Congressional Budget Justification (CBJ): Congressional Budget Justification, FY 2021 | February 2020

Compact Development and Oversight: 609(g) and Due Diligence

(in millions of $) FY 2019
Enacted
FY 2020
Enacted
FY 2021
Request
Total Appropriation/Request 905.0 905.0 800.0
  Compact Development/Oversight 113.1 131.0 113.5
    609(g) Assistance 24.1 36.0 30.0
    Due Diligence 89.0 95.0 83.5

Compact development and oversight funding supports pre-compact planning, post-compact evaluations, and oversight activities. These activities are critical to the success of MCC programs and to ensuring that MCC, partner countries, and the development community are able to take advantage of the learning opportunities inherent in MCC programs. For FY 2021, MCC requests $113.5 million under compact development/oversight, including $30 million for 609(g) funding and $83.5 million for due diligence to support monitoring, programmatic oversight, and data collection and evaluation.

609(g) Assistance

Section 609(g) of MCC’s authorizing statute allows MCC to award contracts or grants for eligible countries for the purpose of facilitating the development or implementation of a compact. Laying the groundwork for compact programs helps MCC improve the quality of its compact programs and the ability of its partner countries to implement compacts successfully. Such groundwork includes project design studies, feasibility studies, environmental 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 achieve substantial results for compact programs.

Due Diligence

For FY 2021, MCC currently expects to use $83.5 million for due diligence. Due diligence funds will be utilized at every stage of the compact and threshold program lifecycle. The funds will be used to obtain information that is 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 their results after close-out. These funds will be utilized to procure the technical expertise required throughout the compact and threshold program lifecycles and allow MCC to right-size its staffing requirements based on the relative size and diversity of its portfolio. Due diligence funds will be utilized after compact closure in order to conduct independent impact evaluations that use rigorous statistical methods to measure changes in beneficiary incomes related to MCC activities. In addition to offering valuable lessons on how MCC can improve, impact evaluations provide critical information about program successes.

Due diligence funds will 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 will choose which projects are most likely to generate benefits, specifically, increased income for program beneficiaries, and refine program design to optimize results. Economic modeling done after compact closeout will help to assess the cost effectiveness of MCC’s programs.