Congressional Budget Justification (CBJ): Congressional Budget Justification, FY 2024 | March 2023
Compact Development and Oversight
|(in millions of $)||FY 2022||FY 2023||FY 2024|
|Compact Development Funding||30.0||28.0||24.0|
Compact development and oversight comprise both Compact Development Funding (CDF) as authorized under Section 609(g) of the Millennium Challenge Act of 2003, as amended, and due diligence funding. These funds support pre-implementation planning and assessment, oversight activities during implementation, and post-compact evaluations – activities critical to the success of MCC programs and which ensure that the agency, our partner countries, and the development community may take advantage of the learning opportunities inherent in MCC programs. These funds are deployed early in and throughout compact development, as both MCC and partner countries ramp up their efforts together and support the growing investment and partnership between both countries, even prior to signing a compact.
For FY 2024, MCC requests $114.5 million for compact development and oversight, including $24 million for compact development funding and $90.5 million for due diligence to support monitoring, programmatic oversight, and data collection and evaluation.
Compact Development Funding
Compact Development Funding allows MCC to award contracts or grants for 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 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, along with support for key staff within the compact development team, to 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.
The FY 2024 Compact Development Funding will support programs to be selected in FY 2024. As part of its ongoing efforts to accelerate compact development timelines, MCC has revised its allocation of compact development funding to provide the funds earlier in the compact development process.
MCC utilizes 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 close-out. These funds are utilized to procure the technical expertise required throughout the compact and threshold lifecycles and allow MCC to right-size its staffing requirements based on the relative size and diversity of its portfolio.
Due diligence funds are utilized after compact closure in order to conduct independent evaluations that use rigorous statistical methods to measure the impact of MCC activities. In addition to offering valuable lessons on how MCC can improve, rigorous evaluations provide critical information about program successes and ensure that our development projects have the intended impact on the people they are meant to serve. Each of these independent evaluations is fully available to the public on the recently launched MCC Evidence Platform, a new interactive web-platform designed to encourage the use of MCC’s data and analysis.
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 serves to refine program design to optimize results. Economic modeling done after compact closure helps to assess the cost effectiveness of the agency’s programs.