Final_Amendment__2_SOL-486-13-000005.pdf

AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT

1. CONTRACT ID CODE

PAGE OF PAGES

1 30

2. AMENDMENT/MODIFICATION NO.

Two (2)

3. EFFECTIVE DATE

See block 16C

4. REQUISITION/PURCHASE REQ. NO

5. PROJECT NO. (If applicable)

6. ISSUED BY CODE 7. ADMINISTERED BY (IF OTHER THAN ITEM 6) CODE

Regional Office of Procurement USAID/Regional Development Mission for Asia Athenee Tower, 25th Floor 63 Wireless Road, Bangkok, Thailand 10330

8. NAME AND ADDRESS OF CONTRACTOR (No., Street, County, State, and Zip Code)

9A. AMENDMENT OF SOLICITATION NO.

SOL-486-13-000005

9B. DATED (SEE ITEM 11)

November 29, 2012

10A. MODIFICATION OF CONTRACT/ORDER NO.

CODE:

FACILITY CODE:

10B. DATED (SEE ITEM 11)

11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS

X The above numbered, solicitation is amended as set forth in item 14. The hour and date specified for receipt of Offers is extended X is not extended.

Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended by one of the following methods:

(a) By completing Items 8 and 15, and returning copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers, FAILURE OF YOUR ACKNOWLEDGMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified.

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13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS,

IT MODIFIES THE CONTRACT/ORDER NO., AS DESCRIBED IN ITEM 14

A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify Authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT

ORDER NO. IN ITEM 10A.

B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43,103 (b).

C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF:

FAA 1961, as amended and EO 11223

D. OTHER (Specify type of modification and authority)

E. IMPORTANT: Contractor is NOT is required to sign this document and return copies to the issuing office.

14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where feasible.

The purposes of this amendment are:

1. To incorporate in Section J, LIST OF ATTACHMENTS, as Attachment G, the “ASEAN ASW Sustainability Study” into the RFP as an integral part of the Solicitation (see Attachment 1 of this Amendment); and,

2. To advise that the ADVANCE Mid-Term evaluation was recently posted to the Development Experience Clearinghouse https://dec.usaid.gov/dec/home/Default.aspx. The document ID# is 22693816-67d3-4aad-b20c-728792421d4b.

Except as so stated, all other terms and conditions in the original RFP remain the same. See page 2 of this Amendment

Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains unchanged and in full force and effect.

15A. NAME AND TITLE OF SIGNER

16A. NAME AND TITLE OF CONTRACTING OFFICER

Craig Riegler

15B. CONTRACTOR/OFFEROR 15C. DATE

SIGNED

16B. UNITED STATES OF AMERICA

16C. DATE

SIGNED

(Signature of person authorized to sign) (Signature of Contracting Officer)

NSN 7540-01-152-8070 STANDARD FORM 30 (REV. 10-83)

Previous Edition Unusable Prescribed by GSA FAR (48 CFR) 53.243

Attachment 1

Attachment G –ASEAN Single Window Sustainability Study: Draft Final Report

Important Note: This draft Sustainability Study (including the recommendations) has not been accepted or endorsed by Member States. The final study accepted/endorsed by ASEAN may differ from this document. The document has been provided as a reference for bidders, and is not a definitive outline for discussing the issue of sustainability.

The successful bidder will be guided by ASEAN, which may or may not utilize the Sustainability Study to guide its decision making process.

‐ End of Amendment No. 2 -

ASEAN Single Window Sustainability Study Draft Final Report

(Deliverable 9)

August 2012 revised October 29, 2012

This publication was produced by Nathan Associates Inc. for review by the United States

Agency for International Development. It was prepared by Lynn Salinger, Nathan Associates.

A S W S U S T A I N A B I L I T Y S T U D Y : D R A F T F I N A L R E P O R T I I

Table of Contents

Acronyms iii

1. Introduction 1

ASW Timeline 1

Sustainability Study Deliverables and This Report 2

2. Summary of ASW Value Proposition & Outlook 5

Benefits of Exchanging Trade Data Electronically through the ASW/NSW Framework 5

ASW Outlook 7

Private Sector Feedback 7

3. Operational Plan for the ASW Regional Services Entity 9

Business Model 9

Governance 11

4. ASW Mission, Sustainability Principles, and Guidelines 13

5. Conclusions and Transition Path 17

Conclusions 17

Transition Path 18

Annex: Enterprise Funds in the United States 21

A S W S U S T A I N A B I L I T Y S T U D Y : D R A F T F I N A L R E P O R T I I I

Acronyms ACDD ASEAN Customs Declaration Document

AMS ASEAN Member States

ASEAN Association of Southeast Asian Nations

ASW ASEAN Single Window

ASWSC ASW Steering Committee

ATIGA ASEAN Trade in Goods Agreement

NSW National Single Window

TWG Technical Working Group

A S W S U S T A I N A B I L I T Y S T U D Y : D R A F T F I N A L R E P O R T 1

1. Introduction The member states of the Association for Southeast Asian Nations (ASEAN) committed to establishing an

ASEAN Single Window (ASW) by signing the ASW Agreement and ASW Protocol in 2005 and 2006, respectively. The ASW is the environment where National Single Windows (NSWs) operate and integrate.

NSWs allow single submission of cargo clearance data, synchronous and simultaneous processing, and decision making through a single channel. The ASEAN-6 – Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore, and Thailand – committed to establishing NSWs by 2008, whereas Cambodia, Lao

PDR, Burma, and Viet Nam are due to implement NSWs by 2012.

The ASEAN Single Window (ASW) concept is dependent on the establishment of an integrated, secured communication network environment operating in a federated manner, with no central server, where ten

National Single Windows of individual ASEAN Member States (AMS) operate and integrate, based on standardized information exchange, procedures, formalities, and international best practices. ASW

Gateways (GW) will be installed at the national level and will connect NSWs through the ASW Network.

ASW TIMELINE

At the individual ASEAN Member State (AMS) level, the ASEAN-6 have made significant strides in establishing their NSWs while, for the CLMV, the focus has been on establishing the platform for NSWs and launching the NSW development process. At the regional level, the AMS have made progress in establishing a regional architecture connecting NSWs, including endorsing a regional architecture for an

ASW Pilot Project involving seven AMS.

AMS, with USAID’s ASW Project support, are developing and pilot testing the architecture, originally consisting of three components, namely:

Component 1: Studying the establishment of the most feasible network architecture to conduct the

ASW Pilot Project using a federated approach;

Component 2: Setting up the network infrastructure agreed by AMS to implement the ASW Pilot

Project; and

Component 3: Conducting the evaluation of outcomes of the Pilot Project and formulation of recommendations for the eventual ASW.

Due to funding constraints, Component 2 has been further subdivided into two sub-components: 1) a scaled-down pilot to test a scaled-down version of the architecture and illustrate the feasibility of the electronic exchange of information and functional services in an integrated secured environment, to be followed, once sufficient funding is assured, by 2) a scaled-up pilot to test the full Component 1 recommended architecture.

The scaled-down pilot, being implemented with support from USAID’s ASW Project, is scheduled to run through October 2012. During this phase, the ASW Gateway is being installed in seven AMS and in the

2 A S W S U S T A I N A B I L I T Y S T U D Y : D R A F T F I N A L R E P O R T

Regional Services server and the architecture will be tested in the exchange of ASEAN Customs

Declaration Document (ACDD) and ASEAN Trade in Goods Agreement (ATIGA) Form D data among the participating AMS. Messages include test data only. A “mini-evaluation” is planned for the end of

2012 to glean lessons from this early activity.

Planning is underway to secure funding for the scaled-up pilot, which is expected to run through 2013 and part of 2014. During the scaled-up pilot, the ASW architecture will be expanded to include the full

Component 1 design and will likely test data exchange at increased volumes. In 2014-2015, live exchange is expected to be introduced and will proceed to gradually include all ten AMS and responsibility for the daily management of the ASW will transition to permanent staff. The Component 3 evaluation of Pilot

Project outcomes is expected to take place end 2014.

By 2015 the full roll-out of the ASW is envisioned in a live environment. AMS are thus planning for the sustainability of the ASW (architecture and services) after completion of the ASW Pilot Project. To this end the ASW Steering Committee (ASWSC) has requested the preparation of a Sustainability Study “to study a sustainability plan, including the business model, on how to convert the Component 1 into a pilot/ prototype and subsequently to the actual ASW, as well as the establishment of an ASW governance structure.”

SUSTAINABILITY STUDY DELIVERABLES AND THIS REPORT

According to the terms of reference endorsed by the ASWSC, the Sustainability Plan encompasses eleven deliverables, referred to below as D1, D2, etc.:

D1 Inception report and proposed work program.1

D2 Value Proposition, including qualitative & quantitative estimates of benefits (costs are included in D4 below).2

D3 Findings and recommendations on ASW governance structure.3

D4 Findings, options, and recommendations on ASW regional operations and staffing requirements, and associated costs.4

D5 ASW business model.5

D6 Presentation to the ASW Technical Working Group.6

1 L. Salinger, “ASEAN Single Window Sustainability Study: Inception Report” (Arlington, VA: Nathan Associates Inc., January 2012/revised February 2012).

2 L. Salinger, K. Tiong, W. Nolle, and S. Magiera, “ASEAN Single Window Sustainability Study: Value Proposition and Future Outlook Report” (Arlington, VA: Nathan Associates Inc., June 2012/revised July 2012/final revision expected August 2012).

3 F. Carbonaro and L. Salinger, “ASEAN Single Window Sustainability Study: Governance Structure, Regional Operations, Staffing Requirements, and Business Model” (Arlington, VA: Nathan Associates Inc., June 2012/revised July 2012/final revision expected August 2012).

4 See D3.

5 See D3.

A S W S U S T A I N A B I L I T Y S T U D Y : D R A F T F I N A L R E P O R T 3

D7 ASW financial projections over a 10-year period.7

D8 Report on future outlook of the ASW, incorporating data exchange with non-ASEAN countries into the ASW architecture.8

D9 Draft Final report, including D2-8.

D10 Presentation of the Draft Final Report to the ASW Steering Committee.

D11 Submission of the Final Report.

This report represents Deliverable 9, the draft final report. It synthesizes and summarizes the key messages of the interim deliverables, Deliverables 2 through 8, makes recommendations regarding the most feasible operating/business model and governance organization for the ASW, based on the review/analysis presented previously, and suggests a “roadmap” for moving forward.

The rest of this paper is organized as follows. Section 2 presents key themes from the value proposition, ASW outlook, and private sector outreach reports. Section 3 envisions an operational plan for the ASW

Regional Services entity, including governance structure and business model. Section 4 synthesizes the key elements of a sustainability plan for the ASW regional services operation, including a set of sustainability principles and guidelines. Section 5 concludes and presents recommendations for the transition path over the next 24 months.

In an annex to the report, as a sample of how public enterprises operate elsewhere, an overview of the legislative framework that governs public enterprises in the state of Massachusetts in the United States in presented, with a summary of the governance, rate setting, and fiscal policy dimensions that characterize such authorities.

6 Presentations have been made to the Technical Working Group in February 2012 (Inception Report), to the Steering Committee in April 2012 (Status Update), and to the TWG in June 2012 (Value Proposition and Governance/Staffing/ Business Model/Costs).

7 R. Enriquez, “ASEAN Single Window Sustainability Study: Financial Feasibility Analysis,” Draft report (Arlington, VA: Nathan Associates Inc., August 2012).

8 See D2.

A S W S U S T A I N A B I L I T Y S T U D Y : D R A F T F I N A L R E P O R T 5

2. Summary of ASW Value Proposition & Outlook The Sustainability Study team, as per the terms of reference, has reviewed the value proposition of the

ASW, conducted a qualitative and quantitative analysis as to its likely impact to facilitate trade and reported on the ASW’s future outlook, incorporating data exchange with non-ASEAN countries into the

ASW architecture. In addition, the team has identified types of direct and indirect benefits that are expected to accrue to the trading community from the cross-border, electronic exchange of cargo clearance data through the ASW regional architecture; identified stakeholders that will be impacted by the ASW;

developed a survey tool to allow an estimation of these benefits; and estimated benefits that may accrue to a representative sample of companies from the cross-border electronic exchange of cargo clearance data through the ASW (Deliverables 2 and 8, jointly submitted).

A summary of value proposition related questions asked by the team is presented below.

ASW Value Proposition, Outlook, and Impact: Summary of Questions Asked

What qualitative value will the ASW offer to private companies engaged in trade within ASEAN, and how significant do companies perceive that value to be? How to define the service to potential consumers?

What will be the impact of intended functionalities of the ASW on companies’ daily trade management operations, with regard to the procedures they follow to comply with AMS trade regulations?

What other functionalities might be envisioned to bring further value to companies engaged in trade in the region? To bring further value to governments overseeing trade in the region? To other potential beneficiaries?

What impact on companies’ costs of compliance could the ASW have? What financial benefits might participating companies realize, in terms of reductions in the wage costs, and costs of materials, fees, dispatching, inventory carrying, and cash flow, associated with the present system?

BENEFITS OF EXCHANGING TRADE DATA ELECTRONICALLY THROUGH THE

ASW/NSW FRAMEWORK

It is appropriate to think of Single Windows as evolving, multi-staged, and multi-layered initiatives. The innovation contributed by ASEAN’s Single Window is the connection of AMS National Single Windows via a regional architecture, which will provide for the secure, cross-border exchange of trade data and information through the ASW architecture. This “ASW/NSW Framework” depends, therefore, not only on this ASW architecture, but critically on NSWs being in place and doing their jobs effectively in all Member States.

Use of the ASW/NSW framework is expected to save companies and governments time and money, the magnitude of which will be affected by additional functionalities that may be included by the AMS. Many of these benefits accrue directly within countries, thanks to the NSWs. However, the exchange through the ASW makes possible greater integration across borders within the region of trade data and information and thus enhances these benefits.

6 A S W S U S T A I N A B I L I T Y S T U D Y : D R A F T F I N A L R E P O R T

Potential benefits of the ASW/NSW framework, as currently envisioned with the exchange of the ASEAN preferential certificates of origin and customs declaration documents, are modest. However, when one considers the exchange of other data, its use for broader application beyond cargo clearance, and the participation of a wider community of trade-related government agencies, the magnitude of potential benefits expands, as summarized below.

Potential benefits to governments that are made possible by the ASW/NSW framework include o Improving compliance at the AMS level with standards and regulations, as electronic processing ensures operational transparency and improved access to information;

o Improving risk and profile management, through interoperability of trade data with database management systems and other sources of intelligence;

o Improving “data mining” capabilities of AMS NSWs to perform risk management on pre-arrival electronic processing;

o Improving track-and-trace capabilities of supporting documentation by AMS NSWs;

o Enabling validation on the exporting side through ASW Regional Services;

o Providing for real-time updates of regional code sets through ASW Regional Services, which in turn ensures synchronized control, standardized reference tables, and operational efficiency among participating governments;

o Helping to institutionalize role-based access management to route cargo clearance data to the appropriate recipient;

o Assuring continuous provision of AMS-to-AMS communication capabilities to guarantee cargo clearance services to the public (although national level communications breakdowns are not similarly assured);

o Contributing to harmonize regional cargo clearance business processes and data;

o Facilitating the timely distribution of relief supplies in the wake of disasters through the rapid electronic exchange of critical cargo data and possibility of validating disaster relief agencies through ASW Regional Services; and o Helping governments to satisfy citizens’ expectations regarding improved food safety, health, environment, transportation safety, and consumer protection through the secure exchange and validation of licenses, certificates, and permits between government agencies across borders.

Potential benefits to businesses of the ASW/NSW framework include o More efficient supply chain management through electronic integration of cargo clearance data with other global logistics information and through possible integration of track-and-trace capabilities as part of the ASW/NSW framework;

o Pre-arrival clearance will become feasible, through the risk analysis of electronic documents and data prior to arrival without first having to examine the physical goods;

o Incorporation of a Customs transit regime, and thus the exchange of transit data, through the ASW will enhance the ability of NSWs to clear goods in transit more quickly;

o Reductions in back-office costs and time to trade, thanks to the shift to electronic submission of documents to the NSWs, the use of a single portal for document submission, and participation of multiple government agencies, all of which is enhanced thanks to the data exchange capabilities via the ASW;

A S W S U S T A I N A B I L I T Y S T U D Y : D R A F T F I N A L R E P O R T 7 o Increasing compliance and reducing double encoding errors, use of the ASW/NSW framework will allow traders to cross-reference commercial documents, freight papers, and other cross-border documents with Customs declaration;

o The ASW/NSW framework could allow the monitoring of utilized permits in accordance with import permit regulations in ASEAN;

o The ASW/NSW integrated network could assign a unique reference key that would allow traders to use a transactional “dashboard” that consolidates all documentary requirements, such as commercial documents, freight papers, and regulatory permits, and would allow traders to attach supporting documents to a Customs declaration;

o Re-use of data transmitted through the ASW, such as deriving Customs declarations from previous cross-border messages received (e.g., commercial documents, freight papers, and government permits and licenses), would increase traders’ compliance, promote consistency in use of data elements, and provide a tool for faster processing of cargo clearance documentary requirements; The ASW/NSW framework would allow predictability and operational transparency that would encourage traders to push for just-in-time delivery of goods. It would possibly translate to storage and insurance fees savings.

More broadly and indirectly:

o ASEAN value-chains and the economies in which they are embedded should become more competitive;

o Consumers should realize savings in terms of lower costs of imported goods;

o Paperless cargo clearance in ASEAN becomes possible; and o ASEAN should become a more attractive platform from which to do business.

ASW OUTLOOK

The ASEAN Single Window of the future can go beyond ASEAN.

With the ASW/NSW framework in place, one could envision that preferential certificates of origin can also be exchanged electronically with FTA partners.

The ASW/NSW framework can also become the channel for electronic submission of required data to satisfy import security requirements of trading partners.

PRIVATE SECTOR FEEDBACK

Private companies have expressed that the ASW/NSW framework is of real interest to their businesses and they are eager to see it proceed.

Among the benefits anticipated by participants are expedited cargo processing and clearance, especially pre-arrival; reduction of paperwork; reduction of costs of doing business (holding smaller inventory, more predictability); enhanced supply-chain integration within AMS; and the better serving of smaller and more remote ports. Participants also expressed the desire for capability of the electronic exchange system to provide track-and-trace and other report and query capabilities.

Companies estimate that, on average, they may save 8 percent of costs using the ASW/NSW framework to exchange documents. While a savings of $60 per consignment may not appear large at first glance, considering that the largest companies in the survey report that they exchange over one million

8 A S W S U S T A I N A B I L I T Y S T U D Y : D R A F T F I N A L R E P O R T consignments each year in each direction, within ASEAN, this potentially adds up to significant total annual savings. For SMEs, savings of $60 per consignment may be significant. Also, relative to fees that may be charged by the ASW for electronic submission of trade data, the savings far outweigh the cost.

Cost Category

Estimate of Total Costs per Consignment, under Current

System

Estimate of Costs per Consignment, with ASW/NSW

Framework

Labor costs $595.51 $550.85

Materials costs $28.06 $25.58

Fees $35.87 $33.25

Dispatch costs $44.88 $38.47

Subtotal $704.29 $648.14

Inventory & Cash Flow costs $63.39 $58.63

Total $767.67 $706.78

Source: ASW Potential Impact Survey, June 2012

A clear majority of firms are ready to use the ASW to exchange a variety of trade-related documents.

Nevertheless, a distinct minority prefer to own their networks for such exchanges. When asked about the exchange through the ASW/NSW framework of which additional documents to prioritize, a slight preference was indicated for the exchange of air waybills, bills of lading, and other consignment data.

Companies are eager to learn more about ASW and what is intended.

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3. Operational Plan for the ASW Regional Services Entity The Sustainability Study, as per the terms of reference, reviewed options and recommendations to establish the ASW governance structure, regional services staffing requirements, and business model to provide for the sustainability of the ASW beyond the pilot stage (Deliverable 3/4/5) and formulated financial projections based on expected revenue/cash-inflows and expenditures (Deliverable 7).

A summary of operational plan related questions asked by the team is presented below.

ASW Operational Plan – Governance, Regional Operations, Staffing Requirements, and Business Model: Summary of Questions Asked

What are the “market” conditions in which the ASW will operate? Is this a competitive market with significant demand and an array of alternative suppliers, or is this a narrow market with limited sources of supply? The market conditions in which the ASW is embedded affect the choice of business model and governance structure (oversight and regulatory framework) to be considered.

Which business model best serves the policy objectives of ASEAN decision makers, in this case, the ASW Steering Committee? The choice of business model – for-profit or not-for-profit, independent concession or regulated public enterprise, managed directly by ASEAN’s Secretariat staff or outsourced to an independent contractor – ultimately determines the choice of governance structure.

What oversight responsibilities and regulatory responsibilities will fall to AMS after the conclusion of the ASW Pilot Project? What reporting requirements will the ASW entity need to satisfy?

Where will the ASW regional services office and server be physically located?

What are the expected costs involved in running ASW Regional Services, in terms of professional and support staff requirements and their salaries, as well as the costs of software, hardware, server co-location, network costs, and other direct costs of operation, plus capital depreciation/renewal costs?

What expected revenues will cover these costs? How will these revenues be defined, at what levels will user fees be set, what is the appropriate regulatory and rate-setting body? Who will collect the revenues and how will they be applied to cover the costs of the ASW regional services entity?

Over a 10-15-year period, what is the expected profit and loss profile for the ASW regional services entity?

The ASW entity will serve a trade-related communications function dedicated to the secure exchange of trade data (messages or documents) among Member States and other AMS Government Agencies through their respective NSWs. Conclusions and recommendations follow on business model and governance issues.

BUSINESS MODEL

Unlike a private firm that seeks to maximize revenues by encouraging consumption of the goods or services it sells, the goal of the ASW is to reduce the volume of trade-related paperwork required of traders for each consignment traded within ASEAN, minimize the time and costs associated with compliance with those requirements, and provide all companies that trade in the

10 A S W S U S T A I N A B I L I T Y S T U D Y : D R A F T F I N A L R E P O R T region with secure, electronic means to convey trade data within the region and (possibly eventually) with FTA partners and other key trading partners.

It is recommended that the ASW be run as a not-for-profit organization, “owned” by the AMS and

“operated” by a private firm contracted by the AMS to provide ASW regional operations management services to the AMS. It could be established as a “public enterprise,” i.e., a business-type enterprise that is not tax-supported, but rather is intended to operate in a fiscally self-sustaining manner, is expected to provide for continuous renewal of related capital investments and/or innovations, and is supported by fees paid by users of the enterprise.9

Further research is required to determine the optimum and most legally compliant way to structure revenue collection. An “enterprise fund” may be established by ASEAN for the collection of fees and disbursement of funds for expenditures.10

It is recommended that the physical location of offices for the staff of the ASW regional services team be separate from the Secretariat in order to allow for independent, professional staffing that is not bound by the Secretariat’s organizational structure. Further, it is recommended that the

ASW RS server be housed in an international standards-compliant data center with secure facilities (these are especially designed, built, and managed to host servers and telecommunications equipment and provide reliable, redundant, and secure computing resources, power, connectivity, backup/recovery services, hardware maintenance, operating software upgrades, malware protection, disaster recovery, etc.)

The AMS will retain ownership of the assets (albeit modest in scope) that have been purchased in the name of the ASW, including (at the moment) a regional server and (to come) software license(s).

The expected demand for ASW services currently equals the G2G exchange of ATIGA Form D and ACDD times the number of expected trade transactions times the expected ASW adoption rate. In the future, the concept of “ASW demand” may be expanded to include B2G or B2B data exchange as well. Estimates of the volume of transactions to be exchanged among AMS have been made by the Sustainability Study team. Assumptions have also been made about ASW voluntary use adoption rates by traders. These are the basis of revenue projections and the financial feasibility analysis. However, these data should be monitored closely in the first two years of operation, to see how demand/use and revenues compare with projections in case fee level or supplemental revenue adjustments need to be made.

Regarding whether private sector participation in the ASW be on a voluntary or obligatory basis, it is recommend that a 3-year transition period be established from voluntary to obligatory use of the

ASW for G2G exchange of data.

9 See annex for more discussion of the model from which this is drawn. This definition draws from municipal finance laws in the United States. U.S. public enterprises are distinguished from other parts of local government as follows. While the costs of local government are borne through payments of taxes, the costs of the former – public enterprises – are covered by fees assessed to users. Public enterprises may include electric or telecommunications utilities, water, sewer, and solid waste funds, even fee-based recreation facilities, and other activities.

10 See annex.

A S W S U S T A I N A B I L I T Y S T U D Y : D R A F T F I N A L R E P O R T 11

A number of different revenue source possibilities exist, including one-time and annual AMS contributions, annual ASEAN Fund contributions, user fees, and donor contributions. Given an estimated annual operating budget of about $1.4 million it is suggested that each AMS contribute

$100-150,000 to an interest-bearing account that would act as seed money to start up the operation when it goes live in 2015. In the interim, while the Pilot Project is ongoing, international development donors may be asked to continue to support the ASW’s development, though AMS may need to contribute a portion (if not the full amount) needed. This account would be replenished through the collection of fees from private users (see below).

Fees to private users (for G2G and eventually expanded exchange) will be set at a level that covers expected costs and is inclusive of some “profit” and innovation allowances; fees will be charged/collected/managed by the ASW entity.

GOVERNANCE

The ASW will require continued oversight by an ASW Advisory Body, comprised of high level representatives from each of the Member States, complemented by an ASW Supervisory Body to provide more direct oversight. While the Advisory Body may meet as needed, it is recommended that the Supervisory Body meet annually or semi-annually to receive progress reports from the

ASW entity, provide annual or semi-annual review of costs and performance, and determine, after conferring with the Advisory Body, user fee levels for the coming fiscal year.

It is recommended that an ASW Experts Committee also be constituted, comprised of both government and industry representatives. The Experts Committee will generate new ideas, stay on the cutting edge of global trade facilitation policies and visions, report on the ASW to international bodies, such as the World Customs Organization, the United Nations Centre for

Trade Facilitation and Electronic Business (UN/CEFACT), and other bodies, and report back to the Supervisory Body.

It is recommended that the ASW be operated by a private entity that is awarded a term-limited, renewable, ASW Regional Operations Management contract. The original term could be 2 years, subject to renewal for another 3 years. After five years, the operation of the ASW entity would be rebid. AMS, through ASEC, will issue RFPs, review bids, and contract for operator’s services directly.

The operation contract for the management of ASW regional operations would be awarded to the firm or consortium that o Demonstrates detailed knowledge of SW operation o Demonstrates understanding of ASEAN and regional trade policy and processes o Commits to provide the most services for the least operations cost o Any other criteria, as defined by AMS.

4. ASW Mission, Sustainability Principles, and Guidelines The ASEAN Single Window – “the environment where National Single Windows (NSWs) operate and integrate” – is on its way to becoming a reality. By 2015, an electronic thoroughfare will exist for the secure exchange of approved trade data (documents) among Customs agencies of the AMS. It will be the world’s first example of a regional Single Window, raising the possibility that a global Single Window may one day become a reality.11

As the Sustainability Study has presented, the real value of the ASW is that it enhances the NSWs’ ability to deliver end-to-end, automated, cargo clearance procedures. This will reduce the costs incurred by private companies to comply with trade paperwork requirements and speed up time to trade for cargo shipped within ASEAN. The ASW can also become the platform through which other trade-related documents – such as phytosanitary, health, and veterinary certificates; cargo manifests; air waybills, bills of lading, invoices, and packing lists; and logistics data – could be exchanged, involving not only Customs but other government agencies as well.

This electronic thoroughfare, which we refer to as the ASW/NSW framework, is a network of ASW

Gateways embedded in National Single Window environments linked to a regional server, with a regional operations office that in its most basic dimension makes sure that the server works, messages are exchanged, and performance reports are circulated to the AMS.

However, as suggested in a companion Sustainability Study piece by Carbonaro and Salinger (2012), … the ASW is more than the sum of its technical architecture components. Operating and maintaining the ASW at the regional level will require more than information and communications technology staff to manage Regional Services and the ASW network. It will require, among other elements, a sustainable source of revenues, a budget to manage expenditures, and agreed locations to house staff and the RS server. In short, an entity is required to manage the ASW.

The mission statement for the ASW entity will thus encompass the network and regional services technical oversight tasks envisioned in the ASW Pilot Project Component 1 as well as overall management of the entity; staying abreast of trade facilitation best practices; outreach (including maintenance of the ASW Web Portal) and capacity building of NSWs, private sector representatives, and other government agencies of the ASEAN Member States; financial management, including collection of user fees, payment of expenses, and procurement; and general administration. Staffing requirements will be defined to respond to the ASW entity’s charge.

11 Indeed, the Global Coalition for Efficient Logistics, a global non-profit organization headquartered in Geneva, is proposing just such a thing.

14 A S W S U S T A I N A B I L I T Y S T U D Y : D R A F T F I N A L R E P O R T

As envisioned by the Sustainability Study, this managing entity will be a unique actor in ASEAN. It will function as a service provider, delivering trade facilitation communications services. The ASW/NSW framework will, in essence, resemble a public enterprise or public benefit corporation serving the needs of both ASEAN Member States’ government agencies and private customers.12

Sustainable operation of this entity will require adherence to a suggested set of principles, each of which is accompanied by a suggested performance guideline. Framed below is suggested language for a possible

Mission Statement, principles, and guidelines.13 This could be discussed as part of the development of an

ASW Blueprint (see conclusions and transition path, Section 5).

ASW/NSW Framework

The mission of the ASW is to provide reliable and cost-effective trade facilitation services to its customers in the form of secure exchange of trade-related documentation, in partnership with AMS National Single

Windows (NSW).

ASW Sustainability Principles ASW Performance Guidelines

The ASW entity will provide G2G trade data (document) exchange services and other services as may be identified in the coming years.

Delivery of this service will require professional, technical, and administrative staff, hardware and software, network services, and overhead (rent, utilities, transportation, telecommunications, etc.), and a budget to manage their costs.

Management of the ASW regional services will be the responsibility of a team of professionals, under the direction of the ASW Executive Director.

This will require a contract for services between ASEAN and an outside service provider and a contract for co-location of the server between ASEAN and an internationally qualified data center. The latter may be subsumed into the former. The contract will be valid for a period of years, as determined by ASEAN, subject to annual performance review.

Costs of operation of the ASW entity will be covered by a transparent and sustainable source of revenues.

A combination of resources may be identified, including contributions from ASEAN member governments, ASEAN funds, or international development partners; fees paid by users; and other sources yet to be identified.

Costs of operation of the ASW entity will be managed for short-term viability and long-term sustainability.

To collect annual revenues and (possibly, eventually) to incur debt will require that the ASW entity be authorized to act as a regional accounting and reporting entity. This entity will present annual budgets to ASEAN for approval, collect fees through the NSWs and possibly other sources of revenue, and apply those revenues to its recurrent costs of operation and to a depreciation account with which to renew its existing capital (upgrade of the server and software on a periodic basis).

The ASW entity will be accountable to AMS. This will require that the entity’s fiscal and reporting responsibilities be defined by the AMS in a set of governing bylaws that includes a mission statement and policies.

12 See the annex for a discussion of these terms in the context of U.S. local (municipal) finance operations.

13 Distinct from the definition of the ASW as stated in the Agreement and Protocol (i.e., the environment where National Single Windows of Member Countries operate and integrate), a Mission Statement defines, in one, easy-to-understand, written-in-laymen’s-terms sentence, the purpose of the organization, who its primary customers are, who owns and oversees it, and how it provides value.

A S W S U S T A I N A B I L I T Y S T U D Y : D R A F T F I N A L R E P O R T

The ASW will report regularly to AMS and the ASEAN trade community on its technical and financial performance.

This will require that the entity’s management be supervised by a representative AMS body (hereafter, the “ASW Advisory Body”), to be comprised of high level representatives from Customs administrations and other government agencies with interests in trade facilitation. This ASW Advisory Body, supported by an ASW Supervisory Body for more direct oversight, will set annual performance goals to be reviewed with the ASW entity as part of its annual performance plan. The ASW Advisory Body, will also review the entity’s annual financial performance and, after holding a public hearing and/or providing an annual public comment period, will approve user rates for the coming year.14

The ASW entity will be established with its own legal and financial identity.

This requires that AMS adopt a policy or a legal framework that acknowledges the right of such a public enterprise to exist and to operate on behalf of AMS.

The ASW/NSW framework rests on the supposition that its services provide tangible value to its customers, who are primarily private companies that trade within the region.

To ensure that customer needs are integrated into the ASW entity’s annual performance plan, private sector input will be sought on a regular basis.

Members of an ASW Experts Committee may be named by NSWs, private sector associations, chambers of commerce and industry, etc. and should comprise companies both headquartered in the ASEAN region and internationally.

14 There is no parallel, private market for these services when focused narrowly on government-to-government (G2G) or business-to-government (B2G) exchange of trade data (documents). However, there is a thriving, parallel, private market for these services when the focus is the exchange of documents between and among companies (B2B), though participation in this end of the market tends to be limited to the largest and most successful private companies that can afford to invest in such systems themselves, or who contract for such services. Because of this market limitation, it will be necessary for the ASW Advisory Body to regulate prices, i.e., the fees charged of private customers.

5. Conclusions and Transition Path

CONCLUSIONS

The Sustainability Study has highlighted various ways in which the ASW/NSW framework is expected to add value to companies that trade in the region, as well as the AMS government agencies that oversee trade. A sample of private companies concurs with that assessment, although their estimates of anticipated cost savings appear to be modest.

However, survey participants have based these estimates on their current, semi-manual, situation and, more importantly, a very limited understanding of what NSWs and ASW are supposed to do for them. When processes are fully automated under the ASW/NSW framework, i.e., when NSWs serve as single entry points for traders to fulfill their export, import, and transit requirements electronically using standardized and harmonized data and when critical data can be exchanged electronically across borders using the ASW and used (and re-used) by traders and governments alike to expedite clearance, labor interventions by firms themselves will be reduced much more significantly than suggested by these results and the impact on cargo clearance will likely be more dramatic.

Moreover, the estimated cost savings presented here do not reflect the key benefit of the ASW /NSW framework, which will be to operationalize end-to-end cargo clearance – integration of pre-arrival customs processing, an automated feedback mechanism, a track-and-trace feature, all to be interfaced with companies’ back-end management systems, wherein purchase orders, commercial invoices, customs declarations, applications for letter of credit purchase orders, and other supporting documents are automatically generated with minimal human intervention.

The medium-run financial feasibility analysis conducted by the Sustainability Study team confirms that the project is viable, based on a number of assumptions relative to market outlook, planned investment and capacity, demand levels, and financing terms. The base-case scenario is financially feasible, with a positive internal rate of return in nominal terms and a positive present value. Based thereon, promoting the ASW as an independent and self-sustaining business unit is recommended.

It is underscored that the very positive financial profitability estimated by the Sustainability Study, under even the conservative/low fee scenario, suggests that the fee structure could be set distinctly lower, if the actual volume of ASW transactions proves to be close to what has been estimated, without risking negative financial profitability. Alternatively, it is clear that given the fee structure proposed here, the project’s viability would not be jeopardized if demand for the ASW should drop significantly below the levels estimated in the study.

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TRANSITION PATH

Recommended next steps are as follows:

AMS obtain a perpetual license for use of the ASW Gateway software. Alternatively, the AMS may wish to contemplate a 3-year license if substantial savings are incurred and if this would allow possible future review and upgrade. A license of some duration is crucial now to enable the data exchange to continue during pilot testing.

AMS proceed with analysis of other business processes, finalizing the Legal Framework

Agreement, undertaking legal gap analyses at the national level, continuing data harmonization initiatives, enhancing risk management systems, etc., as these are critical to taking full advantage of the ASW/NSW framework.

AMS circulate the Sustainability Study for broader public comment. It would be interesting, for example, to organize a seminar at which potential bidders (for the contract to manage the entity that provides ASW regional operations service) could come in to learn more about what is planned and talk about what the kinds of trade facilitation services they provide elsewhere (though it is understood that ASW is the first regional single window of its kind). The Study, once finalized, could be posted on the ASW Web Portal for a three-month public comment period, during which time written comments could be solicited from interested parties.

More detailed data regarding numbers of consignments transacted between/among traders in the

ASEAN region should be solicited using 2012 and 2013 trade data in order to compare with the demand volumes estimated by the Sustainability Study. Following more rigorous demand analysis, adjustments to the financial feasibility analysis can be introduced, as needed.

In 2013-2014 AMS should engage the services of a nucleus of experts (2-3 people) to work with the ASEAN Secretariat to assist in next steps, to carry the ASW development through to live in

2015, including:

o Following receipt of comments, AMS should prepare an ASW Blueprint that formalizes the operational plan vision above into a more concrete proposal. The ASW Blueprint would formalize the organizational structure, business model, with drafting of articles of organizational bylaws.

o AMS will engage in more active public outreach via consultations and comprehensive

ASW Web Portal and NSW Web Portals. The goal is to build a community of practice of regional and international trade facilitation experts and an interested private sector network.

o AMS will draft the bylaws and legal aspects of the public enterprise and submit to

ASEAN lawyers for formal review of the financial, legal, and tax implications.

o Help AMS maximize the G2G exchange by encouraging, for example, exchange of phytosanitary certificates between agriculture ministries or the exchange of health certificates between health ministries or food and drug administrations.

o Prepare the RFP for the management of the ASW regional services entity.

To accomplish all of the above, AMS may need further technical assistance for the next two years while they continue to invest in their NSWs and ASW architecture at the national level (e.g., setting up perimeter networks and appropriate security) and to ensure that a maximum number of government agencies are participating in the NSW process.

By early 2014, a Request for Proposal should be drafted to solicit bids from interested parties seeking to be contracted to manage the ASW regional operations office. The bid should be issued by June 2014, in order for bids to be considered in the second half of 2014, and a decision reached regarding the ASW operator contract award.

Annex: Enterprise Funds in the United States The governance recommendations made by the ASW Sustainability Study team refer to the concepts of

“public enterprises” and “public enterprise funds.” This annex provides background on the concepts, drawn from experience in the United States. The last section summarizes what lessons may be learned from this experience for ASW purposes.

In the United States public enterprises may be established by local governments to deliver specific services to individual customers. Rather than support the cost of operations of these authorities through tax revenues, the operations are supported wholly or in part by customers, who are charged a fee for the service they purchase.

This is significant inter alia because in the case of tax-exempt customers of the enterprise (such as private schools), though they do not pay property taxes to the municipality, they do pay for their use of electricity or water or wastewater treatment. Also, public enterprises are distinct from profit-maximizing, private enterprises in that their social objective may in some instances be to sell less of a good, such as water, than more of a good, such as toothpaste, by promoting resource conservation.

Known as “enterprise funds” in Massachusetts or “public benefit corporations” in the New York State, these entities are normally governed by state laws regarding municipal or local finance, as…