Author Topic: WL Cable: Proposal for Foreign Assistance Agreement to Explore Host...  (Read 1764 times)

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Offline ANdReScR

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UNCLAS QUITO 000818
 
SENSITIVE
SIPDIS
STATE FOR WHA DAS MCMULLEN, WHA/AND, AND EEB/IFD/ODF
STATE PASS TO USAID FOR A-AA/LAC JANET BALLANTYNE AND
DAA/LAC EDWARD LANDAU
 
 
E.O. 12958: N/A
TAGS: PREL EAID EC


SUBJECT: Proposal for Foreign Assistance Agreement to Explore Host Country Contracting for Project Implementation
 
REF: A) QUITO 779, B) QUITO 786, C) LANDAU E-MAIL TO
SANCHEZ-BUSTAMANTE DATED 09/04/2009 (NOTAL)
 
¶1. (U) Action Request for USAID/LAC in paragraph 10.

 
 
¶2. (SBU) Summary. The Government of Ecuador (GOE) has proposed a
"transition clause" in USAID/Ecuador's Assistance Agreement to
signal our concurrence with exploring host country contracting
(HCC) in the near future. DAA/LAC Landau has suggested, and
USAID/Ecuador agrees, that we should investigate the possibility of
using HCC for one project as a pilot effort. While Post cannot
guarantee that the GOE will agree with this approach, USAID/Ecuador
is ready to pursue it. If the GOE agrees, USAID/Ecuador will have
to seriously consider HCC as a potential contracting mechanism in
the future. This may have implications for USAID programs in other
countries of this region. End Summary.
 
 
 
¶3. (U) On August 31, 2009, the GOE sent a proposed "transition
clause" that it would like included in the amendment to
USAID/Ecuador's Bilateral Assistance Agreement ("Amendment"). The
two main points of this clause are: (1) that USAID and the
Ecuadorian Agency for International Cooperation (AGECI) should
explore alternatives for GOE direct implementation (i.e., HCC) of
USG development programs starting in FY 2011; and (2) that the GOE
will participate in the technical evaluation committees that select
contractors and grantees for new projects.
 
 
 
¶4. (SBU) USAID/Ecuador shared this proposed clause with A-AA/LAC,
DAA/LAC, the Regional Legal Adviser, and the Regional Contracting
Officer. Guidance received from DAA/LAC (REF c) suggests that
USAID and AGECI jointly select a project and related GOE
counterpart institution to explore feasibility of pilot host
country contracts in accordance with the Foreign Assistance Act of
1961, as amended, Sections 102 and 601, and USAID Automated
Directives System Chapter 305.
 
 
 
¶5. (SBU) Following this guidance, USAID/Ecuador will explain to
the GOE that it will include a transition clause in the Amendment
indicating that host country contracting will be considered as a
potential contracting mechanism in the future. USAID/Ecuador will
focus on one project only, namely the Integrated Municipal
Development Project, which builds small-scale social and productive
infrastructure along Ecuador's borders. The Technical Secretariat
for Plan Ecuador will be the GOE Contracting Agency for this
effort.
 
 
 
¶6. (SBU) If the GOE accepts this approach, USAID will conduct an
assessment of the Contracting Agency's procurement capability
during the next several months. USAID's assessment team will have
the qualifications necessary to assess all aspects of the
Contracting Agency's capabilities, including procurement system,
accounting system, and internal controls.
 
 
 
¶7. (U) If the assessment results in a recommendation that host
country contracting is practical, then the USAID Mission Director
will review the recommendations of the assessment team and certify
the acceptability of the Contracting Agency's procurement system if
the facts support doing so. The AA/LAC will then review the
recommendations and certification, and approve or disapprove a
single source, negotiated procurement with the host government. If
the assessment indicates that use of HCC would be impractical or
inappropriate and the USAID Mission Director cannot make a positive
determination, then contracting by USAID itself will be used.
 
 
 
¶8. (SBU) If the AA/LAC approves a single source, negotiated
procurement with the GOE, then USAID/Ecuador would move to host
country contracting for its Integrated Municipal Development
Project starting in FY 2011. If the pilot host country contracting
mechanism is successful during implementation of the Integrated
Municipal Development Project in FY 2011, then USAID/Ecuador may
explore other areas of its assistance program that might be
conducive to host country contracting.
 
 
¶9. (U) Regarding the GOE's desire for more involvement in the
selection of contractors and grantees, USAID/Ecuador already
invites GOE staff to participate in technical evaluation committees
(TEC). USAID/Ecuador ensures that the USG maintains a majority
vote in the TEC and is careful to comply with the FY 2009
Appropriations Act, Sec 7034(k), which prohibits approval by the
host government of democracy, human rights, and governance
activities of non-governmental organizations.
 
 
 
¶10. (SBU) Comment and Action Request: The GOE may accept the
pilot approach largely because it wants to have a signed Amendment
before the October 20, 2009 Bilateral Dialogue. However, by
including this transition clause in the Amendment, USAID/Ecuador is
committing to seriously consider host country contracting as a
possible implementation mechanism for the future. If USAID/Ecuador
does not fulfill this commitment, then negotiations for future
assistance agreements will turn increasingly difficult. As
adoption of host country contracting may have consequences in other
countries in the region where USAID implements development
programs, Post urges Washington to confirm this approach before
USAID/Ecuador meets with the GOE on September 14, 2009.
HODGES