Guidance: MCC Guidance to Accountable Entities on Technical … – Millennium Challenge Corporation

Guidance
February 1, 2022
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As used herein, the following terms shall have the following meanings:
In accordance with the relevant grant agreements by which MCC provides funds, MCC has the right to review and approve (through a response of No-Objection) or disapprove (through a response of Objection) a wide range of documents and administrative actions proposed by Accountable Entities (AEs).
This guidance seeks to provide AEs with (1) information related to the MCC Technical Review and No-Objection processes, and (2) best practices on the establishment of internal AE processes relating to MCC document reviews. This guidance is intended to help AEs efficiently and effectively manage their internal review process, which can lead to submission of high-quality requests that meet all MCC requirements and can receive timely MCC Feedback and/or No-Objections.
No-Objections are a core component of MCC’s oversight model. Over the course of a compact, AEs typically submit hundreds of requests for No-Objection. Having clearly established processes and procedures to facilitate No-Objection requests is thus critical for program success.
The purpose of MCC’s No-Objection is to ensure that requests submitted by the AE comply with MCC’s policies, standards, and practices and the relevant legal agreements, as part of the agency’s stewardship of U.S. taxpayer dollars. MCC’s No-Objection assures the AE and the partner country that MCC will allow MCC Funds to be used for the proposed action and/or that a Government Expenditure is expected to fulfil the government’s obligations to MCC. No-Objection reviews allow MCC to oversee what is being proposed and how it will be accomplished or implemented, before permitting MCC Funds to be used. This process is critical, as items that move forward without receiving a required No-Objection could be subject to refund by the AE or partner country government or result in a Government Expenditure not being counted toward the government’s obligations to MCC.
Annex 1 identifies the common documents and decisions that require MCC No-Objection. Additional documents and requests for which MCC will provide its No-Objection should be identified and discussed between MCC and the AE on an ongoing basis throughout program implementation. Further, MCC has the right to Opt-in to provide its No-Objection on any document or decision it deems critical to overall program success. MCC may, at its discretion, also choose to Opt-out of No-Objection reviews. In cases where MCC decides to Opt-in or Opt-out of a review, the Country Team Leadership will provide written notification to the AE.
Requests for No-Objection must be submitted to MCC via the Resident Country Mission (RCM), following the standard process established between MCC and the AE (see Section III for additional information). 2 Unless otherwise agreed by MCC in writing, all No-Objection requests should be submitted in English.
Following submission, MCC’s internal review involves a process with many stakeholders—it is not only one person within MCC who assesses a request for No-Objection.
MCC reviews for No-Objection will primarily focus on compliance with MCC requirements, and MCC will only object to a document if the assessment identifies Fatal Flaws.
Fatal Flaws include, without limitation, the following:
For additional details on how these are applied, the AE should consult the MCC Country Team.
When MCC objects, the specific Fatal Flaw(s), and suggested remedies, will be communicated to the AE in writing by the RCM.
Once MCC’s internal review process is complete, the RCM will respond to the AE with either a No-Objection or an Objection, following established procedures as outlined in Section III below. MCC’s response to a request for No-Objection will always be in English, though MCC may include additional attachments in other languages, where appropriate.
If MCC provides a No-Objection, the AE is authorized to move forward with the request. However, if MCC objects, MCC Funds cannot be used for the request. MCC’s Objection would likewise mean that a Government Expenditure used to implement the request would not fulfil the government’s obligations to MCC. Following an Objection, the AE will typically revise the request and resubmit it for No-Objection.
In some cases, MCC may provide its No-Objection, but also provide Feedback on issues that could help improve the document or request but are not considered Fatal Flaws. In these cases, the AE may choose whether to address or respond to the Feedback in the final version. Edits to address MCC Feedback are the only substantive changes an AE is authorized to make after MCC provides its No-Objection. If other substantive changes are introduced after MCC provides its No-Objection, the AE should resubmit the request for No-Objection.
The AE should always submit the final version 5 of the document to MCC, including incorporation of any Feedback. If the final document or decision is materially different from what MCC provided a No-Objection to, MCC could withhold funding, and might even demand refunds of any amounts spent for purposes other than those approved by MCC.
The MCC Country Team Leadership will work with the AE to define typical expected response times for No-Objections. 6 However, the amount of time required for the RCM to respond to a specific request for No-Objection will vary based on the type of request, level of complexity and whether any MCC consultants will be involved in the review process.
Particularly complex requests may require additional processing time and multiple submissions (in addition to Technical Reviews). In cases where the AE submissions have significant deficiencies and/or require additional coordination within MCC, the response time may be longer. AEs should also be aware that if they submit several requests for No-Objection in a short timeframe MCC may require more time than usual to process all the requests. In cases where MCC requires a longer turnaround time than normal, the RCM will alert the AE as early as possible.
To help promote more efficient No-Objection processes, one or more Technical Reviews with
MCC are strongly recommended. This can help ensure that documents are in an acceptable state before they are submitted for No-Objection.
Technical Reviews provide an opportunity to identify and address significant issues that may be Fatal Flaws. Technical Reviews allow the MCC Country Team and AE counterparts to identify and discuss Feedback, varying technical approaches, and professional differences. They also allow the MCC Country Team to identify and recommend changes related to grammar or stylistic issues. In cases where MCC and AE staff disagree, each side should justify their position (based on previous experience, global standards, etc.) such that MCC can determine the way forward.
As discussed in Section III below, MCC and the AE should agree on whether, or in what circumstances, Technical Reviews are required, 7 and the specific protocols for Technical Review submissions. When documents are submitted to MCC for Technical Review, they will be circulated to all MCC staff who will have a role in the No-Objection process.
The timeline for Technical Reviews may vary widely based on the level of complexity of the document(s) and whether any Informal Reviews are completed before the document is submitted for Technical Review. It is important, however, for MCC and the AE to agree up front on an appropriate timeline for a given Technical Review.
At the end of the Technical Review, MCC provides Feedback; an Objection or No-Objection is not issued.
In certain limited circumstances it may be possible for MCC to undertake expedited reviews; however, this is expected to be uncommon and based on a specific, exigent and justified need. In cases where the AE expects to request an expedited review, the AE should consult the RCM as early as possible to determine if it will be possible and if so, to agree on an appropriate review period.
There are many technical documents—those that will ultimately be submitted for No-Objection and those that will not—that AE staff work on together with their MCC counterparts. Some documents, such as consultant deliverables that do not require No-Objection, may go through an Informal Review by MCC but not require any subsequent action/submission. For other documents that do require No-Objection, an Informal Review can precede a Technical Review and/or submission for No-Objection. In cases where individuals undertake Informal Reviews, these can be performed on an informal basis, between MCC and AE counterparts, and do not need to follow standard No-Objection or Technical Review processes, as established through the procedures outlined in this document.
AE staff are encouraged to discuss the substance of upcoming requests directly with their MCC counterparts during the drafting process, and before the item is ready for Technical Review or submission for No-Objection. When documents are shared with technical counterparts for Informal Review, they may be shared with others on the MCC Country Team, but there are no standard requirements or procedures that govern this.
Close and regular communication between MCC and AE counterparts is critical for effective program operations. Close coordination throughout the Informal Review, Technical Review and No-Objection processes can lead to a more rapid clearance process and minimize iterations between MCC and the AE.
AE staff should collaborate closely with their technical counterparts in MCC, discussing upcoming requests and addressing any key questions. This provides an opportunity for MCC staff to share best practices from experience in other countries. It is also an opportunity for AE staff to confirm that the right AE staff are involved in the internal AE review process, and to determine up front what supporting documents may be required for a given No-Objection.
In planning for upcoming reviews, different types of requests could warrant different types of collaboration between counterparts. MCC and AE staff should employ various types of collaboration, including written exchanges, document reviews, phone calls about specific issues, collaborative work sessions to review and jointly edit documents, etc., as appropriate for the specific request.
Following a Technical Review or Objection, and where practical, AEs should “track changes” in documents and submit both clean and tracked changes versions for No-Objection. This will allow MCC to quickly identify what has changed and facilitate a faster and more efficient No-Objection process.
As mentioned above, No-Objections are a critical component of program implementation processes, and delays with the No-Objection process can lead to overall program delays. To help promote success, AEs must work with MCC early in the program to establish protocols for AEs to submit and MCC to respond to requests for Technical Review and No-Objection. This should, at a minimum, include the following elements:
For an example MCC Country Team and AE protocol for managing Technical Review and No-Objection processes, please see Annex 2.
To help inform both AE and MCC planning processes, the AE is encouraged to maintain a tracker or other tool which can provide a summary overview of the items that are expected to be submitted for No-Objection over a given time. Noting the limited bandwidth of individuals and teams, AEs are encouraged to develop an internal prioritization process, whereby expected upcoming submissions for No-Objection are reviewed, prioritized, and submitted in accordance with the established work plans. This can help the AE ensure that items on the critical path are not delayed while other, lower priority items move forward.
Clear communication with MCC, at both the technical and management levels, can help promote appropriate planning on both sides. This is especially critical in cases of time-sensitive, large, or critical documents, requests that may require input from MCC consultants, 8 and/or items that also have to go to the AE’s Board.
Please refer to Annex 3 for an example tracking tool. AEs are also encouraged to incorporate submissions for No-Objection into its master workplan.
For reviews which are undertaken through the MCC Management Information System (MCC MIS), responses are automatically transmitted to the system users. These users are typically the financial and/or procurement leads in the AE, though it is recommended that the appropriate AE executives also have system access and receive notifications. Whether through the system or otherwise, the AE and MCC should establish procedures to ensure that AE leadership is informed when decisions are taken on these requests.
Many items listed in Annex 1, as well as program-specific items that MCC reviews, are typically deliverables prepared by AE contractors, consultants, grantees, or partners (i.e., design documents, resettlement action plans, environmental and social impact assessments, etc.). To ensure that the AE is able to comply with any contractual timelines, the AE should review all contractual deliverables with MCC during the preparation of terms of reference and prior to contract signatures to identify those that will require MCC No-Objection. AEs should then work with MCC to ensure that all contracts, grant agreements, etc. provide sufficient time for MCC to complete the Technical Review and/or No-Objection reviews and the AE to review and consider MCC’s comments before responding to the contractor, consultant, grantee or partner.
Note that although MCC will make its best effort to identify all documents MCC will need to provide No-Objection on during the planning phase, MCC may still Opt-in to document reviews at a later date. In these cases, the AE should promptly communicate with the consultant if there is an expected need to amend contractual timelines or if there are any expected delays in deliverable finalization.
Contract and grant amendments are the subject of many No-Objection requests and often result in significant discussion between the AE and MCC. In accordance with the MCC Program Procurement Guidelines (PPG) and Program Grant Guidelines (PGG), an MCC No-Objection is typically only required for contracts and amendments over certain thresholds.
For contract and grant amendments that require MCC No-Objection, prior amendments and the original contract or grant agreement are often relevant supporting documents that MCC needs to assess the request; this is particularly true in cases where those contracts, grant agreements, or amendments were not previously submitted to MCC for No-Objection. MCC and the AE should establish protocols for how the AE will transmit copies of the original signed contracts/grant agreements and any earlier amendments that preceded the amendment being sent for MCC No-Objection. 10
To facilitate the review process, MCC also recommends that AEs include a cover sheet/justification with No-Objection request for contract/grant amendments. For a template cover sheet for contract amendments, which has been used successfully in some MCC countries, see the Contract Amendment Authorization Form within the MCC Procurement Toolkit for MCA Entities. 11
Contractual scope changes and grant program description changes may also introduce additional issues that MCC and AE staff must carefully consider. For instance, what is initially viewed as a simple change may have implications for expected program outcomes more broadly that will require careful analysis of the costs, benefits, risk, purpose, potential delays, change in economic rates of return (ERRs), etc. For a framework to help teams think through potential scope changes please refer to the AE’s Contract Administration Manual (CAM), Contract Management Manual (CMM), Contract Administration and Management Manual (CAMM), Grants Operational Manual (GOM), Leverage Grant Facilities (LFG) Operational Manual and Partnership Navigator, and/or change management documents, as applicable.
Changes or modifications that impact a project or activity’s scope, cost, ERR, and/or number of beneficiaries may require additional MCC review prior to MCC issuing a response to a request for No-Objection. This may take longer than the normal review period, and these types of requests may have a higher likelihood of not receiving approval. In cases where the AE expects to request this type of modification, the AE should provide a rationale and consult the RCM as early as possible to determine how best to proceed.
For proposed budget reallocations submitted through Schedule A in the Quarterly Disbursement Request Package (QDRP), the AE must submit a budget reallocation request. 12 For other types of program modifications, AEs should consult the MCC Country Team Leadership to determine what specific documentation may be required.
To help facilitate a smooth No-Objection process, the AE is encouraged to establish its own internal protocols for developing and submitting requests for Technical Review and No-Objection.
AEs are encouraged to establish clear responsibilities for monitoring all No-Objection requirements, ensuring that they are submitted in accordance with the work plans, and tracking internal activity. Note that this should be monitored at multiple levels: technical leads monitor No-Objections related to their specific areas of responsibility and higher levels of management monitor the overall No-Objection process for the AE.
Noting the volume of No-Objection requests that are typically submitted over the course of a program, many AEs have found that having a single No-Objection focal point who is responsible for submitting and receiving responses to requests for No-Objection and monitoring the overall process has helped promote process efficiency.
While No-Objections are required as a central tenet of MCC’s oversight processes, it is important to recognize that AE-level reviews are just as critical. To ensure document preparedness and appropriate communications internally and with key external partners, AEs are encouraged to establish an AE-level review and clearance process. In addition to internal AE reviewers, the AE-level review process may also require review, input and/or approval from external stakeholders 13 or consultants. For instance, implementing entities may be closely involved with the review and approval of design documents, resettlement action plans, consultant reports, etc. The internal process established by the AE should appropriately track and document when such external stakeholders review, provide input and/or approve documents prior to submission to MCC for No-Objection.
Similarly, AE Board of Directors (AE Board) bylaws often require approval of many different types of documents. While the Accountable Entity Guidelines (Section 3.2.E), PPG, and PGG Approvals Matrixes outline some specific items that always require AE Board approval, each AE Board establishes its own review and approval requirements. To ensure that both AE and MCC staff understand which documents require AE Board approval within a specific country, the AE should develop a clear list of items requiring AE Board approval; 14 this list should be shared widely within the AE and with the MCC Country Team.
AEs are encouraged to develop one or more process flows to outline the roles, responsibilities, and steps in the AE-level review process. When developing the process flow(s), AEs should establish the order in which reviews take place, including whether the MCC Technical Review and/or No-Objection processes are undertaken before, after or concurrently with other external stakeholder reviews. Note that the internal review process undertaken by AE staff should normally be completed before documents are submitted to MCC. For reference, a process flow explanation and example process flow diagram are included in Annexes 4 and 4a.
To facilitate the internal AE review process, the AE is encouraged to establish its own clearance matrix which establishes roles, responsibilities, and authorities for each type of document. In particular, the AE Clearance Matrix should help ensure that crosscutting sectors are appropriately engaged in the internal AE review process before requests are submitted to MCC.
There are many forms this matrix can take, and AEs are encouraged to consult the MCC Country Team Leadership if they want to learn more about different approaches. An example AE Clearance Matrix is included in Annex 5. This example focuses specifically on items that require MCC No-Objection, though AEs are encouraged to expand or modify the matrix to include rows for additional, program-specific requests that will require internal review. AEs should also review and modify the columns and designations in the matrix to fit their specific staffing structures and country circumstances. To the extent possible, AEs are also encouraged to delegate approval responsibilities below the executive level.
This matrix should be updated periodically, and could be used to assign specific roles and responsibilities for each item in the No-Objection tracker, discussed in Section III.A above.
Each request for No-Objection must include a clearance sheet indicating which AE staff have reviewed and cleared on the document prior to its submission to MCC. For an example clearance sheet, please see Annex 6.
AEs should agree with the RCM on a format for the clearance sheet. AEs should also establish clear internal processes and procedures for filling out clearance sheets and ensuring that they are submitted to MCC as part of the No-Objection request. In cases where a member of the AE had concerns and did not clear, the reason for their non-clearance, as well as the approver’s rationale for overruling their non-clearance, should be explained on the clearance sheet. Noting that MCC technical staff may raise concerns similar to those of AE technical staff, including this information on the clearance sheet provides an opportunity for MCC to consider the different perspectives when deciding whether to provide a No-Objection.
While the clearance sheets are not required for Technical Reviews, AEs are encouraged to provide MCC with information on which AE staff have provided input, and whether their feedback has been incorporated. This can help facilitate a more efficient MCC Technical Review process.
Some AEs have struggled with document management and version control. This can have significant impacts on program timelines and can negatively affect the No-Objection process. To address this issue, AEs are encouraged to use collaborative software to manage the internal document development and review processes. 15 AEs are also encouraged to establish a document management process that defines roles and responsibilities, nomenclature, and other details related to document management. 16 For additional information on how to use available software and/or establish document management systems, please consult MCC’s MCA MIS team.
With regards to specific No-Objection requests, the document owner should retain responsibility for ensuring that the correct version of the document is used for all steps in the No-Objection process.
While not all AE staff will have a direct role in the No-Objection process, it is important that all program staff have at least a basic understanding of No-Objection requirements and procedures. To facilitate this understanding, MCC and the AE should train staff at all levels, so they are informed on the No-Objection process and its implications for compact implementation, the AE’s internal review process, and their responsibilities within it, based on their specific role within the AE. Trainings can be formal and/or informal, and should be incorporated into the AE’s onboarding plans, periodic training plans, etc.
Of the following annexes, Annex 1 is the only one that conveys specific requirements, noting that the items listed there must all be submitted for No-Objection. Annexes 2 – 6 have been developed as illustrative examples of tools for managing the Technical Review and No-Objection processes. However, these are examples only, and there is no requirement for AEs to use these formats or approaches. Should AEs, together with their respective MCC Country Teams, choose to develop these tools, they may use these examples as starting points for further customization, or create something completely different.
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