Compact Development and Oversight
|FY 2021 Enacted||FY 2022 Annualized Continuing Resolution||FY 2023 President’s Budget|
|Compact Development & Oversight:||113.5||113.5||113.5|
|Compact Development Funding (CDF)||30.0||30.0||28.0|
Compact development and oversight is comprised of both compact development funding (CDF), as authorized under section 609(g) of the Millennium Challenge Act, and due diligence funding. These funds support pre-compact planning and assessment, oversight activities during development and implementation, and post-compact evaluations. These activities are critical to the success of MCC programs and ensure that the agency, its partner countries and the development community are able to take advantage of the learning opportunities inherent in MCC programs.
In particular, these funds ensure that MCC-funded infrastructure is designed and built to high technical and engineering standards and with transparency, inclusive community engagement and good sector governance. This includes making sure that environmental, social and gender considerations are embedded within each project and that health and safety measures and community engagement and ownership are standard practice for every investment. This approach is in line with the values-driven approach outlined in the B3W initiative and provides an important demonstration effect that can help shift the discourse on infrastructure financing from quantity to quality, sustainability and transparency.
MCC’s request includes $113.5 million for CDF and due diligence in FY 2023. Specifically, $28 million for CDF and $85.5 million for due diligence functions is requested. At this level, MCC would support core program development, oversight, and monitoring and evaluation functions, while also directing resources to support the administration’s priorities, including the assessment and design of impactful climate resilience opportunities across the compact and threshold program portfolio. These funds would also enable MCC to supplement technical resources for implementation of the agency’s new elevated priorities. Finally, these funds would support MCC’s strategic priority to assess opportunities to shorten compact development timelines without sacrificing quality. This would allow MCC to be more responsive to partner countries as well as reduce its unobligated balances by delivering programs sooner.
Compact Development Funding
CDF allows MCC to award contracts or grants to eligible countries for the purposes of facilitating the development or implementation of a compact, as noted in section 609(g) of MCC’s authorizing statute. 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 critical project design and 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 time frame, within budget and to MCC’s high technical standards, and can achieve substantial results for compact programs. This rigorous project preparation lays the foundation for successful compacts and impact delivery and is a hallmark of MCC’s—and, more broadly, the U.S. Government’s—approach to infrastructure development.
MCC uses due diligence funds at every stage of the compact and threshold program lifecycle. Due diligence funds allow MCC to obtain information that is necessary to evaluate, assess and appraise proposed projects during compact and threshold development, to effectively oversee and monitor projects during implementation, and to evaluate the results after closeout. These funds are used to procure the technical expertise required throughout the compact and threshold lifecycles, and they allow MCC to right size its staffing requirements based on the size and diversity of its portfolio. Due diligence funds are also used after compact closure to conduct independent impact evaluations. These evaluations include rigorous statistical methods to measure changes in beneficiary incomes related to MCC activities, highlight valuable lessons on how MCC can improve, and provide critical information about program successes.
MCC is currently developing a new online data and analysis repository, the MCC Evidence Platform, to publicly house all of its studies, evaluations and underlying data. The Evidence Platform will offer first-of-its-kind data accessibility and usability for researchers, from students to experienced professionals, allowing them to use the data and documentation provided to reproduce and build upon MCC’s evidence base to drive development effectiveness for, and beyond, MCC. The MCC Evidence Platform will encourage the use of MCC’s data, documentation and analysis as global public goods to support mutual accountability for the agency and its partner countries, and to encourage learning from measured results.
Finally, due diligence funds fund the 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 identifies projects that are most likely to generate long-term economic benefits—specifically, increased income for program beneficiaries. This data is used to refine program design for optimal, sustainable results. Economic modeling performed after compact closeout helps to assess the cost effectiveness of the agency’s programs.