EuropeAid/139521/DH/SER/BT: Simplified RFP … · Web viewAny firm seeking to arrange individual meetings with the DAI Brussels, RGoB or the EUD concerning this proposal during the

Study for a Local Government Rural Revenue Mobilisation Strategy

REQUEST FOR PROPOSAL

European Union – Bhutan Technical Assistance Complementary Support project [EuropeAid/139521/DH/SER/BT] (EU TACS)

EUROPEAID/139521/DH/SER/BT: SIMPLIFIED RFP LOCAL GOVERNMENT RURAL REVENUE MOBILISATION STRATEGY

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1. REQUEST FOR EXPRESSION OF INTEREST

The text below will be used to place an advertisement in the Bhutan Kuensel national newspaper, the Royal Government of Bhutan MoHCA website. A period of one week will be given from the date of publication to the deadline for expressions of interest.

An email will be sent by BPV to relevant networks and contacts alerting them to the advertisement and encouraging any interested parties to apply.

Advertisement text

Expressions of interest are sought from qualified firms to carry out a Study for a Local Government Rural Revenue Mobilisation Strategy. The Local Government Rural Revenue Mobilisation Strategy assignment objectives are to support the DLG to develop such a strategy by reviewing exiting policies and practices; increasing efficiency of collection; exploring alternative/additional sources of revenue; and ultimately identifying ways of maximising collection.

The study will run from 15 November 2019 to 17 February 2020 and deliver the following outputs: (1) Draft and Final Inception report including workplan; (2) Presentation of Inception Report ; (3) Interim Progress Update (presentation); (4) Draft and Final Study Report; and (5) Presentation of draft Study Report.

The acitivty will be managed by DAI Brussels and contribute to the European Union funded project titled: BHUTAN Technical Assistance for Renewable Natural Resources and Climate Change Response and Local Governments and Decentralisation (EU - TACS).

Interested firms are requested to send their expression of interest to Karpo Dukpa at Bhutan Philanthrophy Ventures email: [email protected] . These should be no more than three pages and include (1) a brief description of the firm (2) descriptions of at least two projects completed by the firm in the fields of Finance or Local Governance; (3) details of qualified in-house staff and proposed Study Team. Shortlisted firms will be notified on 25 October 2019 within 7 days of EoI deadline and sent detailed proposal instructions.

Key dates are as follows:

Publication of notice for EoI: 17 October 2019;

EoI submission deadline by: 23 October 2019;

Shortlisted firms notified by: 25 October 2019;

Full proposals due by: 8 November 2019;

Preferred applicant notified by: 12 November 2019;

Activity to commence no later than: 25 November 2019.


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mailto:[email protected]

2. SOLICITATION GUIDELINES

Contents

DRAFT Study for a Local Government Rural Revenue Mobilisation Strategy.........................1

REQUEST FOR PROPOSAL..................................................................................................1

1. REQUEST FOR EXPRESSION OF INTEREST...............................................................2

2. SOLICITATION GUIDELINES..........................................................................................3

Contents...................................................................................................................................3

A. BACKGROUND............................................................................................................4

B. SELECTION PROCESS..............................................................................................5

C. PROPOSAL DEVELOMENT INSTRUCTIONS............................................................8

Terms of Reference: Study for Local Government Rural Revenue Mobilisation Strategy.....12

5. ASSUMPTIONS AND RISKS.........................................................................................18

6. SELECTION CRITERIA..................................................................................................19

7. PROJECT MANAGEMENT AND LOGISTICS................................................................20

RfP - ANNEX 1: EU-TACS Project ToR.................................................................................22

RfP - ANNEX 2 – DAI BRUSSELS SUBCONTRACT TEMPLATE........................................22

ToR - Annex 1: Indicative Contents List for Inception Report including Workplan.................23

ToR - Annex 2: Draft Template for Study Report...................................................................24

ToR - Annex 3: Tax and Non-Tax Revenue Sources for Local Governments.......................25


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ACRONYMS

APA Annual Performance Assessment

ADB Asian Development Bank

BPV Bhutan Philanthropy Ventures

CDfLG&FD Capacity Development for Local Government and Fiscal Decentralisation

DLG Department of Local Governance

DoRF Division of Responsibilities Framework

EU European Union

EU-TACS European Union – Bhutan Technical Assistance Complementary Support

FYP Five Year Plan

GNHC Gross National Happiness Commission

KE Key Expert

LDC Least Developed Country

LGs Local Governments

MoF Ministry of Finance

MoHCA Ministry of Home and Cultural Affairs

MoWHS Ministry of Works and Human Settlement

OECD Organisation for Economic Co-operation and Development

PIT Personal Income Tax

RfP Request for Proposal

RGoB Royal Government of Bhutan

SNKE Senior Non Key Expert

ToR Terms of Reference

TL Team Leader

UN United Nations


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BACKGROUND

DAI Brussels has been contracted by the European Union (EU) to implement a project in Bhtuan titled: Technical Assistance for Renewable Natural Resources and Climate Change Response and Local Governments and Decentralisation (EuropeAid/139521/DH/SER/BT). The project involves provision of long and short term local and international technical assistance to the Royal Government of Bhutan (RGoB) and other non-state stakeholders to contribute to national development objectives. See Annex 2 for details.

A specialist firm is required to carry out a Study for a Local Government Rural Revenue Mobilisation Strategy. DAI Brussels is undertaking a competitive selection process to identify and contract a suitably qualified and experienced firm.

These guidelines are intended for firms that have been shortlisted following advertisement in the Keunsel and on the RGoB website on 17 - 23 October 2019 requesting expressions of interest. It includes information and instructions for firms to prepare and submit a full proposal.

A. SELECTION PROCESS

B.1. Process overview and timeline

A two-step process is being applied to select a suitable firm on the basis of capability, quality and cost of the proposal. The first stage involves solicitation of expressions of interest from firms via a public advertisement.

Expressions of interest are limited to a maximum of three pages and should describe the firm’s profile, relevant project experience and in-house personnel. A shortlist is then established, and full proposals requested. Proposals are evaluated and subcontracting of a preferred firm may proceed, subject to stakeholder approvals and due diligence.

The table below summarises the key steps and timeline.

Step

Description Date

1 Advertisement placed requesting expressions of interest 17 – 23 Oct. 2019

2 Deadline for receiving expressions of interest 23 Oct. 2019

3 Shortlisting up to three most qualified firms, based on extent and relevance of project experience and in-house technical knowledge

25 Oct. 2019

4 Shortlisted firms notified, and proposal guidelines and terms of reference (this document) issued *along with date for possible interviews .

26 Oct. 2019

5 Firms confirm intention to submit proposal 28 Oct. 2019


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6 Window for clarifications closes 30 Oct. 2019

7 Responses to clarifications sent to all firms 4 Nov. 2019

8 Deadline for receipt of proposals 8 Nov. 2019

9 Evaluation committee completes scoring against selection criteria 11 Nov. 2019

10 Interviews with firms* 12 Nov. 2019

11 Preferred firm notified 14 Nov. 2019

12 Due diligence and contracting 19 Nov. 2019

13 Activity commences 25 Nov. 2019

B.2. Process details

Steps 1 through to 4

These steps are completed at the time of this document being issued to shortlisted firms.

The three most qualified firms will be shortlisted, however this number may be lower depending on the number and relevance of applications received.

Shortlisting is undertaken by the evaluation committee made up of a subject matter expert – the EU-TACS Team Leader, a representative from RGoB and a representative from DAI. The committee’s decision is final. Vetting against the EU sanctions lists (https://www.sanctionsmap.eu) and other international databases will also be undertaken at this stage.

Step 5

Shortlisted firms are requested to send a reply email, confirming receipt and their intention, or otherwise, to submit a proposal in accordance with the instructions contained herein. This reply email should be sent to Karpo Dukpa, Senior Manager, Bhutan Philanthrophy Ventures email: [email protected] and Gustavo Porres, DAI Brussels Project Manager [email protected] no later than 17:00 Bhutan time on 28 October 2019.

Should a firm not wish to proceed with a proposal, DAI Brussels may contact second ranked candidates.

Step 6

Firms may submit questions relating to proposal by email to Karpo Dukpa, Senior Manager, Bhutan Philanthrophy Ventures email: [email protected] and Gustavo Porres, DAI Brussels Project Manager [email protected]. The cut-off for questions is 17:00 Bhutan time on 30 October 2019.

Any firm seeking to arrange individual meetings with the DAI Brussels, RGoB or the EUD concerning this proposal during the sollicitation period may be excluded from the procedure.


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https://www.sanctionsmap.eu/

Step 7

Questions and answers will be shared by email on 4 Novemer 2019 with all shortlisted firms and anonymised.

Step 8

Proposals should be prepared closely adhering to the instructions and templates provided in Section C below. Complete proposals should be assembled into one single PDF file of no more than 10 megabytes and submitted by email to Karpo Dukpa, Senior Manager, Bhutan Philanthrophy Ventures email: [email protected] and Gustavo Porres, DAI Brussels Project Manager [email protected] no later than 17:00 Bhutan time on 8 November 2019. Late submissions will not be considered.

Step 9

DAI Brussels will convene an evaluation committee of three, made up a subject matter expert – the EU-TACS Team Leader, a representative from RGoB and a representative from DAI. Scoring will be undertaken strictly against selection criteria contained herein and will be submitted to the funding agency for approval.

Step 10

If considered necessary, the evaluation committee will interview the firm and its proposed personnel prior to finalising the evaluation. The provisional timing for interviews is indicated in section B.1. On the 26 October 2019, the shortlisted firms will be informed of the date for the potentail interview and firms are expected to confirm their availability to participate in the potential interview. Failure to do so may result in exclusion from the selection process.

Step 11

The preferred firm will be notified by email on 14 November 2019. Unsuccessful firms will be notified by 26 November 2019. Unsuccessful firms may be kept on a reserve list. The evaluation committee’s decision shall be final.

Step 12

DAI Brussels will undertake a due diligence process to ascertain management capacity of the preferred firm. This process may identify additional management-related measures to be put in place by the firm as a condition to subcontracting.

A subcontract will be issued by DAI Brussels, which will incorporate the terms of reference for the activity contained herein and the preferred firm’s proposal, including budget.

The standard DAI Brussels subcontract template is included at Annex 3.

Step 13

Activities will commence on 25 November 2019.


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B. PROPOSAL DEVELOPMENT INSTRUCTIONS

C.1. Proposal contents and checklist

# Section Max pages Check

1 Proposal cover page and declaration 2 [√]

2 Capability of the firm

2.1

Company overview 1

2.2

Project experience 2

2.3

Management capacity 1

2.4

Company staffing and financial capacity 2

3 Methodology

3.1

Approach to implementing terms of reference 1

3.2

Description of activities and how they will be carried out 4

4 Workplan and input schedule 1

5 Assigned personnel 1

6 Financial proposal 1

7 Appendices

Maximum 2 pages per CV

C.2. Detailed guidelines and templates

Prepare your proposal strictly adhering to the structure in the table of contents (C.1.) above. Further guidance and templates are provided in the pages below.

The total proposal length should be no greater than 16 pages, not including appendices. [The number of pages for each section is presented in the table above.]


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There are no specific requirements for formatting and page layout, however clear and legible presentation is recommended, including normal page margins, reasonable paragraph spacing and font size, such as Arial 10 (or equivalent).

All sections should be assembled into one single pdf file. This file should be no greater than 10 megabytes. Note, free pdf conversion, assembly and compression tools can be found online.

1. Cover page and declaration

Complete the template in the embedded file below and include this at the front of your proposal.

This is a hurdle administrative requirement and the committee cannot evaluate a proposal should this section not be completed and signed by an authorised representative of the firm.

2. Capability of the firm

2.1. Company overview: provide a succinct overview of the organisation, for example when it was established, its mission, services offered, clients, etc.

2.2. Project experience: describe comparable projects undertaken by the firm and explain how they are relevant to this activity (if not obvious). Include the client, project value and timing.

2.3. Management capacity: briefly list resources, policies and procedures that your firm has in place to help manage the activity. Consider areas such as administrative support, finance and operating manuals, anti-bribery/corruption policies, governance and oversight, insurances, etc.

2.4. Company staffing and financial capacity: use the embedded template below. Once complete, the tables should be presented in the main proposal document (i.e. copied and pasted).

Note, evidence of the figures provided will be requested during the due diligence process.

3. Methodology

3.1. Approach to implementing terms of reference: describe your overall approach. If you have any comments or observations on the terms of reference, include them in this section.

3.2. Description of activities and how they will be carried out: describe the activities that you will deliver and explain, as you consider appropriate, the resourcing, timing, logistics factors, stakeholder participation, etc.


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4. Workplan and input schedule

Use the embedded excel file below to develop your workplan. Once complete, the tables should be presented in the main proposal document (i.e. copied and pasted).

The activity titles and activity numbering in the workplan should be the same as in the methodology text (Section 3 of the proposal) to help with cross-referencing.

The input schedule should include only the personnel that are in the financial proposal. Use the same role titles and personnel names.

5. Assigned personnel

Use the embedded file below to present a tabular summary (no more than 1 page as per C.1. above. Once complete, incorporate into your main proposal document (i.e. copy and paste the pages in). A maximum of 2 pages per curriculum vitae of your assigned personnel should be included in Appendices

Only include the same roles that are in your financial proposal and input schedule. These should be technical roles and, if considered necessary, specific management roles that will input directly to the activity. Do not include any general office support roles.

6. Financial proposal

Use the embedded excel file below to prepare your financial proposal. Once complete, the tables should be presented in the main proposal document (i.e. copied and pasted).

All costs must be presented in Euros, which is the currency of the funding agency. Ancillary costs, including but not limited to overheads, management fees, the cost of support staff and equipment, banking charges, insurance costs, personnel taxes and employment costs, inflation and any other costs and charges must be built into the proposed daily fee rates of assigned personnel.

The total price of your financial proposal will be a factor in the evaluation, as per the selection criteria in the terms of reference at Annex 1.

Note, payment will be monthly, on 30 day terms, counting from receipt of a correctly rendered invoice. All supporting documentation must be attached for invoices to be eligible according to European Union and DAI Brussels policy, including each:


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(i) Timesheets of assigned personnel (only) countersigned by the activity supervisor assigned by DAI Brussels;

(ii) Original physical evidence of costs, such as receipts, signed participant attendance sheets, ticket stubs, boarding passes and so forth, precisely matching the claimed amount; and

(iii) A record of approval by DAI Brussels’ assigned activity supervisor of any deliverables due in the period.

7. Appendices

If you have additional information that you consider important and relevant to the selection criteria, which is not covered in other sections, include it here. Note, no particular additional information is expected.


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Terms of Reference: Study for Local Government Rural Revenue Mobilisation Strategy

Project Technical Assistance for Renewable Natural Resources and Climate Change Response and Local Governments and Decentralisation (EU-TACS) –EuropeAid/139521/DH/SER/BT

Activity Study for Local Government Rural Revenue Mobilisation Strategy

Start/end date

From 25 November 2019 to 17 February 2020

Inputs Intermtittent with Phases and inputs to be confirmed as part of Inception Report

Travel Travel within Bhutan as part of the Study to at least three Dzongkhags and three Gewogs (or more)1

Supervision The subcontract will be held with DAI Brussels. The authorised supervisor for this activity will be the EU-TACS Team Leader.

Location Thimphu, Bhutan with travel within Bhutan as part of the Study to at least three Dzongkhags and three Gewogs (or more)

1. BACKGROUND INFORMATION AND CONTEXT

Country and local government and fiscal decentralisation sector background

Bhutan is a small, land-locked and Least Developed Country (LDC) situated between two large neighbours, i.e. India and China. The total population is currently about 775,000 persons. Bhutan has a total land area of 38,394 km2 of which 72.5 per cent are covered by forest. According to 2015 national data, the population below the poverty line, i.e. with a per capita income below USD 1.25 per day, stands at 8.2 per cent. Bhutan’s economy is traditionally based on agriculture and forestry which provide the main livelihood for more than 60 per cent of its population.

The Constitution and the Local Government Act of Bhutan, enacted in 2009 and amended in 2014, provides for direct participation of the people in the development and management of their own social, economic and environmental well-being through decentralization and devolution of power and authority. These laws stipulates that Local Governments be established in each of the 20 Dzongkhags (districts) comprising the Dzongkhag Tshogdu (District Assemly), Gewog Tshogde (County Council) and Thromde Tshogde (Municipal

1 Rationale for the selection of the Dzongkhags and Gewogs should be included within the Inception Report’s study methodology. A minimum of three of each (or more) should be identified with criteria, inter-alia, based on spread of geographical location across Bhutan, Annual Performance Assessment (APA) performance, and socio-economic context.


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Council). It provides Local Governments with a set of administrative, regulatory, service delivery, and financial powers and functions for governance at the local level.

Since the early 1980s, decentralization has been a key policy objective of the RGoB. Article 22, Section 1 of Bhutan’s Constitution states that “power and authority shall be decentralized and devolved to elected local governments to facilitate the direct participation of the people in the development and management of their own social, economic and environmental well-being”. The objective of the 12th Five Year Plan (FYP) (2018-2023) is to promote "Just, Harmonious and Sustainable Society through Enhanced Decentralization". Hence the European Union’s (EU) Sector Budget Support – Capacity Development for Local Government and Fiscal Decentralisation (CDfLG&FD) which is being implemented by the Department of Local Governance (DLG), Ministry of Home and Cultrual Affairs (MoHCA), Royal Government of Bhutan, will support the achievement of the objectives of the 12th FYP with regard to enhanced decentralisation and better governance at local levels.

Local revenue legislative and policy context

Local revenue mobilisation is an important aspect of good governance, where the levels of government closest to the people can become more autonomous, and citizens can hold their local governments (LGs) accountable for the expenditure of their money.

In Bhutan, Clause 18, Article 22 of the Constitution entitles LGs to levy, collect, and appropriate taxes, duties, tolls, and fees in accordance with such procedure and subject to limitations as may be provided for by Parliament by law.

The Public Finance Act of Bhutan 2007 provides that the Parliament will endorse the requirements of raising revenues through taxes and that the Parliament shall enact laws or resolutions related to public finance, within the principles of financial sustainability in the best interests of the people of Bhutan. The Act also provides that the Minister of Finance shall be responsible, inter alia, for: (a) framing fiscal policies and managing the fiscal affairs of the Government as a whole; (b) proposing taxation measures to the Parliament, and raising other revenues and resources for the Government;

Section 57 of the Local Government Act 2009 allows Gewog Tshogde (GT) to mobilise and spend money for the support of its functions in accordance with RGoB’s policies, rules and regulations. Upon approval by the Parliament, GT can levy taxes on land, building, cattle, grazing, entertainment and advertisement other than advertisement in newspapers, print, radio and internet, and such other taxes as may be determined by Parliament from time to time. GT could appropriate, levy and vary rates of fees and charges on utilities in accordance with the existing law. Section 216 of the LG Act provides financial autonomy to LGs to levy, collect and appropriate taxes, fees, tools, duties and fines in accordance with such procedures and subject to limitation as may be provided for by law.

The 12th FYP has devolved 50 percent of total capital grants for Dzongkhags, Gewogs and Thromde ‘A’s - doubled since the 11th FYP. The route map for decentralisation is currently being formulated through a Decentralisation Policy and Action Plan. The Policy is now being screened by the GNHC before it is adopted by the government.

Challenges in current Local Government rural revenue policy and practice

Currently, LGs’ own revenue sources are not considered as part of the financing for their development plans, and the entire funding of the LG budget is currently provided by the


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Government. In FY 2016-17, fiscal transfers made up 86.6 per cent of Dzongkhag financing, with the balance 12.7 per cent coming from grant funding and 0.7 per cent from loan financing.

The sources for internal revenue are limited and the current rates of rural taxes, which have not been changed since January 1993. Therefore, the amount collected is meagre: annual revenues from rural taxes range from Nu. 20,000 to Nu. 30,000 per annum, per Dzongkhag.

Three studies have been undertaken in recent years in relation to local revenue. A study into Fiscal Decentralisation was undertaken by RGoB in 20172. It has been found that the LGs are fully dependent on the central government for financing their budget. At present, there is no locally generated revenue financing the budget expenditures. In Fiscal Year (FY) 2013-14 Dzongkhags collected the following total amounts of local taxes: house tax: Nu. 4.8 million; land tax: Nu.34.2 million; and cattle tax: Nu. 0.383 million. This minor revenue generation is retained by the Gewogs to meet petty expenses outside the budget.

Examples of revenue raising (including: taxes, fees, service charges, duties, tariffs, fares, loan investments, fines and penalties, auction sale of goods, contracts etc.) as well as revenue sharing arrangements are cited from the Philippines, Nepal and India.

The study has found that citizens consulted were generally of the view that since both the living standards of people and disposable incomes have improved in recent years, that increased local taxation, fees and charges would contribute towards reducing income disparities and poverty. The study identified the possible re-assignment of some fees to LGs, currently retained by central government: business and professional license fees collected by the Department of Revenue and Customs, which amounted to Nu. 87.40 million in FY 2015-16; motor vehicles license fees; and fees from the operation of mines and quarries. However, the study recommended that usage of this revenue should be tied to income and employment generation in the locality, and not for ad hoc activities as is the case now.

The second study – a Municipal Finance Policy Note, was prepared by the World Bank in 20193. Whilst the Policy Note focuses on the Thromdes, it has made observations that are also applicable to mandate of LGs in relation to fiscal decentralisation and domestic revenue mobilisation. It explains that in 2012, the Gross National Happiness Commission (GNHC) developed a Division of Responsibilities Framework (DoRF) to divide roles and delineate responsibilities amongst the central agencies, Thromdes, Dzongkhags and Gewogs based on three key principles: (a) assignment of expenditure responsibilities, (b) assignment of tax and revenue sources, and (c) intergovernmental fiscal transfers between the national government and local governments. Bhutan’s functional and fiscal assignments are a combination of devolution, delegation and deconcentration, but have not been supported by a simultaneous expansion of resources, with limited strengthening of local government systems and enhancement of local accountabilities, all of which they consider would create the capabilities and incentives for better municipal government performance.

2 FISCAL DECENTRALISATION IN BHUTAN, DEPARTMENT OF LOCAL GOVERNANCE, MINISTRY OF HOME AND CULTURAL AFFAIRS (UNDP AND UNCDF), 20173 MUNICIPAL GOVERNANCE AND FINANCE POLICY PAPER, ONE OF FOUR BHUTAN-FOCUSED URBAN POLICY NOTES PRODUCED BY THE WORLD BANK.


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They identified issues affecting revenue collection as including: a weak revenue management system; little incentive or motivation to enhance own revenue sources; lack of government approval of an attempt to revise the rates in FY 2016/17; no own-revenue targets are set and performance is not assessed; limited capacity to assess, administer and monitor collection; and methods of assessment are not transparent.

The study provides examples of practice in the USA and Organisation for Economic Co-operation and Development (OECD) countries in relation to role of property (land, house and property taxes) taxes as part of local revenues. The Paper explains the benefits of such taxes which are among the most predictable sources of revenues for local governments. To update such taxation would require a database an inventory – registry of land and properties, based on a model of valuation.

The Policy Note identifies other requirements to increase the efficiency of revenue mobilisation, including strengthening local revenue administration through business process re-engineering and publishing revenue collection performance reports, for example. The report identifies that there are no institutional platforms in Bhutan for systematic exchange of information and dialog between the central government and LGs, thus limiting avenues for intergovernmental coordination and cooperation; which this ToR observes could provide a forum for the discussion of domestic revenue policy, strategies and generation.

The third study – Local Governance Assessment Study4 was published by Helvetas in 2016. It found that the collection of rural taxes is not cost effective. Generally, the costs of collection (e.g. staff time and transport costs) exceed the revenue collected. Furthermore, they found that Gewogs do not have designated revenue officers who can dedicate time to collection of revenue. The assessment noted that elected LG officials perceived taxes to be an unpopular way of increasing funds and citizens did not see the direct benefits of taxation, through improved service delivery for example.

The assessment highlighted the need to consult citizens on changes in local taxation. Before introducing new taxes and revenues, Gelephu Thromde first initiated consultations with citizens to agree on what would be fair and realistic rates. It also established a social contract that the increased revenue must be used to improve the delivery and quality of services in the municipality. The assessment concluded that policy-makers should consider whether the financial sustainability and ideally even self-reliance of LG shall primarily come through increases in rural taxes or through reviewing of the national tax system (including more effective corporate taxation and for foreign direct investments), since raising rural taxes has clear limits, as often poor people bear the biggest burden.

2. SCOPE OF WORK

Assignment Objectives

The EU-TACS project objective of which this Study is a part is: “to assist Bhutan in achieving the reforms envisaged in its 11th and 12th Five Year Plans in the Local Government and Fiscal Decentralisation sector.

4 THE ASSESSMENT WAS UNDERTAKEN BY HELVETIA’S FOR THE NATIONAL COUNCIL OF BHUTAN.


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The EU-TACS project (RfP - Annex 1) purpose is: “to provide consulting services including technical assistance and studies in support of sound implementation (including communication aspects) of the EU-bilateral development cooperation strategy in Bhutan, with particular focus on the two sector budget support programmes currently being implemented in Bhutan under the Multi-Annual Indicative Programme 2014-2020, i.e. (1) Capacity Development for Local Government and Fiscal Decentralisation and 2) Rural Development and Climate Change Response”.

The Local Government Rural Revenue Mobilisation Strategy assignment objectives are to support the DLG to develop such a strategy by reviewing exiting policies and practices; increasing efficiency of collection; exploring alternative/additional sources of revenue; and ultimately identifying ways of maximising collection.

Study Activities And Tasks

Activities

The Study to be undertaken by a local firm/organisation/Institute will provide the inputs to inform the drafting of the Strategy through the following activities:

(a) Carry out a policy review of the current rural revenue mobilisation legislative and policy frameworks, regulatory guidelines, and their usage (revenue sharing);

(b) Review and analyse current types of Tax and Non-Tax Revenue Sources for LGs (see Appendix 3) and current rates, including a cost/benefit (value for money) analysis of current each type, and particularly, explore alternative/additional/changes in types of Tax and Non-Tax Revenue Sources;

(c) Undertake a situation analysis of the LGs internal revenue generation arrangements and procedures (on paper and in practice), their methods, systems and costs of collection (and identify where costs of collection exceed revenue collected), and current capacity to do so;

(d) Identify ways of increasing capacity to administer and manage local revenue collection (including revenue that may currently be collected by the Department of Customs and Revenue centrally or regionally and could be administered locally with revenue sharing arrnagements5); efficiency of collection methods, including arrangements, methods, systems; and capacity development improvements, and make recommendations accordingly; and

(e) Draft short (including quick wins) and medium-term recommendations in relation to findings of (a), (b), (c), and (d) above for DLG, LGs, Ministry of Finance, Parliament and other related agencies for increasing LG Rural Revenue Mobilisation on strengthening fiscal decentralisation.

The design and planning of the study, and formulation of the recommendations, strategy and action plan should be carried out with close collaboration with DLG and LG staff.

(The Senior Non-key Expert (SNKE) will be responsible for directing, advising and quality assuring all aspects of the local firm/organisation/Institute’s Study activities and reports including: design of approach and methodology, planning, execution, analysis, validation of findings, conclusions and recommendations).

5 For example, trade license renewal fees, motor vehicle license renewal; and Personal Income Tax (PIT)


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The SNKE will ensure that the Study is designed, undertaken and completed to meet international research quality standards, remains on track. and is delivered on time.

Specifically, the SNKE will bring experience and knowledge of international good practice in relation to LG Rural Revenue Mobilisation.

The SNKE will be responsible for finalisation and quality assurance of the Study report, and in particular the (a) formulation of short and medium recommendations, and (b) Drafting the Local Government Rural Revenue Mobilisation Strategy and costed Action Plan).

Tasks

(a) Prepare Inception Report including Workplan (see Appendix 1 Template) and seek endorsement of DLG for the study methodology, and process-steps to apply in carrying out the assignment.

(b) Review all relevant policy documents, Acts, Regulations, Rules and Manuals pertaining to revenue mobilisation and usage. The list of documents reviewed would be confirmed during finalisation of the inception report.

(c) Carry out stakeholders’ consultation at the central level, with relevant agencies and individuals, particularly with MoF and GNHC in relation to legislative framework, policies, procedures and usage of revenue collected.

(d) Carry out field visit to at least three Dzongkhags and three Gewogs (or more)6 for document, system, procedural review and stakeholder consultation on type and size of existing revenue, process and cost of collection, use and effectiveness, including challenges faced and suggestions for policy/system/procedural and efficiency improvements and recommendations.

(e) Draft Study Report (see Appendix 2 Template)

3. RESULTS TO BE ACHIEVED

The main development-oriented results to be achieved through the activity shall be:

a) The Department of Local Governance will gain a clear understanding of the most effective policy options in relation to efficient revenue mobilisaiton and revenue sharing in the short and medium-term; and

b) The Local Governments will share their views on the enabling factors and barriers in terms of methods, systems, costs and organisational capacity, and possible improvements and solutions to increasing revenue generation and accountability to their local communities.

6 Rationale for the selection of the Dzongkhags and Gewogs should be included within the Inception Report’s study methodology. A minimum of three of each (or more) should be identified with criteria, inter-alia, based on spread of geographical location across Bhutan, APA performance, and socio-economic context.


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4. ACTIVITIES, DELIVERABLES AND REPORTING

The following deliverables will be drafted by the Study Team (and finalised and quality assured by the SNKE):

(a) Draft and Final Inception report including workplan, in soft copy (Appendix 1);(b) Presentation of Inception Report to RGoB Reference Group (chaired by DLG);(c) Interim Progress Update (presentation) at mid-way point of Study;(d) Two soft copies of draft Study Report (Appendix 2) and two soft and hard copies of

Final Study Report, after incorporating RGoB and EUD comments;(e) Presentation of draft Study Report to RGoB Reference Group.

The Survey Team will report to the SNKE and provide draft inputs to them.

(All written outputs will be delivered by the SNKE to the TL as determined by the agreed workplan).

A workplan will be produced by the Survey team and finalised by the SNKE and will adhere to the following deadlines:

Draft Inception Report within 5 days of project commencement Completion of Study tools and training of Study enumerators/researchers

within 10 days of project commencement Draft Study Report within 6 weeks of commencement of project Allow 10 days for comments on draft reports by RGoB and EUD Finalise reports within 5 days of comments being received

Formats for the reports are found at Appendix 1 and 2. Further specific guidance will be provided by the EU-TACS Team Leader.

Reports will be produced in English. The Executive Summary of the Final Study Report should be translated into Dzongkha.

10 hard copies of the Final Report should be provided to be distributed by EU-TACS to: DLG, GNHC, Ministry of Finance (MoF), United Nations (UN), World Bank, Asian Development Bank (ADB), Helvetas and others.

Target groups

The design and planning of the study, and formulation of the recommendations, strategy and action plan should be carried out in close collaboration with DLG and LG staff. Central government stakeholders, in additon to DLG include the Minsitry of Finance, Department of Revnue and Customs; and the GNHC.

The key stakeholders at LG level are the (at least) three Dzongkahg and three Gewogs, to be selected by the firm as part of the design of the Study methdolology. They should consulted in relation to current enabling factors and barriers to the efficency of the local revenue mobilisation.


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In additon to the LG staff, communities – including local civil society organisations and the private sector should also be consulted on the potential options for increasing local revenue and the expectations of these stakeholders of LG in return.

Geographical area

(At least) three Dzongkahg and three Gewogs should to be selected by the firm as part of the design of the Study methdolology. Their poverty status, accessibility/isolation and population size should be taken into account to determine a mixed sample. The selection of LGs should be agreed with the Department of Local Governance, who are likely to attend at least some of the LGs along with the Study team.

5. ASSUMPTIONS AND RISKS

Assumptions underlying the activity

The following assumptions have been made to enable the Study to be undertaken successfully:

The design and planning of the study, and formulation of the recommendations, strategy and action plan should be carried out with close collaboration with DLG and LG staff;

The DLG will be available to make contribute to the design, planning, formulation, and oversight of the study;

The DLG will inform the selected LGs of the Study enough time in advance for the interviews, surveys and focus groups etc. to be arranged;

The LGs will pro-actively arrnage interviews, surveys and focus groups etc. and be open about their views and current revenue mobilisation arrangements;

The Study researchers will be properly trained and reflect a gender balance; Consultees shall be selected based on representative socio-economic factors,

including gender and age; and The Study will be carefully managed to ensure that all deadlines are adhered to.

Risks

Risk Potential Impact Mitigation measure

There is little in-country knowledge about tax and non-tax revenue collection.

Options for alternate and most lucrative increased revenue may not be identified.

Local firm should have some experience and/or knowledge of local revenue mobilisaiton initiatives in the region.

SNKE will have good track record in undertaking studies/working with LGs to increase revenue mobilisaiton in the region.

The Study may be The Study is delayed The Study methdology allows for


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delayed during a the period due to adverse weather conditions.

which in turn delays policy decisions taken by the RGoB.

‘Plan B’ for each LG selected and carefully plans its logistics.

The Study does not engage a representative sample of LGs.

The possible solutions and options for increased effective and efficient revenue mobilisation may not be maximised.

The evaluaiton team, including DLG will finally approve the sample of LGs proposed.

The options proposed for increasing revenue mobilisation may not be politcally acceptable.

The options proposed for increasing revenue mobilisation are not adopted and revenue is not increased.

The Study firm, and EU-TACS team along with the Study Reference Group will ensure that options proposed have been subject to a robust cost/benefit analysis and reality check.

6. SELECTION CRITERIA

Candidate profile

The Local Government Rural Revenue Mobilisation Strategy should be undertaken by a well- established (at least 5 years) local firm/organisation/institute (‘firm’) based in Bhutan, that has a thorough understanding of the role of both central and local government, including local government finance. It should be cogniscant of the objecitves of the Royal Government of Bhutan’s (RGoB) 12th Five Year Plan and the agenda for increasing fiscal decentralisation in Bhutan. The firm should be experienced in undertaking surveys and studies (at least three prior to to this EoI) for international donors (preferably including the EU but not essential).

It should be committed to addressing gender and social inclusion as part of its research into possible revenue mobilisation options and their potential differential impacts on communities. It should be open to listening to and analysing the views of a wide range of stakeholders. Furthermore, it should be value the importance of delivering a high quality product in a timely manner.

The selection criteria table below provides defined and weighted criteria.

Selection criteria

# Section Weighting

1 Proposal cover page and declaration Hurdle requirement

2 Capability of the firm 10

2.1 Company overview


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2.2 Project experience

2.3 Management capacity

2.4 Company staffing and financial capacity

3 Methodology 30

3.1 Approach to implementing terms of reference

3.2 Description of activities and how they will be carried out

4 Workplan and input schedule 20

5 Assigned personnel 20

6 Financial proposal 20

7 Appendices (optional)

7. PROJECT MANAGEMENT AND LOGISTICS

Management structure

The successful firm will be issued a subcontract by DAI Brussels. The EU-TACS project Team Leader will take administrative and financial decisions for this subcontract. S/he is supported by a Senior Project Manager and Project Officer based in Bhutan, as well as DAI Brussels Home Office backstopping team.

The Senior Non Key Expert (SNKE) Local Government Rural Revenue Mobilisation Strategy will be supervisor with responsibility for supporting the design, monitoring, reporting and quality assuring the Study. The Team Leader/KE Local Government and Fiscal Decentralisation will be responsible for the oversight and final quality assurance of all deliverables of the Study.

Facilities and logistics

The successful firm will be responsible for providing all facilities and equipment, logistics and all the support required to enable its personnel to implement the activity efficiently. The firm must nominate an activity leader, who will hold overall responsibility for coordination and serve as the focal point in communications with the EU-TACs team.

The firm’s study team (including Study Team Leader (TL)) will have use of a shared desk at the EU-TACS office, and the Study TL will have access to a desk at the Department of Local Governance. The firm’s assigned team will be expected to attend the project office during business hours / for regular meetings, as appropriate to the work plan and input schedule, and at the reasonable request of the EU-TACS SNKE.


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Budget

The maximum all-inclusive budget available for this activity is EUR 17,500. The firm’s financial proposal must be within this ceiling value and will be a factor in the evaluation, in accordance with Section 4.2 of the Activity Terms of Reference.

A. Budget utilisation

DAI will define the upper limits for each line item of the budget, monitor utilisation to date, and any forecast updates for the period ahead.

Note, no re-allocation of funds between budget lines shall be permitted and no budget lines may be exceeded by the end of the subcontract term.

B. Timesheets

Original signed timesheets of all personnel who have provided inputs in the month should be collated and attached to the report. These are to be countersigned by DAI Brussels.


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RfP - ANNEX 1: EU-TACS Project ToR

The Terms of Reference for the overarching project, to which this activity will contribute, titled: Technical Assistance for Renewable Natural Resources and Climate Change Response and Local Governments and Decentralisation (EU-TACS) – EuropeAid/139521/DH/SER/BT

RfP - ANNEX 2 – DAI BRUSSELS SUBCONTRACT TEMPLATE

This is a standard template of the subcontract that will be signed between DAI Brussels and the successful firm. The activity Terms of Reference (Annex 2) and firm’s complete proposal, including financial proposal will be incorporated into and form part of the subcontract.


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Appendix 1: Indicative Contents List for Inception Report including Workplan

(max. 6 pages)

To be drafted by the Study Team (with the exception of (E) which will be prepared by the SNKE) and finalised and quality assured by the SNKE

A. Brief contextual updates as relevant to the activity B. More detailed plans or blueprints for the major technical deliverables (e.g. survey

instrument details, research plan, training plan, etc.)C. Proposed structure and format of written deliverables and the final report (e.g. table

of contents and page lengths)D. Proposed refinements to the methodology, if any

i. Descriptions of any proposed adjustments and reasons, if anyii. Attached Workplan gantt chart, showing timescales for all methods,

deliverables and reporting

E. Finalised Contents List for Strategy and costed Action Plan

F. List of consultations held


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Appendix 2: Draft Template for Study Report

(maximum 20 pages + annexes)

A. List of Tables

B. Abbreviations

C. Executive Summary

D. Introduction

E. Study approach, methodology and sampling, study limitations

F. Major Findings

G. Conclusions

H. Recommendations

I. Annexes:

(ii) Workplan gantt chart(iii) Study Guideline and Protocols(iv) People consulted(v) Documents reviewed(vi) Methods and tools(vii)Summary Profiles of sampled LGs


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Appendix 3: Tax and Non-Tax Revenue Sources for Local Governments

Type of Own Revenue Source Break-up of Revenue Source

Tax Revenue Land tax

Vacant Land and Underdevelopment tax

Property Transfer Tax

Entertainment Tax

Betterment Tax

Non-tax revenues - fees Land Development and Subdivision

Land Demarcation

Building Permit

Land Registration

Site Plan

Vehicle Parking

Market Vendor

Advertisement

Building Approval

Land leasing

Delayed Payment

Other fees

Non-tax revenues -charges Water

Sewage

Connection charge

Solid waste

Pipe realignment

Essential charges

Housing

Other Service Charges

Source: Ministry of Works and Human Settlement (MoWHS) and Thimphu Thromde


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