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Process vs. Substance
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Foreign Aid, Foreign and Security Policy
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The Assumptions
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Change One: Relationship Between Contracts and Projects: Preview of Skills Course Next Semester
Key: Not a Grant
Grants available to Non-Profits
Purpose of Grants is often Sub-Grants
Grant: Gift, with conditions but not legally enforceable
Can only refuse to give additional Money
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Contract
Contract Definition
Legally enforceable documentPurpose
Judicial review in event of a disagreement between the parties
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Contract
A good contract is able to be understood by a member of the judiciary
Projects: Contracts and Grants: Both define obligation by time and money.
Limited time and limited money
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Judicial Review of Contracts
Judge may be assumed to be a lay-person in terms of the technical aspects of the contract
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Judicial Review
For judicial review the contract should strive to make the technical issues as clear as possible
Understandable not just to project teams but to lay individuals as well
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Judicial Review of Contracts
Few contracts are in fact brought before the judiciary for determination
Nonetheless, it is this ultimate test--against judicial criteria--that sets the pattern for contract administration
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Contracts Administration
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Project Planning Documents
Help clarify contract elements
Consists of the following:
A meeting of the mindsSpecific deliverablesConsiderationForce MajeureObjectively Verifiable Indictors
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A Meeting of the Minds
“Intent” of a contract
Establishes for judicial review "why" the contract was entered into
Includes knowing why the two parties have entered into a contract; their long-term objectives
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Intent
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Meeting of the Minds
Actions consistent with the meeting of the minds are consistent with the contract
Actions inconsistent may constitute breach of contract or non-performance
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A Meeting of the Minds
Relates directly to the purpose and goals identified in the project’s planning document
Project document always indicates “outputs” in the hope that it will result in an agreement that the task is completed
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A Meeting of the Minds
Contractor is expected to obey “reasonable person” rule
contractor is expected to do all the things that any reasonable person would do given the resources available, and
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Meeting of Minds
add to the list of outputs in order to reach the agreed upon purpose
contracting agent agrees to modify or add to the inputs in order to reach a modified “meeting of the mind”
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A Meeting of the Minds
Contracting agent has a reasonable right to expect that the contractor will obey the “reasonable person” rule
However, contractor expects that the contracting agent will attempt to take all reasonable actions necessary to realize the overall goal of the activities
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A Meeting of the Minds
“Purpose” of Contract
Most important project focus
Facilitates "meeting of the minds" by clarifying long-term objectives
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In the Development Context
Parties to the Contract:
Developing CountrySponsoring or donor agency
USAID, the World Bank, UNDPHost CountryContractor
NGO, For-profit private firm, University
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In the Development Context
Developing (host) country is usually considered ultimate “client” of the contractor, although this is not legally binding if the contract is made with the donor agency
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Deliverables of Contract
Essentially the “outputs”
Things the contractor has agreed to produce
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Contract Deliverables
Important to note that deliverables under a contract should be results, not activities (or inputs)
Further, objectively verifiable indicators must be provided for each output with qualitative, quantitative, and time targets
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Consideration
Essence of a contract, particularly in terms of its equity provisions
What do a contractor and contracting agent each promise to provide each other?
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Consideration
Minimum guarantee is the inputs
Contractor agrees to provide technical personnel, commodities and undertake activities, etc.
Sponsor agrees to pay contractor certain fees, and may provide on-site support, etc. as agreed upon in the contract
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Force Majeure
The project framework documents and the contract clarify force majeure by:
Identifying factors that require re-analysis of the ability to perform
Setting levels at which those factors become important
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Force Majeure
At input level, contractor identifies assumptions that must be made in order to guarantee ability to produce outputs
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Force Majeure
Example: If the contractor assumes that host government will provide ten vehicles and drivers in order produce the project outputs, but in fact only five are provided, then we expect a corresponding reduction in the quantity or quality of outputs produced
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Objectively Verifiable Indicators
Indicators that determine if the terms of a contract have been met
To avoid a misunderstanding and provide an objective means for recognizing successful achievement of the project objectives, the contract and associated planning documents must establish “objectively verifiable indicators”
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Objectively Verifiable Indicators
Indicators show the results of an activityNot the conditions necessary to achieve
those results
Indicators clarify exactly what we mean by our statement of the objectives at each level in the project planning document
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Objectively Verifiable Indicators
At input level:
only concerned with consumption of project resources
At the purpose level:These are of particular importance and are
given a special name:
End of Project Status (EOPS)
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Coffee Break
Ten Minutes
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Change- 2
Focus: For Profits & Non-Profits for Service Delivery After 1975
Contracts vs. Tied Grants
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Change 3- Old Patterns
Long Term Cooperative Agreements (1970s)- Ten to Fifteen Years
Land Tenure Center University of Wisconsin
Center for Disease Control in AtlantaNational Association of Schools of Public
Affairs and Administration
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Grants and Contracts- 1980s
Non-Profits- Grants and Sub-Grants- Function like Contracts
Contracts- For Profits- Project Driven
Cooperative Agreements- Long Term Grant Commitments (Up to 20 years)
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An Example: 1985- USAID Cooperative Agreement: Performance Management Project
• National Association of Public Affairs and Administration (NASPAA)
• DPMC Department of Agric.
• IDMC Univ. of Maryland
Director: Dr. Louis A. Picard
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Performance Management ProjectResearch Group
• Rondinelli -Foreign Aid• Kerrigan and Luke- Training• Hague and Finsterbusch -Orga-nizational
Development• Kiggundu- Managing organizations • White Program Management• White - Policy Reform• Brinkerhoff strategic Management • Esman-Development Management
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Field Operations
• INCAE- Sub-Contract to Catholic University, Paraguay (W. Schaeffer)
• Swaziland- Rukudzo Murapa• Indonesia- David Korten• Francophone Africa: David Gould• Guinea- Robert Groelsema
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Technical AssistancePolicy Reform • S. Morrison, Africa, • R. Moore, Guatamala: • Barry Ames, Brazil
Management
• FDMS-Gould-sub-contract U. of Pittsburgh• SADCC Study J. Montgomery, R. Klitgaard, et.al.• Business Management- J. McCullough
Decentralization:
• Ed Connerley and Elinor Ostrom
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Change- 4
Continuities and Change in Financing- 2001
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Financing MechanismsContracts
IQCs
Cooperative Agreements
Projectization of Foreign Aid
Categorical Grants with sub-grant mechanisms (more like contracts)
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Public Private Partnerships:The International Context After 1991
Defined:
Partnerships (formal or informal) between:
Non-Governmental Organizations (NGOs),Community Based Organizations (CBOs),Governments,Donors (International and Private),Private- Business Sector.
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Public Private Partnerships
Origins-
a. International Donors- Way of Dealing with Umbrella Grants and implementation of development policies
b. Accepting donor money means accepting donor principles
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Public Private Partnerships
c. Comes out of Structural Adjustment and Policy Reform: Structural Adjustment with a Human Face
d. Seen by some as an alternative to
Contracting Out- Others as part of it e. Critics see it as detrimental to a
market approach to economic change
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Public Private Partnerships
Characteristics-
a. Targeted at the expansion of Social Capital and Synergy in the promotion of Economic and Social Development
b. Seeks a holistic or Integrated Approach to Economic and Social Development
c. Involves informal processes, cultural sensitivities as well as legal norms and contracting principles.
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Public Private Partnerships (PPPs)
PPP Supporting Factors in the International Context
1. Democratic Governance- private sector and NGOs seen as legitimate actors; transparency, accountability and responsiveness
2. Rational Government- Merit Principles, anti-corruption environment, acceptance of non-state actors as service deliverers. Contracting Out
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Public Private Partnerships- Factors
Factors that Support PPPs
3. Decentralization- Subsidiarity: Governance devolved to the lowest levels capable of implementation and contracting out
4. Legal Frameworks- Acceptance of Contractual Agreement as the basic organizational relationship
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Public Private Partnerships-Factors5. Institutional Norms, Organizational Capacity and regularized principles of inter-organizational interaction. Requires high levels of capacity building
6. Social and Economic Stability
7. Organizational flexibility across all
sectors
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Public Private Partnerships- Factors
8. Social and Institutional Pluralism- win-win rather than zero sum game across social, ethnic, religious and racial groups
9. Social Networks exist at Grass roots, and intermediate as well as higher levels of government-See diagram
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Discussion
Jennifer M. Brinkerhoff,Partnership for International
Development: Rhetoric or Results
Boulder, Co.: Lynne Rienner Publishers, 2002