SUBAWARD MANUAL BROADENING PARTICIPATION THROUGH CIVIL SOCIETY (BPCS) IRAQ COUNTRY OFFICE

Transcription

1 SUBAWARD MANUAL BROADENING PARTICIPATION THROUGH CIVIL SOCIETY (BPCS) IRAQ COUNTRY OFFICE 1

2 LIST OF ACRONYMS 22 CFR 226 Federal Regulation Code related to the Administration of Assistance Awards to US Non Governmental Organizations. A 122 OMB Circular: Cost Principles for Non Profit Organizations A 133 OMB Circular: Audit Guidelines for US Non Profit Organizations ADS AO AOR BPCS CFR COP CSO GCD IR MC MOU NICRA NGO NON US NGOs OMB RFA RRC USAID US NGOs Automated Directives Series Agreement Officer Agreement Officer s Representative Broadening Participation through Civil Society Code of Federal Regulation Chief of Party Civil Society Organization Mercy Corps Grant and Compliance Director Intermediate Result Mercy Corps Memorandum of Understanding Negotiated Indirect Cost Rate Agreement Non Governmental Organizations Non U.S. Based Non Governmental Organizations Office of Management and Budget Request for Application RFA Review Committee United States Agency for International Development U.S. Based Non Governmental Organizations 2

3 Table of Contents 1. INTRODUCTION 2. SCOPE AND PURPOSE OF SUBAWARD MANUAL 3. PURPOSE OF SUBAWARDING 4. SUBAWARD AGREEMENT TYPES 4.1 STANDARD SUBAWARD AGREEMENTS 4.2 SIMPLIFIED SUBAWARD AGREEMENTS 4.3 FIXED OBLIGATION SUBAWARDS 4.4 SUBAWARDS SUMMARY CHART BY TYPE 5. SUBAWARDS CYCLE 5.1 PRE AWARD REQUEST FOR APPLICATIONS (RFA) PROCESS PREPARING THE FUNDING OPPORTUNITY DESCRIPTION DETERMING EILGIBILITY REQUIREMENTS DETERMINING APPLICATION EVALUATION CRITERIA PUBLICALLY SOLICITING APPLICATIONS THROUGH AN RFA ELIGIBILITY SCREENING SUBRECIPIENT SELECTION RFA REVIEW COMMITTEE RFA APPLICATION REVIEW PROCESS CONDUCTING PRE AWARD ASSESSMENT OF FINANCIAL RESPONSIBILITY 5.2 AWARD DRAFTING THE SUBAWARD AGREEMENT SPECIAL AWARD CONDITIONS 5.3 USAID APPROVAL AND CONCURRENCE 5.4 IMPLEMENTATION AND MONITORING START UP REPORTING MONITORING PROGRAMMATIC MONITORING PROGRAMMATIC MONITORING PLAN PROGRAMMATIC MONITORING RESPONSIBILITIES PROGRAMMATIC MONITORING TOOLS AND INSTRUMENTS FINANCIAL MONITORING FINANCIAL MONITORING PLAN FINANCIAL MONITORING RESPONSIBILITIES TYPES OF FINANCIAL MONITORING SUBAWARDS TRACKING SHEET FIXED OBLIGATIONS SUBAWARD MONITORING SUBAWARD MODIFICATIONS 3

4 SUBAWARD MODIFICATION PROCEDURES 5.5 SUBAWARDS AUDIT REQUIREMENTS 5.6 CLOSE OUT CLOSE OUT STEPS PRIOR TO THE END DATE OF THE SUBAWARD CLOSE OUT ACTIONS AFTER THE END DATE OF THE SUBAWARD RECORD RETENTION 4

5 Annexes 1. Annex 1: BPCS Subaward Work Plan 2. Annex 2: Example Request For Application 3. Annex 3: Application Screening Sheet 4. Annex 4: Sample Proposal Scoring Sheet 5. Annex 5: Pre Award Assessment of Financial Responsibility 6. Annex 6: Standard Subaward Agreement Template. 7. Annex 7: Simplified Subaward Agreement Template. 8. Annex 8: Fixed Obligation Subaward Template. 9. Annex 9: Financial Review Checklist Template 10. Annex 10: Financial Monitoring Office Visit Report 11. Annex 11: Notification of Corrective Action. 12. Annex 12: Subaward Tracking Sheet 13. Annex 13: Modification Template 14. Annex 14: Audit Scope of Work 15. Annex 15: Annex Notification of Management Decision 16. Annex 16: Final Close out Letter 17. Annex 17: Subaward Closeout Checklist 5

6 1. INTRODUCTION Worldwide, Mercy Corps has implemented over $200 million of programs that have significant Subaward components which include issuing Subawards to US, international, local and communitybased organizations (CBOs) through a transparent, competitive process. Each phase of Subawarding pre award, Subaward, implementation, and closeout is supported by a system that is streamlined and flexible, but which complies with donor and Mercy Corps policy. Mercy Corps Subaward procedures maximize transparency, participation, and collaboration while minimizing risk. Mercy Corps integrates capacity strengthening into all its Subaward programs, helping local organizations improve their ability to manage themselves, serve their communities, articulate the needs of the people they represent, and productively engage with government. Mercy Corps Subawarding procedures ensure that all applicable donor regulations and policies are reflected in Subaward agreements and management, while Mercy Corps maintains the primary relationship with Subrecipients. All templates and guidance have been reviewed by Mercy Corps Legal Counsel and financial compliance experts. These templates clearly delineate agency minimum standards and policies, such as a schedule of applicable terms, program description components, budget requirements, and flow through of donor regulations. BPCS Integrated Grants Fund Program Overview Mercy Corps will issue Subawards to Iraqi NGOs and CSOs to implement activities under four Intermediate Results (IRs). Each Subaward will share the goal of linking capacity development to concrete outcomes and providing flexibility to support efforts in response to the known and emerging priorities of Subrecipient organizations and their constituents. While the Subawards issued under each IR will be distinct in their focus, the consortium recognizes the potential need and benefit to allowing for adjustments as unforeseen opportunities and challenges emerge during implementation. As such, the four IRs, described below, will be under an Integrated Subaward Fund (ISF). The ISF will facilitate the BPCS program to a) support initiatives across the spectrum of the targeted regions to stimulate systemic change, b) be efficient and equitable in overall Subaward fund distribution and c) be flexible to adjust investments if there is potential for major impact with larger/more grants in one category or to avoid waste if contextual constraints do not allow certain Subawards to be efficient or effective. 1. Civic Education and Service Learning Subawards Number: 35 Subawards made on a rolling basis with emphasis on Y1 Range: $15,000 $35,000 Goal: Pair hands on service learning activities with a citizenship curriculum to help people of all ages experience the constructive role citizens can play in their democracy. 2. Civil Society Collaboration Subawards Number: 25 Subawards will be made on a rolling basis primarily in Y2 3 Range: $10,000 $100,000 Goal: Facilitate partnership among formal and informal civil society groups to build trust, experience mutual benefit and do together what they cannot do alone; provide CSOs practical means of applying organizational development skills built through training. 3. Civic Participation Hub Subawards Number: 13 (one per Hub) Subawards on rolling basis in Y1 2 6

7 Range: $20,000 $100,000 Goal: To support the establishment of at least one Civic Participation Hub per governorate that facilitates cross sector interaction and creative action planning by a) helping civil society groups network and learn and b) broadening civic participation by involving a wide range of people and groups to use the space. 4. Advocacy Subawards Number: 60 total Subawards, 10 in Y1; 25 per year Y2 and Y3 Range: $50,000 $80,000 Goal: CSOs to pursue identified policy objectives and subsequently put into practice advocacy skills built through advanced training. In consultation with USAID, MC may choose to issue special category subgrants. For example, elections related subgrants may be issued prior to the 2013 PC elections and 2014 parliamentary elections. The elections related activities could include voter education candidate forums, and monitoring. Depending on the size and quantity of these special grants, they will be in addition to, or part of the 60 advocacy grants. Youth Fund: Seeking to promote and encourage the active engagement of young people, the BPCS consortium Youth Fund, drawn from 20 percent of the Subawards funds under each of the above four categories, will ensure that a minimum amount of funding is provided in each category for youthmanaged projects. Subawards wills be made to local organizations under IR 5 (Marla fund) and will help build the institutional capacity of the recipient organizations as well as provide funds for direct project activities of the Marla fund. The Marla fund is designated to assist victims of conflict. 2. SCOPE AND PURPOSE OF SUBAWARD MANUAL This manual will be used by BPCS partner organizations Mercy Corps, Public Aid Organization (PAO), Mercy Hands, ACDI/VOCA, International Republican Institute (IRI), and International Center for Not for Profit Law (ICNL) (collectively referred to as BPCS in this manual) to manage Subawards awarded by the BPCS program. The purpose of this manual is to provide a framework of management procedures for Subawards awarded by the BPCS program. The procedures described in this manual will ensure that appropriate guidelines and principles are established and that Subrecipients implement their activities in accordance with donor regulations and in a manner that contributes to donor and BPCS strategic objectives. The procedures outlined and materials (templates, forms) included with this manual are designed to be compliant with the policies of both USAID and Mercy Corps. This manual will serve the following purposes: To provide MC staff and partner organizations with an overview of Subawarding under BPCS. To provide step by step guidance on the Subaward cycle: including conceptualization, planning, application, selection, implementation, reporting, monitoring and evaluation, and close out procedures. 7

8 To provide for the use different types of Subaward agreements, as most appropriate. To provide required tools and forms for all stages of the Subaward cycle. To establish consistent and uniform policies and procedures for Subawards issued through an RFA process by the BPCS. All funded Subawards under BPCS program will comply with the USAID regulatory conditions set forth in the prime agreement, applicable standard provisions, CFR(s) and OMB circulars. 3. PURPOSE OF SUBAWARDING: Subawarding is the process of using a portion of BPCS funding to support activities managed by other not for profit organizations. Subawarding is a mechanism to fund activities necessary to achieve BPCS s mission, and increase BPCS outreach and geographic coverage. Activities will emphasize achieving results that are linked to an agreed upon implementation plan for the period of the Subaward. Signed Subaward agreements provide the legal framework for MC and other BPCS partners to enter into binding agreements with other organizations. The Subaward agreement outlines all terms and conditions between MC (or BPCS Partner Organization) and the Subrecipient. While all funding under BPCS comes from USAID, Subrecipients do not have a relationship with USAID directly, and all communication is between Mercy Corps and the Subrecipient, or between one of the partner organizations and the Subrecipient. The following diagram illustrates the line of communication within BPCS. Communication will always flow between the prime donor, USAID, and MC; between MC and its Partners and from the Partners to their Subrecipients. At no time should communication skip a level. That is to say, the Partners and Subrecipients are to have no direct communication with USAID. USAID Mercy Corps Partner Subrecipient Subrecipient 4. SUBAWARD AGREEMENT TYPES: BPCS will utilize several types of Subaward agreements for this program, including Standard, Simplified and Fixed Obligation Agreement. The subaward agreement type used for each subaward will be the 8

9 agreement type that best fits the subrecipient s organizational capacity, the amount of the subaward and the nature of the subaward program activities. 4.1 STANDARD SUBAWARD AGREEMENTS: Standard agreements are used to fund activities of established NGOs. These organizations have established written operations, personnel policies and procedures, and acceptable financial systems. Agreement flows down all applicable USAID regulations and has restrictions on types of activities (within the context of the regulations) being implemented by the Subrecipient. Specific guidelines for Standard Subaward: Standard Subawards are used when the following conditions are met: 1. Any Subaward, with the exception of fixed obligation grants, valued at more than $25,000 will use the Standard Subaward template. 2. May be used for funding activities that require major procurement. Goods to be purchased must meet applicable USAID local cost financing. International travel may be funded under these awards. 3. The Standard Subaward recipient NGOs should have the financial and programmatic capacity to manage larger complex awards. 4. May be used for multi year implementation activities. 5. In the case that Standard Subawards are awarded to NGOs with limited capacity, special award conditions may be included in the Subaward to ensure that the Subrecipient is able to comply with the terms and conditions of the Subaward. 4.2 SIMPLIFIED SUBAWARD AGREEMENTS: Simplified Subawards are typically used for funding discrete activities including: trainings, technical assistance, workshops, public awareness, capacity building, civil society and other similar activities. Generally Simplified Subawards are appropriate for Subrecipients that have a good programmatic track record but do not have sophisticated financial and procurement systems. Specific Guidelines for Simplified Subawards: Simplified Subawards are used when the following conditions are met: 1. Subaward amount is $25,000 (or local currency equivalent) or less. 2. The Subaward period does not exceed 12 months. 3. Program income will not be generated by Subaward activities. 4. No international travel or international training funded in the Subaward. 5. No USAID ineligible or restricted goods funded by the Subaward. 6. No capital equipment (item of equipment costing $5,000 or more per unit with a useful life of one year or more) funded in the Subaward. 7. No indirect costs funded in the Subaward. 9

10 4.3 FIXED OBLIGATION SUBAWARDS: Fixed obligation Subawards allow for the funding of very specific program activities without requiring BPCS to monitor actual costs incurred. They are intended to support specific projects where there is a certainty about the cost, milestones are readily discernible and there is reasonable expectation that milestones in the Subaward will be achieved. An important aspect to these Subawards is the structure of payment. Subrecipients are paid a set amount upon the accomplishment of established milestones. Therefore, it is essential that the BPCS Grants team is satisfied that there is sufficient cost history to negotiate the budget and to ensure that the total budgeted value of the Subaward is a reasonable estimation of the actual cost to implement the activity. The budget must be carefully negotiated to ensure that the Subrecipient has enough money to complete the activity, without having excess funds remaining at the end of the Subaward (Subrecipient should neither make nor lose money on the project). Specific Guidelines for Fixed Obligation Subawards: Fixed obligation Subawards are used when the following conditions are met: 1. The project activity has a high degree of certainty of programmatic results; the activity should include a proposed detailed implementation plan (outputs) linked to detailed reasonable cost breakdowns (budgets). 2. The ability to easily identify and quantify programmatic accomplishments or results in establishing Subaward milestones. 3. The implementation plan can be tracked by certain deliverables or specific milestones. 4. The availability of adequate cost information (historical or unit pricing) exists in order to determine and negotiate the fixed price of the Subaward. 5. Subaward amount is $100,000 (or local currency equivalent) or less. 6. The Subaward period does not exceed 12 months. 7. Program income will not be generated by Subaward activities. 8. No USAID ineligible or restricted goods funded by the Subaward. 10

11 4.4 SUBAWARD SUMMARY CHART BY TYPE: The following chart summarizes key characteristics of the Subaward Types*: No Item Standard Simplified Fixed Obligation 1 Organization type Well established NGOs NGOs with limited experience All 2 Project type All types Discrete easily defined activities; i.e. trainings and campaigns Activities with a high degree of certainty; and easily discernible milestones 3 Subawards Amount Over $25,000 Maximum of $25,000 Maximum of $100,000 4 Period of the Subaward No Limit (within the period of the BPCS program) Maximum of One Year Maximum of One Year 5 Procurement Any type, within applicable regulations Procurement of equipment, real property or international training not allowed Procurement of real property not allowed 6 International Travel Allowed with prior approval Not Allowed N/A 7 Indirect cost Allowed with NICRA Not Allowed N/A 8 Payment Advances or Cost Reimbursement Advances or Cost Reimbursement Payments for completion of milestones. 9 Financial Reporting Monthly or Quarterly and Final Reports Monthly and Final reports Submit milestone completion reports; No Financial Reports required 10 Implementation Plan Detailed Implementation Plan with annual revision Detailed Implementation Plan Detailed implementation plan with milestone / task linked to the budget *Selection of Subaward type will not be based on any one single factor, and all factors will be weighed in selecting the Subaward type. That is to say, a high risk Subrecipient may receive a standard award agreement (with special award conditions) if that award type best fits the type of activities to be implemented. The COP and GCD will determine the appropriate agreement type for each Subaward after weighing all factors. 11

12 5. SUBAWARDS CYCLE The Subaward cycle involves the following stages: Pre-Award Award Implementation Close-Out Request for Application (RFA) Eligibility and Capacity Assessment Subrecipient Selection Pre-award Assessment of Financial Responsibility Ineligibility & Compliance Checking Conflict of Interest Disclosure Draft Subaward Agreement Special Award Conditions added, if any Final Subaward Funds Flow Guidance & Training Liaison with Prime Donor Agreement Financial Monitoring - Tracking - Financial Reports - Office Visits & Follow-up - Monitoring Reports Program Monitoring Final Reports Asset Disposition Final Funds Reconciliation Close-Out Visit or Audit Close-Out Checklist/Letter Filing/Records Retention The GCD will work closely with the COP and Deputy COP to set up a life of Subaward work plan for each round of Subawards (a round of Subawards consists of all Subawards issued in response to an individual RFA). The plan lays out the various stages of the Subaward Cycle starting with RFA preparation and ending with Close out, and determines who is responsible and a time line for completing each stage. The template for the Subaward Work Plan is included as Annex PRE AWARD REQUEST FOR APPLICATIONS (RFA) PROCESS BPCS will issue various RFAs over the life of the program to implement activities under IRs 1 4 and some activities under IR5 (Marla funds). Each RFA will solicit proposals from Iraqi organizations to address specific needs and achieve objectives established by BPCS. In all cases the proposed activities must be relevant to the objectives of BPCS and be allowable under the terms of the prime agreement between MC and USAID. Some RFAs might be designed to target very specific programmatic needs, whereas others might be more general within a particular programmatic sector. Where required by the BPCS cooperative agreement, Mercy Corps will co ordinate with USAID on the development of the RFA documents. Note Not all subawards will be issued through the subaward process. Subrecipients not selected through RFAs, and the corresponding subawards, will be subject all the other procedures described in this manual. Subrecipients named and identified by the BPCS partners in the approved program description (Attachment B of the Cooperative Agreement) will not be selected through the RFA process as they have already been identified. In addition, Subrecipients under IR5 not already identified in the program description generally will be selected from NGOs which had previously received IR5 funds under previous programs in order to utilize and building on their past experience implementing IR5 12

13 activities and from other NGOs based on assessments performed in the field. Some specific IR5 activities, such as disability advocacy, may be issued through the RFA process. Each RFA will use the RFA template as a basis for the RFA content (Annex 2, Example Request for Applications Template). Individual RFA formats may be tailored to allow for ease of use by the applicants depending on the scale and scope of the solicitation. RFAs will be issued in an official version in English, and Arabic and Kurdish versions, as applicable. All RFAs will include the following information, at a minimum: 1. RFA identification number. 2. Funding Opportunity Description, including expected objectives and results to be achieved. 3. Statement identifying the USAID program providing the RFA funding. 4. Eligibility Requirements to receive a Subaward under the RFA. 5. Anticipated regulations that will apply to Subawards issued under the RFA. 6. An estimate of funds available, the number of Subawards BPCS expects to make, and the financial range of the awards. 7. Cost sharing element, if applicable. 8. The anticipated start dates and performance periods of the programs. 9. Anticipated type(s) of Subaward instruments to be issued under the RFA and reporting requirements for the Subaward. 10. Contact information and mechanism for requesting additional information. 11. Format of the application including number of pages, copies, list of attachments, etc. 12. Cost application (budget) format identifying any funding restrictions 13. The due date for submission of proposals 14. The criteria and any sub criteria, when applicable, that BPCS will use to evaluate applications, including an indication of their relative importance. 15. A description of the review and selection process PREPARING THE FUNDING OPPORTUNITY DESCRIPTION The Funding Opportunity Description defines the purpose/nature of the program to be funded under the Request for Applications (RFA). The DCOP/Partner Program Manager and Technical Advisors are responsible for preparing the Funding Opportunity Description. Each Funding Opportunity Description will contain a full programmatic description of the funding opportunity, including a general description of the proposed program, with an indication of the range of activities that might be involved, and the established goals of the activity which the applicant must meet. The level of detail in the program description depends on the requirements of the program objective(s) DETERMINING ELIGIBILITY REQUIREMENTS Eligibility criteria for applicant organizations will be established prior to the issuing of each RFA, Specific eligibility criteria for each RFA will vary depending on the program requirements, donor rules and other programmatic factors (e.g. geographic scope, sector, etc.). The prime grant agreement and program description served as base documents for establishing the eligibility criteria. 13

14 Each RFA will include the following general eligibility requirements: NGOs/CBOs must be legally registered with the federal NGO Directorate or the NGO Directorate in IKRG or have submitted their application prior to applying to an RFA. The organization is not affiliated with any political party nor engaged in any partisan activities. The proposal with all mandatory attachments per the RFA is completed and submitted prior the deadline stipulated in the RFA. The applicant adheres to proposal format guidelines, and proposed budget is within the sub award ceiling. Currently active in the community with existing programs and has relevant previous work experience. Receptivity to participate in learning opportunities and commitment to participating in BPCS capacity building components. In addition to the general eligibility requirements listed above, other specific eligibility requirements maybe included in each individual RFA, as needed DETERMINING APPLICATION EVALUATION CRITERIA A scoring sheet with all application evaluation criteria will be created for each RFA. Please refer to Annex 4 Sample Proposal Scoring Sheet, for an example of a typical scoring sheet. After the evaluation criteria are decided, the minimum scoring criteria for the RFA will be determined. Applications will be reviewed based on the following elements: I. Technical merits in response to the requirements of the RFA including the potential for impact, likelihood of proposed activities to further program objectives and overall responsiveness to needs identified in the program description. II. Cost effectiveness and compliance with funding restrictions stipulated in the RFA, if any. Appropriateness and feasibility of project activities within the proposed timeframe and budget. III. Past performance and current capacity of applicant, including sound financial practice, in areas pertaining to the proposed activity; IV. Other relevant criteria as stipulated in the RFA. This may include environmental compliance measures, gender issues and other cross cutting themes, branding and marking plan, staffing, monitoring and evaluation plans, etc. Points assigned to each element will be adjusted based on the objectives of the RFA. For instance, if capacity building of the Subrecipient is an objective of the RFA, the possible points assigned to current capacity of the applicant will be reduced PUBLICALLY SOLICITING APPLICATIONS THROUGH AN RFA 14

15 Mercy Corps will publically publish each Request for Applications (RFA) to attract proposals from a wide variety of eligible organizations and provide for a transparent and clear process. For each Subaward cycle, a public RFA will be prepared to solicit proposals once the criteria for Subaward (s) and the number and size of Subawards have been determined. Where required by the BPCS cooperative agreement, Mercy Corps will co ordinate with USAID on the development of the announcement. The RFA will generally be published between 14 and 30 days before applications are due, depending on the complexity of the activity and the target group. The announcement may be published in the local media deemed appropriate, as well as posted on appropriate internet sites. Any media postings will direct the applicant to the full application on a public website. In more conflict sensitive areas of the country, print media will not be used. Mercy Corps will always post RFAs on the NCCI website, directly send the solicitation to more than 400 NGOs and provide the RFA to regional and provincial NGO networks. 1 Civil Society Hubs and BPCS partners will also distribute the RFA through their local networks. Once the BPCS Facebook page is created, RFAs will also be posted there. The RFA distribution sites will be documented and kept in MC s grant files. Potential applicants will be required to register their interest with Mercy Corps and a list of interested applicant organizations will be maintained. If it is determined that further clarity is required on the content of the RFA, Mercy Corps may arrange a meeting of all interested applicants. The meeting will be held no later than two weeks prior to the closing date of the application. This will ensure that all applicants have sufficient time to address any questions they may have concerning the RFA. Minutes of the meeting, questions and answers will be published no later than two days after the meeting. Thereafter, any further questions will be received and addressed in writing within a period not exceeding one week after the clarification meeting. For RFAs with a submission deadline shorter than 21 days, no meetings to clarify the content of the RFA will be held due to time constraints. RFAs with the shorter deadlines will typically be targeted at activities with smaller budgets, duration and complexity. However, applicants will be able to write inquires to a specific account and Mercy Corps will determine if a formal response is required. Mercy Corps may also choose to hold informational meetings about an upcoming RFA to generate interest and comment. Any information given to a prospective applicant in response to a question concerning the RFA will be furnished to all Prospective applicants as an amendment to the RFA, if the lack of such information would be prejudicial to other applicants. The proposal submission deadline will include a specific time and date and format of submission. Submissions received after that time and date will not be considered. At the COP s sole discretion, in exceptional circumstances, e.g. a security incident, the COP may extend the submission deadline for all applicants under the RFA. All applications must be received by the deadline stipulated, must be presented in the required format and must clearly address the issues defined in the RFA. Note on RFA Procedures 1 List of active NGOs compiled from UN, INGO, and LNGO networks. 15

16 RFAs targeted specifically at small local partners may require modification to some of the procedures described here, depending on capacity of the targeted applicants. This may include in depth orientation and information sharing sessions in advance of RFAs, simplified application processes, debriefing sessions on the applicants submissions that serve as a learning process and capacity building for local partners during the program implementation. Generally, the procedures applied to high risk recipients would be applied to small local partners in such circumstances. Program specific RFAs would cover deviations from generally applied procedures and describe additional eligibility criteria, monitoring and capacity building activities. ELIGIBILITY SCREENING: All applications received will be reviewed to ensure the organization applying meets the established eligibility criteria for the RFA. The eligibility screening will be done internally by members of the Mercy Corps Program Grants team, to ensure that the basic eligibility criteria have been met. Only those applications that meet the eligibility criteria, are received by the deadline, and are presented in the required format will be forwarded to the Subawards Review Committee. The Application Screening Sheet (Annex 3) will be used to conduct the initial screening SUBRECIPIENT SELECTION RFA Review Committee The BPCS RFA Review Committee (RRC) will be formed to evaluate the eligible applications. The Committee will review the applications based on their technical and financial merits. The Review Committee will at a minimum comprise a relevant donor representative, a program representative, senior management member from each partner and a financial/compliance representative. Technical experts from relevant sectors may also be represented, depending on the nature of proposed activities. The BPCS Subawards review committee members include: 1. One senior staff representative from each BPCS partner (Mercy Corps, ACDI/VOCA, ICNL, IRI, PAO and Mercy Hands) optimally at least 3 of 5 partners will have a representative present. 2. Deputy Chief of Party for BPCS Program 3. Grants & Compliance Director 4. External Expert(s), as required RFA APPLICATION REVIEW PROCESS The RFA committee will be responsible for evaluating applications based on the selection criteria established in the RFA. In the event of a conflict of interest in relation to an application, the affected Committee member must excuse him/herself from all discussions related to that application. A conflict of interest arises if the person, or their spouse, partner or child works for, or is negotiating to work for, or has a financial interest (including being an unpaid member of a Board of Directors) in any organization which submits an application under review; or if the member believes that for any reason they cannot review the application in an unbiased, objective and independent manner. The purpose of the RRC is to: 16

17 Ensure a balance in both geographic and technical expertise. Provide overall feedback on the technical proposal and the Applicants organizational capacities. Where applicable provide any feedback based on the previous experience for each partner with the short listed applicants. Score applications, allowing those applicants that meet the minimum scoring criteria to continue with the rest of selection process. Prior to convening, members of the RRC will receive all eligible applications and scoring sheet (see Annex 4, Application Scoring Sheet). The RRC members will then review and score the applications prior to the meeting, in order to ensure both an independent analysis and to speed the review process during the RRC meeting. Each member of the Committee will individually assign ratings using the established criteria. The RRC will then meet to discuss the applications. After group discussion, the scores will be tallied, and a short list will be made of those applications fulfilling the minimum scoring criteria to be further considered for award. The short list will serve as the preliminary Subaward recommendations from the RRC. Unsuccessful applicants will be notified in writing of the Committee decision. A written evaluation will be prepared for each application including rating and a short narrative explanation for ratings for each of the established criteria. If the RFA did not assign numerical values to the evaluation criteria, then the comparison will be in the form of a narrative that will detail strengths and weaknesses of applications relative to the evaluation criteria. If the RFA does not indicate the relative importance of the evaluation criteria, then all evaluation criteria are equally weighted. If numerical values are assigned to the criteria, the evaluation must include a discussion of the numerical scoring and a narrative explaining each application s strengths and weaknesses compared to the evaluation criteria. For shortlisted applicants, Mercy Corps will screen the potential Subrecipients to check for compliance with USAID regulations which restrict funding organizations or individuals who are debarred, suspended or otherwise excluded from or ineligible for US government funding. Mercy Corps achieves this compliance check through the use of World Tracker software program. Ineligible organizations will be disqualified from further consideration if they are found to be on any of the restricted lists. In addition, for short listed applicants, meeting the minimum scoring criteria does not ensure that a Subaward will be awarded. In addition to a scoring summary, the Committee may raise questions for clarification or issues of concern, which need to be addressed before the final decision on whether to award or not will be made. Applicants will be informed in writing that they are being further considered and will be given a period of time to respond on any issues raised by the RRC. Questions may be in regards to any aspect of their submissions and budget. The Subaward Officers, with input from the Field Program Officers, will work with the potential Subrecipients to revise their applications within the determined time frame. Once the revised applications are received, the RRC will reconvene to discuss and make the decision to fund or not to fund each proposal. The final evaluation and funding recommendation summary will be approved by the members of the Committee and submitted to the Chief of Party or designee for the final review and approval. Concurrently, a one page proposal summary in English for each selected applicant will be submitted to USAID for concurrence. All applicants will be notified in writing of the decision, and a summary of the decision discussion notes will be kept on file for each applicant. 17

18 Those recommended for funding will then enter the Pre Award Assessment stage CONDUCTING THE PRE AWARD ASSESSMENT OF FINANCIAL RESPONSIBILITY Following the decision to fund, Mercy Corps will conduct a Pre Award Assessment of Financial Responsibility to determine the potential Subrecipients capacity to adequately plan and carry out the proposed activities and comply with applicable donor and general accountability regulations. The Pre Award Assessment is used to assist in determining the type of a Subaward agreement to be used, and any special award conditions that will be added to the Subaward agreement. As a part of the objectives of BPCS is to building the capacity of Subrecipients, the pre award assessment will also help identify areas where capacity building is needed. The Pre Award Assessment looks at the applicant s financial management systems and internal controls taking into consideration applicable donor regulations in determining whether the applicant s system of internal controls are adequate to appropriately manage USAID funds. This includes segregation of duties, banking and cash management, documentation and record management, contracting procedures, and personnel and travel policies. The template is included as Annex 5: Pre Award Assessment of Financial Responsibility. The Pre Award Assessment is designed to document the following areas: Organizational Capacity: Size and age of the agency and whether the applicant has adequate financial resources or the ability to obtain such resources, as required during the performance of the Subaward and whether the applicant otherwise qualified to receive a Subaward under applicable donor or country of implementation regulations. General Internal Controls: Strength and sophistication of the agency s internal controls will be evaluated to establish whether the organization has adequate and effective internal controls, including the monitoring of adherence thereto. Knowledge of Prime Donor Rules & Regulations: This part of the assessment should be designed in relation to the complexity of the funding source(s) related requirements and the size of the Subaward and will assess the knowledge and familiarity of the applicant with applicable donor regulations and whether the applicant has the ability to meet the Subaward conditions. Past Performance and Audits: The potential Subrecipient s record of past performance including any prior Subawards from Mercy Corps or other BPCS partners, program donor and other agencies operating in the country will be reviewed to establish whether the applicant has a satisfactory record of performance with respect to planning and implementing programs of similar size and complexity. The organization should provide evidence that it has completed statutory audit(s), if applicable, and provide a copy of the audit report(s) and signed annual financial statements for the past three years. Relevant unsatisfactory performance in the past is enough to justify a finding of non responsibility, unless there is clear evidence of subsequent satisfactory performance or the applicant has taken adequate corrective measures to assure that it will be able to perform its functions satisfactorily. 18

19 Asset Management: For Subawards which include the procurement of equipment, the applicant's property management system. The potential Subrecipient s records should demonstrate adequate and donor compliant property control systems and a program for orderly maintenance of property. Procurement system: The potential Subrecipient should have written procurement procedures that meet the requirements of Standard Provisions for Non US, Nongovernmental Organizations M5. Procurement Policies. Personnel and travel policies are written uniformly, are enforced, and result in personnel and travel costs that are reasonable in accordance with the applicable cost principles. Financial and Accounting Systems of the Subrecipient will be reviewed for the following: The Organization s books, records, program documentation and other materials are maintained in accordance with generally accepted accounting principles. The accounting records should, at a minimum, be adequate to show the ability of the applicant to supply full documentation (supplier or vendor, amount, nature and date) of all costs incurred under a grant, the ability of the applicant to supply full documentation of receipt and use of goods and services acquired under the grant, the cost of the program supplied from other sources. The financial system has the ability to maintain procedures that will minimize the time elapsing between the transfer of funds and their disbursement The organization has adequate financial resources necessary to complete the grant activity and to provide the required level of matching funds where applicable. The accounting and banking system can track BPCS funds separately from other donor funds The organization is willing and able to establish and maintain systems to ensure compliance with the applicable cost principles, monitor compliance with the Subaward terms, and ensure that reporting deadlines are met Risk Assessment Levels: The intent of the Pre Award Assessment of Financial Responsibility is to assess the capacity of applicant organizations to effectively manage USAID funds in compliance with donor (MC, USAID and partners) requirements. The final stage of the Pre Award Assessment is to assign a risk level and then to negotiate a Subaward agreement taking into account the risk level and any needed special award conditions. Low Risk Applicants: If Mercy Corps or the BPCS partner has had a long and successful relationship with the applicant, the applicant has had clean audits and all reports have been filed accurately historically, the applicant would likely be classified as a low risk. Low risk applicant will be able to demonstrate the ability to comply with Subaward terms and conditions with few exceptions. Medium Risk Applicants: A medium risk applicant will be able to demonstrate the ability to comply with Subaward terms and conditions or any exceptions are not likely to materially affect the reliability of reporting or the ability to implement program activities. Medium risk status indicates that several site visits should be planned during program implementation to review the Subrecipient s performance and compliance. Technical assistance to address managerial and financial deficiencies might also be appropriate. 19

20 High Risk Applicants: The applicant demonstrates some ability to comply with grant terms and conditions but the exceptions could materially affect the reliability of reporting or the ability to attain program activities. High risk status indicates that regular and frequent site visits should be planned during program implementation and that the Subrecipient will require technical assistance to address management or procedural deficiencies. A small, startup non profit agency operating a new program would likely be evaluated as a high risk, at least until some history was established. The country office must always consider the complexity of the funding sources and programs being funded in determining the risk assessment. It is quite likely that the same Subrecipient will have different risk assessment levels assigned for a more or less complex project. The following factors tend to indicate high risk: Poor financial stability (i.e., insolvency or threat of insolvency). Inexperience such as may occur in newly formed organizations or in those which have not previously received funding from the program donor. Serious deficiencies in program or business management systems (e.g., substantial failure to comply with the financial management standards or procurement standards). A history of unsatisfactory performance, material violations of grant terms, or large cost disallowances on previous Subawards from the same or other U.S. federal program. Lack of consistency on part of the Subrecipient in complying with applicable local laws and regulations (e.g., registration with the relevant government departments, submission of annual returns, submission of statutory deductions for its staff) Special Award Conditions: For those applicants classified as High or Medium risk, special award conditions may be included in the Subaward Agreement to ensure that the NGO is able to fulfill the requirements of the award. Special award conditions are discussed below in Section Conflict of Interest Disclosure Statement As a part of the pre award assessment, a Conflict of Interest Disclosure Statement must be signed by the Subrecipient s project manager and the director of the Subrecipient organization. Budget negotiation Once the pre award assessment is completed the final changes to the proposal and budget, if any, will be negotiated with the selected applicant. Any changes in the program as a result of the pre award technical, management and financial assessment will be mutually agreed upon. The program budget should include funding elements which are reasonable and allowable in accordance with applicable donor cost principles and specify cost share, where applicable. The budget submission should be reviewed in accordance with the standards set forth in the RFA. All stages of Subaward negotiation shall be documented in writing. 20

21 5.2 AWARD DRAFTING THE SUBAWARD AGREEMENT Templates for simplified, standard and fixed obligation Subawards under BPCS are included as: Annex 6, Standard Subaward Agreement Template; Annex 7, Simplified Subaward Agreement Template; and Annex 8, Fixed Obligation Subaward Template. These templates can be modified to include special award conditions. Each Subaward agreement contains the following elements: Subaward agreement specifying the overall amount of the Subaward, obligated amount (where applicable), the period for the grant and the terms of the grant; Program Description including the indicators to be used for reporting on project results. Implementation Plan an implementation schedule, clear benchmarks and indicators for monitoring and evaluation, a clear listing of intermediate and final deliverables, and the financial and technical reporting requirements; Budget a line item budget by object class category, including cost share required or otherwise provided, or by Milestone for Fixed Obligation Subawards. Forms and templates for reporting. Space for signature by the authorized Mercy Corps representative and countersignature by an authorized representative of the Subrecipient. The required subaward marking provision in accordance with Mandatory Standard Provisions for U.S. Nongovernmental Organizations, M13.(j). In addition, a statement requiring the subrecipients to comply with Mercy Corps approved Branding and Marking Plan will be included, as applicable. Mandatory and Required as Applicable Standard Provisions. (Standard Template only). Special provisions, including substantial involvement requirements (Standard Template only) SPECIAL AWARD CONDITIONS Based on the results of the pre award assessment, special award conditions may be included in the Subaward. Special award conditions are additional requirements or modifications made to the Subaward agreements to help ensure that a medium to high risk Subrecipient will properly manage the Subaward. Special award conditions may be removed by amendment to the Subaward agreement when the situation that gave rise to the condition has been corrected. Similarly, special award conditions may be added if the Subrecipients s performance does not meet requirements. The following table provides a number of suggested special award conditions which may be incorporated into the Subaward agreement when the Subrecipient does not meet the basic criteria listed in the table. The conditions should be incorporated individually as needed to balance against the risk and should be not viewed as an all or nothing list. 21

22 Basic Criteria for Financial Capacity 1. Subrecipient must have an accounting system which is appropriate for the value of the Subaward. 2. Subrecipient must have financial personnel who can competently and accurately track and control Subaward funds and records. 3. Subrecipient must have a written policy covering cash and payment controls including a list of parties authorized to approve transactions. 4. Subrecipient must have a bank account in the name of the organization if banking facilities are available. 5. Subrecipient must have written personnel policies (including, but not limited to, hiring and termination procedures, salary scales, standard benefits package, work agreements and timesheet methods). Special Award Conditions for Medium or High Risk Recipients If no electronic system is used, require a worksheet detailing all expenditures in addition to the summarized financial report. Require copies of receipts to be submitted with financial reports. Require monthly financial reports. If the prime donor rules do not already require one, consider requiring a segregated project bank account. For Subrecipients that lack the ability to track or maintain a fund for accrued expenses, the Subaward agreement should only allow for expenses paid on a cash basis. Require monthly financial reports. Require copies of receipts to be submitted with financial reports. Allow only expenses which have been paid on a cash basis (no accrued expenses). Consider funding the Subrecipient on a reimbursement basis only. Require the Subrecipient to write and submit cash management policies for review. For Subrecipients with very low capacity, consider capping the maximum amount per transaction. Consider funding the Subrecipient on a reimbursement only basis or hold back a percentage of the funding pending the submission of final reports. Require a bank account to be set up and specify in the agreement that funds will be transferred only to that account (requirement for all Subawards; see ). If no bank account is available, require monthly financial reports. For Subrecipients with weak financial systems, consider requiring a segregated project bank account if the prime donor rules do not already require one. Require the Subrecipient to write and submit personnel policies for review. For Subreceipients with very low capacity or which lack a time and effort reporting system, consider funding only direct program personnel who will work exclusively on the Subaward activities. 22