrepreneurship as a preferred career option for youth. Most small business owners do not have any training in business management. As a result, the economy creates few new enterprises, and those that are created are in traditional business lines. SMEs only account for 16% of total lending and 4% of total banking customers. Low productivity remains a challenge due to outdated technology, high waste and cost inefficiencies.

SMEs have the potential to grow and create employment in many economic sectors. Pakistan’s

Information and Communications Technology (ICT) sector is dominated by SMEs and grows more than 20% per year. ICT sector labor costs are reportedly 30 percent less than in India. A vibrant ICT sector has the ability to improve performance in other sectors and can quickly generate employment for young people and women. The existence of Business Development Service Providers (BDSPs) is one of the most important factors identified by SME owners and managers for growth and expansion of operations.

BDSPs can be strengthened to provide tailored business services to SMEs. Investment potential in SMEs is another factor that will spur growth. The Pakistani Diaspora and the corporate sector are interested in investing and acting as mentors for startups and SMEs with growth potential. The State Bank of Pakistan recently raised maximum loan limits for SMEs and substantially reduced documentation requirements, sending a signal to the market and potentially increasing SMEs’ ability to access domestic capital. The

Development Credit Authority (DCA) assessed Pakistan as having great potential for setting up DCA credit guarantees for SMEs, and a recently-launched DCA loan portfolio guarantee under the Financial

Markets Development (FMD) project can help make credit more available.

The GOP has recently announced a new government initiative to address rising youth unemployment. The initiative focuses on six programs of which two pertain to SMEs – a Small Business Loans Program focused on educated youth who wish to start their own business, and a Prime Minister’s Program for Provision of Laptops for over 100,000 students, $40 million in Rupee equivalents has been allocated by the GOP.

C.2.3 Coordination with Other USAID Efforts

USAID is currently implementing several projects in Pakistan which are complementary to SMEA’s objectives. The Contractor must establish and maintain supportive, collaborative relationships with other on-going and upcoming projects that result in a synergistic effect to achieve USAID’s goals. For a list of specific projects complementary to SMEA, please see Section J. 2 List of complimentary projects.

8 According to the USAID commissioned a rapid assessment of BDS landscape in Pakistan in 2009, there are approximately 700 BDSPs in different parts of the country are providing limited number and types of BDSs 9 As reported by Agence France-Presse (AFP) on September 21, 2013.

C.3 STATEMENT OF WORK

C.3.1 Overview

The Contractor will achieve SMEA’s objectives aimed at improvement of the financial and operating performance of at least 6,000 small and medium enterprises (SMEs) in Pakistan in a maximum of seven industrial, manufacturing and service sectors. Through SMEA, the Contractor will further test the hypothesis that SME-led economic growth creates employment, unleashes entrepreneurship and reduces poverty.

The Contractor will promote competitiveness at multiple levels. The multi-level approach is consistent with the findings of six studies commissioned by USAID on Pakistan’s SME sector and a USAID-supported study that reviewed 42 evaluations of private sector development projects implemented by USAID, the World Bank, the Inter-American Development Bank, and the U.K. Department for

International Development (DFID) to determine best practices in promoting economic growth.

SMEA

proposed interventions correlate directly with the combination of interventions that the report identifies which create the greatest opportunity for “strategic impact.”

The Contractor will incorporate the following tested concepts to enhance competitiveness:

● Policy reform is key; the project must promote SME-friendly laws, policies and regulations.

Policy reform efforts will benefit from sector-level activities that will help bring together the collective voices needed to engage constructively with government and drive reforms forward.

● Assistance to focus SMEs must demonstrate the effectiveness of new ways of doing business, providing SMEA with a bottom-up sector-level laboratory that will inform interventions further along the strategic impact continuum.

● Project activities to strengthen selected SME sectors must build critical mass and mutually beneficial relationships that, in turn, will act as an accelerant to the rollout of project-introduced improvements.

● Sector-level activities must include strengthening financial, export and other business services.

Project support for financial services will focus on improving the quality of business plans and the ability of SMEs to implement their business plans. This will increase effective demand for financial services and SME ability to compete for credit resources.

● ICT is critical for helping businesses to grow efficiently and can quickly generate employment for young people and women especially with the recent launch of 3G and 4G services in Pakistan.

Harnessing the power of science, technology, innovation and partnership to source and scale breakthroughs in Pakistan will support USG foreign policy and development goals for a sustainable, inclusive, growing economy.

● An effective trade promotion and facilitation process will support export-oriented SMEs in high end domestic, regional and other international markets.

The Contractor will use great discretion in focusing on select reforms that contribute to the development of the sector and have a high level of support by the GOP and private sector institutions.

The Contractor will support SMEs in up to seven industrial, manufacturing and service sectors to enhance competitiveness in domestic and export markets. The Contractor will focus on the following manufacturing, industrial and service sectors

i) information, communication and technology (ICT);

USAID Bureau for Economic Growth, Agriculture and Trade; “Enterprise Growth Initiatives: Strategic Directions and Options;” Prepared by Development Alternatives, Inc.; February 2004; page

xii. Visit http://pdf.usaid.gov/pdf_docs/Pnacx927.pdf

Ibid.

Sectors are subject to adjustments and change during the life of the project.

http://pdf.usaid.gov/pdf_docs/Pnacx927.pdf

ii) light engineering;

iii) textile (minus spinning);

iv) hospitality;

v) minerals (marble, granite and gems);

vi) logistics and packaging; and

vii) leather (minus tanning).

The contractor must be able to deliver robust sector analysis that will form the basis for intervention in the manufacturing and service sectors selected in the work plan. The analysis must identify the key impediments to growth and competitiveness in the respective sectors related to operational and business-enabling environment.

The Contractor will be expected to concentrate on identifying a maximum of three major interventions per individual sector with justification so that support provided under SMEA will be highly concentrated per sector in just a few challenge or issue areas. The idea is to focus on 20% of the issues that will resolve 60% to 70% of the problems a sector is facing.

To the greatest extent possible, the Contractor will engage local service providers for the implementation of its activities. The Contractor will be a facilitator and an active supporter of its local counterparts in developing and mastering a variety of skills necessary for the effective implementation of project interventions. The Contractor will also collaborate with other organizations to create synergies and capitalize on the best use of resources to implement program activities.

C.3.2 Project Objectives and Related Tasks, Deliverables, and Indicators

a) The tasks and deliverables listed under Objective 1 and Objective 2 represent an estimate of the performance required under the terms of the Contract, which the parties will incorporate into the Annual Work Plan. Any additional details and/or alternate actions that meet the objectives of each Component will need to be approved and captured in the development and/or revision of the Annual Performance Plan and Annual Work Plan.

b) The performance indicators and targets listed for each Objective will significantly inform

USAID’s assessment of the Contractor’s performance, especially in terms of the following

“Quality of Products/Services” submitted by the Contractor, “Business Relations” and the

Contractor’s ability to satisfy the interests of USAID; and USAID’s overall “customer satisfaction” with the Contractor’s performance. The performance targets for the project are stipulated in sections C.3.2(c), C.3.2.1. and C.3.2.2. below. Such performance targets will be assessed by USAID/Pakistan in the Contractor Performance Assessment Reporting

System (“CPARS”). Failure to meet such targets might result in an “Unsatisfactory” rating for this contract.

c) SMEA’s GOAL: To improve the competitiveness of Pakistani Small and Medium

Enterprises (SMEs).

Target Indicators:

Number of jobs/employment attributed to SMEA [Target: 30,000]

Proportion of female participation in SMEA to increase access to productive economic resources [Target:10% of SMEs under SMEA are the women owned/managed]

C.3.2.1 OBJECTIVE 1: Improved Business Enabling Environment (BEE)

Policy changes are necessary in order to foster a positive enabling environment for a large number of

SMEs to access and engage in the financial sector in Pakistan. The Contractor will support improvement in the business-enabling environment for SMEs by working with counterparts to reduce policy, legal and regulatory barriers and, build the capacity of the institutions key to SME-led growth in Pakistan. The

Contractor will take a three-pronged approach to achieve this objective. It will focus on: i) key areas that improve the enabling environment for SME growth across Pakistan’s economy; ii) strengthen and support the legal, policy, regulatory and institutional reform processes pertaining to the sectors selected under

SMEA; and iii) capitalize on USG on-going/past efforts and programs supported by other donors.

Results with Target indicators:

Number of reforms consistent with IMF benchmarks on Doing business are analyzed and recommended for improvement (procedures reduced or simplified) [Target: 20% increase from the baseline in 4 areas]

Number of policies/regulations/administrative procedures at a given stage of development as a result of USG assistance [Target: 20% increase from the baseline]

Sub-Objective 3.2.1A: Improved GoP ability to develop and implement reforms of policies, laws and regulations

Results with Target Indicators:

Number of USG assisted meetings with government officials (such as SECP, SBP, BOI) regarding proposed changes in legal/institutional framework [Target: 40]

Number of entities receiving USG supported capacity enhancement on policy development, analysis and implementation [Target: 10]

Tasks under this sub-objective:

Present a prioritized list of policy, regulatory and/or legal barriers (three in general and three per sector

) which are most likely, if removed, will enhance competitiveness of SMEs.

Present list of key stakeholders to build capacity of the entities relevant to enacting, implementing and enforcing reforms. Outline an approach that will encourage the implementation and adoption of reforms.

Outline a process of continuing review and a flexible approach to respond to changing opportunities in this area.

Sub-Objective 3.2.1B: Strengthened private sector and civil society engagement in policy-making

Results with Target Indicators:

Number of USG-assisted organizations that participate in legislative proceedings and/or engage in advocacy [Target: 20]

Number of SMEs participating in events for public/private stakeholders to facilitate private sector engagement in policy making as a result of USG assistance [Target: 25]

Tasks under this sub-objective:

Build the capacity of the private sector to engage and increase communication/coordination with the relevant GOP departments and Ministries to address and reduce policy, regulatory and reforms barriers for SMEs.

14Sectors identified by SMEA

Support the private sector and the relevant sector/business associations to hold policy dialogues through established platforms and/or working groups.

Target SMEs in the selected sectors that have an interest to improve their operations consistent with international norms and certifications such as the International Labor Organization’s Better Work

Program

C.3.2.2 OBJECTIVE 2: Improved Economic Performance of Focus Enterprises:

The Contractor will directly improve economic performance of 6,000 Pakistani SMEs in a maximum of seven manufacturing and service sectors offering the best domestic and international competitive advantages. At least 10% of these SMEs will be women owned and/or managed. In accordance with the characteristics of each selected sector, the Contractor will directly support 6,000 competitively selected

SMEs in target sectors on a cost-sharing basis. Fifteen (15) BDSPs will be competitively selected on a cost sharing basis, which once capacitated, will provide business services to the SMEA-assisted SMEs on a fee basis.

Under this objective, the Contractor will achieve the following results indicators:

Value on incremental sale attributed to SMEA [Target:80% increase from the baseline]

Value of exports of targeted commodities as a result of SMEA’s assistance [Target:70% increase from the baseline]

Value of new private sector investment leveraged with SMEA’s resources [Target: $50 million]

Sub-objective 3.2.2A: Improved economic performance in select sectors

Results with Target Indicators:

Increase in productivity of SMEA assisted SMEs [Target:40% increase from the baseline]

Percentage increase in revenues at SMEA assisted SMEs [Target: 70% increase from the baseline]

Tasks under this sub-objective:

a) Carry out a preliminary market led value chain analysis of the seven (7) SMEA-selected industrial, manufacturing and service sectors. The analysis may identify the key impediments to growth and competitiveness in these sectors related to operational and business environment aspects. The study will evaluate:

• the potential that these SME sectors offer in creating jobs and promoting broad-based economic growth; current and prospective access to domestic, regional and other international markets;

• current and projected market demand for products;

• the degree of SME presence and opportunity for growth within the specific sector;

• the degree to which the sector also offers professional opportunities and growth to women and young entrepreneurs.

• Measures and interventions to address the identified challenges to growth.

b) Carry out a competitive selection process to identify SMEs in the selected sectors for participation in SMEA, based on their willingness to cost share with USAID and share knowledge and experience with SMEs working in the same sectors.

c) Competitively select fifteen sector/service BDSPs on cost-sharing basis, to provide business life cycle services to assisted SMEs in the target sectors.

d) Build the capacity of the selected BDSPs via technical assistance (TA), deployment of/linking with international and local experts and promote a certification regime. Facilitate linkages between project-supported SMEs and project-supported BDSPs, once trained, through business-to-business introductions and support for BDSP marketing efforts which allow SMEs to secure services from a list of project-assessed BDSPs.

e) Provide selected SMEs with a range of support, including TA, training and matching grants consistent with each sector’s issue areas based on a plan developed and agreed to by the selected

SME and the contractor.

f) Provide need-based support to selected SMEs in core areas such as productivity enhancement accessing technology, domestic and foreign markets and finance, general management, legal and accounting services.

Sub-objective 3.2.2B: Improved Technological Readiness and Innovations:

Recognizing the critical role ICT has in building a competitive economy, and the prospects for innovative

ICT solutions to address development obstacles, the Contractor will support Pakistani efforts to realize the country’s ICT potential. The Contractor will demonstrate the benefits of the use of science and technology by promoting innovative, sustainable and scalable solutions.

Results with Target Indicators:

Number of USG assisted SMEs that applied new technologies or management practice as result of USG assistance [Target: 80% of the assisted SMEs]

Number of new technologies and innovations introduced as a result of SMEA assistance [Target:

20]

Tasks under this sub-objective:

a) Provide technical assistance to ICT firms to develop and market new technologies to enhance competitiveness in the selected sectors.

b) Support opportunities to complement the GOP’s research and innovation fund with an offer of

TA, and finding other ways to reinforce the success of incubators such as Plan 9 – an IT initiative set up by the Punjab Institute of Technology Board.

c) Support ICT solutions for SMEs in selected sectors to enhance production and cost efficiencies;

improve inventory management; better manage customer relationships; access new markets, achieve greater financial inclusion, and employ ICT to expand and increase profitability.

d) Facilitate collaboration between industry and academia to address supply side constraints in terms of trained labor, to promote the commercialization of ICT research, and to increase technology literacy.

e) Administer the Pakistan Challenge Fund for Technology and Innovation (described in Section

C.5)

Sub-objective 3.2.2C: Increased Access to Markets

The Contractor will provide support to SMEs to identify and capitalize on business opportunities in high end domestic and international markets. Target groups will include SMEs in the selected sectors, winners of Challenge Grants, women and youth run startups in the ICT sector, chambers of commerce and industry, and sector associations in the selected industrial and service sectors. The support will focus on improving access to information about high-end domestic, regional and international markets for trade and investment and helping SMEs to meet international quality standards through certification, etc.

Results Indicators:

Percentage of USG SMEs that engage with new domestic/export markets and customers [Target:

80% of the assisted SMEs]

Percentage share (increase) of domestic markets by USG supported SMEs [Target: 50% from the baseline]

Percentage share (increase) of domestic markets by SMEA supported SMEs [Target:50% from the baseline]

Tasks under this sub-objective:

a) Support SMEs in the selected sectors to identify buyers and optimal business partners to access/expand into domestic and export markets

b) Build SMEs knowledge and awareness of domestic and export markets in the selected sectors.

c) Provide trainings to SMEs in the selected sectors about market dynamics.

d) Work with SMEs to enhance their capacity to export products and international business linkages in the selected sectors, and provide technical and financial (on cost-share basis) support for participation in international trade fairs and exhibitions.

e) Provide technical advisors to SMEs in marketing plan development for advertising and promotion of SME products and services.

f) Develop relationships and coordinate with relevant organizations such as BOI, TDAP, Ministry of Industries, Ministry of Commerce, manufacturers and exporters associations

Sub-objective 3.2.2D: Increased Access to Finance

The Contractor will address both the demand-side, and the policy aspects of access to finance. On the demand side, the Contractor, on an as needed basis, will assist the selected SMEs in the selected sectors to become investable and bankable. One of the critical targets for the SMEA supported BDSP partners will be to assist their client SMEs to gain access to finance. This will include improving SMEs’ understanding of the process involved in approaching a financial service provider– bank, equity firm, leasing company, venture capital fund–for finance, from preparation of adequate financial documents to presentation of business plans. On the policy side, the Contractor will work with the SBP and SECP to improve the policy, regulatory and enabling environment to increase access to finance for SMEs. The supply side will be covered by collaborating with the DCA credit enhancement under the USAID FMD

Project and with PPII for accessing equity finance, along with other donors’ access to finance programs such as those of DFID and KfW, for example.

Results with Target Indicators

Number of SMEs receiving business development services from USG assisted sources. [Target: 80% of the assisted SMEs]

Percentage of SMEA assisted SMEs with improved financial worthiness. [Target: 70% of the assisted SMEs]

Tasks under this sub-objective:

a) Build SMEs awareness of sources and types of finance, and improve SMEs knowledge of access to credit and evaluation of these finance/funding options.

b) Improve the capacity of SMEs to develop feasibility plans, including financial projections.

c) Build the capacity of SMEs’ to improve record keeping, financial reporting, corporate governance and other financial worthiness measures.

d) Establish synergies with and capitalize on USAID’s partner projects for access to credit and use of equity funds; including the FMD and the PPII activities.

e) Coordinate and develop relationships with other donors’ access to finance projects to meet supply side needs, such as DFID and KfW.

Sub-objective 3.2.2E: Enabled Women owned/managed SMEs to Run Profitable Businesses

The Contractor will focus on increasing women’s participation in SME ownership by encouraging entrepreneurship through business services that address the specific needs of women owned SMEs. In addition business life cycle support will be provided to the women SMEs by BDSPs. The Contractor will focus on interventions at the policy, institutional and enterprise levels.

Results with Target Indicators

Number of SMEA assisted women SMEs accessing financial services. [Target: 60% of assisted women

SMEs]

Number of USG assisted women SMEs entering new domestic/export markets. [Target: 70% of assisted women SMEs]

Percentage increase sales revenue at the USG assisted women SMEs. [Target: 50% increase in sales revenue for 60% of the assisted women SMEs]

Tasks under this sub-objective:

a) Identify and assess gender specific legal and policy impediments relating to registration, regulation, access to finance, market and technology and women’s entrepreneurship in the identified sectors.

b) Propose and deliver activities that build the capacity of women’s chambers of commerce and industry, business and professional women associations and women entrepreneurs’ networks for advocacy in selected sectors.

c) Provide technical assistance to increase women’s participation in business ownership and management. Provide business life cycle support to the women entrepreneurs by SMEA facilitated BDSPs and/or by women focused BDSPs.

C.4 GEOGRAPHIC CODE

While project activities will take place throughout Pakistan and contractor may wish to open provincial offices, the main project management office will be located in Islamabad. While the business enabling environment work will benefit SMEs across the board, the geographic scope for the sector specific support under SMEA will depend on the type of issues chosen to work on within each of the sectors for which the

Contractor must also enter into partnership with relevant Federal, provincial and local organizations to undertake appropriate activities.

C.5 GRANTS UNDER CONTRACTS

The Contractor will utilize Grants Under Contract (GUC) to encourage firms to develop and market new technologies to enhance firm productivity and efficiencies for both domestic and export markets. The

Contractor will establish and administer a GUC program called the “Pakistan Challenge Fund for Technology and Innovation (PCFTI).” The objectives for setting up this fund are to test and pilot new ideas, and bring successfully demonstrated new ideas to fruition.

In developing the Challenge Fund, the Contractor--through the COR--will consult with the USAID Global

Development Lab to take into account lessons of…