The Trade and Development Agency (TDA) is an independent U.S. Government agency which provides funding for U.S. companies to conduct feasibility studies on major projects in developing and middle income countries. By providing assistance in project planning, TDA promotes economic development, while helping the U.S. private sector get involved in projects that offer significant export opportunities.
Updated March 1999
INTRODUCTION TO TDA
TDA, which has programs throughout the world, was authorized to operate in the New
Independent States (NIS) of the former Soviet Union in 1991. In the few short years since
opening for business in the NIS, TDA has funded studies on over 180 major infrastructure and
industrial projects. These projects present export opportunities of more than $5 billion for U.S.
companies. Exports of U.S. goods and services related to those projects already total about $600
million.
Feasibility Studies
TDA provides grant funding for studies to determine the technical, economic, and financial
feasibility of major projects and to provide detailed data for making decisions on how to proceed
with project implementation. Historically, most TDA projects have been public sector
undertakings, planned and implemented by government ministries or agencies. Increasingly,
however, developing countries, including the NIS countries, have begun to promote private
sector involvement in major infrastructure and industrial projects. Consequently, TDA now
provides funding for both public and private sector projects, including joint ventures in which
U.S. companies plan to take equity.
To initiate TDA consideration of a project, a request for assistance must be made directly to TDA by the appropriate NIS sponsoring entity (government or private sector). In cases where a specific U.S. company has been identified by the NIS sponsoring entity as its partner on the project, that U.S. company must submit a detailed proposal to TDA following a format which is available from TDA.
If a project appears promising, TDA hires its own consultant to review the project, through either a Desk Study or a Definitional Mission (DM). A Desk Study is a review of the project by the consultant in the United States, and is utilized when there is already sufficient information available so that a visit to the host country is not necessary. This is usually the case when TDA has received a detailed proposal from a U.S. company. A DM involves a short visit by the consultant to the host country to gather additional information on the project and work with the sponsoring entity to develop terms of reference and a budget for the feasibility study.
The Desk Study or DM ascertains whether a project meets the following TDA funding criteria: the project is a developmental priority for the host country; financing for project implementation has been identified and is available if the study confirms project feasibility; the potential for U.S. exports during project implementation is significant (potential U.S. exports of at least $10-15 million); and TDA has a facilitative role to play. Before approving funding, TDA also requires endorsement of the project by the appropriate U.S. Embassy or Consulate.
When TDA provides funding for a feasibility study, it signs a Grant Agreement with the NIS sponsoring entity (the Grantee), and it is the Grantee which selects the U.S. firm to conduct the study. In many cases, the Grantee already has identified that firm (typically the firm that has submitted the proposal to TDA). In other cases, a competitive selection process is undertaken by the Grantee, entailing publication of a request for proposals for the study in Commerce Business Daily. In either case, the selected U.S. contractor signs a contract with the Grantee to conduct the study.
While the Grant Agreement is signed by TDA and the Grantee, no funds are actually transferred to the Grantee. Instead, the U.S. contractor conducts work under its contract with the Grantee and submits its invoices to the Grantee, who, if satisfied with the work, approves the invoices and forwards them to TDA. TDA then pays the contractor directly in the United States.
In almost all cases TDA requires cost-sharing, i.e., TDA only partially covers the cost of the feasibility study, with the remainder of the cost being borne by the U.S. firm conducting the study. TDA's contribution varies according to a number of factors, including, among other things, the size of the firm, the potential follow-on benefit to the firm as supplier to or investor in the project, the costs the firm has already incurred in developing the project, and the risks associated with the project. In addition, in appropriate cases, TDA may require the firm conducting the study to reimburse the TDA funding if the project is implemented and the firm reaps a substantial economic benefit.
Contacts:
Daniel Stein
Regional Director
KelleyAnn Szalkowski
Country Manager (Russia)
Melissa Eustace,Country Manager
(all other NIS countries)
Cynthias Paddock, Project Analyst
U.S. Trade and Development Agency
1621North Kent Street, Suite 300
Arlington, Virginia 22209-2131
Tel.: (703) 875-4357
Fax: (703) 875-4009
Home page: http:\\www.tda.gov
This report is provided courtesy of the Business Information Service for the Newly Independent States (BISNIS)