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Sample-Letter of Invitation (LOI)

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					Social Fund for Development UNDP

PROCUREMENT DEPARTMENT Request for Proposal Individual Consultant
To

UNDERTAKE A PRODUCT DEVELOPMENT DESIGN AND PILOT TESTING FOR MICRO CREDIT PRODUCTS Request Ref.:No.1 / UNDP

AUGUST 2009

Letter of Invitation (LOI)
Dear Mr.

Re: Proposal for Consulting Services, Letter of Invitation (LOI)

1. You are hereby invited to submit a technical and financial proposal for Consulting Services required for The Project of Undertake A Product Development Design and Pilot Testing For Micro Credit Products. Your proposal could form the basis for future negotiations and ultimately a contract between you and the Social Fund for Development. 2. A brief description of the Assignment and its objectives are included in the attached Terms of Reference (TOR). 3. The Social Fund for Development (SFD) has received a grant from UNDP hereinafter called "the Bank" in various currencies towards the cost of the Assignment, and intends to apply the proceeds of this grant to eligible payments under the contract for which this LOI is issued. 4. Please note that (i) the costs of preparing the proposal and of negotiating the contract, including a visit to the SFD, are not reimbursable as a direct cost of the Assignment; and (ii) the SFD is not bound to accept any of the proposals submitted. 5. Consultant requiring a clarification of the Documents must notify the SFD, in writing, not later than one week before the proposal submission date. The SFD shall respond by cable, e-mail,or telefax to such requests, and copies of the response shall be sent to all invited Consultants. 6. Your proposal shall be written in English. Your technical proposal shall provide the following and any additional information that may be necessary, a) Recent Curriculum Vitae, Including an outline of recent experience on assignments of a similar nature. For each assignment, the outline should indicate, inter alia, the profile provided, duration. b) Any comments or suggestions on the TOR, and a description of the methodology (work plan) that the Consultant propose to execute the services. c) The Consultant comments, if any, on the data, services and facilities to be provided by the SFD and indicated in the TOR. d) Approach Paper on Methodology Proposed for Performing the Assignment.

7. The financial proposal should list the costs associated with the Assignment. These normally cover where applicable, remuneration, subsistence (per diem, housing), transportation, services

and equipment (vehicles, office equipment, furniture and supplies), printing of documents, surveys. These costs should be broken into foreign and local costs. The financial proposal shall take into account the tax liability and cost of insurances. 8. You shall submit one original technical proposal and one original financial proposal. Each proposal shall be in a separate envelope. The completed technical and financial proposals shall be submitted on or before 6/9/2009 at 12 Noon in 1 Wadi el Nile-7th floor el MohandiseenGiza. And will be valid for 60 days from the date of its submission. 9. The evaluation committee appointed by the SFD shall carry out its evaluation, applying the following evaluation criteria, Points (i) (ii) (iii) (iv) Specific experience of the consultant related to the Assignment Adequacy of the proposed work plan and methodology in responding to the TOR Qualifications and competence of the consultant for the Assignment Other 40 40 10 10 Total: 100 Each responsive proposal shall be attributed a technical score (St). Consultants scoring less than 75 points shall be rejected and their financial proposals returned unopened. The evaluation committee shall convert prices in various currencies to Egyptian Pounds for evaluation purposes. The official selling rates used shall be provided by the Central Bank of Egypt in effect on the date of submission of the proposals. 10. Prior to the expiration of proposal validity, the SFD shall notify the successful Consultant that submitted the highest scoring proposal in writing by registered letter, cable,e-mail or facsimile and invite it to negotiate the Contract. The aim is to reach agreement on all points and initial a draft contract by the conclusion of negotiations. 11. The contract shall be awarded after successful negotiations with the successful Consultant. 12. The selected Consultant is expected to commence the Assignment on the date and at the location specified in the TOR. 13. Please inform the SFD by e-mail /facsimile; (i) (ii) that you received the letter of invitation; whether you will submit a proposal; and

Attachments: (A) Terms of Reference (TOR) (B) Draft Form of Contract

ANNEX I

(A) Terms of Reference

Terms of Reference for An International Expert / Team of Experts to To Undertake a Product Development (Design and Pilot Testing) for Micro Credit products

August 2009

1.

Introduction Beneficiary Country
Egypt

Implementing Agency
Social Fund for Development (SFD)

1.1 Background Information: 1. 1.2 The Social Fund for Development (SFD)
SFD was created in 1991 as a social safety net mechanism aiming at mitigating the negative social impact of the Economic Reform and Structural Adjustment Program (ERSAP). Since then, the SFD has developed into an organization mobilizing national and international resources to invest in social development with special attention to job creation through MSE development and the enhancement of the quality of life of low-income groups. To fulfill its mission, SFD aims at creating employment opportunities for new graduates, unemployed youth, and low-income groups through the encouragement of small enterprises both newly established and already existing. The SFD has now the following business units: 1- Small Enterprise Development Organization (SEDO) 2- Development and Non-Financial Group (DNFG) a. Community Infrastructure Sector Community Infrastructure Department Community Development Department b. Human Resources Development Sector c. Marketing and Management Sector (MMS) 3- Microfinance Central Sector (MFCS) 4- Regional Offices Sector (ROS) 5- Planning & International Cooperation Group (PICG) 6- Media & Public Relations Central Sector (MPRCS) With headquarters in Cairo, the SFD has substantial outreach capacity through a network of regional offices covering the 29 governorates of Egypt. These offices are SFD’s front line in serving SFD customers and providing valuable services. SFD operates on a demand-basis.

Over the years, the SFD has managed to mobilize resources through donors to the tune of USD 2.3 billion. Majority of the loans provided to SFD are at concessional rates with grace periods and long repayment periods, SFD operates on a cost-recovery basis for sustainability purposes. Among SFD’s achievements from 1992-2009, SFD disbursed USD 2.3 Billion into the Egyptian economy, of which 62% was geared towards supporting small enterprises, 26% went towards community development projects and 12% supported the microfinance sector. Among the various Business Units of SFD, the Micro Finance Central Sector (MFCS) plays a major role in implementing SFD activities:

1.2.3The Micro-finance Central Sector (MFCS)
The Micro Finance Central Sector focuses on supporting income-generating activities and the creation of sustainable job opportunities leading to a decrease in poverty levels and improved socio-economic indicators. MFCS Mission: To promote and support the development and long term sustainability of microfinance service providers in order to facilitate poverty alleviation and employment generation MFCS General Objectives are:     To maximize the efficient management of donor funds provided to support microfinance initiatives To build the capacity of intermediaries to provide microfinance services on a sustainable basis To reach all geographic areas of the country To play a catalytic role to influence national policy governing the microfinance sector in Egypt

MFCS Specific Objectives are:    Raising income of poor family's, especially female-headed households. Creating job opportunities through the financing of micro enterprises run by economically active poor. Creating marketing opportunities for micro enterprises.



Improving living conditions through the expansion of existing, and the establishment of the new, micro enterprises; and  Cooperating with microfinance institutions (including banks and NGOs) to upgrade their micro finance services. MFCS works primarily with credit granting NGOs and banks for on-lending to clients. Microfinance programs directed through the MFS are implemented through various types of non-governmental organization (NGO's) and banks in accordance with SFD credit policy. The MFCS works with an array of Intermediary Credit and Financial Services’ Institutions, including Banks, NGOs and CBOs, across the country. Since its inception, it has worked with more than 400 NGOs/CBOs, serving a total of 742,159 clients. MFCS current products consist of financial and non financial services: Financial Services: small loans (up to L.E 25,000) are offered to clients through financial intermediaries, with market-based lending rates. Non- Financial Services: Technical Assistance is offered to intermediaries in the form of institutional capacity building; either through hired specialized consultants or through the specialized Non-Financial group of the SFD

CONSULTANCY OBJECTIVES & EXPECTED RESULTS
2.1 Consultancy Overall objectives
The overall objective of this consultancy is to increase MSEs access to finance and better respond to market needs through the identification of new and diversified products to be provided by Micro Finance Institutions (MFIs) to its clients on the short and medium term, based on the absorption capacity of the market, the needs of the clients, the delivery capacities and prior experience of selected MFIs. 2.2. Information on the context Product development is an instrumental tool used by MFIs to expand their operations, better respond to market needs, ensure sustainability and competitiveness, and increase their profitability. By diversifying their range of products and/or services, organizations are able to tap into new markets and clients, thereby increasing their market-share and profits. Ultimately contributing to the national objectives of expanding financial services to the un-bankable segments of population. Recently, the Egyptian market has been undergoing extensive economic and structural reforms, and is on a steady development path towards consolidated economic growth and expansion. Within this context, the SFD is actively responding to the evolving needs of this new emerging market. Therefore the time is now opportune for developing new products to be offered by MFIs with a specific emphasis on Nonconventional (Islamic Shari’a compliant) financial services and including the

equivalent of other types of credit products (e.g. housing/refurbishing loans, tuition loans and others). 2.3 Deliverables General: The international expert/team of experts will undertake the necessary technical interventions related to the market testing and design of prototype financial products to be offered by an MFI. They shall review available literature on subject1. The focus of the assignment shall be on Islamic compliant financial products, as well as including other types of credit services (e.g. Housing/refurbishing, seasonal and tuition loans). The international expert/team of experts shall take into consideration the regulatory environment, the delivery capacities of MFIs, the economic and social needs of the targeted clients, as well as the services and products offered by other market players. Objectives of Consultancy and Major Deliverables: In line with the above, the international expert/team of experts shall provide the SFD with the following based on the SFD selection of the targeted MFIs2: 1. A survey of needs (based on questionnaires and focus group discussions in a sample branches of the selected MFI) of the current and potential market segments targeted by the selected MFI. 2. A comprehensive market study including a review of the products and services currently offered to MSEs by MFIs, as well as other players; 3. A “Product Specifications Matrix” for each of the suggested prototype financial products for service provision by the selected MFI. This should include products to be offered on the short and medium terms, and should include the proposed competitive range pricing suggested by market needs. 4. A detailed proposal for the delivery steps and client/business assessment tools to be used for each proposed product. This should include but not be limited to the following: a. Draft Credit manual (for proposed loan products) b. Draft operational procedures for field extension, monitoring and field work c. Draft related Internal Controls Policies and Procedures that associates to the proposed product/loan types

1

SFD and other donors have developed important literature on the MF market in Egypt ; namely the National Microfinance Strategy 2005 and the National MF market study and Impact Assessment 2008. 2 The SFD shall inform the consultant of the name of the selected Formal Financial Institution prior to commencement of the work

d. Detailed Pilot Test Plan (including the number of pilot testing branches and its representation for the MFIs geographical locations) to be implemented by the selected MFI, as well as the needs from fixed assets, management information systems, institutional and human capacity development e. An indication of the time span needed for the pilot testing phase (normally corresponding to one or two cycles of offering the suggested new product/loan types) f. Draft Roll-out plan in the nominated MFI’s branches 5. A detailed assessment for the performance of the suggested products/loan (to be conducted after the pilot testing phase) and new proposed delivery mechanism for these products. 3. Suggested Scope of Activities: 3.1 Specific Activities In line with the general and specific objectives of this contract detailed above, the following is the breakdown of the activities to be undertaken by the international expert/ team of experts. A) Undertake a comprehensive market study to include as a minimum:  A review of the Egyptian MSE market in terms of size, geographical distribution, characteristics, demand, growth potential, needs, and regulatory environment.  A study of the potential demand of Egyptian MSE for Islamic Sharia compliant existing and new financial products.  Study and analyze the supply for MSE financial and non financial products offered by MFIs. B) Prepare a Package of suggested products/loan for MSEs to be provided by the selected MFI “Product Specifications Matrix” including:   Review of the selected MFIs current micro finance portfolio, their costing, delivery mechanism and financial viability (as appropriate). Recommend suitable and financially viable new MSE financial products to be offered by the selected MFI, highlighting services/products to be introduced in the short term and in the medium term; primarily focusing on Islamic Shari’a compliant products, housing, tuition and seasonal loans. Prioritize potential MSE financial products to be offered by the selected MFI in terms of: potential demand, cost, marketing, competition and pricing, potential for revenue generation, etc.



C) Promotion and Delivery mechanism   Review and analyze the current delivery mechanism used by the selected MFI. Recommend marketing and promotional strategies to be used to market the new products and services.

 

Recommend the required institutional capacity for the selected MFI to offer the new products, with an estimate of the costs involved, on the short term as well as medium term. Develop capacity building program for the selected MFI relevant staff as needed.

D) Pilot Testing Phase including all relevant interventions according to best practices’ standards. E) Assessment of the pilot testing phase and developing the Roll-out Plan in compliance with best practices’ standards. Project Management 3.2 Responsibility Social Fund for Development (SFD) - 120 Mohi El Din Abul Ezz, Dokki , Cairo, Egypt. The focal point for the consultant is SFD/Project Coordinator, Deputy General Manager, International Cooperation Group, Social Fund for Development. A briefing meeting will be held at SFD premises at the start of the assignment. Also SFD will avail all possible available necessary data and reports to the international expert/team of experts to facilitate their assignment. The SFD shall inform the international expert/team of experts upon award of the selected MFI and coordinate the communication with the consultant vis-à-vis visiting the MFI and performing all necessary work in the MFI's premises and in the field. 4. Logistics and Timing 4.1 Location The international expert/team of experts will be using their own facilities. They are expected to undertake a number of short field visits throughout the country to visit the MFI's regional offices at his/her own expense (transportation, accommodation, food, etc.), according to their proposed and accepted agenda and work plan; which should be approved by SFD. 4.2 Commencement Date and Period of Execution Commencement date is expected to be during October, 2009 and the period of the contract will be for 3 calendar months3 from the date of contract signature. The international expert/team of experts shall undertake a rapid assessment of the Pilot
3

Not meant to reflect the expert’s level of effort

phase4 and deliver the Roll-out plan after one or two cycles of the proposed products initial offering. The development of the Roll-out plan is expected to take five working days from the international expert/team of experts and shall commence after the conclusion of the pilot testing phase with eight to ten months. 4.3 Timeframe for submitting proposals The deadline for submitting comprehensive proposals is set to be September, 6, 2009. 5. Requirments: 5.1 Office Accommodation Provided by the international expert/team of experts 5.2 Qualifications: Priority will be given to a team of experts that have a proven track record with the following minimum requirements:      A minimum of 10 years of experience in Microfinance especially with regards to Product Development. A professional background in Marketing would be an asset. Regional and International experience in product development and loan products and other financial services, with special emphasis on Islamic Shari’a compliant product. A strong experience in market and field based research work using both quantitative and qualitative research methodologies. Proven ability in report writing both English and Arabic. Fluent Spoken and Written English and Arabic.

6. Reports The content of the report should be comprehensive of the assignment as a whole. 6.1 Reporting Requirements The international expert/team of experts should prepare and provide the following reports:  An inception report to be delivered 10 working days after commencing the assessment and his/her initial finding. The report must also highlight the projects overall updated work plan (required meetings/logistics5, activities, associated deliverables and their time frame) projects approach/strategy and procedures, problem analysis and potential solutions, methodologies and timeframe work and recommendations. A mid-term report, based on the scope of activities above.



4 5

Expected to be 10-12 months To be provided by SFD and the selected MFI

   

A draft final report detailing the items listed in the scope of activities above 15 days before the end date of the assignment, to be reviewed by SFD and returned to the consultant within one week before the end date of the assignment. A final report to be submitted 2 weeks following receipt of the SFD comments on the draft final report. All reports should be presented in English (2) hard copies and (2) soft copies on CDs (including the summaries). The Final Report should include an Executive Summary in English and Arabic (2) hard copies and (2) soft copies on CDs. The reporting requirements are subject to revision by SFD.

6.2 Submission and Approval of Progress Reports Five copies of the reports referred to above must be submitted to the project manager identified in the contract. The project manager is responsible for approving the progress report.

(B) FORM OF CONTRACT

SERVICE CONTRACT

BETWEEN

Social Fund for Development

AND

TABLE OF CONTENTS

Page

Article I Article II Article III Article IV Article V Article VI Article VII Article VIII Article IX Article X Article XI Article XII Article XIII Article XIV ANNEX I ANNEX II

Scope of Services .................................................................................................... 1 Commencement of Services and Duration of Contract ......................................... 2 Duties of the Consultant ......................................................................................... 2 Payment for the Services ........................................................................................ 3 Confidentiality and Ownership of Documents ....................................................... 3 Assignment and Sub-Contracting ........................................................................... 4 Liability of the Consultant ...................................................................................... 4 Force Majeure ......................................................................................................... 5 Termination of Contract.......................................................................................... 5 Dispute Settlement .................................................................................................. 6 Modification or Amendment .................................................................................. 6 Effective Date.......................................................................................................... 7 Channel of Communications and Notices .............................................................. 7 Governing Law ....................................................................................................... 8 Terms of Reference Contract Amount and Method of Payment

SERVICE CONTRACT BETWEEN

AND

THIS SERVICE CONTRACT entered into this ______ day of __________, between the_____ having its principal office at _________ (hereinafter called the "Client") and _____________(address), (hereinafter called the "Consultant"). _____ of

WITNESS THAT:

WHEREAS the Client has determined the need to procure the services described, implied or referred to in this Contract, subject to the terms and conditions hereinafter set forth;

WHEREAS the Consultant represents and affirms that he/she possesses the requisite experience, qualifications, capability and skill to perform the said services;

NOW THEREFORE the parties hereto have agreed as follows:

ARTICLE I SCOPE OF SERVICES

1.1

The services to be performed by the Consultant under this Contract (hereinafter called the "Services") are those described in the Terms of Reference attached hereto as Annex I to the present Contract. The Terms of Reference shall form an integral part of this Contract.

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ARTICLE II COMMENCEMENT OF SERVICES AND DURATION OF CONTRACT

2.1

The Consultant shall commence the Services immediately upon signature of the present Contract, and shall carry out the Services in a manner most suited to the requirements of the Contract and in accordance with the schedules and time limits established under the Terms of Reference or indicated by the Client.

2.2

The Services shall be for a maximum duration of

calendar days, or whatever shorter period

shall be indicated by the Client beginning on the date of the commencement of the Services, and ending not later than .

ARTICLE III DUTIES OF THE CONSULTANT

3.1

The Consultant shall perform the Services with all due care, diligence and efficiency, in accordance with the highest standards of professional competence, organization and responsibility, and in a manner acceptable to the Client.

3.2

The Consultant shall:

(a)

regularly report to, and obtain direction and guidance from, the Client on all matters arising from or relating to the present Contract;

(b)

promptly comply with such instructions as may be issued from time to time by the Client in connection with the performance of the Services.

3.3

The Consultant shall perform the Services to the satisfaction of the Client in accordance with the Terms of Reference.

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3.4

The Consultant shall keep and maintain accurate and complete accounts in respect of expenditure incurred under the present Contract in such form and detail as shall be satisfactory to the Client for the purposes of making payment or settlement under the Contract.

3.5

The Consultant shall meet the cost of any insurance and/or medical examination or treatment required by him/her in the course of performing the Services.

3.6

The Consultant shall seek and obtain any visas or residence permits that he/she may require to carry out the services and perform his/her obligations under the present Contract. The Client shall, as necessary, assist the Consultant in obtaining such visas and/or permits.

ARTICLE IV PAYMENT FOR THE SERVICES

4.1

The Client shall pay to the Consultant, in respect of the Services, the various amounts specified in Annex II to this Contract (hereinafter referred to as the "Contract Amount").

4.2

The Contract Amounts shall be paid to the Consultant in accordance with the modalities specified in Annex II to the present Contract, which forms an integral part hereof.

ARTICLE V CONFIDENTIALITY AND OWNERSHIP OF DOCUMENTS

5.1

All documents, statistics, reports, data and other information provided, created, obtained or made available to the Consultant in connection with or by virtue of the present Contract, shall be treated as confidential by the Consultant, and the

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Consultant shall not be entitled to use or make copies of them for any purpose that is not related to the present Contract.

5.2

The documents, statistics, reports and data under the preceding paragraph shall, upon the completion of Services or termination of this Contract, be promptly returned to the Client.

ARTICLE VI ASSIGNMENT AND SUB-CONTRACTING

6.1

Except with the prior written consent of the Client, the Consultant shall not:

(a)

in whole or in part, assign, transfer or otherwise dispose of, his/her rights or obligations under the present Contract;

(b)

sub-contract, or otherwise transfer responsibility for, the whole or any part of the Services.

ARTICLE VII LIABILITY OF THE CONSULTANT

7.1

The Consultant shall abide by, and take all measures necessary to enable him/her comply with, all laws and regulations in force in any place where the Services are to be wholly or partially performed.

7.2

The Consultant shall be fully liable for the consequences of any error or omission on his/her part or for any damage caused by negligence on his/her part in carrying out the Services or performing his/her obligations under the present Contract.

-5ARTICLE VIII FORCE MAJEURE

8.1

Neither party to the present Contract shall be responsible for any delay or failure to perform his/her/its obligations under the Contract if the delay or failure is attributable to force majeure.

8.2

In the event of force majeure which delays performance of the whole or any part of the present Contract for more than sixty (60) days, either party shall have the right, by notice in writing to the other party, to terminate the Contract.

8.3

For purposes of this Article, an event of force majeure shall mean an unforeseen and unavoidable event beyond the reasonable control and contemplation of the party invoking the existence of such event.

ARTICLE IX TERMINATION OF CONTRACT

9.1

The Client may, upon giving not less than seven (7) days' notice in writing to the Consultant, terminate the present Contract for cause if the Consultant has failed to perform the Services or to comply with his/her other obligations under the Contract.

9.2

The Client may, at its option, terminate this Contract when it is in the interest of or for the convenience of the Client to do so, provided that the Consultant shall in that event be given a notice of not less than fifteen (15) days of such termination.

9.3

The Consultant may terminate the present Contract if the Client has, within a period of forty five (45) days after the due date, failed to pay any amount due to him/her in respect of which no dispute has arisen.

-6-

9.4

The parties hereto may by mutual agreement terminate this Contract.

9.5

If the present Contract is terminated under this Article, the Client shall be liable only for payment, in accordance with the payment provisions of the Contract, for the Services actually rendered prior to the effective date of termination, together with such other amounts incidental to the termination as may be reasonable in the circumstances.

ARTICLE X DISPUTE SETTLEMENT

10.1

Any disputes arising out of or in connection with the present Contract shall, unless it is amicably settled, be decided upon by the Courts of the Arab Republic of Egypt.

ARTICLE XI MODIFICATION OR AMENDMENT

11.1

Except by mutual agreement in writing between the parties, no change, modification or amendment shall be made to the present Contract.

11.2

Notwithstanding the preceding paragraph, the Client may at any time order or require changes in the scope of the Services. If such changes add to or reduce the cost of the Services, then the Contract Amount shall be adjusted accordingly.

ARTICLE XII EFFECTIVE DATE

12.1 12.2

The present Contract shall enter into force on the date of its signature by both parties. Unless terminated under Article VIII or IX above, the present Contract shall expire

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upon completion of the Services and the discharge of all obligations rising out of or under the Contract.

ARTICLE XIII CHANNEL OF COMMUNICATIONS AND NOTICE

13.1

For the purposes of the present Contract, the authorized representative of the Client shall be the or such other officer as he/she may designate for this purpose.

13.2

Any communication, notification, submission, notice, demand or request under the present Contract shall be deemed to have been duly transmitted if it shall have been delivered by hand, mail, cable, telefax or e-mail by either party to the other at the appropriate address indicated below, or at such other address as that other party may have indicated:

For the Client: Mail Address Telephone Telefax : : :

For the Consultant: Mail Address Telephone Telefax : : :

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ARTICLE XIV GOVERNING LAW

14.1

This Contract shall be governed by, and construed in all respects in accordance with, the Laws of the Arab Republic of Egypt

IN WITNESS WHEREOF the parties hereto have caused the present Contract to be signed in their respective names in two original counterparts in English on the date first above written.

FOR THE CLIENT

FOR THE CONSULTANT

_____________

_________________________

ANNEX I

Terms of Reference

ANNEX II -

Contract Amount and Method of Payment

(10 ) percent of the lump sum amount shall be paid upon submission of the inception report. (20 ) percent of the lump sum amount shall be paid upon submission of the interim report. (20 ) percent of the lump sum amount shall be paid upon submission of the draft final report. ( 50) percent of the lump sum amount shall be paid upon approval of the final report.

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Description: Sample-Letter of Invitation (LOI)