Issuance Date: August 29, 2003

Coalition Provisional Authority Contracting Activity Baghdad, Iraq APO AE 09335 Issuance Date: August 29, 2003 Deadline for Questions: September 5, 2003 Closing Date: September 15, 2003 Closing Time: 5 pm, Baghdad time (9 am, EDT) Subject: Request for Applications (RFA) Number CPA - 0001 National Micro and Small Enterprise Credit Program in Iraq The Coalition Provisional Authority (CPA) is seeking applications from international organizations for a program for micro and small enterprise lending in several areas of Iraq. Please refer to Section II, Program Description, for a complete statement of goals and expected results. Subject to the availability of funds, the CPA intends to award up to three grants to implement this program over a 12 month period, beginning on or about October 1, 2003. The CPA intends to provide approximately $15 million in funding to be allocated among the three awards, as described in the program description. The CPA reserves the right to fund any or none of the applications submitted. For the purposes of this program, this RFA is being issued and consists of this cover letter and the following: Section I – Background Information Section II – Program Description Section III – Selection Criteria Section IV – Grant Application Format For the purposes of this RFA, the term "Grant" is synonymous with "Grant Agreement"; "Grantee" is synonymous with "Applicant” or “Recipient;” and "Grant Officer" is synonymous with "Agreement Officer". If you decide to submit an application, it should be received by the closing date and time indicated at the top of this cover letter at the place designated below for receipt of applications. Applications thereof shall be submitted with the name and address of the applicant and RFA number inscribed thereon, to: By Email – electronic submissions: Contracting Officer Email address is: CPA_contracting_acti@orha.centcom.mil Applicants are requested to submit both technical and cost portions of their applications in separate electronic files. Award(s) will be made to those responsible applicant(s) whose application(s) offers the greatest value. It is not the policy of the CPA to award profit (fee) under this anticipated grant agreement. However, all reasonable, allocable, and allowable expenses, both direct and indirect, which are related to the program, may be paid under the grant. Issuance of this RFA does not constitute an award commitment on the part of the CPA, nor does it commit the CPA to pay for costs incurred in the preparation and submission of an application. Further, the CPA reserves the right to reject any or all applications received. Applications are submitted at the risk of the applicant; should circumstances prevent award of a grant agreement, all preparation and submission costs are at the applicant's expense. The method of distribution of this procurement opportunity is via the Internet. This RFA and any future amendments and answers to questions can be downloaded from the CPA Web site ( HYPERLINK "http://www.cpa-iraq.org" www.cpa-iraq.org). It is the responsibility of the recipient of the application document to ensure that it has been received from Internet in its entirety and the CPA bears no responsibility for data errors resulting from transmission or conversion processes. In the event of an inconsistency between the documents comprising this RFA, it shall be resolved by the following descending order of precedence: (a) Section III - Selection Criteria (b) Section IV - Grant Application Format (c) Section II - the Program Description (d) This cover letter Any questions concerning this RFA should be submitted via email to at: HYPERLINK "mailto:CPA_contracting_acti@orha.centcom.mil" CPA_contracting_acti@orha.centcom.mil, by September 5, 2003. Responses to questions will be answered expeditiously and be posted on the CPA Web site. Sincerely, Patricia G. Logsdon Contracting Officer National Micro and Small Enterprise Credit Program in Iraq Request for Application August 29, 2003 National Micro and Small Enterprise Credit Program in Iraq Table of Contents Request for Application Section I – Introduction and Overview Section II – Program Description Section III – Selection Criteria Section IV – Grant Application Format SECTION I - INTRODUCTION AND OVERVIEW The purpose of this program is to develop sustainable small and micro enterprise (SME) lending activities established and operated as part of building a sustainable small and micro finance industry in Iraq through banks, non-bank finance companies and non-government organizations (NGOs). This is in line with efforts by the Coalition Provisional Authority (CPA) to provide economic rehabilitation and reform in Iraq to stimulate domestic and foreign investment, international trade, employment and broad-based prosperity. Sustainable economic reform and recovery in Iraq depends upon the success of economic policy reform and institution-building programs. These will impact both on the immediate economic and social well being of the population, and on the prospects for long-term country buy-in to and participation in the full adoption and implementation of a sound macroeconomic and structural policy framework and administrative implementation system The U.S. Government, through USAID, recently awarded the “Economic Recovery, Reform and Sustained Growth in Iraq” program to a U.S. contractor, BearingPoint. This Program is a vehicle for economic development, with an objective to create and develop growing, integrated and sustainable economic activity in Iraq. The contract includes five components. Within each component there are a broad range of tasks and subtasks and a set of priorities, which are being agreed upon with the CPA. Further, through USAID, the CPA may call upon the contractor to provide oversight and monitoring of this grant program. One component of the contract area deals with micro, small and medium businesses. This component is relevant to the RFA. Thus, selected information is provided below concerning the prospective activities in the component. Credit Activities for Micro Enterprises and Small and Medium Size Businesses. This component anticipates initiation of activities to support the micro, small and medium-size business sector. In Iraq, there is a very strong potential for small and micro finance activities. Iraq is densely populated and, while the region has undergone significant economic turmoil, the natural resources and infrastructure to support small businesses exists. A small and micro finance program, using culturally appropriate, sound lending methodologies has the potential to be successful. The largest and most urgent challenge that any new government faces is revitalizing the economy and creating new jobs. High unemployment reflects a dire state in the productive sector, particularly where there are large, socially owned enterprises involved. The need for new job creation will only increase when workers are laid off from these firms as they are restructured for privatization, or liquidation. Credit availability is the key to revitalizing the economy. The country’s capital stock has been seriously depleted and there has been virtually no investment in plant and equipment for many years. There exists, however, the opportunity to create a vibrant private sector. Historically, micro-enterprises and small and medium size businesses have been successfully engaged in trading activities, agribusiness, light manufacturing, and a variety of other sectors. The primary objective of any initial activities under this component is to create rapid employment generation in a productive and growing private sector. The CPA seeks to implement a sustainable small and micro finance industry in Iraq. Focusing on urban areas at the beginning, the program will establish small and micro finance institutions in select regions. These institutions will eventually become legally registered under the laws and regulations of the country. By using tools and methodologies that have been demonstrated as successful, the small and micro finance program will be able to develop its lending programs rapidly. The basic approach might be as follows: 1) establish an organization and financial framework so that a lending organization will eventually become legally registered; 2) identify and train a high quality local staff that manages the organization; 3) establish credit policies and procedures designed for organizational and financial sustainability; 4) build the funds systems in a manner that will be consistent with Central Bank regulations and requirement in the banking system; 5) draw upon existing, working models for finance in the region (including models for Islamic lending); and 6) establish a local board of directors with local leaders that offer strategic leadership. By adapting proven methodologies and best practices, the objective will be to establish a sustainable small and micro finance industry that will create opportunities for income generation and employment throughout the country. In an area of economic disruption, ethnic unrest and insecurity, the ability of the SMEs to function in a beneficial way is a significant step in creating stability. By creating employment and income generating opportunities, the program will also support economic development in Iraq. SECTION II - PROGRAM DESCRIPTION NATIONAL MICRO AND SMALL ENTERPRISE CREDIT PROGRAM Anticipated Results and Impact Group and individual loan products developed Micro and small enterprise loans available Portfolio of loans has loan loss rate of less than 2 percent and delinquency rate of less than 5 percent Large number of repeat borrowers High percentage of women borrowers General Program Description and Focus Objective: Provide rapid disbursing sources of credit to stimulate business investment and create employment in the private sector. Establish micro and/or small enterprise lending programs based on sound financial practices. Serve the major cities and population centers in the following geographical locations: Baghdad Governorate Northern Governorates – Ninawa, Tameem, As Sulaymaniyah, Arbil and Dahuk Other Governorates – Al-Anbar Governorate, Salah ad-Din, Diyala, Wasit and Maysan Duration: Awards to be made for one year. Up to 3 awards to be issued for a total value of $15 million for initial awards. Additional funding may be added to the awards at a later date. Estimated allocation of funds for each area follows: Baghdad Governorate - $7 million Northern Governorates - $5 million Other Governorates - $3 million A significant portion of the proposed program cost should be devoted to loan capital. For example, administrative costs should not exceed approximately 30 percent of total program cost. Micro-enterprises are defined as having fewer than 5 employees. Small enterprises normally operate outside the home and have from 6 to 50 employees. Group and individual lending is acceptable. Indicative loan sizes are below. These figures will be agreed upon with CPA in the final award. Microfinance group loans are estimated to range from $100 to $500 per individual within the group. Individual loans for micro and small enterprises are estimated to range from $500 to $25,000. Illustrative Activities/Approaches Applicants for the RFA should prepare a proposal in recognition that, at this time, a usual capacity building program directly with local organizations may not yet be feasible. However, the program should be designed and implemented so that, over time, the program approach, its employees and its financial assets can be transferred to an Iraqi organization. Linkages with the Iraqi banking sector are encouraged during program implementation as well as in anticipation of an eventual establishment of an Iraqi organization. A number of activities should be incorporated into the applicants’ proposals. These include the following elements. Conduct rapid survey of local institutions and neighborhood organizations to determine suitability to immediately establish working relationships with local partner(s). Examine capacity and terms to be offered by local banks to serve as “disbursing/payment agents” on behalf of the lending organizations. Conduct rapid survey of supply and demand for micro and small enterprise lending in order to determine the various loan products (size, terms, interest rates, etc.) to be offered and suitability of group versus individual loan approaches. Recommend lending approaches and methodologies for two distinct types of lending: Microlending: For microlending, character based judgments as to the integrity of the borrower are normal, with simple cash flow projections. Group or individual loans may be considered. Small enterprise lending: For small enterprise loans, character based approaches may be combined with business plans and cash flow projections to determine credit needs. Consider performance-based salary/bonus structure for employees (loan officers and supervisors) involved in the lending. Train Iraqi staff (management and loan officers) in financially sound, best practice credit approaches. Install appropriate financial and management information system for reporting program progress and tracking loans. Develop and implement profitability monitoring process to ensure program sustainability. Develop exit strategy to transfer program to an Iraqi organization(s). Build capacity of an Iraqi board of directors to govern the organization. Note: Bearing Point, as instructed by CPA and USAID, will be conducting survey work on micro and small enterprises and the banking sector. The results of this work, when available, will be made available to the RFA awardees. Start-Up and Implementation It is expected that the recipient will begin activities in targeted regions within two weeks of signing an agreement. Recipients should furnish a one-year work plan, with phases and task-level details for the first three months. The work plan should contain a clear set of phases, each of which has realistic and achievable results. The plan should also specify reporting approaches, which may be further detailed by the CPA. Performance Monitoring Applicants should furnish a Performance Monitoring Plan (PMP) that clearly articulates the results to be achieved and changes to be effected. The PMP should establish indicators, baselines, and targets consistent with anticipated results. Portfolio targets should be specified by applicants, such as described in the chart below: 1 month 3 months 6 months 12 months No. of active clients (total) No. of active women clients Loan portfolio outstanding Operational sustainability Reporting Requirements Work plan/schedule to be submitted within 10 days of arrival of program director. Performance monitoring plan (PMP) that articulates the results to be achieved. Quarterly progress reports of approximately 5 pages, plus appropriate supporting annexes. The quarterly report should describe actual progress against plans, reasons for not achieving plans and problems areas if any. Quarterly profitability report (Program income statement). Brief monthly summary progress reports, with emphasis on results and program impact. Monthly financial report of expenditures. A final report at the end of the period. Staffing and Management With the possible exception of headquarters-based senior management and some finance and administrative personnel, the staff proposed for this program should be dedicated to it full time. The recipient will be expected to manage the program from Iraq and perform extensive field monitoring. However, since proximity to those towns, communities and villages being served is fundamental to the effectiveness of the program, applicants should consider decentralizing their operations and using qualified staff, partners, and other resources with proven skills. Oversight Under the direction of CPA, USAID is likely to use BearingPoint to provide monitoring and oversight for ongoing and new small and micro credit/finance programs supported by the CPA in Iraq. The recipients will be accountable for achieving tasks and indicative benchmarks set forth in the agreements. All tasks under the agreements are to be carried out subject to the supervision, direction, and any necessary redirection by the CPA. SECTION III - SELECTION CRITERIA Awards will be made based on the ranking of proposals according to the technical selection criteria identified below. Technical Approach Demonstrated understanding of and appreciation for the economic and security situation and challenges in Iraq as affects the flexibility and responsiveness levels for the proposal and the implementation. Sound technical approach and methodologies for micro and small enterprise lending, including attention to gender issues and cultural and religious practices. Strength and relevance of the proposed program, its activities and approaches, and its potential to succeed; understanding of approaches that have worked in the Middle East region, such as Islamic lending. Personnel Appropriateness and expertise of personnel devoted to the program, as demonstrated by curriculum vita and letters of commitment for proposed key personnel. Demonstrated technical, managerial, and financial experience and competence in implementing micro and small enterprise credit programs. Experience in managing activities that produced significant results in challenging environments with high level of responsiveness and flexibility. Experience in working with or knowledge of donor-supported programs and international organizations; as well as in similar contexts and countries. Past experience in the region is desirable. Management and Partnerships Appropriateness and capability of the organization to design and implement an innovative program. Appropriateness and efficiency of the organizational structure, in the home office and in Iraq, with clear roles and responsibilities for all aspects of financial and program management. Ability to quickly start activities in the targeted regions within two weeks of signing the award. Appropriateness and capability of the systems provided such as the management information systems, accounting systems, performance monitoring plans to track the achievement of the results and outstanding loans. Commitment to collaborative planning and implementation, demonstrated ability to form and manage partnerships with local and regional organizations. The ability to bring regional partnerships and expertise is highly desirable. Experience in and commitment to creating viable linkages with key partners engaged in designing and implementing the program, e.g., PVOs and NGOs, banks, other donors. Past Performance Applicant organizations will be subject to past performance scrutiny. Applicants shall submit a matrix as an attachment with names of all organizations both commercial and governmental, from which they have received contracts or grant assistance awards for similar activities, size and scope over the past three years. Information should include the contract or grant award number and value of award; country where work was performed; brief description of the work; partner organizations or counterparts; results achieved (particularly results where rapid mobilization and quick impact was called for); and other relevant information that will clarify the depth and breadth of experience and involvement. Reference information must include names of contracting or grants officers and technical personnel involved in supervising the program as well as their current telephone numbers and email addresses. SECTION IV - GRANT APPLICATION FORMAT PREPARATION GUIDELINES All applications received by the deadline will be reviewed for responsiveness to the specifications outlined in these guidelines and the application format. Section III addresses the technical evaluation procedures for the applications. In the interest of time, applications shall be submitted in electronic format, rather than hard copies. Two files should be sent: one for the technical proposal and one for the cost proposal. Applications and modifications thereof shall be submitted according to the instructions in the cover letter of this RFA, and showing the RFA number, and the name and address of the applicant. The application should be prepared according to the format set forth below. Applications must be submitted no later than the date and time indicated on the cover page of this RFA, to the location indicated on the cover letter accompanying this RFA. Applications which are submitted late or are incomplete run the risk of not being considered in the review process. Technical applications should be specific, complete and presented concisely. The applications should demonstrate the applicant's capabilities and expertise with respect to achieving the goals of this program. The applications should take into account the technical evaluation criteria found in Section III. Preparation of Applications: Each applicant shall furnish the information required by this RFA. In the interest of saving time and reducing expenses, only electronic submissions (email with attachments) will be accepted. Email should be limited to two attachments (one for Cost and one for Technical), up to 2 MB limit. The applicant should submit the Technical Application and Cost Application in separate files attached to the email. The Technical Application should not make reference to pricing or cost data in order that the technical evaluation may be made strictly on the basis of technical merit. Submissions should be made using Microsoft Word and Excel, or software compatible with a Microsoft Windows environment (e.g. Portable Document Format (PDF) file in a MS Windows environment). Applicants should be aware that the CPA may use advisory personnel to review and applications. Applicants who include data that they do not want disclosed to the public for any purpose or used by the CPA and their advisors except for evaluation purposes, should: (a) Mark the title page with the following legend: "This application includes data that shall not be disclosed outside the CPA and its advisors and shall not be duplicated, used, or disclosed - in whole or in part - for any purpose other than to evaluate this application. If, however, a grant is awarded to this applicant as a result of - or in connection with - the submission of this data, the CPA shall have the right to duplicate, use, or disclose the data to the extent provided in the resulting grant. This restriction does not limit the CPA's right to use information contained in this data if it is obtained from another source without restriction. The data subject to this restriction are contained in sheets; and (b) Mark each sheet of data it wishes to restrict with the following legend: "Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this application." Explanation to Prospective Applicants - Any prospective applicant desiring an explanation or interpretation of this RFA must request it in writing by the date on the cover letter to allow a reply to reach all prospective applicants before the submission of their applications. Oral explanations or instructions given before award of a Grant will not be binding. Any information given to a prospective applicant concerning this RFA will be furnished promptly to all other prospective applicants as an amendment of this RFA, if that information is necessary in submitting applications or if the lack of it would be prejudicial to any other prospective applicants. Grant Award: The CPA may award one or more Grants resulting from this RFA to the responsible applicant(s) whose application(s) conforming to this RFA offers the greatest value (see also Section III of this RFA). The CPA may (a) reject any or all applications, (b) accept other than the lowest cost application, (c) accept more than one application, (d) accept alternate applications, and (e) waive informalities and minor irregularities in applications received. The CPA may award one or more Grant(s) on the basis of initial applications received, without discussions. Therefore, each initial application should contain the applicant's best terms from a cost and technical standpoint. A written award mailed or otherwise furnished to the successful applicant(s) within the time for acceptance specified either in the application(s) or in this RFA (whichever is later) shall result in a binding Grant without further action by either party. Before the application's specified expiration time, the CPA may accept an application, whether or not there are negotiations after its receipt, unless a written notice of withdrawal is received before award. Negotiations conducted after receipt of an application do not constitute a rejection or counteroffer by the CPA. Neither financial data submitted with an application nor representations concerning facilities or financing, will form a part of the resulting Grant(s). Authority to Obligate the CPA - The Agreement Officer is the only individual who may legally commit the CPA to the expenditure of funds. No costs chargeable to the proposed Grant may be incurred before receipt of either a fully executed Grant or a specific, written authorization from the Agreement Officer. COST APPLICATION FORMAT The Cost or Business Application is to be submitted in a separate volume (electronic file) from the technical application. Certain documents are required to be submitted by an applicant in order for a Grant Officer to make a determination of responsibility. However, it is CPA policy not to burden applicants with undue reporting requirements if that information is readily available through other sources. The following sections describe the documentation that applicants for Assistance award must submit to CPA prior to award. While there is no page limit for this portion, applicants are encouraged to be as concise as possible, but still provide the necessary detail to address the following: Include a budget with an accompanying budget narrative, which provides in detail the total costs for implementation of the program your organization is proposing, including: the breakdown of all costs associated with the program according to costs of, if applicable, headquarters, regional and/or country offices; the breakdown of all costs according to each partner organization involved in the program; the costs associated with external, expatriate technical assistance and those associated with local in-country technical assistance; the breakdown of the financial and in-kind contributions of all organizations involved in implementing this Agreement; and potential contributions of private donors to this Agreement. A current Negotiated Indirect Cost Rate Agreement (NICRA), if available for those applicants from the U.S. Applicants who do not currently have a Negotiated Indirect Cost Rate Agreement shall also submit copies of the applicant's financial reports for the previous 3-year period, which have been audited by a certified public accountant or other auditor satisfactory to CPA. For-profit organizations will not be allowed to charge a fee or earn a profit under this grant agreement. Applicants should submit any additional evidence of responsibility deemed necessary for the Grant Officer to make a determination of responsibility, e.g. organization’s accounting manual. The information submitted should substantiate that the Applicant: Has adequate financial resources or the ability to obtain such resources as required during the performance of the award. Has the ability to comply with the award conditions, taking into account all existing and currently prospective commitments of the applicant. Has a satisfactory record of performance. Past relevant unsatisfactory performance is ordinarily sufficient to justify a finding of non-responsibility, unless there is clear evidence of subsequent satisfactory performance. Has a satisfactory record of integrity and business ethics. TECHNICAL APPLICATION FORMAT The technical application is the critical item of consideration in selection for award of this Agreement. It should be specific, complete, and presented concisely. Section III addresses the technical evaluation criteria for the application. All Applicants are advised that lack of completeness or superficiality of the application may constitute grounds for excluding it from consideration. The technical application must set forth strategies, results, activities and indicators to best accomplish the objective of the Program. This technical application should not exceed 20 pages, but it should be complete and address the evaluation criteria. The technical application can be supplanted by attachments such as curricula vitae of personnel, work plan, matrix summarizing qualifications, etc. PAGE PAGE 2 PAGE 2 PAGE 1 PAGE 1