Compact Development and Oversight

(in millions of $)	FY 2017 Enacted	FY 2018 CR Rate Annualized	FY 2019 Request
Total Appropriation/Request	905.0	898.9	800.0
Compact Development/Oversight	94.0	93.9	109.0
609(g) Assistance	22.0	26.6	22.0
Due Diligence	72.0	67.3	87.0

MCC is requesting $109 million in funding for compact development and oversight in FY 2019. $22 million would be programmed towards assistance under section 609(g) of MCC’s authorizing statute and $87 million would be programmed toward due diligence to support programmatic oversight, quality control, and post-completion work, such as data collection and evaluation.

Pre-compact planning, post-compact evaluations, and oversight are critical to the success of MCC program investments and to ensuring that MCC, partner countries, and the development community are able to take advantage of the learning opportunities inherent in MCC programs.

609(g) Assistance

Assistance provided under section 609(g) of MCC’s authorizing statute represents less than three percent of MCC’s overall request. Nonetheless, 609(g) assistance is critical to the success of compact development and allows MCC to fulfill its goal of developing high-quality compacts more quickly. MCC 609(g) assistance grants help country partners undertake detailed project preparation work on proposed projects. This preparation includes project design studies, feasibility studies, environmental and social impact assessments, engineering and geotechnical designs, economic baseline surveys, technical assessments of financial management and procurement capabilities, and other specialized analyses that help partner countries fully prepare projects that can be implemented within the fixed five-year timeframe, within budget, and provide substantial returns to MCC’s investment.

Due Diligence

Due diligence funds allow MCC to obtain information necessary to evaluate, assess, and appraise proposed projects during compact and threshold program development, to effectively oversee and monitor projects during implementation, and to evaluate the results post-implementation. The number of compacts and threshold programs in implementation is projected to grow between FY 2019 and FY 2020.

Due diligence funding is utilized to procure the technical expertise required throughout the compact and threshold program life cycles and allows MCC to right-size staffing requirements based on the relative size and diversity of the program portfolio. For example, though MCC employs full-time staff with expertise in the agriculture sector, one compact program may include a project that calls for unique knowledge of certain livestock issues. In such a case, MCC might procure external technical expertise to address the niche need. Similarly, if MCC is analyzing the effectiveness of electricity or water utilities across multiple countries, MCC may hire technical expertise to develop an analytical tool to assess the technical and commercial strengths and weaknesses of each utility. Through this procurement strategy, MCC may deploy the same analytical tool during compact development and compare utility performance across multiple compacts.

In addition to program development and implementation, due diligence funds continue to be utilized post-closure of compacts in order to conduct independent evaluations that use rigorous statistical methods to measure changes in beneficiary incomes related to MCC activities. Evaluations provide critical information about program successes as well as valuable lessons on how MCC may continue to improve the design, development, and implementation of future programs with partner countries.

For example, MCC recently undertook a review of its roads projects in order to better design, implement, and evaluate such projects. Through evidence collected across 16 compacts with road projects, MCC uncovered seven key lessons, including the need to prioritize and select projects based on a road network analysis, to standardize content and quality of road data collection across projects, and to consider cost and the potential for learning in determining how road projects are evaluated. This body of evidence and analysis, The Road Principles into Practice paper, was published in November 2017. Most importantly, the lessons from this analysis are already being applied to road projects in Nepal and Côte d’Ivoire.

Due diligence funds also support data and technical expertise needed for calculating economic rates of return for compact projects. Through pre-compact economic modeling of expected economic rates of return, MCC chooses which projects are most likely to generate benefits, specifically, increased income for program beneficiaries, and refines program design to optimize results. Economic modeling done after compact closeout helps to assess the cost effectiveness of the agency’s programs.