Millennium Challenge Corporation
The United States government established the Millennium Challenge Corporation (MCC) in 2004 as a new foreign assistance agency whose mission is to reduce poverty through economic growth. Known for its unique approach, MCC forms partnerships with developing country governments that are committed to good governance, economic freedom, and investments in their citizens. Created by Congress, MCC provides those eligible countries with large-scale, time bound grants to fund country-led solutions for reducing poverty through sustainable economic growth. MCC views this economic growth as the catalyst for poverty alleviation and works with countries based upon their commitment to achieve these shared goals.
In creating MCC, the U.S. was seeking to create a country-driven development mechanism where projects are designed and implemented by the recipient country. MCC's approach is based upon the following four pillars:
- Through the competitive selection process, MCC's Board examines a country's performance against several independent and transparent policy indicators and selects countries based on policy performance.
- By encouraging country-led solutions, MCC requires selected countries to identify their priorities for achieving sustainable economic growth and poverty reduction. Countries develop their MCC proposals in broad consultation within their society. MCC then works in close partnership to help countries refine programs.
- By encouraging country-led implementation, MCC requires selected countries to set up a local accountable entity (AE), often called Millennium Challenge Account (or MCA), to manage and oversee all aspects of implementation.
- Additionally, MCC is focused on results, ensuring that the American people are getting a good return on their investment. MCC employs technically rigorous, systematic, and transparent methods of projecting, tracking, and evaluating the impacts of its programs.
To achieve all this, MCC provides three different kinds of monetary assistance:
- Compacts a large, 5-year grant provided by MCC to an eligible country to fund specific programs targeted at reducing poverty and stimulating economic growth.
- Concurrent compact for regional investment a grant to promote cross-border economic integration and increase regional collaboration for trade.
- Threshold an agreement with a developing country that is willing to demonstrate a meaningful commitment to reform and a high probability of success but does not yet meet the necessary number of policy indicators for approval. Thresholds are smaller grants that are provided in hopes of helping countries become eligible for compact agreements in the future.
Since 2004, MCC has approved billions in compacts and threshold programs worldwide. MCC does not replace the U.S. Agency for International Development (USAID) or other U.S. government foreign assistance programs. Rather, in countries that receive both MCC and USAID funding, the agencies will often collaborate to provide a comprehensive and complementary portfolio of development assistance.
MCC is managed by a Board of Directors, chaired by the Secretary of State and the Secretary of the Treasury is the Vice Chair. This Board selects eligible countries and approves compact and threshold proposals.
Identification and selection of candidate countries
In December of each year, MCC prepares a list of eligible countries that meet MCC's selection criteria, and that are committed to: governing justly, investing in their citizens, and encouraging economic freedom. Candidate countries must not be subject to legal provisions that prohibit them from receiving U.S. economic assistance.
To determine which eligible countries will be selected for MCC funding, each country is measured against independent policy indicators, varying from civil liberties and anti-corruption to immunization rates and inflation. A scorecard is created which ranks the candidate's policy performance against other countries in its peer income group. A country is considered to "pass" the scorecard if it:
- "passes" at least 10 of the policy indicators
- "passes" the Control of Corruption indicator
- "passes" either the Civil Liberties or Political Rights indicator
Successful countries are then invited to submit proposals for funding.
Development and approval of compact proposals
Once a country is selected, it must develop a funding proposal outlining its priorities for MCC assistance. The proposal must be based on a timely and meaningful consultative process with civil society and the private sector. MCC evaluates and conducts due diligence on each proposal. If a country proposal is approved by the MCC Board, MCC and the country enter a country-specific compact that outlines the responsibilities of both parties and stipulates the progress benchmarks to ensure accountability and outcomes.
Implementation of programs and monitoring results
Consistent with the country-led development approach, the implementation of MCC-funded projects is conducted by the recipient country, specifically the AE within the country, with ongoing oversight by MCC in Washington. Each country is responsible for establishing an accountable agency with a defined structure and procedures, which then develops and carries out all plans for the implementation of compact activities. These activities include:
- financial plans
- procurement plans
- work plans
- monitoring and evaluation plans, and
- audit plans
It becomes the central point of contact for MCC, other donors, contractors, and consultants. Along with establishing an accountable entity, the country also selects fiscal and procurement agents, responsible for the financial and reporting systems, and managing procurements of goods, services and construction contractors that are to be funded by MCC funds.
- engaged in activities contrary to the national security interests of the United States
- engaged in a pattern of actions inconsistent with MCA eligibility criteria; or
- failed to adhere to its responsibilities under a MCC program agreement
Foreign competition and Canada's capabilities
All MCC funding is untied, and all procurements are conducted in an open, transparent, fair and, competitive manner. Local firms and international firms are eligible to bid. There is no set-aside for consideration, including no domestic preference permitted.
Canada has recognized international expertise in many of the sectors of funding priority in the approved MCC compacts including: agriculture, education, energy, health, roads and transportation infrastructure, as well as cross-cutting needs related to climate, gender, diversity and inclusion.
In recent years, an increasing number of MCC-financed contracts have been awarded to Canadian firms. As with projects financed by the IFIs and the UN, Canadian firms and NGOs are advised to work with a local partner to be competitive, though it is not required by MCC. Local firms provide local intelligence and knowledge, which can be helpful to execute projects.
The MCC Program Procurement Guidelines are principally based on the World Bank's procurement policies and procedures but have been adapted to better reflect the needs of MCC programs and the applicable laws and regulations that govern them.
Some key differences between the MCC guidelines and those of the World Bank include:
- Government-Owned Enterprises (GOEs) are not eligible to compete for MCC funded contracts, except for GOEs with academic, research or statistical mandates (Government-owned Force Accounts).
- Tighter restrictions on currency use, limiting currency to either USD, local currency, or a combination of the two.
- Application of domestic preference is not permitted.
- Firms may be ineligible due to debarment or suspension from participating in U.S. government funded procurements or prohibited due to applicable U.S. law, executive order, or policy.
- MCC allows procurement documents to be in English, French, or Spanish. No other language is permitted.
- MCA Entities are required to use MCC developed Standard Bidding Documents (SBDs).
Identifying procurement opportunities
MCC offers 2 kinds of opportunities, procurement opportunities with partner (recipient) countries (AE-led) and, corporate procurement opportunities (MCC-led, in support of their own internal needs). Annually, partner country contracts average USD $500M while MCC corporate contracts average USD $70M.
All AE's procurements are solicited, awarded, and administered by the AE, the organization established by the partner country to manage the programs identified in the compact. MCC is not a party to these contracts but does offer oversight for program implementation. The AE is required to post procurement notices on its own website as well as, United Nations Development Business (UNDB) and dgMarket. MCC also posts these announcements on SAM.gov and encourages the AE to post on any other suitable and relevant websites or publications.
Complementary to this, and in order to streamline information about business opportunities, MCC also publishes a quarterly Partner Country Business Forecast for planned contract and grant opportunities at or above US$200K. Firms are encouraged to monitor the Business Forecast regularly and contact the project officer for questions. In addition, MCC publishes contract award data, which can be used as a market intelligence tool and to generate potential partnering opportunities.
For the most part, corporate procurement involves work related to studies, due diligence, monitoring and evaluation and technical assistance that support the operational work of MCC in Washington (MCC-led). These assignments are advertised on both SAM.gov and Grants.gov.
Do you have questions about doing business with the Millennium Challenge Corporation (MCC)?
- Watch the video Working with the Millennium Challenge Corporation (MCC)
- Contact the Office of Liaison with the International Financial Institutions (OLIFI) based at the Embassy of Canada in Washington, D.C.
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