AMENDMENT 0001 to RFA No. W914NS-04-R-0157 Full text of this Amendment, including the SF 30, is available at the following website: http://iraqcoalition.org/business. Alternate location: www.cpa-iq.org. Click on Business Opportunities, then CPA Solicitations, then search by Solicitation Number for W914NS-04-R-0157. A. On page 5 of 21 in the RFA, please note: Excluded Transactions: • Activities related to tobacco • Activities related to the production of alcoholic beverages • Drug products not certified by applicable health authorities • Activities related to gambling • Activities related to military - Any loan for the purpose of weapons destruction, mine clearing, explosive detection, and related activities is permitted. Any loan the purpose of which is to fund activity substantially related to developing, procuring, servicing or providing training for weapons, weapons platforms, or ammunition is prohibited. B. Selection Criteria: Subject to availability of funding, the Grants Officer will award the grant resulting from this solicitation to the responsible Applicant whose Application, conforming to the solicitation, will be most advantageous to the contracting activity. For the purpose of this solicitation, Technical, Experience (Past Performance), and Price factors will be evaluated by the Government (See RFA, Section III – Selection Criteria, pages 8 and 9). The Applications will address in detail each of the three factors identified below (See RFA, Section III – Selection Criteria, pages 8 and 9). This is a best-value procurement. The factors (See RFA, Section III – Selection Criteria, pages 8 and 9) and volume contents (See RFA, Section III – Grant Application Format, pages 9 through 13), in descending order of importance, are: Technical, Experience (Past Performance), and Price. When combined, the non-price factors are significantly more important than price. C. Questions and Responses relative to RFA No. W914NS-04-R-0157 1. Does the CPA envision a specific job creation condition as a result of each loan? For example, is it required that 1 job is created for every $15,000 lent? Response: No 2. What is the required (or expected) percentage contribution of capital by the small business owner in relation to the amount contributed by Administrator/Grantee? Response: No specific standard. This will be decided by the Iraqi financial institution through which the loan application is submitted. 3. Can the Administrator/Grantee charge the small business owner a loan fee to cover administrative costs? Response: The Administrator’s costs are paid through the grant. The Applicant can propose to charge a fee to cover costs for the Administrator’s efforts. 4. Is the one year grace period for loan repayment a requirement, or can it be shorter? Response: The one year grace period for loan repayment is a requirement. 5. What forms of collateral are acceptable? Can a lien on fixed assets or mortgages be placed? Response: This will be decided by the Iraqi financial institution through which the loan application is submitted. 6. Have any particular industries been identified as likely beneficiaries of the loans? Are there any restrictions on what percentage of the loan portfolio can go to any one specific industry? Response: No industry preferences or restrictions. 7. On page 6, under item number 4, what is meant by materially worse than the aggregate loan portfolio? Response: The Administrator, using data from the Grantee, will measure the performance of the portfolio of loans that each Grantee makes using grant funds. Any Grantee whose portfolio or grant-funded loan is substantially below the average will be precluded from further participation in the program, upon the recommendation of the Administrator, and the decision of the Grantor. The Administrator should recommend to the Grantor a quantitative measurement of “materially worse.” 8. What is the relationship between the Grantor and the Administrator, specifically with regard to the termination conditions? How much of the fee is the Administrator eligible for? What guidelines and parameters are the Administrator expected to follow? Response: The relationship between the Grantor and Administrator, and the Administrator guidelines and parameters, are described in the RFA. The Applicant must propose a fee that is will receive for acting as Administrator. The Administrator is not required to share this fee with any third party, but the Administrator is responsible for its own expenses. 9. Will there be flexibility for the Administrator to conduct a reasonable phased geographical rollout of the program, or is the Administrator expected to be able to begin operations immediately on a nation wide basis? Response: The Administrator is not required to have offices throughout Iraq, but should have a means of communicating, including exchanging of documents, with Iraqi financial institutions located in major cities. It is permissible to take a reasonable amount of time to make these arrangements. 10. Asked another way - Would an applicant who can demonstrate the ability to immediately begin operations in the central region and who can show that they can begin operations in the North and South in a reasonable period thereafter be excluded from the tender? Response: No END OF AMENDMENT 0001----------------------------------------------------------------------COMBINED SYNOPSIS/SOLICITATION: POC for this solicitation, as amended, is LTC Karen Maskew,
[email protected]. Please prepare Applications in the format specified in Section IV of the RFA. Full text of Amendment 0001, and the RFA for this solicitation, is available at the following website: http://iraqcoalition.org/business. Alternate location: www.cpa-iq.org. Click on Business Opportunities, then CPA Solicitations, then search by Solicitation Number for W914NS-04-R-0157. POC for this solicitation is LTC Karen Maskew,
[email protected]. Please prepare Applications in the format specified in Section IV of the RFA. Full text of this solicitation is available at the following website: http://iraqcoalition.org/business. Alternate location: www.cpa-iq.org. Click on Business Opportunities, then CPA Solicitations, then search by Solicitation Number for W914NS-04-R-0157. Description: The purpose of the grant program that will be operated by the Administrator is to provide grants to Iraqi financing institutions (“Grantees”), which Grantees will leverage on a one-to-one basis for small business lending to businesses owned and operated by Iraqis. It is expected to lead to a sustainable commercial lending profile in the Iraqi finance industry with the intention of providing a successful example that would be duplicated in all financial institutions in the country. This is in line with efforts by the Coalition Provisional Authority (CPA) to provide economic rehabilitation and reform in Iraq to stimulate domestic and foreign investment, domestic and international trade, employment, and broad-based prosperity through private capital formation. In Iraq, there is strong demand for small business finance activities. Iraq has a relatively large domestic market and deep entrepreneurial roots. Despite recently undergoing economic turmoil Iraq has the natural resources and infrastructure to support small businesses. A small business commercial lending program delivered by locally present financing institutions, using sound lending methodologies, has great potential to be successful. The country faces large and urgent challenges in revitalizing the economy and creating new jobs. Credit availability is a key factor in revitalizing the economy. The country’s capital stock has been seriously depleted and there has been little investment in plant and equipment for many years. Historically, small-and-medium size businesses have been successfully engaged in trading activities, agribusiness, light manufacturing, and a variety of other sectors. The primary objective of the activities under this grant program is to generate a productive and growing private sector, create rapid employment, and lay the foundation for sustainable growth and economic development. Anticipated Results and Impact. (1) The small business loans made possible by these grants will provide businesses, some of which have few other alternatives for obtaining needed capital, with financial resources for investment, expansion, working capital and other legitimate business purposes, thereby stimulating job creation and economic growth; (2) The grants will bolster financial institutions’ balance sheets. The experience gained by the applicants in making loans with grant funds will increase the technical and managerial competence of the applicants. The grant funds also will provide applicants with opportunities to increase their customer base by seeking out new borrowers to whom to lend; (3) The program has been designed for maximum flexibility and simplicity in order to facilitate a credit flow to small businesses as quickly as feasible in view of the current stressful economic and political situation in Iraq, including high unemployment, large excess manufacturing capacity and severe shortage of medium term credit through the financial system. General Program Description and Focus. Objective: (1) Enable funds to be distributed into the economy quickly via small business loans, thus stimulating commercial activity and creating employment in the private sector; (2) Provide impetus and capability to financial institutions to establish medium term lending programs (two years to five years) based on sound financial practices and cash flow analysis. Grantee criteria. (1) Private sector financial institutions in Iraq in good standing that engage in lending, including private sector banks and NGOs engaged in microfinance, will be eligible to receive Grants; (2) Grants in the aggregate to an individual Grantee may not comprise more than 50% (giving effect to the grants) of the total loan portfolio of the Grantee. Loan Characteristics: (1) Funding: Each loan made with grant funds (“Small Business Loan”) must be comprised 50% of grant funds and 50% of funds from the Grantee’s own resources; (2) Size: Each Small Business Loan must be between $25,000 and $500,000. Each Grant with respect to a Small Business Loan will therefore be in the range of $12,500 to $250,000; (3) Term: Small Business Loans will have a final maturity within the range of two to five years. Level amortization payments shall begin no earlier than the 12-month anniversary of the loan; (4) Small Business Loans must carry an interest rate that conforms to Iraq financial market standards current at the time of the making of the loan; (5) Borrowers under this program must be majority owned by Iraqis and operated by Iraqis. No state-owned enterprises, but joint ventures are eligible so long as majority owned and operated by Iraqi private sector; (6) Borrowers must utilize the funds for legitimate business purposes; (7) Note that borrowers do not need to be “small businesses”. Grantees may apply their own credit risk standards in making decisions whether or not to extend Small Business Loans; (8) As part of its due diligence and credit analysis process, each Grantee must produce a business plan for each Small Business Loan it intends to make including the following information on the borrower: (a) use of proceeds; (b) business description; (c) competitive analysis; (c) historical financial statements; (d) projected future financial statements (giving effect to the loan); (e) projected cash flow debt service coverage ratios; (f) description of management; (g) description of shareholders Excluded Transactions: (a) Activities related to tobacco; (b) Activities related to the production of alcoholic beverages; (c) Drug products not certified by applicable health authorities; (d) Activities related to gambling; (e) Activities related to military Administrator Responsibilities. (1) The Administrator and the Grantor shall establish a segregated bank account in a reputable bank for the grant funds (the “Grant Pool”). The Grantor will have signature authority over the account which it will delegate to the Administrator in whole or in part at its discretion. The Grantor at its discretion may transfer all or a portion of available funds at any time into the Grant Pool for onward distribution to Grantees. The Administrator may only transfer funds from the Grant Pool in order to fund Small Business Loans and for no other purpose. The Administrator shall not transfer funds from the Grant Pool to pay any expense or fee or procurement on behalf of the Administrator or any third party. (2) The Administrator shall receive applications for Grants from potential Grantees. Prior to forwarding application to Administrator, Grantee will review application and perform credit investigation on borrower. If Grantee approves loan, then Grantee may forward to Administrator for apply for matching funds. Each such application will include documentary evidence to demonstrate conformance with all items under “Grantee Criteria”, “Loan Characteristics” and “Excluded Transactions” but the Administrator shall not impose onerous or unreasonably burdensome requirements on the Grantee relative to compiling the application. The Administrator will use reasonable judgment in viewing the evidence but will not be required to confirm the accuracy or completeness of the evidence and will not be liable for any mistakes or omissions in the evidence. (3) Upon successful review of an application, the Administrator shall instruct the Grantee to disburse the amount of the Grantee’s own matching funds (50% of the amount of the proposed Small Business Loan) to the borrower. Upon evidence of such disbursement on a timely basis, the Administrator shall transfer the grant portion of the Small Business Loan from the Grant Pool directly into the account of the borrower. Payment of principal and interest on the entire Small Business Loan will be due to the Grantee, and the Administrator shall have no responsibility for ensuring the borrower’s performance under the loan agreement with the Grantee. (4) The Administrator shall require periodic reports from the Grantee on the performance of the Small Business Loans made with grant funds. The Administrator shall be empowered (subject to Grantor’s discretion) to preclude from further participation in the program any Grantee whose Small Business Loan portfolio performance is materially worse than the aggregate Small Business Loan portfolio, excluding the Grantee in consideration. (5) The Administrator shall not give preference in allocating Grants to particular Grantees. Applications for Grants shall be processed in the order received. Any Grantee may not submit more than two applications per week in order to allow all Grantees access to the Grant Pool. (6) The Administrator shall consult periodically with the Grantor on the progress and performance of the program; shall prepare and provide Quarterly Utilization Reports to the Grantor no later than 15 calendar days after the close of a quarter; and shall provide other information whether in the form of reports or otherwise as requested by the Grantor to fulfill Grantor’s statutory and management responsibilities and objectives. (7) The Grantor in its sole discretion shall have the power to exclude any actual or potential Grantee from the program or limit participation in the program. If the Administrator believes that any actual or potential Grantee should be excluded or limited on the basis of financial, legal, moral or other valid reason, it shall promptly consult with the Grantor and carry out the instructions of the Grantor. (8) The Administrator shall not accept applications for grants from any Grantee under common control or ownership with the Administrator. Start-Up, Implementation, Duration and Termination. (1) The Administrator should be prepared to begin administration of the program within one week of signing the contract. The Administrator shall promote at its own expense the existence of the program with potential grantees in all areas of the country with the intent of achieving a reasonable geographic dispersion of grant funds.(2) The program will terminate at the end of one year. Any grant funds not expended by that time will be donated to a charitable organization for activities in Iraq, by decision of the Grantor after consultation with the Administrator. (3) The Grantor may terminate the Administrator at any time, with or without cause. If so terminated, the Administrator will be eligible to receive fees, in accordance with the contract, proportionate to its level of activity prior to termination date. Reporting Requirements. (1) Quarterly Utilization Reports of the amount of grant funds used in the preceding period are required of the Administrator per information noted above. (2) Grant recipients may be subject to an audit during the 12 months that this facility is available. This audit would be limited to review of the loans made under this program and their general administration and would be paid for by the Grantor using funds from the Grant Pool or otherwise at the Grantor’s discretion. Oversight. The Administrator will be accountable to Grantor for achieving tasks set forth in the contract. All tasks under the contract are to be carried out subject to the supervision, direction, and any necessary redirection by the Grantor. Duration of the contract period: one year from Grant Award Procedures to be used in awarding the contract: The Applicant shall furnish a proposal that describes the broad and detailed capabilities it possesses to carry out the tasks and goals described in Section II. The proposal shall contain a work plan that describes the specific measures the Applicant will undertake to achieve the objectives of the program. Describe the program in sufficient detail, to include identification of a clear set of phases. Each phase shall specify realistic and achievable goals and objectives. Proposals will be evaluated on the following criteria: Technical Capability. (1) Capability to immediately promote, establish and begin administering the program. This criterion shall also evaluate the proposed program phases to determine if the phases comprise a comprehensive, and complete program, and the degree to which the goals and objectives for each phase of the proposed program are realistic and achievable. (2) Capability to design and implement financial controls and analytical, management and reporting procedures to effectively administer, monitor, assess and report on the grant program. (3) Specific relevant accounting, finance, legal, and business capabilities; (4) Capability to operate throughout Iraq; (5) Personnel with demonstrated technical, managerial, legal, accounting, administrative and financial experience and competence, especially with financial institutions and small businesses; (6) Capability to provide agency, trust, fiduciary or other “trusted third party” services. Experience. (1) Within the past 5 years, general and specific experience of the organization and relevant personnel in: (A) the nature and specific tasks and responsibilities of programs such as the Small Business Loan Grant Program; and (B) the Middle East and specifically Iraq. (2) Experience in agency, trust, fiduciary or other “trusted third party” services or transactions Price. (1) Applicant may quote a fixed price, a price per service, per transaction, per time period, or any other reasonable metric, or any combination of metrics. (2) For the purpose of analyzing prices, Grantor will assume a disbursement schedule as follows: $7,000,000 total disbursement, average grant size approximately $135,000, disbursement period one year, frequency one disbursement per week. (3) Prices shall be expressed in USD and must separately identify any third party expenses or fees incurred by the Administrator in performance of the services herein, including, without limitation, bank fees, legal fees, travel expenses, agents, advisors, taxes, and other such costs. The anticipated award date: 30 July 2004 The RFA available at the following website: http://iraqcoalition.org/business Application format guidelines are contained in the solicitation documents available at the above website.