esp small grants manual

SMALL GRANTS MANUAL

JANUARY 2006

This publication was produced by Development Alternatives, Inc. for review by the United States Agency for International Development under Contract No. 497-M-00-05-00005-00

SMALL GRANTS MANUAL

TABLE OF CONTENTS

LIST OF ACRONYMS ..............................................................................................................VI 1. DESCRIPTION OF THE ENVIRONMENTAL SERVICES PROGRAM ....................... 1 2. INTRODUCTION TO THE ESP SMALL GRANTS PROGRAM.................................. 3

2.1. PRINCIPLE OBJECTIVES OF THE SMALL GRANTS PROGRAM................................................3 2.2. ILLUSTRATIVE GRANT ACTIVITIES.................................................................................................5 2.3. GENERAL GRANT TERMS ..................................................................................................................6 2.4. MINIMUM ELIGIBILITY CRITERIA .....................................................................................................7

3. THE GRANT AWARD PROCESS ................................................................................... 8 3.1. OVERVIEW OF THE AWARD PROCESS.........................................................................................8

3.1.1. TYPES OF APPLICATIONS............................................................................................................................8 3.1.2. THE REQUEST FOR APPLICATION..........................................................................................................8 3.1.3. GRANT APPLICATIONS ................................................................................................................................9 3.1.4. THE GRANTS COMMITTEE.................................................................................................................... 10 3.1.5. USAID APPROVAL ....................................................................................................................................... 11 3.1.6. AWARD ELEMENTS.................................................................................................................................. 11

3.2. FULL AND OPEN REQUESTS FOR ASSISTANCE ...................................................................... 12 3.2.1. THE FULL AND OPEN PROCESS........................................................................................................... 12

3.3. DIRECT SOLICITATIONS................................................................................................................. 13 3.3.1. DIRECT SOLICITATION PROCESS......................................................................................................... 14

3.4. UNSOLICITED APPLICATIONS ..................................................................................................... 15 3.4.1. THE UNSOLICITED APPLICATION PROCESS.................................................................................... 15

3.5. FAST-TRACK AWARD PROCESS .................................................................................................. 16 3.6. EVALUATION CRITERIA.................................................................................................................. 16 3.7. HIGH RISK ORGANIZATIONS....................................................................................................... 17

4. TYPES OF GRANTS........................................................................................................ 18 4.1. STANDARD GRANT FORMAT ...................................................................................................... 18

4.1.1. ACCOUNTING SYSTEM REQUIREMENTS AND FINANCIAL CAPABILITY QUESTIONNAIRE 18 4.1.2. DISBURSEMENT GUIDELINES .............................................................................................................. 19

4.2. SIMPLIFIED GRANTS.......................................................................................................................... 19 4.2.1. DISBURSEMENT GUIDELINES .............................................................................................................. 20

4.3. FIXED OBLIGATION GRANT......................................................................................................... 20 4.3.1. FIXED OBLIGATION FORMAT REQUIREMENTS............................................................................. 20 4.3.2. FIXED OBLIGATION GRANT IMPLEMENTATION PLAN............................................................... 21 4.3.3. DISBURSEMENT GUIDELINES .............................................................................................................. 21

4.4. IN-KIND GRANTS.............................................................................................................................. 22 4.4.1. DISBURSEMENT GUIDELINES .............................................................................................................. 22 4.4.2. THE STANDARD PROVISION ON GRANT PROPERTY................................................................... 22 4.4.3. BLENDED IN-KIND AND SIMPLIFIED GRANTS............................................................................... 23

5. GRANTS PROGRAM ADMINISTRATION .................................................................. 24 5.1. A. OVERVIEW OF GRANTS ADMINISTRATION...................................................................... 24 5.2. MONITORING AND REPORTING................................................................................................ 25 5.3. USE AND DISPOSITION OF PROJECT INCOME....................................................................... 25 5.4. PROCUREMENT PROCEDURES .................................................................................................... 26

5.4.1. PROCUREMENT STANDARDS............................................................................................................... 26 5.4.2. ALLOWABLE COSTS/ELIGIBILITY RULES FOR GOODS AND SERVICES................................... 27 5.4.3. SOURCE, ORIGIN, AND NATIONALITY............................................................................................... 28 5.4.4. RECOMMENDED PROCUREMENT PROCEDURES, BY DOLLAR AMOUNT .......................... 29 5.4.5. EQUIPMENT ................................................................................................................................................ 30

5.4.6. SUPPLIES ....................................................................................................................................................... 30 5.4.7. TRAVEL........................................................................................................................................................... 31

5.5. RIGHTS TO INTELLECTUAL PROPERTY .................................................................................... 31 5.6. AMENDMENTS AND EXTENSION ............................................................................................... 32 5.7. GRANT FILES AND PROJECT CLOSEOUT ................................................................................. 33

5.7.1. RECORDS RETENTION ............................................................................................................................ 34 5.7.2. CLOSEOUT PROCEDURES ...................................................................................................................... 34

5.8. LANGUAGE ......................................................................................................................................... 35 5.9. TERMINATION AND SUSPENSION.............................................................................................. 35

LIST OF ACRONYMS ADS Automated Directive System

CDA Cooperative Development Authority

CFR Code of Federal Regulations

CO Community Organization

COP Chief of Party

CTO Cognizant Technical Officer

DAI Development Alternatives, Inc.

DCOP Deputy Chief of Party

E.O Executive Order

ESP Environmental Service Program

GIS Geographical Information System

GOI Government of Indonesia

GUC Grants under Contract

ISWM Integrated Solid Waste Management

LGU Local Government Unit

NGO Non-Governmental Organization

PDAM Perusahaan Daerah Air Minum – Local Water Utilities

RFA Request for Assistance

SEC Securities and Exchange Commission

SGP Small Grant Program

USAID United States Agency for International Development

SECTION I

1. DESCRIPTION OF THE ENVIRONMENTAL SERVICES PROGRAM

The Environmental Services Program (ESP) is a five-year program funded by the United States Agency for International Development (USAID) and implemented by Development Alternatives, Inc. (DAI), a US-based consulting firm that specializes in the management of foreign assistance programs. ESP works with government, private sector, NGOs, community groups and other stakeholders to improve the management of water sources and broaden the distribution of safe water to urban dwellers by strengthening watershed management and delivery of key environmental services, including clean water, sanitation and solid waste management. The four inter-related objectives of the program are:

1. To strengthen the capacity of communities, governments, the private sector, local institutions, and NGOs to advocate for expanded delivery of key environmental services through improved water resources and protected areas management;

2. To expand opportunities for communities, NGOs, private sector, and

universities to participate more effectively in local management of water resources and delivery of key environmental services;

3. To strengthen biodiversity conservation through improving understanding and

appreciation for the linkage between protected and forested areas and the delivery of key environmental services; and

4. To improve the health and livelihood of Indonesians through improved and

expanded access to key environmental services (water, sanitation, solid waste) through the use of appropriate technologies, innovative financing, environmentally sustainable best practices, and sustainable market oriented activities.

Working from ‘Ridges to Reefs’ or ‘Hulu ke Hilir,’ ESP uses water as an integrating theme to bring together watershed management and water resource conservation with improved and expanded access to clean water delivery and solid waste management. The result contributes to healthy people and healthy ecosystems. ESP supports water utilities (PDAMs) and local governments to provide better quality water to more people, so the public will be less prone to illness caused by contaminated water and poor hygiene. Moreover, ESP supports appropriate pricing of water and the efficient capturing of revenues so that PDAMs can improve the quality of service and expand service, while also being able to invest in

SMALL GRANTS MANUAL

water resource conservation. Such water resource conservation, targeted at upper watersheds with high biodiversity value, can preserve a perennial flow of clean water.

ESP’s success toward improving environmental services in an integrated manner requires confronting and resolving a number of major challenges. Three significant challenges stand out. 1. Cross-jurisdictional stewardship. How can downstream users of raw water ensure that upstream local governments are investing in protecting the ecosystems essential to the provision of the water? How can the people ultimately responsible for sound watershed management (farmers and forest dwellers) be adequately compensated for efforts from which they themselves derive no clear benefits? 2. Capital access. The water utilities (PDAMs) must improve their management systems, maintenance capacity, and distribution networks in order to increase revenues. Yet how can they access the capital to make these improvements when many are in debt and few have achieved full cost recovery in their current operations? The PDAMs most in need of capital are neither financially viable nor creditworthy. 3. Mind-set. How can the end-users of the water - household consumers - be enlisted to advocate for better water and sanitation services while accepting that these services do not come without a cost? How can the utility managers be led to value professionalism, accountability, and customer service - and dismantle entrenched cronyism, irresponsibility, and corruption? ESP works in the High Priority Provinces of North Sumatera, West Sumatera, West Java/DKI Jakarta and East Java, with intergrated teams working out of offices in Medan, Padang, Jakarta and Surabaya. ESP provides limited technical support through small offices in Special Concern areas of Balikpapan in East Kalimantan, Manado in North Sulawesi, and Manokwari and Jayapura in Papua. Field activities in watershed management and environmental services delivery are focused at the local level and engage community, private sector, NGO, community groups, universities, and government stakeholders. Key government stakeholders are represented at the district and municipal, provincial and national levels. The ESP activities are subject to the rules and regulations that govern USAID operations.

ENVIRONMENTAL SERVICES PROGRAM WWW.ESP.OR.ID 2

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SECTION II

2. INTRODUCTION TO THE ESP SMALL GRANTS PROGRAM

The purpose of Section II is to provide an introduction to the ESP small grants program. More specifically, this section will address the principle objectives of the small grants program, outline illustrative activities, describe the general grant terms, and enumerate the minimum eligibility criteria for participation in the program.

2.1. PRINCIPLE OBJECTIVES OF THE SMALL GRANTS PROGRAM

The ESP small grants program (ESP-SGP) represents a key component of the Project’s strategy for improving advocacy and behavior change in watershed management, biodiversity conservation, and environmental service delivery in the priority provinces of North and West Sumatera, East and West Java, and DKI Jakarta and the four special imperative areas of Balikpapan in East Kalimantan, Manado in North Sulawesi and Manokwari and Jayapura in Papua. The nature of the small grants program is outlined under the Action Memorandum for Mission Director of July 13, 2004 (USAID waiver) attached to this manual. Basically the grants under contracts (GUCs) shall be limited to the following:

(a) the total value of any individual grant to any organization shall not exceed $25,000;

(b) USAID will be significantly involved in establishing selection criteria and must approve the actual selection of grantees;

(c) the contractor must apply the same requirements that would apply to USAID-executed grants; and

(d) USAID must retain in the contract the ability to terminate the grant activities unilaterally in extraordinary circumstances.

The principle objectives of the ESP Small Grants Program are to:

• Organize and integrate ESP activities at local level in order to meet the objectives articulated in the respective workplan and ultimately the Higher Quality Basic Human Services strategic objective which will focus on the interdependence of health and the environment and their effect on health outcome.


SMALL GRANTS MANUAL

• Build partnerships and networks of local stakeholders to address the urgent need for improving advocacy and behavior change in watershed management, biodiversity conservation, and environmental service delivery.

• Demonstrate community-level strategies and technologies that will improve watershed management and the delivery of key environmental services such as clean water, sanitation and solid waste management which are critical to the ultimate goal of improving child survival in the priority areas and special imperative areas by reducing the prevalence of childhood diarrhea in children under five.

• Draw lessons from community-level experiences, and support the replication of successful community-level strategies and innovations among ESP partners at local level.

• Increase the capacity of local NGOs and other non-governmental institutions to deliver watershed management services, conservation management services, municipal water services, municipal water financing services, solid waste management services, and water sanitation services to the communities.

The scope of grant applications must meet one of the above principle objectives in order to be considered for funding. An additional underlying purpose of the Small Grant Program is to build the capacity of community-based non-governmental organizations devoted to improved environmental resource management. Such organizations play an important role in increasing awareness of environmental and biodiversity conservation efforts. In this regard, the ESP-SGP will target local organizations that demonstrate potential in becoming environmental leaders in their communities. In general, Requests for Assistance (RFAs) will be issued in relation to one of the specific objectives. Issuing RFAs according to program objectives will directly link grant activities to the quantitative targets specified by USAID. Once awarded, the Contractor will administer the grants in accordance with the guidelines of this Manual, the provisions of the individual grants, and applicable law. As stipulated by USAID, individual grant amounts will not exceed $25,000 USD. Furthermore, before awarding a proposed grant, the Contractor shall coordinate USAID’s involvement in the evaluation of proposals. The Contractor shall receive the prior written approval of the Cognizant Technical Officer (CTO) as to 1) the selection of the proposed grantee, 2) the amount of the proposed grant, and 3) the nature of the grant activities. The Contractor shall follow all guidelines of USAID’s Automated Directives System (ADS) 302.5.6 and 303; CIB 01-17; and Prime Contract 497-M-00-05-00005-00, except as modified by this Agreement or as approved through a specific written authorization by the USAID Contracting Officer. ENVIRONMENTAL SERVICES PROGRAM WWW.ESP.OR.ID 4

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2.2. ILLUSTRATIVE GRANT ACTIVITIES The list below is illustrative of activities that may be supported by grant funds. These categories and activities are illustrative only; variations are likely to emerge in actual practice in keeping with the needs and opportunities for flexible and innovative development in Environmental Services Project areas. Categories of assistance and examples of eligible activities and cost items may include, but are not limited to, any of the following:

“Social Marketing” public awareness campaign. These include conservation awareness campaigns promoting positive public attitudes towards environmental and biodiversity conservation, and focus on upper watershed protected areas of high conservation value; urban environmental services campaigns building community awareness and promoting citizen participation in advocating for improved water supply and sanitation; and health and hygiene outreach and education campaigns to build connections between clean water, proper hygiene, and family health. Eco-regional planning. This allows watershed management interventions to take into account the influence of broader land-use patterns on ecology and biodiversity conservation with the purpose to raise rural incomes while promoting sound farming and forestry management practices. These also include GIS application and spatial planning. Institutionalized peer capacity-building. Training to PDAM through three levels of training: (a) management, to build professionalism in senior management; (b) technical, for supervisors and operators; and (c) customer orientation, for customer service staff. Establishing of Farmer Field Schools. Establishment of Farmer Field Schools to introduce Integrated Pest Management skills and technologies, which reduce pesticide usage and other agricultural inputs while increasing harvests. Development of community tree nurseries and facilitate reforestation activities. Development of village-based networks for improving watershed management. Natural Resource Conservation and Protection. Support for community nurseries, agro forestry, social forestry, and other similar programs. Institutional Strengthening. Provide products and/or services to strengthen the institutional capacity of the NGOs and other non-government institutions in such areas as management services. Other. To be determined and approved by the Grants Committee.


SMALL GRANTS MANUAL

2.3. GENERAL GRANT TERMS The Contractor may not award any grant that exceeds $25,000 USD or for a period that extends beyond the estimated completion date of the ESP Project. The terms of all grants shall allow for an orderly close-out prior to the expiration date of the Contract. Grants will be awarded to non-government organizations (International, national, and local), universities, community organizations, and other civil society partners. All interest and other refunds by award recipients hereunder will be made to a special, non-commingled, interest-bearing account established by the Contractor (the “Separate Account”). The Contractor has no beneficial interest in any funds in the Separate Account. Funds in the Separate Account shall be paid annually to USAID, as directed by the CTO. At the conclusion of the Contract, any funds remaining in the Separate Account shall be returned to USAID and any interest shall be refunded to the U.S. Government. Grants will be structured, timely, quantified and, whenever possible, used in combination with, and in order to leverage, other financial resources, including cost-sharing with grantees and in-kind contributions. Cost-sharing or matching refers to that portion of project or program costs not borne by ESP but used to complete the project for which funding is requested. Efforts to share costs are one of the main conditions for funding a grant. Acceptable matching or cost sharing includes the association’s contribution, the villagers’ cash and in-kind contribution (such as land that the NGOs are able to use for the project), when such contributions meet the criteria established in the standard provision governing Recipient contributions. While all cost-sharing must be in conformance with applicable guidance (when applicable, for U.S. organizations, Title 22 of the Code of Federal Regulations [www.access.gpo.gov/nara/cfr], Part 226.23, and for non-U.S. organizations, the grant Standard Provision entitled “Cost Sharing”), USAID’s policy is not to apply its source, origin, and nationality requirements or the restricted goods provision established in the grant Standard Provision entitled “USAID Eligibility Rules for Goods and Services” on cost-sharing amounts. In accordance with 22 CFR 226.24, program income may be used to finance the non-ESP cost-share of the grant award with the approval of the Grants Committee. By mutual agreement, donors and/or local government units (LGUs) may agree to fund separate components of the same project. In the application form or concept paper, small grant applicants should indicate the cost sharing arrangements that are possible for them. All grants awarded under the ESP Small Grants program shall include the following standard clause:

The Contractor/Recipient is reminded that U.S. Executive Orders and U.S. law prohibits transactions with, and the provision of resources and support to, individuals and organizations associated with terrorism. It is the legal responsibility of the contractor/ recipient to ensure compliance with these Executive Orders and laws. This provision must be included in all sub-contracts/sub-awards issued under this subcontract/agreement.

The grantee will sign the required debarment and suspension certification, the drug free workplace certification, and the certification regarding terrorist financing. Under ADS 303.5.15a, support of international travel or the purchase of equipment having a useful life


SMALL GRANTS MANUAL

over one year and an acquisition cost of $5,000 or more may be authorized as long as the applicable Standard Provisions for those types of costs are attached to the simplified grant format.

2.4. MINIMUM ELIGIBILITY CRITERIA The small grants program shall target proposals coming from ESP partners domicile in the ESP priority province or special imperative area. Organizations eligible for funding include non-government organizations (International, national, and local), universities, community organizations, and other civil society partners. Grants may be awarded on both a solicited and unsolicited basis. The minimum eligibility criteria for the submission of a grant application are as follows:

• Applicant shall be from NGOs (International, national, and local), universities, community organizations, and other civil society partners;

• Proposed activity does not exceed $25,000 USD in cost;

• Proposed activity must meet at least one of the ESP objectives and the BHS objectives. It must also be consistent with the USAID Country Strategy for Indonesia;

• Proposed activity must be located in the ESP priority provinces or special imperative areas;

• Proposed activity must contain expected outcomes and results consistent with and linked to ESP results framework;

• Proposed activity must provide cost-sharing of at least 10% of total funding either in cash or in-kind contribution or a combination of cash and in-kind contribution.

Additionally, grants may NOT be awarded to:

• Any U.S. entity which is a “private voluntary organization” (PVO) but has not registered as such with USAID;

• Any entity whose name appears on the “List of Parties Excluded from Federal Procurement and Non-Procurement Programs”;

• Any “public international organization”;

• Any governmental agency;

• Any entity affiliated with the Contractor or any of its directors, officers, or employees;

• Any military organizations such as TNI or entity affiliated with TNI;

• Any political party organization;

• Any government sponsored cooperatives;

• Any labor unions; and

• Individuals. ENVIRONMENTAL SERVICES PROGRAM WWW.ESP.OR.ID 7

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SECTION III

3. THE GRANT AWARD PROCESS

The purpose of Section III is to describe the general award process that the Contractor will adhere to under the ESP Small Grants Program. More specifically, this section will address common elements of the awards process as well as those elements that will vary according to the type of application.

3.1. OVERVIEW OF THE AWARD PROCESS

3.1.1. TYPES OF APPLICATIONS Applications for grants will generally fall into 1 of 3 categories:

1. Applications solicited through a full and open request for assistance (RFA). The Contractor anticipates issuing full and open requests for assistance for awards that are more general in scope and larger in magnitude.

2. Applications solicited directly from a pre-selected NGO or group of

NGOs or group of ESP partners. The Contractor anticipates utilizing sole-source and limited competition for activities with specific scopes of work within a defined geographic area. Restrictions on competition, however, are subject to the criteria referenced in Section III.C below.

3. Unsolicited applications. It is expected that, from time to time,

organizations familiar with the ESP Project may submit unsolicited requests for funding. Such submissions will be evaluated on a case by case basis.

All grants will require an application and will undergo a review and approval process. While review procedures may vary somewhat, commonalities exist across all three categories of grant applications. These commonalities – the RFA, the grant application document, the grants committee, the pre-award responsibility determination, USAID approval, and the elements of the final award – are discussed in turn below.

3.1.2. THE REQUEST FOR APPLICATION The Request for Application (RFA) represents the formal beginning of the award process for all solicited applications. The contents of the RFA will be guided by the general minimum requirements as stipulated in E303.5.4b of the ADS. The Request for Applications (RFA) shall contain at a minimum:

1. Minimum eligibility and qualification requirements, where applicable.


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2. A general description of the proposed program with an indication of the range of activities that might be involved, as well as any established goals and the results to be achieved of the program.

3. The selection criteria used to evaluate applications, including an indication of their relative importance.

4. A statement that the award will be administered in accordance with the applicable USAID Standard Provisions for non-U.S. organizations. Complete copies of these documents will not be attached to the RFA; rather, the applicants will be informed of how they may receive copies (e.g., name of individual they may contact or USAID homepage on Internet).

5. An estimate of funds available for the RFA and number of awards anticipated, including a statement to the effect that ESP reserves the right to fund any or none of the applications submitted.

6. The minimum cost-sharing element percentage, whether it is required or suggested, and the impact of the proposed cost-sharing percentage on the award decision.

7. Expected duration of ESP support or the period of performance. 8. Requirements and expectations regarding results, indicators, monitoring, and

reporting. 9. Deadline for submission of application, the application format, and the consequences

of late submission. 10. Point of contact, including name, title, address and phone number. Required

certifications, including the Implementation of E.O. 13224 -- Executive Order on Terrorist Financing (AAPD 02-04) and "Prohibition on Assistance to Drug Traffickers" (Form 487 or other).

11. Required format for application. 12. Any other relevant information.

The RFA will be issued at least 30 days before the applications are due. The time period allotted for proposal submission will be determined by the complexity of the information to be submitted.

3.1.3. GRANT APPLICATIONS While the format of grant applications will vary in accordance with the technical specifications and kind or type of grant, all proposals should include the following common elements:

1. Cover Letter 2. Application Document

a. Summary b. Background c. Applicant Information d. Statement of Objectives e. Goals f. Project Activities g. Technical Feasibility h. Monitoring and Reporting Plan


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3. List of Team Members 4. Illustrative Budget 5. Statement of Cost Sharing (including applicant's contribution in money or in kind).

All information received from applicants shall be considered proprietary and held in strict confidence by those individuals who review it in order to protect the integrity and privacy rights of the grant applicant.

3.1.4. THE GRANTS COMMITTEE All prospective awards will be reviewed by a Grants Committee prior to signing. The DAI-ESP may have a Grants Committee at the regional level and a Grants Committee at the national level. The regional level Grants Committee will pre-screen applications from prospective recipients. The Grants Committee at the regional level consists totally of DAI-ESP technical staff. Except as discussed in Section III.E below, the national Grants Committee will consist of at least four DAI-ESP representatives (Grants Manager, Senior Accountant, and two technical specialist), and a USAID Representative. Delegation of this authority to other persons not officially occupying these positions is not permitted. The Contractor or USAID may invite representatives of other SO Offices and NGO to sit on the committee where appropriate. The decisions of this committee will be made by majority vote of the members participating in a meeting. The USAID representative will be a non-voting member of the Grants Committee. The Grants Committee will have administrative, technical, and financial review responsibilities. Members are technical and administrative staff of ESP Project and USAID and can be expected to make sound judgments of the technical aspects and feasibility of the proposed projects. The USAID Representative has no vote in the selection process, but the USAID CTO must approve all proposed grant recipients, before final award is made. It will be the role of the Contractor to provide all the needed background information and written instructions, including the evaluation criteria, to the individuals on the Grants Committee. He/she must also ensure that all rules and regulations in the Grants Manual are carried out in all phases of the grant award process. The Contractor must also respond to any requests made by the Grants Committee for additional information or further studies. The Contractor shall take steps to ensure that members of the Grants Committee—as well as any other DAI-ESP staff involved in the review/approval—do not have any conflicts of interest or the appearance of such with regard to the organizations whose applications are under review.

An individual shall be considered to have the appearance of a conflict of interest if that person, or that person's spouse, partner, child, close friends or relatives, work for or are negotiating to work for, or have a financial interest (including being an unpaid member of a Board of Directors) in any organization which submitted an application currently under the Committee's review.

In such cases, the Committee shall carefully review the situation, consult the CTO, to determine the appropriate action required to avoid or mitigate such conflict and ensure impartiality in the award of grants under the program. Members of the evaluation committee shall neither solicit nor accept gratuities, favors, or anything of monetary value from parties to sub-Grants. ENVIRONMENTAL SERVICES PROGRAM WWW.ESP.OR.ID 10

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3.1.4.1. PRE-AWARD RESPONSIBILITY DETERMINATION

The recommendation or selection of an application in accordance with established procedures does not guarantee an award. Rather, all candidates for Standard, Simplified Grants, or In-Kind Grants must first have an approved concept paper and demonstrate that they possess, or have the ability to obtain, the necessary management competence to practice mutually agreed upon methods of accountability for funds and other assets provided. While 22 CFR 226 does not cover awards to non-U.S. recipients, the Contractors shall rely on the standards established in that regulation in determining whether potential non-U.S. recipients are responsible. The format of the Pre-Award Responsibility Determination will differ according to the type of grant contemplated. Candidates for Standard Grants, for example, will be required to complete “The Accounting System and Financial Capability Questionnaire.” The Contractor may also undertake field visits to gather additional information and observe the functionality of the managerial systems first hand. Such visits would generally include a review of the applicant’s recent audited financial statements, projected budget, cash flow, and organizational chart, and applicable policies and procedures. Based on the results of the Questionnaire and field visits, the Contractor may provide specific instructions to the applicant on needed improvements to ensure proper handling of grant funds. For Simplified Grants candidates, the Contractor will conduct a more informal survey, focusing on (1) the way in which the applicant tracks expenses incurred and (2) the applicant’s expected cash flow. Given that Simplified Grants are funded on a reimbursement basis only, both functions are fundamental to grant implementation. For In-Kind Grants, the Contractor will assess primarily the applicant’s ability to track and safeguard assets that are purchased on its behalf. The only exception to the completion of the pre-award determination policy is for recipients of Fixed Obligation Grants. Given that the FOG mechanism is based upon the completion of tangible deliverables and not the compiling of receipts, proof of adherence to accepted accounting procedures is not compulsory.

3.1.5. USAID APPROVAL The final determination of award will be at the sole discretion of the Cognizant Technical Officer (CTO). The Contractor will not proceed with the signing of the grant until the concurrence of USAID has been obtained in writing.

3.1.6. AWARD ELEMENTS After financial management and responsibility requirements have been satisfied, the grant type determined, and final negotiations completed, the Contractor will prepare a specific Grant for each grantee organization in accordance with the appropriate format for the type of grant approved. All grants must include a Program Description that identifies the goals


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and objectives of the grant project, the specific activities to be carried out, the measurable results to be achieved, budget, and project duration. The Program Description must have clearly established goals that are realistic, measurable and represent the highest objective that the recipient can expect to materially affect and for which it will be held accountable. Upon preparation of the final grant, the grantee signature shall be obtained and the grant will be submitted to the Contractor for countersignature to effect grant award. Every grant shall include a termination provision. The ESP Chief of Party or Deputy Chief of Party shall have the sole authority to sign grant agreements.

3.2. FULL AND OPEN REQUESTS FOR ASSISTANCE

The Contractor anticipates issuing full and open requests for assistance for awards that are more general in scope and/or larger in magnitude. Illustrative characteristics of activities that would likely be procured through a full and open RFA include the following:

• The scope of work is highly generalized, meaning that a broad range of activities will be considered as long as the objectives of the activity support the overall objectives of the ESP Project.

• The anticipated activity is national or regional in scope.

• The Contractor anticipates that there are a significant number of organizations that could potentially undertake the activity successfully.

• The Contractor anticipates multiple awards.

3.2.1. THE FULL AND OPEN PROCESS The ESP Project will publish RFAs for organizations to provide technical assistance, financial assistance, or other services to clients in the geographic area covered by the Project. Specific evaluation criteria and a methodology will be established as part of the request for applications. The following procedures will be followed:

1. Development of Scope of Work – In consultation with USAID and Project counterparts, the ESP team will seek to develop a scope of work that broadly supports the objectives of the ESP Project.

2. RFA Preparation – The RFA document will be prepared and approved by the

Contractor in coordination with the DAI Administrative backstop for Indonesia and the DAI Contracts Office in Bethesda, Maryland (see ADS E303.5.4b for additional information on the contents of the RFA).


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3. USAID Approval – Before advertising, the Contractor will request the approval of the USAID Cognizant Technical Officer (CTO).

4. Public Notice – A notice will normally be made in at least three Indonesia

newspapers with widespread distribution.

5. RFA Distribution – The RFA will be distributed to organizations requesting the RFA. Applications will be due within thirty (30) days, unless otherwise stipulated in the RFA.

6. Bidders Conference – When multiple awards are anticipated, the Contractor may

opt to hold a bidders conference to answer questions of applicants and provide general guidance on the appropriate format and content of grant applications.

7. Clarifications – The Grants Committee will provide in writing answers to written

questions from applicants, requests for clarifications, and/or additional information as needed to perform its evaluation and make its recommendation. It is expected that the time frame for this stage will be less than one week.

8. Grants Review Committee – Once the submission period has closed, a Grants

Review Committee will be convened to evaluate the applications. The Committee will evaluate applications based on the criteria established in Section III.F of this Manual (as well as any additional criteria deemed appropriate prior to the actual review) and will prepare a written record of the results. The record will contain a recommendation with a justification for the final decision to fund, to not fund, or to take any other disposition.

9. Negotiation – Once initial selection of the grantees is made, the Grants

Committee may engage in additional negotiations with the prospective grantee to resolve any outstanding concerns regarding the application. Site visits and interviews of management personnel are optional for the Grants Committee.

10. Pre-Award Responsibility Determination – As outlined above in Section III.A,

the Contractor will undertake a Pre-Award Responsibility Determination to ascertain the level of management and financial capacity of the applicant. The level of scrutiny will be determined by the format of the grant under consideration.

11. Award – Subject to CTO’s approval, the Contractor will proceed with the signing

and commencement of the award. Those applicants not receiving an award will be notified in this regard.

3.3. DIRECT SOLICITATIONS The Contractor also anticipates engaging in direct solicitation where appropriate. Direct solicitations may be to one organization (with the end objective of a sole-source award) or to several organizations (resulting in a limited competition if only one award is envisioned). Illustrative characteristics of activities awarded via direct solicitation include the following:

• The scope of work is for a specific technical area;


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• The activity will take place within a strictly defined geographic area; • The Contractor anticipates a single award or small number of awards.

When the Contractor anticipates a direct solicitation, it shall submit to the CTO for prior approval a written justification based on one of the following competition exceptions:

• Amendments and Follow-On Activities – Amendments to existing awards or follow-on awards for the same activity, or to further develop an existing assistance relationship, for amounts equal to or less than the original grant.

• Exclusive or Predominant Capability – Assistance awards for which one

Recipient is considered to have exclusive or predominant capability based on proprietary capability, specialized facilities or technical expertise, or based on an existing unique relationship with the cooperating country or beneficiaries.

• Critical Objectives of the Program – When circumstances are determined to

be critical to the objectives of ESP, or when the non-provision of a specific grant would impede the achievement of ESP’s results and/or the fulfillment of U.S. foreign assistance objectives, the Grants Committee can formally waive competition requirements.

3.3.1. DIRECT SOLICITATION PROCESS The direct solicitation of applicants will follow the process outlined below.

1. Development of Scope of Work – In consultation with USAID and Project counterparts, the DAI-ESP team will develop a scope of work. In general, SOWs for direct solicitations will be developed in direct response to a perceived need and will consist of a specific activity within a defined geographic area.

2. Pre-Identification of Applicants – The DAI-ESP team will pre-identify capable

candidates for receipt of the direct solicitation.

3. USAID Approval – The Contractor will submit the SOW and the name(s) of the proposed candidates for USAID for approval before formally contacting the candidates. Included in the request for approval will be a justification for the limited competition based upon the above stated conditions.

4. Direct Solicitation – The Contractor will provide the solicitation to the

candidate(s) and provide general guidance in the preparation of an application. Included in the solicitation will be a deadline by which the candidate must formally respond.

5. Grants Review Committee – Once the submission period has closed, a Grants

Review Committee will be convened to evaluate the response of the organization(s) using the established criteria. The Committee will prepare a written record of the results. The record will contain a recommendation with a justification for the final decision to fund, to not fund, or to take any other disposition.

6. Negotiation – Once initial selection of the grantees is made, the Grants

Committee may engage in additional negotiations with the prospective grantee to


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resolve any outstanding concerns regarding the application. Site visits and interviews of management personnel are optional for the Grants Committee.

7. Pre-Award Responsibility Determination – As outlined above in Section II.A,

the Contractor will undertake a Pre-Award Responsibility Determination to ascertain the level of management and financial capacity of the applicant. The level of scrutiny will be determined by the format of the grant under consideration.

8. Award – Subject to CTO’s approval, the Contractor will proceed with the signing

and commencement of the award.

3.4. UNSOLICITED APPLICATIONS Unsolicited applications for grants to do activities that support the broad objectives of ESP will be reviewed on an ongoing basis. Applications must be submitted solely on the applicant’s initiative without prior formal or informal solicitation to qualify. Awards may be made based on an unsolicited application without the benefit of competition where the application clearly demonstrates a unique, innovative, or proprietary capability, represents appropriate use of ESP funds to support the ESP objectives, and fits within an existing ESP Work Plan. The burden of proof that the application is indeed “unsolicited” (i.e. without prior formal or informal solicitation) rests with DAI and must be documented.

3.4.1. THE UNSOLICITED APPLICATION PROCESS The ESP team will proceed to screen application(s) and recommend grantees for approval in accordance with the following procedure:

1. Application Screening – Staff will screen applications based on the minimum eligibility requirements and forward eligible grant applications to the Grants Committee.

2. Grants Committee – The Committee will evaluate applications based on the

criteria established, and will prepare a written record of the results. The record will contain a recommendation with a justification for the final decision to fund, to not fund, or to take any other disposition.

3. Pre-Award Responsibility Determination

4. Award – Subject to CTO’s approval, the Contractor may negotiate and process

the award in accordance with Section N of this manual.


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3.5. FAST-TRACK AWARD PROCESS In order to expedite the processing of smaller awards, DAI will use a “fast-track” process for all direct-solicited or unsolicited grants under $10,000 USD. Under the fast-track process, the grants committee will be limited to internal DAI-ESP staff. The evaluation and documentation process will remain the same. Additionally, no award will be made absent USAID approval.

3.6. EVALUATION CRITERIA Grant applications that meet minimum eligibility criteria will be reviewed and awarded based on the following general selection criteria as well as any additional criteria determined by the Grants Committee.

1. Conformity to ESP and BHS Objectives. Is the proposed activity in line with ESP and BHS objectives and the Project SOW? What is the likelihood that the activity will help meet Project targets and further Project objectives?

2. Technical Approach. Is the technical approach feasible in the given time period

with the given resources? Is the technical approach innovative?

3. Institutional Capacity. Does the organization present evidence that it possesses the technical, managerial, and financial capacity to accomplish the proposed task?

4. Cost. Is the proposed cost within the expected range? Are the costs reasonable,

allocable, and allowable? Can the organization demonstrate that it adheres to basic accounting and management principles? To what extent does the proposed activity leverage other funding sources?

5. Cross-Cutting Issues. Does the grantee incorporate gender issues and

indigenous peoples? 6. Sustainability. What is the probability that the activities will be sustainable over

the long term without continued outside approach? Evaluation may entail interviewing, site visits, background research, and/or solicitation of additional information. The Contractor or his/her designee will prepare a written record of the results of the Committee’s evaluation. The written record will account for how the application was evaluated in terms of the selection criteria, and will contain a recommendation with a justification for the final decision to fund, to not fund, or to take any other disposition.


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3.7. HIGH RISK ORGANIZATIONS If Contractor evaluates the institutional capabilities of a grantee and determines that they are limited or deficient in accordance with 22 CFR 226.14, Contractor will classify them as high-risk. Specific techniques to address this high risk include, but are not limited to: 1) special award conditions, such as additional financial reporting detail or frequency; and 2) providing technical assistance to the grantee. This option may be used only for such a period of time until the potential recipient can correct any institutional deficiencies, but not for the life of the award.


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SECTION IV

4. TYPES OF GRANTS

The purpose of Section IV is to describe the types of grants that the Contractor envisions awarding under the ESP small grants program, namely, Standard Grants, Simplified Grants, Fixed Obligation Grants, and In-Kind Grants. More specifically, this section outlines the nature of each grant, criteria for selecting which grant format to use, and implementation procedures unique to each grant type.

4.1. STANDARD GRANT FORMAT The Standard Grant Format can be used for any grantee provided that they have the financial and management capacity to receive direct cash disbursements. The primary advantage of the Standard Grant is decreased administrative burden in that the method of cash disbursement is more flexible. The disadvantage is that the Standard Grant can only be issued to more developed organizations that possess documented management capacity. Additionally, the grant document is itself more complicated than other formats in that all Mandatory Standard Provision for Non-US, Non-Governmental Recipients must be included as attachments. The implementation of Standard Grants is governed by the following federal and USAID regulations:

• Mandatory Standard Provisions for Non-U.S., Non-Governmental Recipients

• Required as Applicable Standard Provisions for Non-U.S., Non-Governmental Recipients

• ADS 303; ADS 302.5.6

• OMB Circular 122 “Cost Principles for Non-Profit Organizations”; and

• Section 22 of the Code of Federal Regulations, Part 226, in particular 226.20 through 226.28.

4.1.1. ACCOUNTING SYSTEM REQUIREMENTS AND FINANCIAL CAPABILITY QUESTIONNAIRE

As indicated in Section III.A (Pre-Award Responsibility Determination), prior to the finalization of the grant award, prospective Standard Format grantees must complete and submit DAI’s Accounting System Requirements and Financial Capability Questionnaire. The purpose of this Questionnaire is to assess the suitability of the prospective grantees financial oversight and accounting controls for the implementation of a small grant. More specifically, the Questionnaire will assist the Contractor in identifying the extent to which the grantees


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financial systems match the requirements of the US Federal Government. Included in the Questionnaire are queries addressing accounting system requirements, time and effort reporting, funds management, internal control standards, and procurement policies. Based on the results of the Questionnaire, the Contractor will choose to (a) proceed with the Standard Grant format with no conditional requirements when systems are found to be satisfactory, (b) proceed with the Standard Grant with conditional requirements when certain deficiencies are identified, or (c) select an alternative grant format that is better suited to the nature of the grantee. If no appropriate alternative grant mechanism can be identified, the Contractor will not proceed with the award.

4.1.2. DISBURSEMENT GUIDELINES In order to minimize risk, the disbursement of cash under Standard Grants will be on an incremental basis as opposed to a lump sum payment up front. Grantees will submit a quarterly budget based upon upcoming deliverables for approval by the Contractor. If the expected expenses are found to be reasonable, the Contractor will issue a grant disbursement, which will then be included on the Contractor’s invoice to USAID for that period. At the close of the quarter, the Contractor will verify that the funds were used appropriately via the submission of a financial statement and/or a deliverable by the grantee. The next disbursement will not be released until the grantee has provided adequate evidence that the existing funds were expended in their entirety in a satisfactory manner. Additionally, ten percent of the total grant amount will always be withheld until all aspects of the scope of work have been completed to the satisfaction of the Contractor.

4.2. SIMPLIFIED GRANTS The Simplified Grant mechanism is advantageous in that it offers a more streamlined approach to the issuance of small grants under USAID contracts. The Simplified Grant can be used for both US and non-US organizations. The primary disadvantage of this format is that all disbursements are made on a reimbursement basis only, so grantees must possess adequate capital up front to begin incurring expenses without a cash transfer from the Contractor. As such, the Simplified Grant format is used when an organization possesses sufficient cash flow but lacks the capacity to manage direct cash disbursements. This format can also be used in a situation in which the Contractor would like to have more control—either programmatically or administratively—over the progress of the activity. The Simplified Grant format shall be used only when the grant meets the following conditions (per ADS 303.5.15):

1. The total value of the grant does not exceed $25,000; 2. The assistance instrument is a grant, not a cooperative agreement, and is made with

a non-U.S. organization; 3. All costs to be charged to the grant are identified in the grant text and do not

include international airfares, or if a cost-reimbursement grant, indirect costs; 4. Any goods to be purchased by grantee meet the rules governing local cost financing,

and no single item having a useful life of over one year and an acquisition cost of $5,000 or more shall be purchased;


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5. Sub-agreements, if any, must meet the same conditions listed here for simplified grant formats;

6. The Grantee is required to sign the Debarment and Suspension certification and any other required certifications, and

7. The Recipient shall receive payments on a reimbursement basis. The Contractor can modify the format for simplified grants for non-U.S. organizations to include support of international travel (#2) or the purchase of equipment (#3) as long as the applicable Standard Provisions for those specific types of activities are referenced in the grant award.

4.2.1. DISBURSEMENT GUIDELINES All disbursements under Simplified Grants will be made on the basis of actual incurred expenses. The grantee will submit a listing of costs incurred (in the form of an invoice) and the Contractor will review the costs and transfer an amount of money equal to the expenses that it finds reasonable and allowable. Only expenses already identified in the grant itself will be considered allowable. The frequency of billing will be based upon the terms set forth in the grant. The Contractor will invoice USAID only after costs are approved and the respective disbursement to the grantee has occurred.

4.3. FIXED OBLIGATION GRANT The Fixed Obligation Grant (FOG) allows for the award of a grant for very specific program elements without the requirement of Contractor monitoring the actual costs subsequently incurred, as all costs are covered on a benchmarked reimbursement basis. It is intended for use to support specific projects where there is a certainty about the costs, and in which the accomplishment of the purpose or milestone in the grant is readily discernible. A discussion by the Contractor of the appropriateness of this type of grant and the appropriate benchmarks to the project will be included in the documentation of the grant negotiations. Partial payments may be set up at different stages including the submission of a complete work-plan, after partial implementation, or upon demonstration of achieved results, and the payment amounts should reflect the relative value of the benchmarks achieved or the programmatic objectives that are sought.

4.3.1. FIXED OBLIGATION FORMAT REQUIREMENTS

In addition to assuring that the grant will meet the applicable conditions (#1 - #7) described above for the simplified format, the Contractor must also certify (or ensure) the appropriateness of issuing a fixed obligation grant based on the following factors:

1. Programmatic accomplishments or results are easily identified and quantified, and are established in grant benchmarks;


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2. There is very limited risk that there will be changes to the project; 3. There is adequate cost information (historical or unit pricing) available to determine

and negotiate the fixed price of the grant, which may include an amount based on the grantee’s demonstrated indirect costs;

4. Negotiations ensure to the extent possible that the funds budgeted will be the actual cost of the effort so that funds will not be remaining upon completion of the project;

5. Grantees will be informed, through a clause in the grant format, of the right of ESP or USAID to terminate the grant in whole or in part, or suspend payments, should the grantee become insolvent during performance of the award; and

6. At the end of the grant, grantees must certify in writing to ESP that the activity was completed. If the grantee cannot certify completion, it shall be expected to make appropriate reimbursements.

4.3.2. FIXED OBLIGATION GRANT IMPLEMENTATION PLAN

Once a fixed obligation grant has been approved, a detailed implementation plan will be developed by the grantee, in collaboration with the Contractor’s grants and/or technical personnel. The implementation plan will include:

• Result or results to be achieved (measurable goals);

• Responsibilities and contributions of each party to the grant;

• Well defined benchmarks and verification requirements for each achieved benchmark (including analyzed costs);

• Type of payment mechanism (in-kind or direct payment) and payment amount per benchmark; and

• Timeliness for achievement of results and deliverables.

4.3.3. DISBURSEMENT GUIDELINES All disbursements under Fixed Obligation Grants will be made upon the submission of evidence that a benchmark has been achieved. Such evidence may come in many forms, including a work-plan, a technical report, a financial report, meeting notes, the arrangement of specified logistics, the finalization of a list of training participants, the completion of a phase of an infrastructure project, etc. The following is an example of how a disbursement schedule might be structured under a Fixed Obligation Grant:

Example: Community Awareness Campaign Activity Goal: Building community awareness of proper ways to dispose of

residential solid waste Budget: $7,500 USD


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Benchmark Description Disbursement

1 Work-plan drafted and approved $2,500

2 Packet of solid-waste awareness materials created for distribution to each household

$1,500

3 Information packets printed and distributed $1,500

4 Community Round-tables held to discuss information and answer questions (four)

$2,000 ($500 per event)

$7,500

Benchmarking FOGs is very important. While achievement of a benchmark is necessary to trigger a disbursement, it is not necessary to make a disbursement for every benchmark.

4.4. IN-KIND GRANTS Under the In-Kind grant format, goods and services are procured directly by DAI-ESP in close correspondence with the grantee. Once purchased, goods and services are delivered immediately to the grantee or to the grant activity. All procurement undertaken on the grantees’ behalf by DAI-ESP will be done in compliance with USAID’s procurement regulations. The In-Kind Grant is used primarily for local NGOs that are unable to demonstrate the minimum level of financial management capacity required to receive Fixed Obligation Grants, Simplified Grants, or Standard Grants. This format should not be used for third country or international NGOs due to the fact that such organizations generally possess adequate capacity to manage cash.

4.4.1. DISBURSEMENT GUIDELINES No disbursements are made directly to the grantee under an In-Kind Grant. Rather, the Contractor procures all necessary commodities and services on behalf of the grantee. This does not mean, however, that the grantee is not an active partner in deciding how the funds are to be utilized. While the Contractor will ensure the integrity of any procurement and make the final payment itself, the grantee can provide input as to what is needed and gather quotes from possible service-providers or vendors.

4.4.2. THE STANDARD PROVISION ON GRANT PROPERTY

An important aspect of implementing In-Kind Grants is ensuring that all program property is properly used and disposed of once the grant is complete. Once procured, the grantee is required to use and conserve the property for the purposes specified in the project awarded with the grant, according to the Standard Provision “Title to and Use of Property (Recipient Title: $50,000 and under)” as follows:


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Standard Provision on Title to and Use of Property (Recipient Title; $50,000 and Under)

(This provision is applicable only when title to property is vested in the recipient and under $50,000 in equipment is expected to be procured with USAID funds. Equipment is defined as any tangible personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit.)

(a) Title to all property financed under this award shall vest in the recipient. (b) The recipient agrees to use and maintain the property for the purpose of the

award and in accordance with the procedures established in this Provision. (c) With respect to property having an acquired value of $5,000 or more, the

recipient agrees to report such items to the Agreement Officer as they are acquired and to maintain a control system which will permit their ready identification and location.

(d) Within ninety calendar days after the end of the award, the recipient will

provide a list to the Contractor of each item that has current fair market value of $5,000 or more with a detailed proposal of what the recipient intends to do with that property. However, if the recipient uses the property for purposes other than those of the award or sells or leases the property, USAID shall be reimbursed of its share of the property unless the Agreement Officer authorizes USAID’s share of the income from selling or leasing the property to be used as program income. This share is based upon the percentage of USAID's contribution to the recipient's program. If USAID paid 100% of the recipient's costs, then USAID would receive 100% of the selling cost less a nominal selling fee of $500 or 10%, whichever is less.

The Grantee will provide the Contractor with a complete list of all non-expendable property, its location and condition within 45 days prior to the end of the period of performance. The Grantee will provide DAI with a copy of the plan to transfer this equipment. Within 45 days, the Contractor will give its reply about the actual transfer.

4.4.3. BLENDED IN-KIND AND SIMPLIFIED GRANTS

In some circumstances the Contractor may elect to use an In-Kind disbursement in support of a Simplified Grant. Such an approach is useful when the Simplified Grant format is the most appropriate format overall, but the purchase of a single costly item inhibits the use of a Simplified Grant due to the fact that the grantee does not possess the cash on hand to make such purchase. In this circumstance, the Contractor will proceed with the Simplified Grant while including a single In-Kind transfer under the auspices of the original grant.


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SECTION V

5. GRANTS PROGRAM ADMINISTRATION

The purpose of Section V is to provide a general listing of the rules and regulations that govern the administration of active ESP grants irrespective of grant type or amount.

5.1. A. OVERVIEW OF GRANTS ADMINISTRATION

Award administration encompasses all dealings between the Contractor and the recipient from the time the award is made until the end of ESP Program support. The specific nature and extent of administration will vary from award to award. It can range from reviewing and analyzing performance reports, performing site visits to a more technically developed involvement for high-risk recipients. Post award orientation with the Recipient and DAI-ESP technical staff is encouraged to clarify the roles and responsibilities of the DAI-ESP officials who will administer the award. The Contractor shall serve as the mandatory control point of record for all official communication dealing with grant administration. The Contractor shall provide for the continuing oversight by appropriate DAI-ESP staff of the financial management aspects of the award through reviews of reports, correspondence, site visits or other appropriate means. When deemed necessary the Contractor shall request or arrange for special audits. Site visits are an important part of effective award management. Joint site visits by the Contractor and the DAI-ESP technical staff are encouraged, since they can often be a more effective review of the project. A brief report highlighting the findings will be completed and included in the grant file. Grants shall be subject to the provisions established and included in each award. The Contractor shall determine that the award does not contain administrative approvals that are in conflict with the grant provisions, stated regulations and policies. The Contractor shall be responsible for processing all award modification, suspension and termination actions. Finally, while the Contractor may provide general assistance to the grantee throughout the implementation of the award, the final responsibility for adequate completion of the grant requirements shall rest with the grantee. Toward this end, each grant shall include that following clause:


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The grantee recipient has full responsibility for the conduct of the project or activity supported under an award and for adherence to the award conditions. Although the recipient is encouraged to seek the advice and opinion of the Contractor on special problems that may arise, such advice does not diminish the recipient’s responsibility for making sound technical and administrative judgments and should not imply that the responsibility for operating decisions has shifted to the Contractor. The recipient is responsible for notifying the DAI about any significant problems relating to the administrative or financial aspects of the award.

5.2. MONITORING AND REPORTING The grantee shall maintain books, records, documents, and other evidence relating to the ESP project. Accounting records that are supported by documentation will at a minimum be adequate to show all costs incurred under the grant, receipt and use of goods and services acquired under the grant, costs of the project supplied from other sources, and the overall progress of the project. All grantees will be subject to regular and periodic monitoring visits and periodic reporting requirements. All projects must submit a final report on activities supported by the grant. For projects completed in less than a six-month period, a final expense and activity report must be submitted to the Contractor upon completion. For projects exceeding a six month timeframe, quarterly expense and activity reports in addition to a final expense and activity report must be submitted to the Contractor, or as otherwise specified in the grant.

Due to the nature of this grant program, most grantees under this grant program will be exempt from Federal audit requirements. Nevertheless, grantees will be required to adhere to USAID regulations, including requirements to maintain records for a minimum of three years to make accounting records available for review by appropriate representatives of USAID or the Contractor.

5.3. USE AND DISPOSITION OF PROJECT INCOME

Program Income is defined as income earned by the grantee that is directly generated by a supported grant activity or earned as a result of the grant award. It may result from activities integrally related to the grant, or from activities which are incidental to the main purpose of the grant. Program income may be earned both from grantee activities and from services provided by an individual performing a role in the grant activity. The time-frame for earning program income is any income earned by a grantee during the grant period. “During the grant period” means between the effective date of the Grant Agreement and the end date of the grant as reflected in the final financial report.


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Examples of program income include:

1. Fees for services performed and for the sales of services, e.g., sale of computer time 2. Use or rental of real or personal property acquired with grant funds 3. Sale of commodities or items fabricated under the grant, e.g. publications 4. Payments of principal and interest on loans made with grant funds 5. Any donations that are solicited by the grantee during a grant activity

The Grantee will inform DAI-ESP of any program income generated under the grant and agrees to USAID’s disposition of such program income which is in accordance with 22 CFR 226.24. Program income earned under this agreement shall be applied and used in the following descending order:

1. Added to funds committed by USAID and the recipient to the project or program, and used to further eligible project or program objectives;

2. Used to finance the non-Federal share of the project or program; and 3. Deducted from the total project or program allowable cost in determining the net

allowable costs on which the federal share of costs is based. If the terms and conditions of the award do not specify how program income is to be used, then number 2) shall apply automatically. Grantees who are commercial organizations may not apply Option 1) to their program income. Recipients shall have no obligation to the US government regarding program income earned after the end of the project/grant period. Costs incident to the generation of program income may be deducted from gross income to determine program income, provided that these costs have been charged to the award and they comply with the applicable rules for allowable costs under grants. Unless terms and conditions of the award provide otherwise, recipients shall have no obligation to the US government with respect to program income earned from license fees and royalties for copyrighted material, patents, patent applications, trademarks, and inventions produced under an award.

5.4. PROCUREMENT PROCEDURES

5.4.1. PROCUREMENT STANDARDS USAID/DAI will establish standardized written procurement procedures. These procedures shall provide, at a minimum, that: • DAI (or the grantee, if receiving cash), will avoid purchasing unnecessary items;

• Where appropriate, DAI or the grantee will determine whether lease and purchase alternatives is the most economical and practical procurement; and


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• The recipient will document a price or cost analysis in its procurement files in connection with every procurement action. Price analysis will be accomplished in various ways, including the comparison price quotations submitted, and market prices, together with discounts. Cost analysis is the review and evaluation of each element of cost to determine reasonableness, allocability, and allowability.

• For procurement elements or awards greater than $10,000, further requirements may apply as found in the Procurement of Goods and Services (October 1998) clause from the Standard Mandatory Provisions for Non-U.S., Nongovernmental Recipients.

5.4.2. ALLOWABLE COSTS/ELIGIBILITY RULES FOR GOODS AND SERVICES

Expenses incurred under the small grants program must meet the following criteria in order to be eligible for reimbursement:

Reasonable Cost: Means those costs which are generally recognized as ordinary and necessary and would be incurred by a prudent person in the conduct of normal business. Allocable Costs: Means those costs which are incurred specifically for the award. Allowable Costs: Means those costs which are reasonable and allocable and conform to any limitations in the award. Cost Principles: which costs are allowable, allowable with prior approval, or allowable by type of grantee (U.S. NGO, non-U.S. NGO, etc.)

It is DAI’s goal to ensure that costs incurred are in accordance with the applicable set of Cost Principles under the Mandatory Standard Provision for Non-U.S., Non-Governmental Recipients (Allowable Costs). DAI will determine which costs are allowable, allowable with prior approval or unallowable, for Non-U.S. Non-Governmental grantees. The following guidelines will be used during the budget review stage of grant proposal evaluation, before the grant agreement is approved, to determine if a questionable cost is allowable:

1. Review OMB Circular A-122, Attachment B, a list of “Selected Items of Cost” which describes what is and is not allowable, or allowable under what circumstances (for example, “alcoholic beverages: Costs of alcoholic beverages are unallowable”).

2. Review ADS 312 “Eligibility of Commodities” for more information if an item to be procured is a restricted good or service.

3. Determine whether the costs are reasonable, allocable and allowable.

4. Contact the DAI home office for review and decision when appropriate.

5. Prior to incurring a questionable cost, obtain USAID’s Contracting Officer written determination on whether the cost will be allowable. (This should be done even for cash disbursements, as DAI is accountable for the use of funds provided to the grantees.)


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DAI will also adhere to the list of restricted goods and services clause from the list in ADS 312 “Eligibility of Commodities”. The following restricted goods and services shall not be procured without the prior approval of the USAID/OP Contracting Officer:

• Agricultural commodities*;

• Motor vehicles;

• Pharmaceuticals;

• Pesticides;

• Used equipment;

• Contraceptives; and

• Fertilizer.

Waivers on Agricultural Commodities (ADS E312.5.3a2e): Depending on the source origin designation of the DAI contract, a geographic source waiver, in accordance with ADS Chapter 310, may be required if the commodity is to be purchased from a country not eligible under the agreement. If a proposal is to procure an agricultural commodity, DAI staff must review ADS 312 and obtain USAID waiver if necessary before the grant is implemented1. DAI will work with the USAID Office of Procurement to obtain appropriate and necessary waivers prior to procurement. For a complete list of the restricted goods please refer to ADS 312.5.4

The following clause from Mandatory Standard Provisions for Non-U.S., Nongovernmental Recipients shall apply to all grants issued under this program:

USAID Eligibility rules for Goods and Services (September 1998) This provision is applicable when the costs for goods or services will be paid for with USAID funds. This provision is not applicable if the recipient is providing for the goods or services with private funds as part of a cost-sharing requirement, or with Program Income generated under the award.

5.4.3. SOURCE, ORIGIN, AND NATIONALITY2 The authorized geographic code for the proposed project is listed in as “000 and Indonesia.” DAI’s program is designed to adhere to these requirements.

3Refer to ADS 312 “Mandatory Reference, USAID Commodity Eligibility Listing” for a list of restricted commodities.

2 References: • Required as Applicable Standard Provision for non-U.S., Non-Governmental Recipients (#6,

USAID Eligibility Rules for Goods and Services). • Required as Applicable Standard Provision for non-U.S., Non-Governmental Recipients (#8,

Local Procurement). • ADS Chapter 310 “Source, Origin and Nationality” • 22 CFR 228 “Rules on Source, Origin and Nationality” (although this applies solely to U.S.

NGOs, it can be used as guidance).


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5.4.4. RECOMMENDED PROCUREMENT PROCEDURES, BY DOLLAR AMOUNT

Procurement Amounts Action(s) Taken Forms To File

If total anticipated price is less than $500

Purchase as needed at market price– no paperwork other than receipt for billing purposes needed.

None

If total anticipated price (total payment to vendor, not per item) is between $500 and less than $2500

Bid or documented verbal price quote. Three quotes are recommended, but not mandatory. Memo to File must include: - Company names - tel. # - date contacted - price quoted

Memo to File

If total anticipated price is between $2500 and less than $100,000

Requires three written bids from vendors. Create a Bid Comparison Matrix. Must stipulate Selection Criteria Must convene a bid committee to review the bids together.

Bid Comparison Matrix Copies of vendor bids Bid Decision Memo to File

$100,000 or more Requires formal advertisement. Issue formal bid documents, such as Request For Quotes (RFQ). Must stipulate Selection Criteria Must convene a bid committee.

Copy of RFQ and responses Bid Comparison Matrix Bid Decision Memo to file CO Approval (as needed)

The bid committee should be made up of the procurement person and 2 other people: the Chief of Party, and the Deputy Chief or Party. If either the COP or the DCOP is not available, then another person such as Another PDO, the Finance Specialist, or another procurement staff person should be on the committee in their place. The committee members should each sign the Bid Committee form, which confirms choice of the vendor for this procurement. This document should be attached to the bidding documents and put into the file. DAI staff should avoid the practice of purchasing off the shelf items from one vendor in an exclusive or repeated manner. For routine purchases, DAI should work with several vendors, encouraging them to improve their responsiveness. The COP may elect to draw up a short list of pre-qualified vendors, setting up a working agreement with them for routine purchases. In some countries where suppliers are plentiful, a tendering process may be used to pre-qualify vendors of routine, often purchased items.


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5.4.5. EQUIPMENT Equipment is defined as any tangible personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit. If equipment is deemed justified to be purchased under a grant, standard DAI procurement procedures will be followed and the Required as Applicable Standard Provision for Non-U.S. Non-Governmental Recipients (Title to and Use of Property, Recipient Title) will be incorporated into the Grant Agreement. Under the simplified grants, the Agreement Officer must approve the purchase of equipment over $5,000, and applicable provisions must be included in the grant format. The purchase of equipment with a value exceeding $5,000 is not authorized under a fixed obligation grant. The project must follow standard procurement procedures. The grantee is required to use and maintain the equipment for the purpose of the award in accordance with the applicable standard provision and as summarized below: • The recipient is required to maintain equipment records that include the description of

the equipment, the source of the equipment, the title holder, the serial number or other identification, the acquisition date, the cost of equipment, the location, use, and condition of the equipment, and any ultimate disposition data including the date of disposal and the sale price of the equipment.

• The recipient is required to take an annual physical inventory of the equipment and reconcile the results with the equipment records and submit a copy of the physical inventory to DAI .

• In the grant agreement, the grantee will agree to indemnify DAI, its Officers, and Directors, including cost of defense, for any claim made against them arising out of the Grantee's performance of this grant agreement. This indemnity shall be in excess of DAI's insurance policies, but not limited by the scope of such policies. DAI and USAID do not assume liability for third party claims for damages arising out of this grant.

5.4.6. SUPPLIES Supplies are all property, excluding equipment. In accordance with the applicable Standard Provisions, title to supplies and other expendable property shall vest in the grantee upon acquisition. If, for example, an in-kind grant awarded for repairing a community meeting room was budgeted 100 sacks of cement, but only 80 sacks were used, the remaining 20 sacks would remain the property of DAI to fund a different grant needing cement. However, if this same grant were implemented through cash disbursements and the grantee purchased 100 sacks of cement but only used 80 sacks, the grantee must calculate the residual inventory. If unused supplies exceeds $5,000 in total aggregate value upon termination or completion of the project and the supplies are not needed for other USAID or U.S. government-funded project or program, the grantee may retain the supplies for use on non-federal activities or sell them, but shall in either case compensate the federal government for its share.


SMALL GRANTS MANUAL

5.4.7. TRAVEL DAI must obtain USAID Agreement Officer approval, in the approved grant document, to use grant funds in support of international travel where applicable and necessary. Guidance will be followed as set forth in the Required as Applicable Standard Provision for Non-U.S. Non-Governmental Recipients (International Air Travel and Transportation). For grantees receiving cash disbursements for travel, the Standard Provision (referenced above) must be followed and incorporated in to the Grant Agreement. If the grant is in-kind (that is, DAI negotiates and purchases the tickets for the grantee), DAI must follow Standard Provisions when approving travel and purchasing the tickets. In either case, the Fly America Act applies at all times.

5.5. RIGHTS TO INTELLECTUAL PROPERTY

This provision is applicable when publications are financed under the award. (a) USAID shall be prominently acknowledged in all publications, videos, or other information/media products funded or partially funded through this award, and the product shall state that the views expressed by the author(s) do not necessarily reflect those of USAID. Acknowledgments should identify the sponsoring USAID Office and Bureau or Mission as well as the U.S. Agency for International Development substantially as follows:

This [publication, video or other information/media product (specify)] was made possible through support provided by the Office of __________________, Bureau for __________________, U.S. Agency for International Development, under the terms of Award No. ____________. The opinions expressed herein are those of the author(s) and do not necessarily reflect the views of the U.S. Agency for International Development.

(b) Unless the grantee is instructed otherwise by USAID or DAI staff, publications, videos, or other information/media products funded under this award and intended for general readership or other general use will be marked with the USAID logo and/or U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT appearing either at the top or at the bottom of the front cover or, if more suitable, on the first inside title page for printed products, and in equivalent appropriate location in videos or other information/media products. Logos and markings of co-sponsors or authorizing institutions should be similarly located and of similar size and appearance. (c) The grantee shall provide DAI one copy of all published works developed under the award with lists of other written work produced under the award. At the end of the project, DAI shall submit one electronic or one hard copy of final documents (electronic copies are preferred) to PPC/CDIE/DIO at the following address:

USAID Development Experience Clearinghouse (DEC) ATTN: Document Acquisitions 1611 Kent Street, Suite 200 Arlington, VA 22209-2111


SMALL GRANTS MANUAL

Internet e-mail address: [email protected] Homepage: http://www.dec.org

Electronic documents may be submitted on 3.5” diskettes or as e-mail attachments, and should consist of only one electronic file that comprises the complete and final equivalent of the paper copy; otherwise, a hard copy should be sent. Acceptable software formats for electronic documents include Microsoft Word, WordPerfect, Microsoft Excel and Portable Document Format (PDF). Each document submitted to PPC/CDIE/DIO should include the following information: 1) descriptive title; 2) author(s) name; 3) award number; 4) sponsoring USAID office; 5) date of publication; 6) software name and version (if electronic document is sent). (d) In the event grant funds are used to underwrite the cost of publishing, in lieu of the publisher assuming this cost as is the normal practice, any profits or royalties up to the amount of such cost shall be credited to the grant unless grant agreement has identified the profits or royalties as program income.

(e) Except as otherwise provided in the terms and conditions of the grant, the author and/or the grantee is free to copyright any books, publications, or other copyrightable materials developed in the course of or under this award, but USAID reserves a royalty-free, nonexclusive, and irrevocable right to reproduce, publish, or otherwise use, and to authorize others to use the work for Government purposes.

5.6. AMENDMENTS AND EXTENSION The Contractor has the authority to make, without the prior approval of the CTO, written amendments to awarded grants, provided that the amendments 1) are of a minor or administrative nature, 2) do not change the obligated amount or the purposes of any award, 3) are satisfactory to the awardee, and 4) are promptly transmitted to the CTO. The CTO must give his or her prior approval to all other amendments. Once a grant has been awarded, no additional competition is required for amendments to the existing award or follow-on awards for the same activity, or to further develop an existing assistance relationship for amounts equal to or less than the original grant. Approval of the grants committee is required for amendments to existing awards that involve any substantial change, extension or expansion of previously approved grant activities. The DAI-ESP Grants Manager shall serve as the mandatory control point of record for all official communication that would constitute an amendment to the award. Amendments will be made by formal modifications to the basic award document.


SMALL GRANTS MANUAL

5.7. GRANT FILES AND PROJECT CLOSEOUT

USAID reserves the right to conduct financial reviews or audits, and to otherwise ensure the adequate accountability of organizations expending USG funds. The grant files will contain the essential documents to demonstrate that the grant was successfully completed and that funds were spent prudently with costs justified. In order to prepare the grant files for closeout, the project will maintain an on-going official grant “Master File” or binder, which includes only the documents that need to be preserved in case of audit. This file will be clearly organized and easy to understand. An auditor with very little prior knowledge of the project will be able to quickly review the file and conclude whether the grant funds were used for their designated purpose, whether systematic and competitive procurement procedures were used, and whether all funds were properly accounted for. At closeout, project staff will also ensure that all entries in the grants management database are complete, which will help guide an auditor through DAI’s grants management system. The Master File will include:

1. Grant Documents • Proposal from grantee • Signed grant approval from USAID • Negotiation Memorandum • Signed Grant Agreement • Signed Addenda to agreement, where applicable • Any extensions or additional approvals from USAID (including print-outs of

approval emails), where applicable • Grant Budget and any budget amendments • Grant correspondence • Grantee Certifications • Grantee determination of responsibility

2. Procurement Documents

• •

Bidding documentation (see section VI, Procurement Procedures) Procurement Negotiation Memorandum

• In-kind agreements with vendors, if used • If a single item worth $5,000 or more was given to a grantee, the file must

include an inventory list of such goods and equipment.

4. Financial Documents • Financial reports from grantee (these can be stored separately, if organized by

grant number)


SMALL GRANTS MANUAL

• The financial documents themselves may be included in the grant file, or there can be a spreadsheet that cross-references grant payments with separate field-based Finance Department files. This permits an auditor to look up original receipts and other financial documentation for each grant as needed.

5. Reporting and Evaluation Documents

When applicable, the file shall include the determination of responsibility of the grantee. • Final reports from grantee, when required • Reports on payment of foreign taxes • Monitoring reports • Impact assessments • Additional demonstration of activities (i.e. photographs, cassette tapes of radio

PSA, video tapes of conference events, newspaper clippings, and so on.) • Grant paperwork beyond a single copy of the items on this checklist can be

disposed of after closeout.

5.7.1. RECORDS RETENTION The Contractor will act as custodian for USAID of all records relating to grants under the Contract. The Contractor will preserve all records with respect to its grant-making (including with respect to the deliberations of all Review Panels) and administration hereunder. Copies of all reports received from awardees will be promptly forwarded to the CTO or his/her designee. USAID and the Comptroller General shall have full access to all documents, papers and others records of the Contractor with respect to its duties hereunder. At the conclusion of the Contract, the Contractor shall consult with the CTO for direction as to which records shall be transferred to USAID.

5.7.2. CLOSEOUT PROCEDURES Closeout of grants awarded under the standard and simplified formats shall be conducted by DAI in accordance with 22 CFR 226.71. Grant closeout for fixed obligations grants will be accomplished with acceptance of the final milestone and the approval of final payment. The DAI is responsible for ensuring that the grantee has completed all requirements for closeout and shall include information on grant closeouts in the monthly report of grant activities. USAID reserves the right to direct DAI to unilaterally terminate grants entered into by the DAI for the ESP activity.


SMALL GRANTS MANUAL

5.8. LANGUAGE The text of all awards shall be in English and Indonesian, with the qualification that the English version shall prevail.

5.9. TERMINATION AND SUSPENSION Language must be included in the grant agreement giving DAI the right to terminate a grant, in whole or part, or suspend payments, should the grantee become insolvent during the performance of the award or should the grantee not meet their responsibilities as set forth in the Grant Agreement. A termination letter will placed in the grantee’s file and include the following:

• The reasons for the termination; • The effective date; and • The portion terminated (in case of partial termination). The exact language of the provision which shall be attached to the Grant can be found in Annex J: Mandatory Standard Provisions For Non-U.S., Nongovernmental Recipients under #5 Termination and Suspension.


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