MCC PRINCIPLES MCC PROCUREMENT PROCESSES LOOKING FORWARD

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2 MCC PRINCIPLES MCC PROCUREMENT PROCESSES LOOKING FORWARD

3 WHAT IS MCC? The Millennium Challenge Corporation is a U.S. Government agency designed to reduce poverty through economic growth in select developing countries. Good governance Economic freedom Investments in people

4 MCC s mandate: Reduce poverty through economic growth. Created with bipartisan support by the U.S. Congress in 2004 Led by a governing Board of Directors: Secretary of State (Chair) MCC Chief Executive Officer Secretary of the Treasury U.S. Trade Representative USAID Administrator Four members of the private sector

5 TWO TYPES OF PROGRAMS MCC Compacts 5-year grants Large-scale and complex Awarded to eligible countries as determined by MCC s eligibility criteria and final vote of the MCC Board of Directors $8.8 billion awarded as compact grants 24 partner countries in Latin America, Africa, Europe, the Middle East, Asia, and the Pacific (16 active compacts) Implemented by the partner country government with guidance and oversight from MCC Threshold Programs 2- or 3-year grants Smaller in scale and objectives Awarded to countries not compacteligible but committed to improving policy performance $495 million awarded as Threshold grants 21 partner countries in Latin America, Africa, Europe, the Middle East, and Asia (5 active) Implemented by MCC and USAID in consultation with the partner country government

6 WHAT S DIFFERENT ABOUT MCC? Competitive selection Country-led design Country-led implementation Focus on results

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8 DISTRIBUTION OF INVESTMENTS Program Admin & Monitoring 11% Health, Education & Comm Servs 7% Transport 36% Governance 4% Energy 7% Financial Services 6% Water Supply & Sanitation 9% Agriculture 20%

9 MCC PRINCIPLES MCC PROCUREMENT PROCESSES LOOKING FORWARD

10 PROCUREMENT PROCESS Compact procurements Administered by MCA Entities. Contract opportunities all untied are published to: Threshold procurements Administered by USAID. Most tied to US companies. Opportunities published to MCC corporate procurements Administered by MCC. Some tied to US companies. Opportunities published to 10

11 INFRASTRUCTURE WORKS & SERVICES PROCURED (1) By MCC Due Diligence Support Feasibility Studies, Design & Preparation of Bidding Documents, EIAs, RAPs Independent Engineering Services (implementation support and oversight) Specialty Consulting By MCAs Project Management Consulting Feasibility Studies SEAs, EIAs, RAPs Design & Preparation of Bidding Documents Construction Supervision Construction Specialty Consulting

12 INFRASTRUCTURE WORKS & SERVICES PROCURED (2) By MCC MCC may act as the procurement agent for a country but does not directly execute those works, goods and services contracts MCC procurements follows Federal Acquisition Regulation For engineering services, MCC follows Qualifications Based Selection (Brooks Act) For non-engineering services, MCC follows Qualifications and Cost Based Selection By MCAs Follow MCC s Procurement Guidelines Any large works or services contracts are procured through international competitive bidding Services typically use Qualifications and Cost Based Selection Works use Cost Based Selection, however, the lowest cost provider is only selected if it meets the selection criteria

13 One-stop-shop for Bidders Open, Planned & Awarded Opportunities at/above $200k all posted to 13

14 PROCUREMENT OPPORTUNITIES 14

15 COMPACT IMPLEMENTATION STRUCTURE MCC $$ Washington, DC MCC Resident Mission Host Country Government Accountable Entity (MCA) Fiscal Agent/ Funds Control Procurement Agent Bank Account Common Payment System (Paid from US Treasury) Project Manager 1 Project Manager 2 Project Manager 3 $$ Contractor Contractor Contractor Ensures Sound Fiscal Accountability

16 MCC PRINCIPLES MCC PROCUREMENT PROCESSES LOOKING FORWARD

17 THE ZAMBIA COMPACT Water Sector Project $355 million total Procurement Project Management Consultant 2012 Lusaka Water and Sanitation Projects Works 2013 Timeframe Lusaka Drainage Project Works Technical Assistance Consultancies

18 THE CAPE VERDE II COMPACT WASH Sector Project $41 million total Procurement Study WASH Sector Master Plan 2012 Technical Assistance Project Management and Change Management (Sector/Utility Reform) Supervisory Engineer Water and Sanitation Projects Timeframe End Small Works Water and Sanitation Projects

19 THE INDONESIA COMPACT PICTURE Green Prosperity (GP) Project $334 million total Procurement Timeframe Project Arranger and Oversight Services 2012 Technical Assistance (TA) Consultants 2012 Land Use Planners 2012 Financial Facility Manager 2013 Program Management 2013 Contractors and Equipment Suppliers 2014 Engineers (design and works supervision) 2014

20 COMPACTS IN DEVELOPMENT Country MCA Procurements Timeframe Malawi (possible restart) Ghana II Benin II Georgia II El Salvador II

21 OBSERVATIONS ON USING FIDIC IN AFRICA (1) Successes - Projects using both Red and Yellow Book contract forms have been completed well - MCC Standard Bidding Documents using FIDIC contracts have resulted in robust competition in many cases - When high quality engineering staff have implemented projects, the outcomes have met contractual and reasonable expectations of Employers - Adding Project Management Consultants has improved Employer responsiveness to site consultants and contractors - MCC oversight from its staff and independent engineers has provided valuable extra support in low capacity environments -

22 OBSERVATIONS ON USING FIDIC IN AFRICA (2) Challenges - Poor performance in too many cases by engineering firms has contributed to cost overruns and schedule delays. Typical problems include: - Inadequate understanding of FIDIC processes (even for those whose qualifications state such experience) -- Little or no quality assurance by engineering firms for design or supervision services -- Understaffing against contractually agreed levels - Numerous contractors have ignored requirements to provide timely work plans, appropriate methodologies and adequate quality control - No mechanism to prevent delayed claims submissions to DABs has impacted effective budget management - Difficulties in reducing costs through appropriate variation orders in Red Book contracts when more efficient construction methods could be applied

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