Compact Implementation Guidance

Policy for Accountable Entities and Implementation Structures

OGC-2007-4.2

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Annex I: Utilization of Non-MCA Structures

I. Relevant Policy Provision

Section 2.3 of the Policy requires that existing implementation structures established by other donors and existing government systems and structures be consistent with MCC requirements and efficient for implementing the Program. This Annex I seeks to provide guidance on factors to consider in determining whether to utilize an existing implementation structure.

II. Key Considerations

In assessing whether the utilization of an existing implementation structure is consistent with MCC requirements and efficient for implementing the Program, the following parameters should be considered:

Parameters for assessing program implementation structure
Category Issue Key Considerations
MCC statutory and policy requirements MCC Statute- Limitations on MCC Assistance MCC Assistance must be used in compliance with MCC’s statutory requirements (i.e. can’t be used for military assistance or training; result in U.S. job loss or production displacement; cause environment, health, or safety hazards; or fund abortions/involuntary sterilizations)
MCC Statute- Taxation MCC Assistance must be exempt from taxation.
U.S. laws MCC Assistance must be used in compliance with other requirements under U.S. laws (e.g. OFAC sanctions).
MCC Policies Generally, the policies of the existing implementation structure should be reviewed to assess compatibility with MCC policies as well as applicable IFC Performance Standards. Depending on the initial assessment, the team may decide to move forward with a gap analysis to prepare an action plan for policy harmonization so as to achieve compliance with MCC requirements while reducing administrative burden.
Governance Board of Directors Existing oversight body/mechanism (e.g. board, funders’ committee, etc.) of the existing implementation structure must be aligned with MCC’s requirements as set out in the AE Policy (Section 3.2 Board Structure, Composition and Duties).
MCC Observer MCC must be able to retain its observer status/function in the oversight body of the existing implementation structure in a manner consistent with the requirements as set out in the AE Policy (Section 3.2(B)(2) Role of the MCC Observer).
Civil Society/Private Sector Civil society and the private sector must be able to participate in the decision-making of the existing implementation structure in a manner consistent with the requirements as set out in the AE Policy (Section 2.2(E) Civil Society and Private Sector Participation).
Records & Archiving The record-keeping and archiving processes of the existing implementation structure must be aligned with MCC’s requirements as set out in the AE Policy (Section 3.2(A)(6) Accurate Record Keeping and Section 3.5(D)(8)) as well as MCC’s Program Closure Guidelines.
Operations Government/Other Donors

The government or other donors involved in the existing implementation structure should be aligned with MCC’s policies and principles.

The existing government structure approach may be feasible for a PIU inside existing ministries whereas ordinary ministry staff within an existing ministry would be subject to ministry governance.

In previous experiences with existing government structures, MCC has experienced a decrease of counterpart commitment. This risk may be reduced by clearly documenting the government’s commitment to the existing structure’s operational continuity.

Sectoral Synergy

For a single sector-compact, utilizing an existing implementation structure that shares the same focus could work well. For existing implementation structures that are focused on multiple sectors, perhaps we can identify the part of the organigram that fits the compact.

For multi-sector compacts, we would have to look at the degree of overlap with a multi-sector existing implementation structure. Alignment may be challenging with a single-sector existing implementation structure.

Resource Allocation

Where the existing implementation structure is implementing other projects apart from MCC or MCC is co-funding a project with the government or other donors involved in the existing implementation structure, it will be appropriate to develop a clear framework on sharing or separating staff, funding, and other resources.

For existing government structures, it may be appropriate to implement a framework for crediting government contributions (e.g. for man-hours, office space, etc.) towards country contribution requirements under the Principal Program Documents. However, we will also need to put a system in place to avoid commingling of funds.

It is worth noting that where programs under the existing implementation structure terminate before or after MCC’s programs, there may be changes in MCA’s cost burden for both staffing and other indirect costs (e.g. office space, utilities, etc.).

Staffing

Given MCC’s hard deadline for program implementation, initial performance readiness is critical. The existing implementation structure must have sufficient capacity for critical MCA functions such as procurement, financial management, project management, contract management, etc.

To that end, it will be important to assess the performance of the existing implementation structure whereby we can review the organigram as well as individual CVs to:

  • gauge performance on other projects;
  • consider the level of absorption and manpower allocation for existing staff;
  • sort out reporting lines;
  • figure out funding for existing staff with program resources; and
  • identify gaps where additional hiring or creation of an additional unit is needed to focus on MCC programs.

It is also worth noting that for existing staff, MCC will not have an N/O opportunity for their hiring and MCC Assistance cannot be used to fund existing staff for work they were already supposed to do.

Existing policies of the existing implementation structure on recruitment remuneration must be harmonized with MCC Cost Principles and MCC HR Guidance.

Asset Transfer Existing policies of the existing implementation structure on the transfer and liquidation of assets must be harmonized with MCC Program Closure Guidelines.

III. Discussion

Other factors to consider in using existing implementation structures include: (1) re-imagining the role of the Accountable Entity to focus on coordination among Implementing Entities and support of capacity growth for Implementing Entities over time- which may mitigate the trade-off of timeline constraints and low capacities or (2) installing a board or other oversight mechanism on top of the existing implementation structure.

Annex II: Utilization of a Designated Final Authority

I. Relevant Policy Provision

Section 3.3(A) of the Policy requires that the Designated Final Authority approach must capture the same level of transparency, efficacy, and efficiency in achieving the Program objectives that a Board structure provides. This Annex II seeks to provide guidance on assessing the feasibility of the Designated Final Authority approach through the SWOT 5 analysis framework.

II. SWOT analysis

Strengths Weaknesses
  • Efficiencies in Governance: The single Designated Final Authority approach reduces the administrative burden and logistical challenges encountered with the board structure (e.g. scheduling/preparation of meetings, quorum requirements, board member appointment/replacement, etc.).
  • Weaker Governance: The single Designated Final Authority approach may elevate the risk for corruption and conflicts of interest by foregoing the transparency built into a board structure (e.g. board meetings and minutes, MCC observer, civil society/private-sector participation, etc.).
  • Lack of Broader Engagement: The single Designated Final Authority approach may decrease the quality of oversight, deliberations, and guidance by reducing the opportunity for the Accountable Entity to directly engage the knowledge, expertise, and influence of non-government actors and other parts of the government.
Opportunities Threats
  • Ownership: A single Designated Final Authority may have a greater sense of ownership and commitment by the Designated Final Authority towards the program.
  • Influence: A single Designated Final Authority who is highly influential (e.g. close to the political leadership of the host country) may be able to provide better support for program implementation.
  • Lack of government-wide coordination: Compared to a board comprised of members from different areas of government, the single Designated Final Authority approach may result in diminished collaboration across different ministries/departments in Program implementation.
  • Lack of Durability/Political Capture: The single Designated Final Authority approach exposes the MCA’s governance structure to the individual risk of the Designated Final Authority. For example, the Designated Final Authority may be closely associated with a single political party and may be vulnerable to changes in the political environment of the host country- which, in turn, may hamper the continuity of the MCA’s operations. This risk is present with the board structure as well- but diluted due to the plurality of board members.

III. Discussion

Given the significant risks and downsides of the single Designated Final Authority approach, it is challenging to envision a scenario where such an approach would be acceptable to MCC. Some suggestions to approximate the efficiencies of a single Designated Final Authority approach are to: (1) consider installing a smaller board, (2) empower the Operations Unit on operational issues and trim the board’s role to focus more on oversight, high-level strategic guidance, and political support (e.g. for policy reforms and permits), or (3) delegate more authority to the Implementing Entities and keep the Accountable Entity in more of an oversight/support function.

Footnotes
  • 1. This Policy uses the term “will” instead of “shall” or “should” in an effort to comply with USG policy to use plain English (see the Plain Writing Act of 2010 and Executive Order 13563 “Improving Regulation and Regulatory Review”). Also, the word “will” or “must” was selected for use in those provisions that are mandatory, while “should” is occasionally used for those provisions that contain best practice but are not mandatory.
  • 2. See Annex I of this Policy for further guidance on the utilization of Existing Implementation Structures.
  • 3. MCC and the Government may agree to other governance structures that do not utilize a Board but rather designate a minister or senior official to be the final authority for the Accountable Entity. In such instances, (1) the rights and obligations of a Board and its members will apply with equal effect to such Designated Final Authority as set out in Section 3.3 of this Policy, and (2) any other references in this Policy to a Board or its members will be interpreted, as applicable, as a reference to the Designated Final Authority.
  • 4. See Annex II of this Policy for further guidance on the utilization of the Designated Final Authority approach.
  • 5. Strengths, Weaknesses, Opportunities, and Threats.