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USAID Democratic Governance East
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a. Performance under this contract during the second and subsequent program years is contingent upon
the appropriation of funds. All program years except the first are subject to cancellation. Cancellation
shall occur by the dates specified below if the Contracting Officer:

1. Notifies  the  Contractor  that  funds  are  not  available  for  contract  performance  for  any
subsequent program year; or
2. Fails to notify the Contractor that funds are available for performance of the succeeding
program year.

b. Cancellation Ceiling:

This is a CPFF type contract where the Contractor is authorized to be reimbursed for all costs which
are  allowable  in  accordance  with  FAR  52.216-7,  “Allowable  Costs  and  Payment.”  Therefore,  the
Contractor  will  not  incur  any  costs  which  would  have  been  amortized  over  the  life  of  the  contract
should the contract be cancelled in accordance with FAR 52.217-2.


The  Government's  liability  for  cancellation  charges  shall  not  exceed  $0.  This  amount  will  be  reduced  in
accordance with FAR 17.106-1(c)(1) at the conclusion of each program year, as follows:

Program Year  Cancellation Date Cancellation Ceiling
Year 1: 2018/2019  N/A N/A
Year 2: 2019/2020 MONTH TBD, 2019 TBD
Year 3: 2020/2021  MONTH TBD, 2020 TBD
Year 4: 2021/2022  MONTH TBD, 2021 TBD
Year 5: 2022/2023 MONTH TBD, 2022 TBD







[END OF SECTION B]
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USAID Democratic Governance East
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SECTION C – DESCRIPTION/SPECIFICATIONS/STATEMENT OF WORK


C.1.0 PURPOSE AND SCOPE

USAID’s goals in Ukraine are, inter alia, to promote good governance, accelerate economic growth, advance
anti-corruption efforts, and strengthen an inclusive civic identity in the country. The purpose of this contract
is  to  support  USAID’s  objectives  of  promoting  inclusive  civic  identity,  common  civic  values,  and  a  unified
Ukraine  by  addressing  the divisive  impacts  of  Russia’s  aggression, cases  of  far-right  Ukrainian  nationalism,
and  the  consequences  of  ongoing  armed  conflict  through  increased  citizen  participation,  improved  service
delivery and more responsive governance. USAID envisions a fast, flexible, and adaptive mechanism in this
flagship program to effectively promote civic awareness, social entrepreneurship, citizen engagement, and the
benefits  of  reforms  and  broad  integration  into  the  Euro-Atlantic  community  through  community-level
improvements  in  services  and  more  responsive  local  governance  in  areas  most  affected  by  conflict  and
divisive influences.

C.2.0 CONTEXT/BACKGROUND

Several  momentous  events  have  followed  in  the  wake  of  the  2013  “Euro-Maidan”  protests  and  the  2014
Revolution  of  Dignity  that  led  to  the  removal  of  President  Viktor  Yanukovych  in  February  2014.  These
include referenda in Crimea and Sevastopol in March 2014; the outbreak of armed conflict in eastern Ukraine;
and  Presidential,  Parliamentary  and  local  elections  in  2014-2015.  The  Government  that  took  office  in
December  2014  carried  a  mandate  for  reforms  yet  faced  formidable  political,  security,  and  economic
challenges  that  included  containing  the  conflict  and  restoring  peace  in  the  east;  ensuring  macroeconomic
stability;  containing  a  major  banking  crisis;  reducing  the  fiscal  deficit  in  the  midst  of  a  recession;  and
reducing  deep-seated  corruption  while  contending  with  powerful  vested  interests  that  continue  to  oppose
reforms.  The  pace  of  reform  has  been  uneven  as  a  result  of  these  constraints  and  increasing  political
uncertainty over the future of armed conflict in the east and other threats to Ukraine’s prospects for recovery
and  development.  Reforms  continued  to  lag  behind  expectations  as  a  new  government  took  office  in  April
2016, despite the passage of an action plan identifying key reform initiatives in May 2016.

C.2.1 Current Ukraine Context
While  the  impacts  of  Russia’s  aggression  are  manifest  throughout  Ukraine,  they  are  particularly  visible
throughout the Donbas and surrounding oblasts, and in Crimea. Since the onset of conflict in spring 2014 up
to  November  2017,  over  10,000  Ukrainians  have  been  killed  according  to  the  Office  of  the  United  Nations
High  Commissioner  for  Human  Rights.  According  to  USAID’s  Office  of  Foreign  Disaster  Assistance
(OFDA),  as  of  January  2018,  3.4  million  are  in  need  of  humanitarian  assistance  and  1.6  million  are
considered as internally displaced persons (IDPs) as a result of the ongoing conflict. Additionally, widespread
and  systematic  human  rights  abuses  committed  by  the  Russian  Federation  and  Russia-led  forces  in  Donbas
and  Crimea  have  only  accelerated  with  impunity.  Credible  reports by  Office  of  the  UN  High  Commissioner
for  Human  Rights  (OHCHR),  the  Organization  for  Security  and  Co-operation  in  Europe  (OSCE)  Special
Monitoring Mission (SMM), and watchdog groups show that despite efforts to achieve peace in Donbas, the
parties have failed to comply with the Minsk II peace agreements, with grave human rights consequences for
the conflict-affected population, especially those living near the contact line and in non-government
controlled areas (NGCAs).

Populations in Donbas and neighboring regions harbor perceptions of being left out, marginalized, or rebuked
for being perceived as Russian-leaning. They are also the most unaware and/or skeptical of the reform process
and, as a result, less accepting of the national government’s proclamations and policies than any other parts of
the country. While early progress has been made in implementing reforms in the east and south since the 2014
Revolution  of  Dignity,  enduring  governance  and  service  delivery  challenges,  along  with  the  impact  of
Kremlin-led  attempts  to  propagate  divisive  narratives  and  exploit  existing  social  divisions,  are  undermining
greater  support  for  Ukraine’s  democratic  transition  and  European  future  in  these  regions.  Furthermore,
Ukraine  has  long-standing  problems  attracting  foreign  investment  due  to  rampant  corruption,  an  ineffective
system  of  property  and  investment  protections,  and  an  unpredictable  and  ad  hoc  policy  environment.  These

realities have been made worse through Russian trade and transit bans, and using other economic measures to
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USAID Democratic Governance East
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further  decrease  investor  confidence,  increase  balance  of  payments  problems,  and  inhibit  needed  energy
sector modernization and transformation.

Ukraine  today  remains  at  a  crossroads.  The  economy  has  stabilized  but  economic  prospects  remain  weak.
Addressing longstanding governance challenges, a need for economic growth, and civic participation
bottlenecks  on  multiple  fronts  will  be  essential  to  strengthening  the  stability  and      unity  of  the  country.

Populations  that  harbor  perceptions  of  being  left  out,  marginalized,  or  punished  for  their  historical  or
contemporary place in Ukrainian society must be included in efforts to develop a vibrant, unified state.

By  mid-2017,  modest  economic  gains  and  key  reforms  had  advanced.  Polling  by  organizations  such  as  the
International Republican Institute (IRI)1 in July 2017 found the first improvements in “national mood”2 since
the  onset  of  war.  However,  that  mood  is  not  shared  evenly  throughout  the  country.  Majorities  of  citizens  in

Kharkiv,  Donetsk,  Luhansk,  Kherson,  and  Odesa  oblasts  are  far  more  skeptical  of  Ukraine’s  progress;  the
most  unaware  of  the  reform  process;  and  as  a  result  are  less  accepting  of  national  Government  of  Ukraine

(GOU)  reform  progress  and  proclamations  than  the  rest  of  the  country.  The  frustration  and  anxiety  felt  by
many  residents  in the east and  south is  rooted  in  divisive  myths  about  nationalism,  an  entrenched culture  of
corruption—an  issue  across  all  of  Ukraine—and  poor  governance  that  pre-dates  the  conflict;  modern-day
fears  about  these  regions’  economic  decline;  service  delivery  deficits;  and  rhetoric  and  policies  in  Kyiv
strengthened by Russian media and pro-Russia local elite narratives that portray these regions as being apart
from the rest of Ukraine and disloyal. They are also more likely to attribute malign intentions to Kyiv and to
assign blame for a lack of reform or the poor economy on mismanagement by national institutions or western
influence rather than direct them to Russia.

USAID’s Social Cohesion and Reconciliation Index (SCORE)3 revealed that the Donbas, along with regions
such  as  Kharkiv,  Kherson,  and  Odesa,  have  strong  social,  cultural,  and,  in  spite  of  the  conflict,  political
leanings  toward  Russia;  are  exposed  to  media  originating  from  Russia;  remains  skeptical  of  closer  relations
with  the  West  due  to  social,  cultural,  and  economic  ties  to  the  Russia.  Indeed,  one  of  the  most  striking
differences  in  perceptions  held  by  residents  of  Donbas  and  the  rest  of  the  country  is  the  degree  to  which
residents are skeptical of a European future, Ukrainian patriotism, culture and language, and still hold strong
ties to Russia and nostalgia for the Soviet Union. Other studies reveal that fewer residents of the Donbas are
likely to blame Russia for the conflict, with most feeling that sanctions against Russia should end and over 30
percent maintaining that Ukraine should join the Eurasian Customs Union.


In  many  ways,  the  future  of  Ukraine  will  be  decided  in  regions  such  as  Donetsk,  Luhansk,  Kherson,  and
Kharkiv, where uncertainty about the future drives skepticism over Ukraine’s European-oriented trajectory. In
addition,  presidential  and  parliamentary  elections  loom  on  the  horizon  in  2019  and  populist  politics  are
resonating across the country, particularly in the east and south, sowing mistrust and skepticism in the reform
process.

The frustration and anxiety felt by many residents in the east and south is rooted in an entrenched culture of
corruption  and  poor  governance  that  pre-dates the conflict;  modern-day  fears about these regions’ economic
decline;  service  delivery  deficits;  and  rhetoric  and  policies  in  Kyiv  that  portray  these  regions  as  being
separatist-minded  and  disloyal.  This  disaffection  is  stoked  by  malign  Kremlin-backed  narratives  and  by  the
nationalist  views  expressed  by  political  parties  and  political  actors  in  the  center  and  west  of  the  country.
While  early  progress  has  been  made  in  implementing  reforms  in  the  east  and  south  of  the  country  after  the

2013  Euro-Maidan  protests  and  2014  Revolution  of  Dignity,  enduring  economic  and  service  delivery
challenges along with the impact of divisive narratives and social identities4 are undermining greater support
for Ukraine’s democratic transition and European future in these regions.
                                                      1 See http://www.iri.org/resource/ukraine-poll-slight-improvement-national-outlook-strong-support-europe.  2  “National  mood”  here  refers  to  Ukrainians  expressing  both  an  awareness  of  reforms  and  general  appreciation  of
progress against those reforms. 3 See http://scoreforpeace.org/eng/?country=25. Also, note that the 2017 results will be available soon. 4 “Divisive social identities” is a reference to citizens’ political and social orientations that are alternatively aligned with
the Russian Federation, Kyiv, or Donbas, and western versions of events and prospects for the country. There are also
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USAID Democratic Governance East
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C.2.2 Donbas Context
As described briefly above and mentioned in detail in USAID’s 2017 Donbas Assessment5, a combination of
pre-crisis  political,  economic,  and  social  challenges  rooted  in  the  dissolution  of  the  Soviet  Union  and
Ukrainian  independence  precipitated  the  violence  that  erupted  in  2014.  Shocks  over  the  four  years  of  the
ensuing crisis have now deepened political disillusionment, weakened economic performance, slowed
reforms,  and  increased  poverty.  The  chronic  nature  of  these  challenges  and  a  widening  gap  among  citizens
over the future of the country could yet fuel additional political and social crises in Ukraine.


Outside of these general challenges to the unity and resilience of the country’s institutions, there are particular
features (and challenges) that distinguish the Donbas region. These factors range from those that are unique to
the  region to  those  that  are  distinct  by  a  matter  of  degree  from  the  rest  of  the  country.  These  characteristics
frame a development context that is unlike assistance environments found in most other oblasts.

Moreover,  the  Donbas  region  requires  more  than  humanitarian  response  after  four  years  of  conflict.  Timely
recovery  and  development  support  is  vital  to  the  stability  of  the  region  and  the  unity  of  the  country.  The
distinctiveness of the Donbas requires that any development strategy that promotes the unity and stability of
the state should regard the Donbas region as a specific problem set, requiring a focus on the particular factors

that drive ongoing instability in the region – even as violent conflict continues.

As  a  region,  the  Donbas  is  less  accepting  of  a  European  future  than  any  other  part  of  the  country.  On  most
questions  of  popular  opinion  regarding  the  government  in  Kyiv,  the  economy,  and  the  general  trajectory  of
Ukraine,  the  Donbas  (and  in  fact  much  of  southeastern  Ukraine)  trends  away  from  the  rest  of  the  country.
Ukrainians in the Donbas are also the most unaware of (and skeptical toward) the reform process.


Many of these perceptions predate the current conflict, including low regard for political authorities in Kyiv
and  a  more  eastward-looking  orientation  as  part  of  a  regional  and  national  identity.  Differences  like  these
contributed  to  the  events  that  would  come  to  divide  the  Donbas  into  separate  areas  of  control  in  2014.

Messages and policies by the national government easily play into the perceptions and narratives that Kyiv is
punishing  the  region.  Moreover,  the  inversion  of  status  from  when  the  rest  of  the  country  depended  a  great
deal  on  the  Donbas  to  a  situation  where  newly  disadvantaged  government-controlled  areas  (GCAs)  of  the
Donbas are dependent on the central and western parts of the country is deeply unsettling to residents.
There  are  significant  differences  in  social  cohesion  between  GCAs  and  NGCAs  of  the  Donbas  as  well  as
diverse perspectives on the economy and perceptions of quality of life between areas of control. There is also
a growing gap in how residents of government-controlled and occupied Donbas view their political identity.

While studies suggest strong, polarized “Pro-Ukrainian/Europe” and “Pro-Russian” camps in the region, there
is  also  a  large,  undecided  segment  of  the  population.  This  nascent  pluralism,  born  of  disenchantment  with
existing political options, is a new phenomenon within the Donbas – and one that presents new opportunities
to engage.

The  conflict  in  the  Donbas  has  created  significant  challenges  to  civilian  governance  in  the  government-
controlled areas of the region. Large numbers of displaced Ukrainians as well as 8,000 to 10,000 residents a
day  traveling  from  NGCAs  place  significant  burdens  on  service  delivery  in  the  region  that  are  felt  by  host
residents, the displaced, and residents coming from separatist areas.


large segments of the population in these regions that identify with neither perspective. “Divisive narratives” refer to
news and other information streams that reinforce the differences between these orientations and identities.  5 Available on USAID’s Development Experience Clearinghouse (DEC) at  http://pdf.usaid.gov/pdf_docs/pa00mpjs.pdf.
Offerors are strongly advised to review this assessment and similar analyses, as described throughout this statement of
work, of the particular political dimensions of Donbas. Offerors may want to consider reviewing, inter alia, the
following scholarly works for additional background on the political dynamics of Donbas: Taras Kuzio, Putin’s War
Against Ukraine: Revolution, Nationalism, and Crime, 2017, University of Toronto Press: Toronto, CA; Tracey German
and Emmanuel Karagiannis (eds.), The Ukrainian Crisis: The Role of, and Implications for, Sub-State and Non-State
Actors, 2017, Routledge: Oxford, UK; and Nicolai Petro (ed.), Ukraine in Crisis, 2017, Routledge: Oxford, UK. .