21 March 2006
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[Federal Register: March 21, 2006 (Volume 71, Number 54)]
[Notices]
[Page 14295-14326]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21mr06-151]
[[Page 14295]]
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Part II
Millennium Challenge Corporation
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Notice of Entering Into a Compact With the Government of the Republic
of Vanuatu; Notice
[[Page 14296]]
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MILLENNIUM CHALLENGE CORPORATION
[MCC FR 06-06]
Notice of Entering Into a Compact With the Government of the
Republic of Vanuatu
AGENCY: Millennium Challenge Corporation.
ACTION: Notice.
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SUMMARY: In accordance with section 610(b)(2) of the Millennium
Challenge Act of 2003 (Pub. L. 108-199, Division D), the Millennium
Challenge Corporation (MCC) is publishing a summary and the complete
text of the Millennium Challenge Compact between the United States of
America, acting through the Millennium Challenge Corporation, and the
Government of the Republic of Vanuatu. Representatives of the United
States Government and the Government of the Republic of Vanuatu
executed the Compact documents on March, 2, 2006.
Dated: March 13, 2006.
John C. Mantini,
Assistant General Counsel, Millennium Challenge Corporation.
Summary of Millennium Challenge Compact With the Government of the
Republic of Vanuatu
I. Introduction
Vanuatu is a small island nation in the South Pacific comprised of
83 separate islands, where approximately half of the population lives
in poverty. As a small, open, island economy, agriculture and tourism
are central to Vanuatu's growth. These two sectors together employ more
than 70% of Vanuatu's working population \1\ and represent
approximately 34% of Vanuatu's GDP.\2\ Vanuatu's poor transportation
infrastructure, however, continues to hinder formal economic activity
and investment in the agriculture and tourism sectors, thereby
constraining private-sector led economic growth. Vanuatu's capital
outlays, at 7% of national expenditures, are the lowest in the Pacific
region.\3\
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\1\ Source: Vanuatu Labor Market Survey (2000).
\2\ Derived from IMF Article IV Consultation statistics and WTTC
Satellite Account data.
\3\ IMF Article IV Consultation (2005).
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The five-year, $65.69 million Vanuatu Compact provides an in-depth
focus on one economic development priority: overcoming transport
infrastructure constraints to poverty reduction and economic growth,
specifically for rural areas. Consisting of eleven infrastructure
projects--including roads, wharves, an airstrip, and warehouses, as
well as institutional strengthening initiatives for enhanced
maintenance capacity, the program aims to benefit poor, rural
agricultural producers and providers of tourist-related goods and
services by reducing transportation costs and improving the reliability
of access to transportation services (the ``MCA Program'').
II. Program Overview and Budget
Vanuatu's MCA Program consists of two principal components: (i)
Civil works for the reconstruction of priority transport infrastructure
on eight islands, covering roads, wharfs, airstrips, and warehouses
(the ``Transport Infrastructure Project''); and (ii) institutional
strengthening efforts in Vanuatu's Public Works Department (``PWD''),
including the provision of plant and equipment for maintenance, in
order to facilitate enhanced sustainability and maintenance of
infrastructure assets (the ``Institutional Strengthening Project'').
Technical, economic, environmental, and social assessments were
completed on each of the eleven civil works subprojects and
institutional strengthening components contained in the MCA Program.
The following eleven sub-projects are included as part of the U.S.
$54.47 million Transport Infrastructure Project:
1. Efate island--Upgrade 90km of the Ring Road;
2. Santo island--Upgrade 70km of the East Coast Road from
Luganville to Port Orly;
3. Santo island--Upgrade South Coast Road Bridges (5);
4. Malekula island--Reconstruct 11km of the Norsup Lakatoro Lits
Lits Road;
5. Malekula island--Upgrade South West Bay Airstrip;
6. Pentecost island--Construct the Loltong Wharf and Upgrade of
North-South Road to Wharf;
7. Tanna island--Reconstruct the Whitesands Road;
8. Epi island--Upgrade Lamen Bay Wharf;
9. Ambae island--Reconstruct Creek Crossings on 50km Road section;
10. Malo island--Upgrade 15km of Roads; and
11. Warehouses (for produce and freight storage):
(i) Ambae island (Lolowai).
(ii) Epi island (Lamen Bay).
(iii) Pentecost island (Loltong).
(iv) Malo island (Nunuka).
(v) Malekula island (South West Bay).
Recognizing the importance of the maintenance of transport
infrastructure in meeting program objectives, the Vanuatu Compact will
provide focused assistance of U.S. $6.22 million to the principal
institution in the Transport Infrastructure Project, namely PWD, to
remove key constraints that face the institution in effectively
delivering maintenance and repair services. The MCA Program also
provides support for the sustainability and viability of the
institution through organizational reform and policy changes. (Refer to
Sections V. C. Government Commitment and Effectiveness and D.
Sustainability, for further information on these maintenance
initiatives.) The following table presents the total Compact cost, by
component:
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Timeline
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Description CY1 ($US CY2 ($US CY3 ($US CY4 ($US CY5 ($US Total
mil) mil) mil) mil) mil)
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Transport Infrastructure Project.. 4.00 22.45 25.80 2.21 0.03 54.47
Institutional Strengthening for 5.47 0.48 0.09 0.09 0.09 6.22
sustainability/Maintenance.......
Program Administration & Audits... 1.67 0.53 0.49 0.49 0.49 3.63
Monitoring & Evaluation........... 0.28 0.06 0.06 0.06 0.91 1.37
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Total......................... 11.42 23.51 26.43 2.85 1.52 65.69
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[[Page 14297]]
III. Impact
The Transport Infrastructure Project is expected to have a
transformational impact on Vanuatu's economic development, increasing
average income per capita (in real terms) by approximately $200, or 15%
of current income per capita, by 2010. GDP is expected to increase by
an additional 3% a year as a result of the program.
Based on the areas covered by the transport assets, the program can
be expected to benefit approximately 65,000 poor, rural inhabitants
living nearby and using the roads to access markets and social
services. The program is also expected to expand the tourism sector by
approximately 15% once construction is complete. Based on the most
recent employment data \4\ this translates to the creation of 280
additional formal sector jobs and 25 new locally-owned businesses each
year in this sector, impacting the lives of over 1,300 people. The
total number of beneficiaries would be higher if the spillover impact
of tourism activities on agriculture, fishery and construction
sectors--as well as impact of the national maintenance strengthening
component--could be measured.
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\4\ National Tourism Development Office (2000) and assuming 2%
growth rate based on labor force growth.
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IV. Program Management
The Government of Vanuatu (``GOV'') is creating an independent
entity, MCA-Vanuatu, housed within the Ministry of Finance and Economic
Management, with primary responsibility for oversight and management of
Compact implementation, particularly all monitoring and evaluation
activities. To oversee MCA-Vanuatu, the GOV has established a Steering
Committee consisting of five Director General-level and four Director-
level civil servants, one private sector representative (General
Manager of Vanuatu Chamber of Commerce), and one civil society
representative (Secretary General of Vanuatu Association of NGOs), with
all members of the Steering Committee possessing voting rights.
Observers to the Steering Committee will include two Government
Directors and an MCC representative.
The PWD will serve as the project manager, holding responsibility
for oversight of the specific activities of the Transport
Infrastructure Project. External professional services (for
construction supervision) will be contracted through MCA-Vanuatu to
assist PWD in its functions.
The Department of Finance in the Ministry of Finance and Economic
Management will serve as the fiscal agent on behalf of MCA-Vanuatu. For
procurements, an external procurement agent will be used, and is
currently being selected through a competitive process. Procurements
will be conducted in accordance with MCC-modified World Bank
Procurement Guidelines. A special U.S. Dollar account will be
established at the Reserve Bank of Vanuatu for receipt of MCC
disbursements.
V. Assessment
A. Economic Analysis
The economic internal rate of return (``ERR'') for the overall
program is estimated to be 25%, calculated over a twenty-year time
horizon. Expected benefits include: Increased agricultural and
fisheries production, induced tourism investment and expenditures,
reduced transport operating costs, reduced infrastructure closures,
reduced freight spoilage, value-added from storage warehouses, and
maintenance cost savings.
In addition to the quantifiable benefits described above, the
upgraded road network is expected to improve the quality of life of all
ni-Vanuatu living within the vicinity of the road by improving access
(via lower costs and shorter travel times) to social services, such as
health centers and schools.
B. Consultative Process
Vanuatu engaged in a comprehensive consultative process, consisting
of: (i) Ongoing national and provincial public forums, such as the
Comprehensive Reform Program Summit, National Business Forum, Rural
Economic Development Initiative, and Government Investment Program
workshops, which included specific discussion on priorities and
projects for the MCA proposal; and (ii) public outreach meetings in
four of Vanuatu's six provinces. Consulted groups included Vanuatu's
council of chiefs, women's group leaders, the private sector, NGOs,
church leaders, and government officials from Vanuatu's provinces. The
proposed projects for MCC consideration were derived from each
province's Rural Economic Development Plan, which included extensive
local-level stakeholder consultation forums in each of Vanuatu's six
provinces.
To sustain public awareness and participation in the Compact
development process, the GOV held MCA public outreach meetings in
various provinces and engaged local media regarding proposal due
diligence, project selection, and Compact development.
C. Government Commitment and Effectiveness
The GOV is undertaking several major policy changes as a part of
the MCA Program. These include:
Policy changes to ensure sufficient budget allocations for road
maintenance activities by the GOV. This policy change will provide PWD
with sufficient means to maintain all new and existing transport
infrastructure.
The GOV or the respective province will develop a revenue
collection mechanism and an implementation plan for the collection of
wharf user fees and their application towards wharf maintenance. This
policy change would provide sufficient funds for maintenance of the
wharves, thereby preserving their useful life and ability to contribute
to economic growth and higher incomes.
D. Sustainability
In addition to the efforts mentioned above, the program will
support the following major institutional changes to promote enhanced
maintenance and sustainability of infrastructure assets:
Establishment of a service performance contract between the
Ministry of Infrastructure and Public Utilities and PWD in order to
make PWD accountable for service delivery against targets set on an
annual basis (the ``Service Performance Contract''). The Service
Performance Contract is expected to reduce the overall cost of
maintenance on an annual basis, and assure proper and timely
maintenance of infrastructure assets.
Establishment of maintenance contracts with community
representatives for various sub-projects to involve local communities
(users) in maintenance activities.
E. Environment and Social Impacts
Initial environmental and social assessment of each of the eleven
proposed projects included in the Transport Infrastructure Project has
been completed. Impacts associated with these projects, which primarily
involve the rehabilitation of existing infrastructure, are likely to be
site-specific and readily mitigable, and are therefore screened as
Category B activities in accordance with the MCC Environmental
Guidelines. No significant adverse environmental or social impacts,
such as the need for resettlement, were identified in the initial
assessment. However, further environmental and social assessment will
be required during the design stage
[[Page 14298]]
to confirm the findings of the initial assessment and to address design
alternatives. Project-specific environmental management plans will be
completed prior to construction.
To address environmental and social issues during program
implementation, MCA-Vanuatu will select in an open and competitive
process, subject to the approval of MCC, an environmental and social
impact officer (``ESI Officer''). The ESI Officer will provide MCA-
Vanuatu with expertise in environmental, social, and gender impact
assessment, and will be responsible for ensuring that the activities
related to the Transport Infrastructure Project and Institutional
Strengthening Project are undertaken in accordance with the MCC
Environmental Guidelines and safeguard policies. The ESI Officer will
be located within the Environmental Unit of the Government, but will be
dedicated to the management of environmental and social issues
associated with implementation of the Transport Infrastructure Project
and Institutional Strengthening Project. The ESI Officer will convene
periodic public meetings to provide implementation updates to identify
and address public concerns.
F. Donor Coordination
The GOV and MCC have convened various meetings with donor partners
such as Australia, New Zealand, France, the European Union, Japan, the
Asian Development Bank (``ADB''), the World Bank, and the IMF to
discuss potential project-level coordination opportunities and
collaborative partnerships for implementation and monitoring. It is
widely accepted among donors that Vanuatu has a substantial need for
investments in transport infrastructure, particularly for rural areas
and the outer islands. The MCA Program builds upon analytical work
previously conducted by the ADB on outer island transport
infrastructure development in Vanuatu.
Donors such as Australia and New Zealand have recently committed to
enlarging their assistance to the productive sectors in response to the
priorities for growth and poverty reduction outlined in the GOV's
National Priorities and Action Agenda. MCC's focus on transport
infrastructure presents a number of mutually beneficial coordination
opportunities with ongoing and planned donor programs, such as: The EU
and France's Agricultural Producers Organization Project; the EU and
ADB's Tourism Training and Education project; ADB's Rural Credit
Strengthening and Secured Transaction Framework projects; AusAID's
Business Climate Reform program; the EU and France's International
Airport upgrading; and the EU and JICA's Institutional Strengthening
for Infrastructure Maintenance programs. Moreover, AusAID is providing
funding for key household data surveys (such as the Household Income
and Expenditure Survey), which will be used in monitoring program
impacts.
Millennium Challenge Compact Between the United States of America
Acting Through the Millennium Challenge Corporation and the Government
of the Republic of Vanuatu
Table of Contents
Article I. Purpose and Term
Section 1.1 Project Objectives
Section 1.2 Projects
Section 1.3 Entry into Force; Compact Term
Article II. Funding and Resources
Section 2.1 MCC Funding
Section 2.2 Government Resources
Section 2.3 Limitations on the Use of Treatment of MCC Funding
Section 2.4 Incorporation; Notice; Clarification
Section 2.5 Refunds; Violations
Article III. Implementation
Section 3.1 Implementation Framework
Section 3.2 Government Responsibilities
Section 3.3 Government Deliveries
Section 3.4 Government Assurances
Section 3.5 Implementation Letters; Supplemental Agreements
Section 3.6 Procurement; Awards of Assistance
Section 3.7 Policy Performance; Policy Reforms
Section 3.8 Records and Information; Access; Audits; Reviews
Section 3.9 Insurance
Section 3.10 Domestic Requirements
Section 3.11 No Conflict
Section 3.12 Reports
Article IV. Conditions Precedent; Deliveries
Section 4.1 Conditions Prior to the Entry into Force and
Deliveries
Section 4.2 Conditions Precedent to MCC Disbursements or Re-
Disbursements
Article V. Final Clauses
Section 5.1 Communications
Section 5.2 Representatives
Section 5.3 Amendments
Section 5.4 Termination; Suspension
Section 5.5 Privileges and Immunities
Section 5.6 Attachments
Section 5.7 Inconsistencies
Section 5.8 Indemnification
Section 5.9 Headings
Section 5.10 Interpretation; Definitions
Section 5.11 Signatures
Section 5.12 Designation
Section 5.13 Survival
Section 5.14 Consultation
Section 5.15 MCC Status
Section 5.16 Language
Section 5.17 Publicity; Information and Marking
Exhibit A: Definitions
Exhibit B: List of Certain Supplemental Agreements
Annex I: Program Description
Schedule 1: Transport Infrastructure Project
Annex II: Financial Plan Summary
Annex III: Description of the M&E Plan
Millennium Challenge Compact
This Millennium Challenge Compact (the ``Compact'') is made between
the United States of America, acting through the Millennium Challenge
Corporation, a United States Government corporation (``MCC''), and the
Government of the Republic of Vanuatu (the ``Government'') (referred to
herein individually as a ``Party'' and collectively, the ``Parties'').
A compendium of capitalized terms defined herein is included in Exhibit
A attached hereto.
Recitals
Whereas, MCC, acting through its Board of Directors, has selected
Vanuatu as eligible to present to MCC a proposal for the use of
Millennium Challenge Account (``MCA'') assistance to help facilitate
poverty reduction through economic growth in Vanuatu;
Whereas, the Government has carried out a consultative process with
the country's private sector and civil society to outline the country's
priorities for the use of MCA assistance and developed a proposal,
which was submitted to MCC on March 31, 2005 (the ``Proposal'');
Whereas, the Proposal focused on, among other things, increasing
economic activity and incomes in rural areas through comprehensive
investments in transport infrastructure, including roads, wharfs,
airstrips and warehouses;
Whereas, MCC has evaluated the Proposal and related documents to
determine whether the Proposal is consistent with core MCA principles
and includes proposed activities and projects that will advance the
progress of Vanuatu towards achieving economic growth and poverty
reduction; and
Whereas, based on MCC's evaluation of the Proposal and related
documents and subsequent discussions and negotiations between the
Parties, the Government and MCC determined to enter into this Compact
to implement a program using MCC Funding to advance Vanuatu's progress
towards economic growth and poverty reduction (the ``Program'');
Now, therefore, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, the Parties hereby agree as
follows:
Article I. Purpose and Term
Section 1.1 Project Objectives. The overall objective of this
Compact is to
[[Page 14299]]
reduce poverty and increase incomes in rural areas by stimulating
economic activity in the tourism and agricultural sectors through the
improvement of transport infrastructure, which is key to economic
growth and poverty reduction in Vanuatu (the ``Compact Goal''). The
Parties have identified the following project-level objectives (each a
``Project Objective'' and together the ``Project Objectives'') to
advance the Compact Goal, each of which is described in more detail in
the Annexes attached hereto:
(a) Provide improved or new priority transport infrastructure in
rural areas and outer islands, including roads, wharfs, airstrips and
warehouses (the ``Infrastructure Objective''); and
(b) Strengthen the ability of the Government, specifically the
capacity and capability of the Department of Public Works, to maintain
and sustain Vanuatu's infrastructure assets (the ``Institutional
Strengthening Objective'').
The Government expects to achieve, and shall use its best efforts
to ensure the achievement of, these Project Objectives during the
Compact Term.
Section 1.2 Projects. The Annexes attached hereto describe the
specific projects and the policy reforms and other activities related
thereto (each, a ``Project'') that the Government will carry out, or
cause to be carried out, in furtherance of this Compact to achieve the
Project Objectives.
Section 1.3 Entry into Force; Compact Term. This Compact shall
enter into force on the date of the last letter in an exchange of
letters between the Principal Representatives of each Party confirming
that each Party has completed its domestic requirements for entry into
force of this Compact and that all conditions set forth in section 4.1
have been satisfied by the Government and MCC (such date, the ``Entry
into Force''). This Compact shall remain in force for five (5) years
from the date of the entry into force of this Compact, unless earlier
terminated in accordance with section 5.4 (the ``Compact Term'').
Article II. Funding and Resources
Section 2.1 MCC Funding.
(a) MCC's Contribution. MCC hereby grants to the Government,
subject to the terms and conditions of this Compact, an amount not to
exceed Sixty-Five Million Six Hundred Ninety Thousand United States
Dollars (USD $65,690,000) ( ``MCC Funding'') during the Compact Term to
enable the Government to implement the Program and achieve the Project
Objectives.
(i) Subject to sections 2.1(a)(ii), 2.2.(b) and 5.4, the allocation
of MCC Funding within the Program and among and within the Projects
shall be as generally described in Annex II or as otherwise agreed upon
by the Parties from time to time.
(ii) If at any time MCC determines that a condition precedent to an
MCC Disbursement has not been satisfied, MCC may, upon written notice
to the Government, reduce the total amount of MCC Funding by an amount
equal to the amount estimated in the applicable Detailed Financial Plan
for the Program or Project activity for which such condition precedent
has not been met. Upon the expiration or termination of this Compact,
(1) any amounts of MCC Funding not disbursed by MCC to the Government
shall be automatically released from any obligation in connection with
this Compact and (2) any amounts of MCC Funding disbursed by MCC to the
Government as provided in section 2.1(b)(i), but not re-disbursed as
provided in section 2.1(b)(ii) or otherwise incurred as permitted
pursuant to section 5.4(e) prior to the expiration or termination of
this Compact, shall be returned to MCC in accordance with section
2.5(a)(ii).
(b) Disbursements.
(i) Disbursements of MCC Funding. MCC shall from time to time make
disbursements of MCC Funding (each such disbursement, an ``MCC
Disbursement'') to a Permitted Account or through such other mechanism
agreed by the Parties under and in accordance with the procedures and
requirements set forth in Annex I, the Disbursement Agreement or as
otherwise provided in any other relevant Supplemental Agreement.
(ii) Re-Disbursements of MCC Funding. The release of MCC Funding
from a Permitted Account (each such release, a ``Re-Disbursement''),
shall be made in accordance with the procedures and requirements set
forth in Annex I, the Disbursement Agreement or as otherwise provided
in any other relevant Supplemental Agreement.
(c) Interest. Unless the Parties agree otherwise in writing, any
interest or other earnings on MCC Funding that accrue (collectively,
``Accrued Interest'') shall be held in a Permitted Account and accrue
in accordance with the requirements for the accrual and treatment of
Accrued Interest as specified in Annex I or any relevant Supplemental
Agreement. On a quarterly basis and upon the termination or expiration
of this Compact, the Government shall return, or ensure the return of,
all Accrued Interest to any United States Government account designated
by MCC.
(d) Conversion; Exchange Rate. The Government shall ensure that all
MCC Funding that is held in the Permitted Account(s) shall be
denominated in the currency of the United States of America (``United
States Dollars'') prior to Re-Disbursement; provided, that a certain
portion of MCC Funding may be transferred to a Local Account and may be
held in such Local Account in the currency of Vanuatu prior to Re-
Disbursement in accordance with the requirements of Annex I and any
relevant Supplemental Agreement. To the extent that any amount of MCC
Funding held in United States Dollars must be converted into the
currency of the Republic of Vanuatu for any purpose, including for any
Re-Disbursement or any transfer of MCC Funding into a Local Account,
the Government shall ensure that such amount is converted consistent
with Annex I, including the rate and manner set forth in Annex I, and
the requirements of the Disbursement Agreement or any other
Supplemental Agreement between the Parties.
(e) Guidance. From time to time, MCC may provide guidance to the
Government through Implementation Letters on the frequency, form and
content of requests for MCC Disbursements and Re-Disbursements or any
other matter relating to MCC Funding. The Government shall apply such
guidance in implementing this Compact.
Section 2.2 Government Resources.
(a) The Government shall provide or cause to be provided such
Government funds and other resources, and shall take or cause to be
taken such actions, including obtaining all necessary approvals and
consents, as are specified in this Compact or in any Supplemental
Agreement to which the Government is a party or as are otherwise
necessary and appropriate to effectively carry out the Government
Responsibilities or other responsibilities or obligations of the
Government under or in furtherance of this Compact during the Compact
Term and through the completion of any post-Compact Term activities,
audits or other responsibilities.
(b) If at any time during the Compact Term, the Government
materially reallocates or reduces the allocation in its national budget
or any other ni-Vanuatu governmental authority at a departmental,
municipal, regional or other jurisdictional level materially
reallocates or reduces the allocation of its respective budget, of the
normal and expected resources that the Government or such other
governmental authority, as applicable, would have otherwise received or
budgeted, from external or
[[Page 14300]]
domestic sources, for the activities contemplated herein, the
Government shall notify MCC in writing within fifteen (15) days of such
reallocation or reduction, such notification to contain information
regarding the amount of the reallocation or reduction, the affected
activities, and an explanation for the reallocation or reduction. In
the event that MCC independently determines upon review of the executed
national annual budget that such a material reallocation or reduction
of resources has occurred, MCC shall notify the Government and,
following such notification, the Government shall provide a written
explanation for such reallocation or reduction and MCC may (i) reduce,
in its sole discretion, the total amount of MCC Funding or any MCC
Disbursement by an amount equal to the amount estimated in the
applicable Detailed Financial Plan for the activity for which funds
were reduced or reallocated or (ii) otherwise suspend or terminate MCC
Funding in accordance with section 5.4(b).
(c) The Government shall use its best efforts to ensure that all
MCC Funding is fully reflected and accounted for in the annual budget
of Vanuatu on a multi-year basis.
(d) The Government shall establish an independent unit within the
Ministry of Finance and Economic Management, or such other entity as
may be acceptable to MCC, which shall be responsible for the oversight
and management of the Program as specified in Annex I (``MCA-
Vanuatu''). The Government shall ensure the independent and proper
administration of MCA-Vanuatu in accordance with the terms of the
Compact, the Governing Documents of MCA-Vanuatu and any relevant
Supplemental Agreements.
Section 2.3 Limitations on the Use or Treatment of MCC Funding.
(a) Abortions and Involuntary Sterilizations. The Government shall
ensure that MCC Funding shall not be used to undertake, fund or
otherwise support any activity that is subject to prohibitions on use
of funds contained in (i) paragraphs (1) through (3) of section 104(f)
of the Foreign Assistance Act of 1961 (22 U.S.C. 2151b(f)(1)-(3), a
United States statute, which prohibitions shall apply to the same
extent and in the same manner as such prohibitions apply to funds made
available to carry out Part I of such Act; or (ii) any provision of law
comparable to the eleventh and fourteenth provisos under the heading
``Child Survival and Health Programs Fund'' of division E of Public Law
108-7 (117 Stat. 162), a United States statute.
(b) United States Job Loss or Displacement of Production. The
Government shall ensure that MCC Funding shall not be used to
undertake, fund or otherwise support any activity that is likely to
cause a substantial loss of United States jobs or a substantial
displacement of United States production, including:
(i) Providing financial incentives to relocate a substantial number
of United States jobs or cause a substantial displacement of production
outside the United States;
(ii) Supporting investment promotion missions or other travel to
the United States with the intention of inducing United States firms to
relocate a substantial number of United States jobs or a substantial
amount of production outside the United States;
(iii) Conducting feasibility studies, research services, studies,
travel to or from the United States, or providing insurance or
technical and management assistance, with the intention of inducing
United States firms to relocate a substantial number of United States
jobs or cause a substantial displacement of production outside the
United States;
(iv) Advertising in the United States to encourage United States
firms to relocate a substantial number of United States jobs or cause a
substantial displacement of production outside the United States;
(v) Training workers for firms that intend to relocate a
substantial number of United States jobs or cause a substantial
displacement of production outside the United States;
(vi) Supporting a United States office of an organization that
offers incentives for United States firms to relocate a substantial
number of United States jobs or cause a substantial displacement of
production outside the United States; or
(vii) Providing general budget support for an organization that
engages in any activity prohibited above.
(c) Military Assistance and Training. The Government shall ensure
that MCC Funding shall not be used to undertake, fund or otherwise
support the purchase or use of goods or services for military purposes,
including military training, or to provide any assistance to the
military, police, militia, national guard or other quasi-military
organization or unit.
(d) Prohibition of Assistance Relating to Environmental, Health or
Safety Hazards. The Government shall ensure that MCC Funding shall not
be used to undertake, fund or otherwise support any activity that is
likely to cause a significant environmental, health, or safety hazard.
Unless MCC and the Government agree otherwise in writing, the
Government shall ensure that activities undertaken, funded or otherwise
supported in whole or in part (directly or indirectly) by MCC Funding
comply with environmental guidelines delivered by MCC to the Government
or posted by MCC on its Web-site or otherwise publicly made available,
as such guidelines may be amended from time to time (the
``Environmental Guidelines''), including any definition of ``likely to
cause a significant environmental, health, or safety hazard'' as may be
set forth in such Environmental Guidelines.
(e) Taxation.
(i) Taxes. As required by applicable United States law and
consistent with the applicable requirement of Vanuatu law that
international cooperation assistance shall be exempt from taxes, the
Government shall ensure that the Program, all Program Assets, MCC
Funding and Accrued Interest shall be free from any taxes imposed under
laws currently or hereafter in effect in Vanuatu during the Compact
Term. This exemption shall apply to any use of any Program Asset, MCC
Funding and Accrued Interest, including any Exempt Uses, and to any
work performed under or activities undertaken in furtherance of this
Compact by any person or entity (including contractors and grantees)
funded by MCC Funding, and shall apply to all taxes, tariffs, duties,
and other levies (each a ``Tax'' and collectively, ``Taxes''),
including:
(1) To the extent attributable to MCC Funding, income taxes and
other taxes on profit or businesses imposed on organizations or
entities, other than nationals of Vanuatu, receiving MCC Funding,
including taxes on the acquisition, ownership, rental, disposition or
other use of real or personal property, taxes on investment or deposit
requirements and currency controls in Vanuatu, or any other tax, duty,
charge or fee of whatever nature, except fees for specific services
rendered; for purposes of this section 2.3(e), the term ``national''
refers to organizations established under the laws of Vanuatu, other
than MCA-Vanuatu or any other entity established solely for purposes of
managing or overseeing the implementation of the Program or any wholly-
owned subsidiaries, divisions, or Affiliates of entities not registered
or established under the laws of Vanuatu;
(2) Customs duties, tariffs, import and export taxes, or other
levies on the importation, use and re-exportation of goods, services,
or the personal belongings and effects, including personally-owned
automobiles, for Program use or the personal use of individuals who are
neither citizens nor
[[Page 14301]]
permanent residents of Vanuatu and who are present in Vanuatu for
purposes of carrying out the Program or their family members, including
all charges based on the value of such imported goods;
(3) Taxes on the income or personal property of all individuals who
are neither citizens nor permanent residents of Vanuatu, including
income and social security taxes of all types and all taxes on the
personal property owned by such individuals, to the extent such income
or property are attributable to MCC Funding; and
(4) Taxes or duties levied on the purchase of goods or services
funded by MCC Funding, including sales taxes, tourism taxes, value-
added taxes (VAT), or other similar charges.
(ii) This section 2.3(e) shall apply, but is not limited to (1) any
transaction, service, activity, contract, grant or other implementing
agreement funded in whole or in part by MCC Funding; (2) any supplies,
equipment, materials, property or other goods (referred to herein
collectively as ``goods'') or funds introduced into, acquired in, used
or disposed of in, or imported into or exported from, Vanuatu by MCC,
or by any person or entity (including contractors and grantees) as part
of, or in conjunction with, MCC Funding or the Program; (3) any
contractor, grantee, or other organization carrying out activities
funded in whole or in part by MCC Funding; and (4) any employee of such
organizations (the uses set forth in clauses (1) through (4) are
collectively referred to herein as ``Exempt Uses'').
(iii) If a Tax has been levied and paid contrary to the
requirements of this section 2.3(e), whether inadvertently, due to the
impracticality of implementation of this provision with respect to
certain types or amounts of taxes, or otherwise, the Government shall
refund promptly to MCC to an account designated by MCC the amount of
such Tax in the currency of Vanuatu, within thirty (30) days (or such
other period as may be agreed in writing by the Parties) after the
Government is notified in writing according to procedures agreed by the
Parties, whether by MCC or otherwise, of such levy and tax payment;
provided, however, the Government shall apply national funds to satisfy
its obligations under this section 2.3(e)(iii) and no MCC Funding,
Accrued Interest, or any assets, goods, or property (real, tangible, or
intangible) purchased or financed in whole or in part (directly or
indirectly) by MCC Funding (``Program Assets'') may be applied by the
Government in satisfaction of its obligations under this paragraph.
(iv) The Parties shall memorialize in a mutually acceptable
Supplemental Agreement or other suitable document the mechanisms for
implementing this section 2.3(e), including (1) a formula for
determining refunds for Taxes paid, the amount of which is not
susceptible to precise determination, (2) a mechanism for ensuring the
tax-free importation, use, and re-exportation of goods, services, or
the personal belongings of individuals (including all Providers)
described in paragraph (i)(2) of this section 2.3(e), and (3) any other
appropriate Government action to facilitate the administration of this
section 2.3(e).
(f) Alteration. The Government shall ensure that neither MCC
Funding nor Accrued Interest or Program Assets shall be subject to any
impoundment, rescission, sequestration or any provision of law now or
hereafter in effect in Vanuatu that would have the effect of requiring
or allowing any impoundment, rescission or sequestration of any MCC
Funding, Accrued Interest or Program Asset.
(g) Liens or Encumbrances. The Government shall ensure that no MCC
Funding, Accrued Interest or Program Assets shall be subject to any
lien, attachment, enforcement of judgment, pledge, or encumbrance of
any kind (each a ``Lien''), except with the prior approval of MCC in
accordance with section 3(c) of Annex I, and in the event of the
imposition of any Lien not so approved, the Government shall promptly
seek the release of such Lien and shall promptly pay any amounts owed
to obtain such release; provided, however, the Government shall satisfy
its obligations under this section 2.3(g) at its own expense and no MCC
Funding, Accrued Interest or Program Assets may be applied by the
Government in satisfaction of its obligations under this section
2.3(g).
(h) Other Limitations. The Government shall ensure that the use or
treatment of MCC Funding shall be subject to such other limitations (i)
as required by the applicable law of the United States of America now
or hereafter in effect during the Compact Term, (ii) as advisable under
or required by applicable United States Government policies now or
hereafter in effect during the Compact Term, or (iii) to which the
Parties may otherwise agree in writing.
(i) Utilization of Goods, Services and Works. The Government shall
ensure that any Program Assets, services, facilities or works funded in
whole or in part (directly or indirectly) by MCC Funding, unless
otherwise agreed by the Parties in writing, shall be used solely in
furtherance of this Compact.
(j) Notification of Applicable Laws and Policies. MCC shall notify
the Government of any applicable United States law or policy affecting
the use or treatment of MCC Funding, whether or not specifically
identified in this section 2.3, and shall provide to the Government a
copy of the text of any such applicable law and a written explanation
of any such applicable policy.
Section 2.4 Incorporation; Notice; Clarification.
(a) The Government shall include, or ensure the inclusion of, all
of the requirements set forth in section 2.3 in all Supplemental
Agreements to which MCC is not a party and shall use its best efforts
to ensure that no such Supplemental Agreement is implemented in
violation of the prohibitions set forth in section 2.3.
(b) The Government shall ensure notification of all of the
requirements set forth in section 2.3 to any Provider and all relevant
officers, directors, employees, agents, representatives, Affiliates,
contractors, sub-contractors, grantees and sub-grantees of any
Provider. The term ``Provider'' shall mean (i) MCA-Vanuatu and any
Government Affiliate or Permitted Designee involved in any activities
in furtherance of this Compact or (ii) any third party who receives at
least USD $50,000 in the aggregate of MCC Funding (other than employees
of MCA-Vanuatu) during the Compact Term or such other amount as the
Parties may agree in writing, whether directly from MCC, indirectly
through Re-Disbursements, or otherwise.
(c) In the event the Government or any Provider requires
clarification from MCC as to whether an activity contemplated to be
undertaken in furtherance of this Compact violates or may violate any
provision of section 2.3, the Government shall notify, or ensure that
such Provider notifies, MCC in writing and provide in such notification
a detailed description of the activity in question. In such event, the
Government shall not proceed, and shall use its best efforts to ensure
that no relevant Provider proceeds, with such activity, and the
Government shall ensure that no Re-Disbursements shall be made for such
activity, until MCC advises the Government or such Provider in writing
that the activity is permissible.
Section 2.5 Refunds; Violation.
(a) Notwithstanding the availability to MCC, or exercise by MCC of,
any other remedies, including under international law, this Compact, or
any Supplemental Agreement:
[[Page 14302]]
(i) If any amount of MCC Funding or Accrued Interest, or any
Program Asset, is used for any purpose prohibited under this Article II
or otherwise in violation of any of the terms and conditions of this
Compact, any guidance in any Implementation Letter, or any Supplemental
Agreement between the Parties, MCC may require the Government to repay
promptly to MCC to an account designated by MCC or to others as MCC may
direct the amount of such misused MCC Funding or Accrued Interest, or
the cash equivalent of the value of any misused Program Asset, in
United States Dollars, plus any interest that accrued or would have
accrued thereon, within thirty (30) days (or such other period as may
be agreed in writing by the Parties) after the Government is notified,
whether by MCC or otherwise, of such prohibited use; provided, however,
the Government shall apply national funds to satisfy its obligations
under this section 2.5(a)(i) and no MCC Funding, Accrued Interest, nor
Program Assets may be applied by the Government in satisfaction of its
obligations under this section 2.5(a)(i); and
(ii) If all or any portion of this Compact is terminated or
suspended and upon the expiration of this Compact, the Government
shall, subject to the requirements of sections 5.4(e) and 5.4(f),
refund, or ensure the refund, to MCC to such account(s) designated by
MCC the amount of any MCC Funding, plus any Accrued Interest, promptly,
but in no event later than thirty (30) days after the Government
receives MCC's request for such refund; provided, that if this Compact
is terminated or suspended in part, MCC may request a refund for only
the amount of MCC Funding, plus any Accrued Interest, then allocated to
the terminated or suspended portion; provided, further, that any refund
of MCC Funding or Accrued Interest shall be to such account(s) as
designated by MCC.
(b) Notwithstanding any other provision in this Compact or any
other agreement to the contrary, MCC's right under this section 2.5 for
a refund shall continue during the Compact Term and for a period of (i)
five (5) years thereafter or (ii) one (1) year after MCC receives
actual knowledge of such violation, whichever is later.
(c) If MCC determines that any activity or failure to act violates,
or may violate, any section in this Article II, MCC may refuse any
further MCC Disbursements for or conditioned upon such activity, and
may take any action to prevent any Re-Disbursement related to such
activity.
Article III. Implementation
Section 3.1 Implementation Framework. This Compact shall be
implemented by the Parties in accordance with this Article III and as
further specified in the Annexes and in relevant Supplemental
Agreements.
Section 3.2 Government Responsibilities.
(a) The Government shall have principal responsibility for
oversight and management of the implementation of the Program (i) in
accordance with the terms and conditions specified in this Compact and
relevant Supplemental Agreements, (ii) in accordance with all
applicable laws then in effect in the Republic of Vanuatu, and (iii) in
a timely and cost-effective manner and in conformity with sound
technical, financial and management practices (collectively, the
``Government Responsibilities''). Unless otherwise expressly provided,
any reference to the Government Responsibilities or any other
responsibilities or obligations of the Government herein shall be
deemed to apply to any Government Affiliate and any of their respective
directors, officers, employees, contractors, sub-contractors, grantees,
sub-grantees, agents or representatives.
(b) The Government shall ensure that no person or entity shall
participate in the selection, award, administration or oversight of a
contract, grant or other benefit or transaction funded in whole or in
part (directly or indirectly) by MCC Funding, in which (i) the entity,
the person, members of the person's immediate family or household or
his or her business partners, or organizations controlled by or
substantially involving such person or entity, has or have a financial
or other interest or (ii) the person or entity is negotiating or has
any arrangement concerning prospective employment, unless such person
or entity has first disclosed in writing to the Government the conflict
of interest and, following such disclosure, the Parties agreed in
writing to proceed notwithstanding such conflict. The Government shall
ensure that no person or entity involved in the selection, award,
administration, oversight or implementation of any contract, grant or
other benefit or transaction funded in whole or in part (directly or
indirectly) by MCC Funding shall solicit or accept from or offer to a
third party or seek or be promised (directly or indirectly) for itself
or for another person or entity any gift, gratuity, favor or benefit,
other than items of de minimis value and otherwise consistent with such
guidance as MCC may provide from time to time.
(c) The Government shall not designate any person or entity,
including any Government Affiliate, to implement, in whole or in part,
this Compact or any Supplemental Agreement between the Parties
(including any Government Responsibilities or any other
responsibilities or obligations of the Government under this Compact or
any Supplemental Agreement between the Parties) or to exercise any
rights of the Government under this Compact or any Supplemental
Agreement between the Parties, except as expressly provided herein or
with the prior written consent of MCC; provided, however, the
Government may designate MCA-Vanuatu or, with the prior written consent
of MCC, such other mutually acceptable persons or entities, to
implement some or all of the Government Responsibilities or any other
responsibilities or obligations of the Government or to exercise any
rights of the Government under this Compact or any Supplemental
Agreement between the Parties (referred to herein collectively as
``Designated Rights and Responsibilities''), in accordance with the
terms and conditions set forth in this Compact or such Supplemental
Agreement (each, a ``Permitted Designee''). Notwithstanding any
provision herein or any other agreement to the contrary, no such
designation shall relieve the Government of such Designated Rights and
Responsibilities, for which the Government shall retain ultimate
responsibility. In the event that the Government designates any person
or entity, including any Government Affiliate, to implement any portion
of the Government Responsibilities or other responsibilities or
obligations of the Government, or to exercise any rights of the
Government under this Compact or any Supplemental Agreement between the
Parties, in accordance with this section 3.2(c), then the Government
shall (i) cause such person or entity to perform such Designated Rights
and Responsibilities in the same manner and to the full extent to which
the Government is obligated to perform such Designated Rights and
Responsibilities, (ii) ensure that such person or entity does not
assign, delegate, or contract (or otherwise transfer) any of such
Designated Rights and Responsibilities to any other person or entity
and (iii) cause such person or entity to certify to MCC in writing that
it will so perform such Designated Rights and Responsibilities and will
not assign, delegate, or contract (or otherwise transfer) any of such
Designated Rights
[[Page 14303]]
and Responsibilities to any person or entity without the prior written
consent of MCC.
(d) The Government shall, upon a request from MCC, execute, or
ensure the execution of, an assignment to MCC of any cause of action
which may accrue to the benefit of the Government, a Government
Affiliate or any Permitted Designee including MCA-Vanuatu in connection
with or arising out of any activities funded in whole or in part
(directly or indirectly) by MCC Funding.
(e) The Government shall ensure that (i) no decision of MCA-Vanuatu
is modified, supplemented, unduly influenced or rescinded by any
governmental authority, except by a non-appealable judicial decision or
any judicial decision which MCA-Vanuatu, with the agreement of MCC,
decides not to appeal, and (ii) the authority of MCA-Vanuatu shall not
be expanded, restricted, or otherwise modified, except in accordance
with this Compact, the Governance Agreement, or any other Supplemental
Agreement between the Parties.
(f) The Government shall ensure that all persons and individuals
that enter into agreements to provide goods, services or works under
the Program or in furtherance of this Compact shall do so in accordance
with the Procurement Guidelines and shall obtain all necessary
immigration, business and other permits, licenses, consents and
approvals to enable them and their personnel to fully perform under
such agreements.
Section 3.3 Government Deliveries. The Government shall proceed,
and cause others to proceed, in a timely manner to deliver to MCC all
Government deliveries required to be delivered by the Government under
this Compact or any Supplemental Agreement between the Parties, in form
and substance as set forth in this Compact or in any such Supplemental
Agreement.
Section 3.4 Government Assurances. The Government hereby provides
the following assurances to MCC that as of the date this Compact is
signed:
(a) The information contained in the Proposal and any agreement,
report, statement, communication, document or otherwise delivered or
otherwise communicated to MCC by or on behalf of the Government on or
after the date of the submission of the Proposal (i) are true, correct
and complete in all material respects and (ii) do not omit any fact
known to the Government that if disclosed would (1) alter in any
material respect the information delivered, (2) likely have a material
adverse effect on the Government's ability to effectively implement, or
ensure the effective implementation of, the Program or any Project or
to otherwise carry out its responsibilities or obligations under or in
furtherance of this Compact, or (3) have likely adversely affected
MCC's determination to enter into this Compact or any Supplemental
Agreement between the Parties;
(b) Unless otherwise disclosed in writing to MCC, the MCC Funding
made available hereunder is in addition to the normal and expected
resources that the Government usually receives or budgets for the
activities contemplated herein from external or domestic sources;
(c) This Compact does not conflict and will not conflict with any
international agreement or obligation to which the Government is a
party or by which it is bound; and
(d) No payments have been (i) received by any official of the
Government or any other government body in connection with the
procurement of goods, services or works to be undertaken or funded in
whole or in part (directly or indirectly) by MCC Funding, except fees,
taxes, or similar payments legally established in Vanuatu or (ii) made
to any third party, in connection with or in furtherance of this
Compact, in violation of the United States Foreign Corrupt Practices
Act of 1977, as amended (15 U.S.C. 78a et seq.).
Section 3.5 Implementation Letters; Supplemental Agreements.
(a) MCC may, from time to time, issue one or more letters to
furnish additional information or guidance to assist the Government in
the implementation of this Compact (each, an ``Implementation
Letter''). The Government shall apply such guidance in implementing
this Compact.
(b) The details of any funding, implementing and other arrangements
in furtherance of this Compact may be memorialized in one or more
agreements between (i) the Government (or any Government Affiliate or
Permitted Designee) and MCC, (ii) MCC and/or the Government (or any
Government Affiliate or Permitted Designee) and any third party,
including any of the Providers or Permitted Designee or (iii) any third
parties where neither MCC nor the Government is a party, before, on or
after the Entry into Force (each, a ``Supplemental Agreement''). The
Government shall deliver, or cause to be delivered, to MCC within five
(5) days of its execution a copy of any Supplemental Agreement to which
MCC is not a party.
Section 3.6 Procurement; Awards of Assistance.
(a) The Government shall ensure that the procurement of all goods,
services and works by the Government or any Provider in furtherance of
this Compact shall be consistent with the procurement guidelines (the
``Procurement Guidelines'') reflected in a Supplemental Agreement
between MCC and MCA-Vanuatu (the ``Procurement Agreement''), which
Procurement Guidelines shall include the following requirements:
(i) Internationally accepted procurement rules with open, fair and
competitive procedures are used in a transparent manner to solicit,
award and administer contracts, grants, and other agreements and to
procure goods, services and works;
(ii) Solicitations for goods, services, and works shall be based
upon a clear and accurate description of the goods, services or works
to be acquired;
(iii) Contracts shall be awarded only to qualified and capable
contractors that have the capability and willingness to perform the
contracts in accordance with the terms and conditions of the applicable
contracts and on a cost effective and timely basis; and
(iv) No more than a commercially reasonable price, as determined,
for example, by a comparison of price quotations and market prices,
shall be paid to procure goods, services, and works.
(b) The Government shall maintain, and shall use its best efforts
to ensure that all Providers maintain, records regarding the receipt
and use of goods, services and works acquired in furtherance of this
Compact, the nature and extent of solicitations of prospective
suppliers of goods, services and works acquired in furtherance of this
Compact, and the basis of award of contracts, grants and other
agreements in furtherance of this Compact.
(c) The Government shall use its best efforts to ensure that
information, including solicitations, regarding procurement, grant and
other agreement actions funded (or to be funded) in whole or in part
(directly or indirectly) by MCC Funding shall be made publicly
available in the manner outlined in the Procurement Guidelines or in
any other manner agreed upon by the Parties in writing.
(d) The Government shall ensure that no goods, services or works
funded in whole or in part (directly or indirectly) by MCC Funding are
procured pursuant to orders or contracts firmly placed or entered into
prior to the Entry into Force, except as the Parties may otherwise
agree in writing.
(e) The Government shall ensure that MCA-Vanuatu and any other
Permitted
[[Page 14304]]
Designee follows, and uses its best efforts to ensure that all
Providers follow, the Procurement Guidelines in procuring (including
soliciting) goods, services and works and in awarding and administering
contracts, grants and other agreements in furtherance of this Compact,
and shall furnish MCC evidence of the adoption of the Procurement
Guidelines by MCA-Vanuatu no later than the time specified in the
Disbursement Agreement.
(f) The Government shall include, or ensure the inclusion of, the
requirements of this section 3.6 into all Supplemental Agreements
between the Government or any Government Affiliate or Permitted
Designee or any of their respective directors, officers, employees,
Affiliates, contractors, sub-contractors, grantees, sub-grantees,
representatives or agents, on the one hand, and a Provider, on the
other hand.
Section 3.7 Policy Performance; Policy Reforms. In addition to the
specific policy and legal reform commitments identified in Annex I and
the Schedules thereto, the Government shall seek to maintain and
improve its level of performance under the policy criteria identified
in section 607 of the Millennium Challenge Act of 2003, as amended (the
``Act''), and the MCA selection criteria and methodology published by
MCC pursuant to section 607 of the Act from time to time (``MCA
Eligibility Criteria'').
Section 3.8 Records and Information; Access; Audits; Reviews.
(a) Reports and Information. The Government shall furnish to MCC,
and shall use its best efforts to ensure that all Providers and any
other third party receiving MCC Funding, as appropriate, furnish to the
Government (and the Government shall provide to MCC), any records and
other information required to be maintained under this section 3.8 and
such other information, documents and reports as may be necessary or
appropriate for the Government to effectively carry out its obligations
under this Compact, including under section 3.12.
(b) Government Books and Records. The Government shall maintain,
and shall use its best efforts to ensure that all Providers maintain,
accounting books, records, documents and other evidence relating to
this Compact adequate to show, to the satisfaction of MCC, without
limitation, the use of all MCC Funding, including all costs incurred by
the Government and the Providers in furtherance of this Compact, the
receipt, acceptance and use of goods, services and works acquired in
furtherance of this Compact by the Government and the Providers,
agreed-upon cost sharing requirements, the nature and extent of
solicitations of prospective suppliers of goods, services and works
acquired by the Government and the Providers in furtherance of this
Compact, the basis of award of Government and other contracts and
orders in furtherance of this Compact, the overall progress of the
implementation of the Program, and any documents required by this
Compact or any Supplemental Agreement between the Parties or reasonably
requested by MCC upon reasonable notice (``Compact Records''). The
Government shall maintain, and shall use its best efforts to ensure
that all Covered Providers maintain, Compact Records in accordance with
generally accepted accounting principles prevailing in the United
States, or at the Government's option and with the prior written
approval by MCC, other accounting principles, such as those (i)
prescribed by the International Accounting Standards Committee (an
affiliate of the International Federation of Accountants) or (ii) then
prevailing in Vanuatu. Compact Records shall be maintained for at least
five (5) years after the end of the Compact Term or for such longer
period, if any, required to resolve any litigation, claims or audit
findings or any statutory requirements.
(c) Access. At the request of MCC, the Government, at all
reasonable times, shall permit, or cause to be permitted, authorized
representatives of MCC, the Inspector General, the United States
Government Accountability Office, any auditor responsible for an audit
contemplated herein or otherwise conducted in furtherance of this
Compact, and any agents or representatives engaged by MCC or a
Permitted Designee to conduct any assessment, review or evaluation of
the Program, at all reasonable times the opportunity to audit, review,
evaluate or inspect activities funded in whole or in part (directly or
indirectly) by MCC Funding or undertaken in connection with the
Program, the utilization of goods and services purchased or funded in
whole or in part (directly or indirectly) by MCC Funding, and Compact
Records, including of the Government or any Provider, relating to
activities funded or undertaken in furtherance of, or otherwise
relating to, this Compact, and shall use its best efforts to ensure
access by MCC, the Inspector General, the United States Government
Accountability Office or relevant auditor, reviewer or evaluator or
their respective representatives or agents to all relevant directors,
officers, employees, Affiliates, contractors, representatives and
agents of the Government or any Provider.
(d) Audits.
(i) Government Audits. The Government shall, on at least an annual
basis and as the Parties may otherwise agree in writing, conduct, or
cause to be conducted, financial audits of all MCC Disbursements and
Re-Disbursements during the year since the Entry into Force or since
the prior anniversary of the Entry into Force in accordance with the
following terms, except as the Parties may otherwise agree in writing.
As requested by MCC in writing, the Government shall use, or cause to
be used, or select, or cause to be selected, an auditor named on the
approved list of auditors in accordance with the Guidelines for
Financial Audits Contracted by Foreign Recipients (the ``Audit
Guidelines'') issued by the Inspector General of the United States
Agency for International Development (the ``Inspector General''), and
as approved by MCC, to conduct such annual audits. Such audits shall be
performed in accordance with such Audit Guidelines and be subject to
quality assurance oversight by the Inspector General in accordance with
such Audit Guidelines. An audit shall be completed no later than 90
days after the first anniversary of the Entry into Force of this
Compact and no later than 90 days after each anniversary of the Entry
into Force of this Compact thereafter, or such other period as the
Parties may otherwise agree in writing.
(ii) Audits of U.S. Entities. The Government shall ensure that
Supplemental Agreements between the Government or any Provider, on the
one hand, and a United States nonprofit organization, on the other
hand, state that the United States organization is subject to the
applicable audit requirements contained in OMB Circular A-133,
notwithstanding any other provision of this Compact to the contrary.
The Government shall ensure that Supplemental Agreements between the
Government or any Provider, on the one hand, and a United States for-
profit Covered Provider, on the other hand, state that the United
States organization is subject to audit by the cognizant United States
Government agency, unless the Government and MCC agree otherwise in
writing.
(iii) Audit Plan. The Government shall submit, or cause to be
submitted, to MCC, no later than twenty (20) days prior to the date of
its adoption, in form and substance satisfactory to MCC, a plan, in
accordance with the Audit Guidelines, for the audit of the expenditures
of any Covered Providers, which audit plan, in the form and
[[Page 14305]]
substance as approved by MCA-Vanuatu, the Government shall adopt, or
cause to be adopted, no later than sixty (60) days prior to the end of
the first anniversary of the Entry into Force of this Compact or prior
to the end of the first period to be audited.
(iv) Covered Provider. A ``Covered Provider'' is (1) a non-United
States Provider that receives (other than pursuant to a direct contract
or agreement with MCC) USD $300,000 or more of MCC Funding in any MCA-
Vanuatu fiscal year or any other non-United States person or entity
that receives (directly or indirectly) USD $300,000 or more of MCC
Funding from any Provider in such fiscal year or (2) any United States
Provider that receives (other than pursuant to a direct contract or
agreement with MCC) USD $500,000 or more of MCC Funding in any MCA-
Vanuatu fiscal year or any other United States person or entity that
receives (directly or indirectly) USD $500,000 or more of MCC Funding
from any Provider in such fiscal year.
(v) Corrective Actions. The Government shall use its best efforts
to ensure that Covered Providers take, where necessary, appropriate and
timely corrective actions in response to audits, consider whether a
Covered Provider's audit necessitates adjustment of its own records,
and require each such Covered Provider to permit independent auditors
to have access to its records and financial statements as necessary.
(vi) Audit Reports. The Government shall furnish, or use its best
efforts to cause to be furnished, to MCC an audit report in a form
satisfactory to MCC for each audit required by this section 3.8, other
than audits arranged for by MCC, no later than 90 days after the end of
the period under audit, or such other time as may be agreed by the
Parties from time to time.
(vii) Other Providers. For Providers who receive MCC Funding under
this Compact pursuant to direct contracts or agreements with MCC, MCC
shall include appropriate audit requirements in such contracts or
agreements and shall, on behalf of the Government, unless otherwise
agreed by the Parties, conduct the follow-up activities with regard to
the audit reports furnished pursuant to such requirements.
(viii) Audit by MCC. MCC retains the right to perform, or cause to
be performed, the audits required under this section 3.8 by utilizing
MCC Funding or other resources available to MCC for this purpose, and
to audit, conduct a financial review, or otherwise ensure
accountability of any Provider or any other third party receiving MCC
Funding, regardless of the requirements of this section 3.8. MCC will
provide notice to the Government of its intent to exercise such right.
(e) Application to Providers. The Government shall include, or
ensure the inclusion of, at a minimum, the requirements of:
(i) Paragraphs (a), (b), (c), (d)(ii), (d)(iii), (d)(v), (d)(vi),
and (d)(viii) of this section 3.8 into all Supplemental Agreements
between the Government, any Government Affiliate, any Permitted
Designee or any of their respective directors, officers, employees,
Affiliates, contractors, sub-contractors, grantees, sub-grantees,
representatives or agents (each, a ``Government Party''), on the one
hand, and a Covered Provider that is not a non-profit organization
domiciled in the United States, on the other hand;
(ii) Paragraphs (a), (b), (c), (d)(ii), and (d)(viii) of this
section 3.8 into all Supplemental Agreements between a Government Party
and a Provider that does not meet the definition of a Covered Provider;
and
(iii) Paragraphs (a), (b), (c), (d)(ii), (d)(v) and (d)(viii) of
this section 3.8 into all Supplemental Agreements between a Government
Party and a Covered Provider that is a non-profit organization
domiciled in the United States.
(f) Reviews or Evaluations. The Government shall conduct, or cause
to be conducted, such performance reviews, data quality reviews,
environmental audits, or program evaluations during the Compact Term or
otherwise and in accordance with the M&E Plan or as otherwise agreed in
writing by the Parties.
(g) Cost of Audits, Reviews or Evaluations. MCC Funding may be used
to fund the costs of any Audits, reviews or evaluations required under
this Compact, including as reflected on Exhibit A to Annex II, and in
no event shall the Government be responsible for the costs of any such
Audits, reviews or evaluations from financial sources other than MCC
Funding.
Section 3.9 Insurance. The Government shall, to MCC's satisfaction,
insure or cause to be insured all Program Assets and shall obtain or
cause to be obtained such other appropriate insurance and other
protections to cover against risks or liabilities associated with the
operations of the Program, including by requiring Providers to obtain
adequate insurance and post adequate performance bonds or other
guarantees. MCA-Vanuatu or the Implementing Entity, as applicable,
shall be named as the payee on any such insurance and the beneficiary
of any such guarantee, including performance bonds. MCC and, to the
extent it is not named as the insured party, MCA-Vanuatu shall be named
as additional insured on any such insurance or other guarantee, to the
extent permissible under applicable laws. The Government shall ensure
that any proceeds from claims paid under such insurance or any other
form of guarantee shall be used to replace or repair any loss of
Program Assets or to pursue the procurement of the covered goods,
services or works; provided, however, at MCC's election, such proceeds
shall be deposited in a Permitted Account as designated by MCA-Vanuatu
and acceptable to MCC or otherwise as directed by MCC. To the extent
MCA-Vanuatu is held liable under any indemnification or other similar
provision of any agreement between MCA-Vanuatu, on the one hand, and
any other Provider or other third party, on the other hand, the
Government shall pay in full on behalf of MCA-Vanuatu any such
obligation; provided, further, the Government shall apply national
funds to satisfy its obligations under this section 3.9 and no MCC
Funding, Accrued Interest, or Program Asset may be applied by the
Government in satisfaction of its obligations under this section 3.9.
Section 3.10 Domestic Requirements. The Government shall proceed in
a timely manner to seek any required ratification of this Compact or
similar domestic requirement, which process the Government shall
initiate promptly after the conclusion of this Compact. Notwithstanding
anything to the contrary in this Compact, this section 3.10 shall
provisionally apply prior to the Entry into Force.
Section 3.11 No Conflict. The Government shall undertake not to
enter into any agreement in conflict with this Compact or any
Supplemental Agreement during the Compact Term.
Section 3.12 Reports. The Government shall provide, or cause to be
provided, to MCC at least on each anniversary of the Entry Into Force
and otherwise within thirty (30) days of any written request by MCC, or
as otherwise agreed in writing by the Parties, the following
information:
(a) The name of each entity to which MCC Funding has been provided;
(b) The amount of MCC Funding provided to such entity;
(c) A description of the Program and each Project funded in
furtherance of this Compact, including:
(i) A statement of whether the Program or any Project was solicited
or unsolicited; and
[[Page 14306]]
(ii) A detailed description of the objectives and measures for
results of the Program or Project;
(d) The progress made by Vanuatu toward achieving the Compact Goal
and Project Objectives;
(e) A description of the extent to which MCC Funding has been
effective in helping Vanuatu to achieve the Compact Goal and Project
Objectives;
(f) A description of the coordination of MCC Funding with other
United States foreign assistance and other related trade policies;
(g) A description of the coordination of MCC Funding with
assistance provided by other donor countries, subject to the relevant
protocols governing such assistance;
(h) Any report, document or filing that the Government, any
Government Affiliate or any Permitted Designee submits to any
government body in connection with this Compact;
(i) Any report or document required to be delivered to MCC under
the Environmental Guidelines, any Audit Plan, or any component of the
Implementation Plan; and
(j) Any other report, document or information requested by MCC or
required by this Compact or any Supplemental Agreement between the
Parties.
Article IV. Conditions Precedent; Deliveries
Section 4.1 Conditions Prior to the Entry into Force and
Deliveries. As conditions precedent to the Entry into Force, the
Parties shall satisfy the conditions set forth in this section 4.1.
(a) The Government (or a mutually acceptable Government Affiliate)
and MCC shall execute a Disbursement Agreement, which agreement shall
be in full force and effect as of the Entry into Force.
(b) The Government (or a mutually acceptable Government Affiliate)
and MCC shall execute one or more of the Supplemental Agreements
identified in Exhibit B attached hereto, which agreements shall be in
full force and effect as of the Entry into Force, or execute one or
more term sheets that set forth the material and principal terms and
conditions that will be included in any such Supplemental Agreement
that has not been entered into as of the Entry into Force (the
``Supplemental Agreement Term Sheets'').
(c) The Government (or mutually acceptable Government Affiliate)
and MCC shall execute a Procurement Agreement, which agreement shall be
in full force and effect as of the Entry into Force.
(d) The Government shall deliver a written statement as to the
incumbency and specimen signature of the Principal Representative and
each Additional Representative executing any document under this
Compact, such written statement to be signed by a duly authorized
official of the Government other than the Principal Representative or
any such Additional Representative.
(e) The Government shall deliver a certificate signed and dated by
the Principal Representative of the Government certifying:
(i) That the Government has completed all of its domestic
requirements for this Compact to be fully enforceable under Vanuatu
law; and
(ii) That attached thereto are true, correct and complete copies of
any decree, legislation, regulation or other governmental document
relating to its domestic requirements for this Compact to enter into
force, which MCC may post on its Web site or otherwise make publicly
available.
(f) MCC shall deliver a certificate signed and dated by the
Principal Representative of MCC certifying that MCC has completed its
domestic requirements for this Compact to enter into force.
(g) MCC shall deliver a written statement as to the incumbency and
specimen signature of the Principal Representative and each Additional
Representative executing any document under this Compact such written
statement to be signed by a duly authorized officer of MCC other than
the Principal Representative or any such Additional Representative.
Section 4.2 Conditions Precedent to MCC Disbursements or Re-
Disbursements. Prior to, and as condition precedent to, any MCC
Disbursement or Re-Disbursement, the Government shall satisfy, or
ensure the satisfaction of, all applicable conditions precedent in the
Disbursement Agreement.
Article V. Final Clauses
Section 5.1 Communications. Unless otherwise expressly stated in
this Compact or otherwise agreed in writing by the Parties, any notice,
certificate, request, report, document or other communication required,
permitted, or submitted by either Party to the other under this Compact
shall be: (a) In writing; (b) in English; and (c) deemed duly given:
(i) Upon personal delivery to the Party to be notified; (ii) when sent
by confirmed facsimile or electronic mail, if sent during normal
business hours of the recipient Party, if not, then on the next
business day; or (iii) two (2) business days after deposit with an
internationally recognized overnight courier, specifying next day
delivery, with written verification of receipt to the Party to be
notified at the address indicated below, or at such other address as
such Party may designate:
To MCC:
Millennium Challenge Corporation, Attention: Vice President of
Operations, (with a copy to the Vice President and General Counsel),
875 Fifteenth Street, NW., Washington, DC 20005, United States of
America, Facsimile: (202) 521-3700, E-mail: VPOperations@mcc.gov (Vice
President of Operations); VPGeneralCounsel@mcc.gov (Vice President and
General Counsel)
To the Government:
Office of the Prime Minister, Attention: Director-General, Office
of the Prime Minister, PMB 9053 Port Vila, Republic of Vanuatu,
Facsimile: (678) 26708.
Notwithstanding the foregoing, any audit report delivered pursuant
to section 3.8, if delivered by facsimile or electronic mail, shall be
followed by an original in overnight express mail. This section 5.1
shall not apply to the exchange of letters contemplated in section 1.3
or any amendments under section 5.3.
Section 5.2 Representatives. Unless otherwise agreed in writing by
MCC, for all purposes relevant to this Compact, the Government shall be
represented by the Director-General of the Prime Minister's Office, or
in his absence the relevant designated Additional Representative, and
MCC shall be represented by the individual holding the position of, or
acting as, Vice President, Department of Operations (each, a
``Principal Representative''), each of whom, by written notice, may
designate one or more additional representatives (each, an ``Additional
Representative'') for all purposes other than signing amendments to
this Compact. The names of the Principal Representative and any
Additional Representative of each of the Parties shall be provided,
with specimen signatures, to the other Party, and the Parties may
accept as duly authorized any instrument signed by such representatives
relating to the implementation of this Compact, until receipt of
written notice of revocation of their authority. MCC may change its
Principal Representative to a new representative of equivalent or
higher rank upon written notice to the Government, which notice shall
include the specimen signature of the new Principal Representative.
[[Page 14307]]
Section 5.3 Amendments. The Parties may amend this Compact only by
a written agreement signed by the Principal Representatives of the
Parties and subject to the respective domestic approval requirements to
which this Compact was subject.
Section 5.4 Termination; Suspension.
(a) Subject to section 2.5 and paragraphs (e) through (h) of this
section 5.4, either Party may terminate this Compact in its entirety by
giving the other Party thirty (30) days' written notice.
(b) Notwithstanding any other provision of this Compact, including
section 2.1, or any Supplemental Agreement between the Parties, MCC may
suspend or terminate this Compact or MCC Funding, in whole or in part,
and any obligation or sub-obligation related thereto, upon giving the
Government written notice, if MCC determines, in its sole discretion
that:
(i) Any use or proposed use of MCC Funding or Program Assets or
continued implementation of the Compact would be in violation of
applicable law or United States Government policy, whether now or
hereafter in effect;
(ii) The Government, any Provider, or any other third party
receiving MCC Funding or using Program Assets is engaged in activities
that are contrary to the national security interests of the United
States;
(iii) The Government or any Permitted Designee has committed an act
or omission or an event has occurred that would render Vanuatu
ineligible to receive United States economic assistance under Part I of
the Foreign Assistance Act of 1961, as amended (22 U.S.C 2151 et seq.),
by reason of the application of any provision of the Foreign Assistance
Act of 1961 or any other provision of law;
(iv) The Government or any Permitted Designee has engaged in a
pattern of actions or omissions inconsistent with the MCA Eligibility
Criteria, or there has occurred a significant decline in the
performance of Vanuatu on one or more of the eligibility indicators
contained therein;
(v) The Government or any Provider has materially breached one or
more of its assurances or any covenants, obligations or
responsibilities under this Compact or any Supplemental Agreement;
(vi) An audit, review, report or any other document or other
evidence reveals that actual expenditures for the Program or any
Project or any Project Activity were greater than the projected
expenditure for such activities identified in the applicable Detailed
Financial Plan or are projected to be greater than projected
expenditures for such activities;
(vii) If the Government (1) materially reduces the allocation in
its national budget or any other Government budget of the normal and
expected resources that the Government would have otherwise received or
budgeted, from external or domestic sources, for the activities
contemplated herein; (2) fails to contribute or provide the amount,
level, type and quality of resources required to effectively carry out
the Government Responsibilities or any other responsibilities or
obligations of the Government under or in furtherance of this Compact;
or (3) fails to pay any of its obligations as required under this
Compact or any Supplemental Agreement, including such obligations which
shall be paid solely out of national funds;
(viii) If the Government, any Provider, or any other third party
receiving MCC Funding or using Program Assets, or any of their
respective directors, officers, employees, Affiliates, contractors,
sub-contractors, grantees, sub-grantees, representatives or agents, is
found to have been convicted of a narcotics offense or to have been
engaged in drug trafficking;
(ix) Any MCC Funding or Program Assets are applied (directly or
indirectly) to the provision of resources and support to, individuals
and organizations associated with terrorism, sex trafficking or
prostitution;
(x) An event or condition of any character has occurred that: (1)
Materially and adversely affects, or is likely to materially and
adversely affect, the ability of the Government or any other party to
effectively implement, or ensure the effective implementation of, the
Program or any Project or to otherwise carry out its responsibilities
or obligations under or in furtherance of this Compact or any
Supplemental Agreement or to perform its obligations under or in
furtherance of this Compact or any Supplemental Agreement or to
exercise its rights thereunder; (2) makes it improbable that the
Project Objectives will be achieved during the Compact Term; (3)
materially and adversely affects the Program Assets or any Permitted
Account; or (4) constitutes misconduct injurious to MCC, or constitutes
a fraud or a felony, by the Government, any Government Affiliate,
Permitted Designee or Provider, or any officer, director, employee,
agent, representative, Affiliate, contractor, grantee, subcontractor or
sub-grantee thereof;
(xi) The Government or any Permitted Designee or Provider has taken
any action or omission or engaged in any activity in violation of, or
inconsistent with, the requirements of this Compact or any Supplemental
Agreement to which the Government or any Permitted Designee or Provider
is a party;
(xii) There has occurred a failure to meet a condition precedent or
series of conditions precedent or any other requirements or conditions
in connection with MCC Disbursement as set out in and in accordance
with any Supplemental Agreement between the Parties; or
(xiii) Any MCC Funding, Accrued Interest or Program Asset becomes
subject to a Lien without the prior approval of MCC, and the Government
fails to (i) obtain the release of such Lien and (ii) pay solely with
national funds (and not with MCC Funding, Accrued Interest or Program
Assets) any amounts owed to obtain such release, all within 30 days
after the imposition of such Lien.
(c) MCC may reinstate any suspended or terminated MCC Funding under
this Compact or any Supplemental Agreement if MCC determines, in its
sole discretion, that the Government or other relevant party has
demonstrated a commitment to correcting each condition for which MCC
Funding was suspended or terminated.
(d) The authority to suspend or terminate this Compact or any MCC
Funding under this section 5.4 includes the authority to suspend or
terminate any obligations or sub-obligations relating to MCC Funding
under any Supplemental Agreement without any liability to MCC
whatsoever.
(e) All MCC Disbursements and Re-Disbursements shall cease upon
expiration, suspension, or termination of this Compact; provided,
however, (i) reasonable expenditures for goods, services and works that
are properly incurred under or in furtherance of this Compact before
expiration, suspension or termination of the Compact and (ii)
reasonable expenditures for goods and services (including
administrative expenses) properly incurred within one hundred twenty
(120) days after the expiration, suspension or termination of the
Compact in connection with the winding up of the Program may be paid
from MCC Funding, provided that in the case of clauses (i) and (ii) the
request for such payment is (A) properly submitted within ninety (90)
days after the expiration, suspension or termination of the Compact and
(B) subject to the prior written consent of MCC.
(f) Except for payments which the Parties are committed to make
under noncancelable commitments entered into with third parties before
such
[[Page 14308]]
suspension or termination, the suspension or termination of this
Compact or any Supplemental Agreement, in whole or in part, shall
suspend, for the period of the suspension, or terminate, or ensure the
suspension or termination of, as applicable, any obligation or sub-
obligation of the Parties to provide financial or other resources under
this Compact or any Supplemental Agreement, or to the suspended or
terminated portion of this Compact or such Supplemental Agreement, as
applicable. In the event of such suspension or termination, the
Government shall use its best efforts to suspend or terminate, or
ensure the suspension or termination of, as applicable, all such
noncancelable commitments related to the suspended or terminated MCC
Funding. Any portion of this Compact or any such Supplemental Agreement
that is not suspended or terminated shall remain in full force and
effect.
(g) Upon the full or partial suspension or termination of this
Compact or any MCC Funding, MCC may, at its expense, direct that title
to Program Assets be transferred to MCC if such Program Assets are in a
deliverable state; provided, for any Program Asset(s) partially
purchased or funded (directly or indirectly) by MCC Funding, the
Government shall reimburse to a United States Government account
designated by MCC the cash equivalent of the portion of the value of
such Program Asset(s).
(h) Prior to the expiration of this Compact or upon the termination
of this Compact, the Parties shall consult in good faith with a view to
reaching an agreement in writing on (i) the post-Compact Term treatment
of MCA-Vanuatu, (ii) the process for ensuring the refunds of MCC
Disbursements that have not yet been released from a Permitted Account
through a valid Re-Disbursement nor otherwise committed in accordance
with section 5.4(e), or (iii) any other matter related to the winding
up of the Program and this Compact.
Section 5.5 Privileges and Immunities. MCC is an agency of the
Government of the United States of America and its personnel assigned
to Vanuatu will be notified pursuant to the Vienna Convention on
Diplomatic Relations as members of the mission of the Embassy of the
United States of America. The Government shall ensure that any
personnel of MCC, including individuals detailed to or contracted by
MCC, and the members of the families of such personnel, while such
personnel are performing duties in Vanuatu, shall enjoy the privileges
and immunities that are enjoyed by a member of the United States
Foreign Service, or the family of a member of the United States Foreign
Service, as appropriate, of comparable rank and salary of such
personnel, if such personnel or the members of the families of such
personnel are not a national of, or permanently resident in Vanuatu.
Section 5.6 Attachments. Any annex, schedule, exhibit, table,
appendix or other attachment expressly attached hereto (collectively,
the ``Attachments'') is incorporated herein by reference and shall
constitute an integral part of this Compact.
Section 5.7 Inconsistencies.
(a) Conflicts or inconsistencies between any parts of this Compact
shall be resolved by applying the following descending order of
precedence:
(i) Articles I through V; and
(ii) Any Attachments.
(b) In the event of any conflict or inconsistency between this
Compact and any Supplemental Agreement between the Parties, the terms
of this Compact shall prevail. In the event of any conflict or
inconsistency between any Supplemental Agreement between the Parties
and any other Supplemental Agreement, the terms of the Supplemental
Agreement between the Parties shall prevail. In the event of any
conflict or inconsistency between Supplemental Agreements between any
parties, the terms of a more recently executed Supplemental Agreement
between such parties shall take precedence over a previously executed
Supplemental Agreement between such parties. In the event of any
inconsistency between a Supplemental Agreement between the Parties and
any component of the Implementation Plan, the terms of the relevant
Supplemental Agreement shall prevail.
Section 5.8 Indemnification. The Government shall indemnify and
hold MCC and any MCC officer, director, employee, Affiliate,
contractor, agent or representative (each of MCC and any such persons,
an ``MCC Indemnified Party'') harmless from and against, and shall
compensate, reimburse and pay such MCC Indemnified Party for, any
liability or other damages which (i) are (directly or indirectly)
suffered or incurred by such MCC Indemnified Party, or to which any MCC
Indemnified Party may otherwise become subject, regardless of whether
or not such damages relate to any third-party claim, and (ii) arise
from or as a result of the negligence or willful misconduct of the
Government, any Government Affiliate, or any Permitted Designee,
(directly or indirectly) connected with, any activities (including acts
or omissions) undertaken in furtherance of this Compact; provided,
however, the Government shall apply national funds to satisfy its
obligations under this Section 5.8 and no MCC Funding, Accrued
Interest, or Program Asset may be applied by the Government in
satisfaction of its obligations under this section 5.8.
Section 5.9 Headings. The section and subsection headings used in
this Compact are included for convenience only and are not to be
considered in construing or interpreting this Compact.
Section 5.10 Interpretation; Definitions.
(a) Any reference to the term ``including'' in this Compact shall
be deemed to mean ``including without limitation'' except as expressly
provided otherwise.
(b) Any reference to activities undertaken ``in furtherance of this
Compact'' or similar language shall include activities undertaken by
the Government, any Government Affiliate or Permitted Designee, any
Provider or any other third party receiving MCC Funding involved in
carrying out the purposes of this Compact or any Supplemental
Agreement, including their respective directors, officers, employees,
Affiliates, contractors, sub-contractors, grantees, sub-grantees,
representatives or agents, whether pursuant to the terms of this
Compact, any Supplemental Agreement or otherwise.
(c) References to ``day'' or ``days'' shall be calendar days unless
provided otherwise.
(d) The term ``United States Government'' shall, for the purposes
of this Compact, mean any branch, agency, bureau, government
corporation, government chartered entity or other body of the Federal
government of the United States.
(e) The term ``Affiliate'' of a party is a person or entity that
controls, is controlled by, or is under the same control as the party
in question, whether by ownership or by voting, financial or other
power or means of influence.
(f) The term ``Government Affiliate'' is an Affiliate, ministry,
bureau, department, agency, government corporation or any other entity
chartered or established by the Government.
(g) References to any Affiliate or Government Affiliate herein
shall include any of their respective directors, officers, employees,
affiliates, contractors, sub-contractors, grantees, sub-grantees,
representatives, and agents.
(h) Any references to ``Supplemental Agreement between the
Parties'' shall
[[Page 14309]]
mean any agreement between MCC on the one hand, and the Government or
any Government Affiliate or Permitted Designee on the other hand.
Section 5.11 Signatures. Other than a signature to this Compact or
an amendment to this Compact pursuant to section 5.3, a signature
delivered by facsimile or electronic mail in accordance with section
5.1 shall be deemed an original signature, and the Parties hereby waive
any objection to such signature or to the validity of the underlying
document, certificate, notice, instrument or agreement on the basis of
the signature's legal effect, validity or enforceability solely because
it is in facsimile or electronic form. Such signature shall be accepted
by the receiving Party as an original signature and shall be binding on
the Party delivering such signature.
Section 5.12 Designation. MCC may designate any Affiliate, agent,
or representative to implement, in whole or in part, its obligations,
and exercise any of its rights, under this Compact or any Supplemental
Agreement between the Parties.
Section 5.13 Survival. Any Government Responsibilities, covenants,
or obligations or other responsibilities to be performed by the
Government after the Compact Term shall survive the termination or
expiration of this Compact and expire in accordance with their
respective terms. Notwithstanding the termination or expiration of this
Compact, the following provisions shall remain in force: Sections 2.2,
2.3, 2.5, 3.2, 3.3, 3.4, 3.5, 3.8, 3.9 (for one year), 3.12, 5.1, 5.2,
5.4(d), 5.4(e) (for sixty days), 5.4(f), 5.4(g), 5.4(h), 5.5, 5.6, 5.7,
5.8, 5.9, 5.10, 5.11, 5.12, this section 5.13, 5.14, and 5.15.
Section 5.14 Consultation. Either Party may, at any time, request
consultations relating to the interpretation or implementation of this
Compact or any Supplemental Agreement between the Parties. Such
consultations shall begin at the earliest possible date. The request
for consultations shall designate a representative for the requesting
Party with the authority to enter consultations and the other Party
shall endeavor to designate a representative of equal or comparable
rank. If such representatives are unable to resolve the matter within
20 days from the commencement of the consultations then each Party
shall forward the consultation to the Principal Representative or such
other representative of comparable or higher rank. The consultations
shall last no longer than 45 days from date of commencement. If the
matter is not resolved within such time period, either Party may
terminate this Compact pursuant to section 5.4(a). The Parties shall
enter any such consultations guided by the principle of achieving the
Compact Goal in a timely and cost-effective manner.
Section 5.15 MCC Status. MCC is a United States government
corporation acting on behalf of the United States Government in the
implementation of this Compact. As such, MCC has no liability under
this Compact, is immune from any action or proceeding arising under or
relating to this Compact and the Government hereby waives and releases
all claims related to any such liability. In matters arising under or
relating to this Compact, MCC is not subject to the jurisdiction of the
courts or other body of Vanuatu.
Section 5.16 Language. This Compact is prepared in English and in
the event of any ambiguity or conflict between this official English
version and any other version translated into any language for the
convenience of the Parties, this official English version shall
prevail.
Section 5.17 Publicity; Information and Marking. The Government
shall give appropriate publicity to this Compact as a program to which
the United States, through MCC, has contributed, including by posting
this Compact, and any amendments thereto, on the MCA-Vanuatu Web site,
identifying Program activity sites, and marking Program Assets;
provided, any announcement, press release or statement regarding MCC or
the fact that MCC is funding the Program or any other publicity
materials referencing MCC, including the publicity described in this
section 5.17, shall be subject to prior approval by MCC and shall be
consistent with any instructions provided by MCC from time to time in
relevant Implementation Letters. Upon the termination or expiration of
this Compact, MCC may request the removal of, and the Government shall,
upon such request, remove, or cause the removal of, any such markings
and any references to MCC in any publicity materials or on the MCA-
Vanuatu Web site.
In Witness Whereof, the undersigned, duly authorized by their
respective governments, have signed this Compact this 2nd day of March,
2006 and this Compact shall enter into force in accordance with section
1.3.
Done at Port Vila, Vanuatu in the English language.
For the United States of America, acting through the Millennium
Challenge Corporation, Name: Charles O. Sethness, Title: Vice
President, Accountability.
For the Government of The Republic of Vanuatu, Name: Ham Lini,
Title: Prime Minister of the Republic of Vanuatu.
Exhibit A--Definitions
The following compendium of capitalized terms that are used herein
is provided for the convenience of the reader. To the extent that there
is a conflict or inconsistency between the definitions in this Exhibit
A and the definitions elsewhere in the text of this Compact, the
definition elsewhere in this Compact shall prevail over the definition
in this Exhibit A.
Accrued Interest is any interest or other earnings on MCC Funding
that accrues or are earned.
Act means the Millennium Challenge Act of 2003, as amended.
ADB means the Asian Development Bank.
Additional Representative is a representative as may be designated
by a Principal Representative, by written notice, for all purposes
other than signing amendments to this Compact.
Affiliate means the affiliate of a party, which is a person or
entity that controls, is controlled by, or is under the same control as
the party in question, whether by ownership or by voting, financial or
other power or means of influence. References to Affiliate herein shall
include any of their respective directors, officers, employees,
affiliates, contractors, sub-contractors, grantees, sub-grantees,
representatives, and agents.
Attachments means any annex, schedule, exhibit, table, appendix or
other attachment to this Compact.
Audit Guidelines means the ``Guidelines for Financial Audits
Contracted by Foreign Recipients'' issued by the Inspector General of
the United States Agency for International Development.
Auditor means the auditor(s) as defined in, and engaged pursuant
to, section 3(h) of Annex I and as required by section 3.8(d) of the
Compact.
Auditor/Reviewer Agreement is an agreement between MCA-Vanuatu and
each Auditor or Reviewer, in form and substance satisfactory to MCC,
that sets forth the roles and responsibilities of the Auditor or
Reviewer with respect to the audit, review or evaluation, including
access rights, required form and content of the applicable audit,
review or evaluation and other appropriate terms and conditions such as
payment of the Auditor or Reviewer.
AusAID means the Australian Agency for International Development.
[[Page 14310]]
Bank(s) means each individually and collectively, any bank holding
an account referenced in section 4(d) of Annex I.
Bank Agreement means an agreement between MCA-Vanuatu and a Bank,
satisfactory to MCC, that sets forth the signatory authority, access
rights, anti-money laundering and anti-terrorist financing provisions,
and other terms related to the Permitted Account.
Beneficiaries means the intended beneficiaries identified in
accordance with section 3 of Schedule 1 of Annex I.
Chair means the Chair of the Steering Committee.
Compact means the Millennium Challenge Compact made between the
United States of America, acting through the Millennium Challenge
Corporation, and the Government of the Republic of Vanuatu.
Compact Goal means reducing poverty and increasing incomes in rural
areas by stimulating economic activity in the tourism and agricultural
sectors through the improvement of transport infrastructure in Vanuatu.
Compact Records shall have the meaning set forth in section 3.8(b).
Compact Reports means any documents or reports delivered to MCC in
satisfaction of the Government's reporting requirements under this
Compact or any Supplemental Agreement between the Parties.
Compact Term means the term for which this Compact shall remain in
force, which shall be the five (5) year period from the Entry into
Force, unless earlier terminated in accordance with section 5.4.
Covered Provider shall have the meaning set forth in section
3.8(d)(iv).
Designated Rights and Responsibilities shall have the meaning set
forth in section 3.2(c).
Detailed Financial Plan means the financial plans that detail the
annual and quarterly budget and projected cash requirements for the
Program (including administrative costs) and the Transport
Infrastructure Project, projected both on a commitment and cash
requirement basis.
Disbursement Agreement is a Supplemental Agreement that MCC, the
Government (or a mutually acceptable Government Affiliate) and MCA-
Vanuatu shall enter into that (i) further specifies the terms and
conditions of any MCC Disbursements and Re-Disbursements, (ii) is in a
form and substance mutually satisfactory to the Parties, and (iii) is
signed by the Principal Representative of each Party (or in the case of
the Government, the principal representative of the applicable
Government Affiliate) and of MCA-Vanuatu.
EMPs means environmental management plans.
Entry into Force means the entry into force of this Compact, which
shall be on the date of the last letter in an exchange of letters
between the Principal Representatives of each Party confirming that all
conditions set forth in section 4.1 have been satisfied by the
Government and MCC.
Environmental Guidelines means the environmental guidelines
delivered by MCC to the Government or posted by MCC on its Web site or
otherwise publicly made available, as such guidelines may be amended
from time to time.
Equipment Subproject Activity shall have the meaning set forth in
section 2(b)(i) of Schedule 1 of Annex 1.
ESI Officer means Environmental and Social Impact Officer.
EU means the European Union.
Evaluation Component means the component of the M&E Plan that
specifies a methodology, process and timeline for the evaluation of
planned, ongoing, or completed Project Activities to determine their
efficiency, effectiveness, impact and sustainability.
Exempt Uses shall have the meaning set forth in section 2.3(e)(ii).
Final Evaluation shall have the meaning set forth in section 3(a)
of Annex III.
Financial Plan means collectively, the Multi-Year Financial Plan,
each Detailed Financial Plan, and each amendment, supplement or other
change thereto.
Financial Plan Annex means Annex II of this Compact, which
summarizes the Multi-Year Financial Plan for the Program.
Fiscal Accountability Plan shall have the meaning set forth in
section 4(c) of Annex I.
Fiscal Agent shall have the mean set forth in section 3(g) of Annex
I.
Fiscal Agent Agreement is an agreement between MCA-Vanuatu and each
Fiscal Agent, in form and substance satisfactory to MCC, that sets
forth the roles and responsibilities of the Fiscal Agent and other
appropriate terms and conditions, such as payment of the Fiscal Agent.
GDP means gross domestic product.
Goal Indicator means the Indicator in the M&E Plan that will
measure results for the overall Program. A table of Compact Goal
Indicator definitions is set forth at section 2(a)(i) of Annex III.
Governance Agreement is the governance agreement to be entered into
by the Government and MCA-Vanuatu and, at MCC's option, MCC, that, in
addition to the Governing Documents, sets forth the terms and
conditions to govern MCA-Vanuatu.
Governing Documents shall have the meaning set forth in section
3(c)(i)(10) of Annex I.
Government means the Government of the Republic of Vanuatu.
Government Affiliate is an Affiliate, ministry, bureau, department,
agency, government corporation or any other entity chartered or
established by the Government. References to Government Affiliate shall
include any of their respective directors, officers, employees,
affiliates, contractors, sub-contractors, grantees, sub-grantees,
representatives, and agents.
Government Members are the government members identified in section
3(d)(ii)(2)(A)(i-x) of Annex I serving as voting members on the
Steering Committee, and any replacements thereof in accordance with
section 3(d)(ii)(2)(A) of Annex I.
Government Party means the Government, any Government Affiliate,
any Permitted Designee or any of their respective directors, officers,
employees, Affiliates, contractors, sub-contractors, grantees, sub-
grantees, representatives or agents.
Government Responsibilities shall have the meaning set forth in
section 3.2(a).
HIES means the Household Income and Expenditure Survey.
Implementation Letter is a letter that may be issued by MCC from
time to time to furnish additional information or guidance to assist
the Government in the implementation of this Compact.
Implementation Plan is a detailed plan for the implementation of
the Program and each Project activity, which will be memorialized in
one or more documents and shall consist of: (i) A Financial Plan, (ii)
a Fiscal Accountability Plan, (iii) a Procurement Plan, (iv) Work
Plans, and (v) an M&E Plan.
Implementing Entity means a Government agency, nongovernmental
organization or other public- or private-sector entity or persons to
which MCA-Vanuatu may provide MCC Funding, directly or indirectly,
through the Outside Project Manager to implement and carry out the
Transport Infrastructure Project or any other activities to be carried
out in furtherance of this Compact.
Implementing Entity Agreement is an agreement between MCA-Vanuatu
and an Implementing Entity, in form and substance satisfactory to MCC,
that sets forth the roles and responsibilities of such Implementing
Entity and other
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appropriate terms and conditions, such as payment of the Implementing
Entity.
Indicator(s) means the quantitative, objective and reliable data
that the M&E Plan will use to measure the results of the Program.
Indicator Baseline shall have the meaning set forth in section 2(a)
of Annex III.
Infrastructure Activity is the Project Activity described in
section 2(a) of Schedule 1 of Annex I.
Infrastructure Objective means the Project Objective to provide
improved or new priority transport infrastructure in rural areas and
outer islands, including roads, wharfs, airstrips and warehouses.
Infrastructure Subproject Activity shall have the meaning set forth
in section 2(a) of Schedule 1 of Annex 1.
Inspector General means the Inspector General of the United States
Agency for International Development.
Institutional Strengthening Activity shall have the meaning set
forth in section 2(b) of Schedule 1 of Annex 1.
Institutional Strengthening Objective means the Project Objective
to strengthen the ability of the Government, specifically the capacity
and capability of the Department of Public Works, to maintain and
sustain Vanuatu's infrastructure assets.
Institutional Strengthening Subproject Activity shall have the
meaning set forth in Section 2(b) of Schedule 1 of Annex 1.
Lien means any lien, attachment, enforcement of judgment, pledge,
or encumbrance of any kind.
Local Account shall have the meaning set forth in section 4(d)(ii)
of Annex I.
M&E Annex means Annex III of this Compact, which generally
describes the components of the M&E Plan for the Program.
M&E Implementation Manual means the implementation manual to be
developed by MCA-Vanuatu and approved by MCC consistent with the M&E
Plan.
M&E Plan means the plan to measure and evaluate progress toward
achievement of the Compact Goal and Objectives of this Compact.
Managing Director means the Managing Director of MCA-Vanuatu.
Material Agreement shall have the meaning set forth in section
3(c)(i)(3) of Annex I.
Material Re-Disbursement means any Re-Disbursement that requires
MCC approval under applicable law, the Governing Documents, the
Procurement Agreement, Procurement Guidelines, or any Supplemental
Agreement.
Material Terms of Reference means any terms of reference for the
procurement of goods, services or works that require MCC approval under
applicable law, the Governing Documents, the Procurement Agreement,
Procurement Guidelines, or any Supplemental Agreement.
MCA means the Millennium Challenge Account.
MCA Eligibility Criteria means the MCA selection criteria and
methodology published by MCC pursuant to section 607 of the Act from
time to time.
MCA-Vanuatu shall have the meaning set forth in section 2.2(d) of
this Compact and as is further described in section 3(d) of Annex I.
MCA-Vanuatu Web site means the Web site operated by MCA-Vanuatu.
MCC means the Millennium Challenge Corporation.
MCC Disbursement means the disbursement of MCC Funding by MCC to a
Permitted Account or through such other mechanism agreed by the Parties
as defined in and in accordance with section 2.1(b)(i) of this Compact.
MCC Disbursement Request means the applicable request that the
Government and MCA-Vanuatu will jointly submit for an MCC Disbursement
as may be specified in the Disbursement Agreement.
MCC Funding shall have the meaning set forth in section 2.1(a).
MCC Indemnified Party means MCC and any MCC officer, director,
employee, Affiliate, contractor, agent or representative.
MCC Representative is a representative appointed by MCC to serve as
an Observer on the Steering Committee.
Monitoring Component means the component of the M&E Plan that
specifies how progress toward the Project Objectives and intermediate
results of the Transport Infrastructure Project will be monitored and
as set forth in section 2 of Annex III.
Multi-Year Financial Plan means the multi-year financial plan for
the Program and for the Transport Infrastructure Project, which is
summarized in Annex II.
Multi-Year Financial Plan Summary means a multi-year Financial plan
summary attached to this Compact as Exhibit A of Annex II.
NGOs means non-governmental organizations.
Non-Government Members are the General Manager of the Chamber of
Commerce and the Secretary-General of the Vanuatu Non-Governmental
Organization serving as Voting Members on the Steering Committee.
Objective Indicator means the Indicator in the M&E Plan for each
Project Objective that will measure the final results of the Transport
Infrastructure Project in order to monitor its success in meeting each
of the Project Objectives. A table of Objective Indicator definitions
is set forth at section 2(a)(ii) of Annex III.
Observers means the non-voting observers of the Steering Committee
described in section 3(d)(ii)(2) of Annex I.
Outcome Indicator means the Indicator in the M&E Plan that will
measure the intermediate results achieved under each of the Project
Activities to provide an early measure of the likely impact of the
Transport Infrastructure Project. A table of Outcome Indicator
definitions is set forth at section 2(a)(ii) of Annex III.
Outside Project Manager means the qualified persons or entities
engaged by MCA-Vanuatu, to serve as outside project managers in
accordance with section 3(e) of Annex I.
PAA is the Government's National Priorities and Action Agenda.
Parties means the United States, acting through MCC, and the
Government.
Party means (i) the United States, acting through MCC or (ii) the
Government.
Permitted Account(s) shall have the meaning set forth in section
4(d) of Annex I.
Permitted Designee shall have the meaning set forth in section
3.2(c).
Pledge means any pledge of any MCC Funding or any Program Assets,
or any guarantee (directly or indirectly) of any indebtedness.
Principal Representative means (i) for the Government, the
individual holding the position of the Director-General of the Prime
Minister's Office, or in his absence the relevant designated Additional
Representative and (ii) for MCC, the individual holding the position
of, or acting as, the Vice President of Operations.
Procurement Agent are the procurement agents that MCA-Vanuatu will
engage to carry out and/or certify specified procurement activities in
furtherance of this Compact on behalf of the Government, MCA-Vanuatu,
the Project Manager or Implementing Entity.
Procurement Agent Agreement is the agreement that MCA-Vanuatu
enters into with the Procurement Agent, in form and substance
satisfactory to MCC, that sets forth the roles and responsibilities of
the Procurement Agent with respect to the conduct, monitoring and
review of procurements and other appropriate terms and conditions, such
as payment of the Procurement Agent.
[[Page 14312]]
Procurement Agreement is a Supplemental Agreement between MCC and
MCA-Vanuatu, which includes the Procurement Guidelines, and governs the
procurement of all goods, services and works by the Government or any
Provider in furtherance of this Compact.
Procurement Guidelines shall have the meaning set forth in section
3.6(a).
Procurement Plan shall have the meaning set forth in section 3(i)
of Annex I.
Program means a program, to be implemented under this Compact,
using MCC Funding to advance Vanuatu's progress towards economic growth
and poverty reduction.
Program Annex means Annex I to this Compact, which generally
describes the Program that MCC Funding will support in Vanuatu during
the Compact Term and the results to be achieved from the investment of
MCC Funding.
Program Assets means (i) MCC Funding, (ii) Accrued Interest, or
(iii) any assets, goods, or property (real, tangible, or intangible)
purchased or financed in whole or in part (directly or indirectly) by
MCC Funding.
Program Management Unit means a management unit of MCA-Vanuatu to
have overall management responsibility for the implementation of this
Compact.
Project means the Transport Infrastructure Project, and the policy
reforms and other activities related thereto that the Government will
carry out, or cause to be carried out in furtherance of this Compact to
achieve the Objectives and the Compact Goal.
Project Activity means the activities that will be undertaken in
furtherance of the Transport Infrastructure Project.
Project Activity Indicator shall have the meaning set forth in
section 2(a)(iii) of Annex III.
Project Activity Outcomes is the progress made toward the Project
Objectives and the intermediate results of the Transport Infrastructure
Project and each Project Activity.
Project Objective(s) means the Infrastructure Objective and the
Institutional Strengthening Objective.
Proposal is the proposal for use of MCA assistance submitted to MCC
by the Government on March 31, 2005.
Provider shall have the meaning set forth in section 2.4(b).
PWD means the Public Works Department.
PWD Project Management Unit shall have the meaning set for in
section 3(e) of Annex 1.
REDI means the Rural Economic Development Initiative coordinated by
the Department of Strategic Management of the Government.
Re-Disbursement is the release of MCC Funding from a Permitted
Account.
Reviewer shall have the meaning set forth in section 3(h) of Annex
I.
Road Maintenance Budget Allocation shall have the meaning set forth
in section 5(b)(i) of Schedule 1 of Annex 1.
Special Account shall have the meaning set forth in section 4(d(i)
of Annex I.
Steering Committee means an independent Steering Committee of MCA-
Vanuatu to oversee MCA-Vanuatu's responsibilities and obligations under
this Compact.
Supplemental Agreement shall have the meaning set forth in section
3.5(b).
Supplemental Agreement Between the Parties means any agreement
between MCC on the one hand, and the Government or any Government
Affiliate or Permitted Designee on the other hand.
Supplemental Agreement Term Sheets shall have the meaning set forth
in section 4.1(b).
Target means one or more expected results that specify the expected
value and the expected time by which that result will be achieved.
Tax(es) shall have the meaning set forth in section 2.3(e)(i).
Transport Infrastructure Project means the Project and Project
Activities that the Parties intend to implement in furtherance of the
Infrastructure Objective and the Institutional Strengthening Objective
and as further described in Schedule I to Annex I.
Technical Assistance Subproject Activity shall have the meaning set
forth in section 2(b)(ii) of Schedule 1 of Annex I.
United States Dollars (USD) means the currency of the United States
of America.
United States Government means any branch, agency, bureau,
government corporation, government chartered entity or other body of
the Federal government of the United States.
Vice Chair means the Vice Chair of the Steering Committee.
Voting Members are the voting members on the Steering Committee
described in section 3(d)(ii)(2) of Annex I.
Work Plans means work plans for the overall administration of the
Program and for the Transport Infrastructure Project.
Exhibit B--List of Certain Supplemental Agreements
1. Governance Agreement.
2. Fiscal Agent Agreement.
3. Implementing Entity Agreements.
4. Bank Agreement.
5. Procurement Agent Agreement.
Annex I--Program Description
This Annex I to the Compact (the ``Program Annex'') generally
describes the Program that MCC Funding will support in Vanuatu during
the Compact Term and the results to be achieved from the investment of
MCC Funding. Prior to any MCC Disbursement or Re-Disbursement,
including for the Transport Infrastructure Project (described in
Schedule I to this Program Annex), MCC, the Government (or a mutually
acceptable Government Affiliate) and MCA-Vanuatu shall enter into a
Supplemental Agreement that (i) further specifies the terms and
conditions of such MCC Disbursements and Re-Disbursements, (ii) is in a
form and substance mutually satisfactory to the Parties, and (iii) is
signed by the Principal Representative of each Party (or in the case of
the Government, the principal representative of the applicable
Government Affiliate) and of MCA-Vanuatu (the ``Disbursement
Agreement'').
Except as specifically provided herein, the Parties may amend this
Program Annex only by written agreement signed by the Principal
Representative of each Party. Except as defined in this Program Annex,
each capitalized term in this Program Annex shall have the same meaning
given such term elsewhere in this Compact. Unless otherwise expressly
stated, each Section reference herein is to the relevant Section of the
main body of the Compact.
1. Background; Consultative Process
(a) Background. Over the past decade, Vanuatu's economic growth has
fallen short of its population growth. From 1994 to 2003, annual real
gross domestic product (``GDP'') growth in Vanuatu has averaged 1.0%
while annual population growth has averaged 2.6% and average per capita
income in real terms declined by 15.4%. Although the Government has
fostered macroeconomic stability by reducing fiscal deficits and
maintaining prudent levels of external debt over the past five years,
this progress has largely come at the expense of capital expenditures.
Vanuatu's capital outlays are the lowest in the Pacific region
(whereas, in contrast, Vanuatu's budget allocation for education from
2000 to 2003 was significantly higher than most Pacific countries).
The Government has identified the major constraints to economic
development as the lack of an attractive investment climate for private
sector investment, a lack of income earning
[[Page 14313]]
opportunities for a fast growing population due to the high cost of
doing business, and poor access to basic health and primary education
services in rural areas. The Government needs to spend considerably
more on infrastructure in order to reduce business costs and therefore
improve the environment for private sector-led economic growth.
The current state of Vanuatu's transportation infrastructure is
hindering formal economic activity and investment in the agriculture
and tourism sector--the two primary sources of growth and employment in
Vanuatu. These two sectors together employ 92% of Vanuatu's working
population and represent approximately 32% of Vanuatu's GDP.
Furthermore, small-scale agriculture is the mainstay of Vanuatu's rural
areas, where 80% of the population resides and 51% of the population in
such rural areas lives in hardship. Consequently, specific policies and
investments aimed at reducing the transport cost burden faced by those
engaged in economic activity within these sectors are key to bringing
about a reduction in rural hardship.
(b) National Development Plan. The Government's National Priorities
and Action Agenda (``PAA'') serves as the country's national
development strategy and integrates and prioritizes the action plans
for economic development. The PAA is intended to more effectively link
these plans with the Government's medium-term investment program and
annual budget. Moreover, the PAA has been subject to broad stakeholder
consultation through public consultative workshops with the provincial
governments, non-governmental organizations (``NGOs''), private sector,
and civil society.
The top two priorities in the latest PAA include: (i) ``Improving
the lives of people in rural areas by improving service delivery,
expanding market access to rural produce, lowering costs of credit and
transportation, and ensuring sustainable use of natural resources;''
and (ii) ``raising private investment by lowering obstacles to growth
of private enterprise including lowering costs of doing business,
facilitating long-term secure access to land, and providing better
support services to businesses.'' The Program's focus on transport
infrastructure, with the goals of reducing transport costs of doing
business and stimulating agricultural and tourism-based economic
activity in the rural areas, is consistent with the key priorities
contained in the PAA for reducing poverty and increasing economic
growth.
(c) Consultative Process. Vanuatu engaged in a comprehensive
consultative process, which included: (i) Ongoing national and
provincial public forums, such as the CRP Summit, National Business
Forum, and REDI workshops which included specific discussion on
priorities and projects for the Proposal; (ii) one MCA-specific public
awareness meeting on the outer island of Ambrym; and (iii) public
outreach meetings in four of Vanuatu's six provinces. Consulted groups
included the Republic of Vanuatu's council of chiefs, women's group
leaders, the private sector, NGOs, church leaders, and provincial
government officials. During the consultation process, the lack of
adequate transport infrastructure repeatedly surfaced as a priority
(and even served as a barrier to meeting attendance). With respect to
selection of specific transport infrastructure projects for MCC
consideration, all projects in Vanuatu's Proposal were derived from
previous local-level stakeholder consultation forums in each of six
provinces. In these forums, government provincial leaders met with
representative groups of civil society, NGOs, and private sector to
identify economic opportunities limited by a lack of adequate
infrastructure and proposing infrastructure projects. This process
resulted in a pool of projects from which specific selection criteria
(such as economic and poverty impact) were used to select a short-list
of projects to be subjected to detailed feasibility studies.
Subsequently, in each province's ongoing consultation workshops, it was
confirmed that a number of the priority infrastructure projects
remained unfunded.
The Government recently conducted a significant public outreach
campaign, in which the short-list of projects subject to MCC due
diligence were released to local newspaper and radio media, discussed
in provincial ``public outreach meetings'' (led by the Government's MCA
transaction team), and sent to civil society, private sector
organizations, and donors for comment and input. The Government intends
to continue these modes of outreach in order to sustain public
awareness and foster stakeholder participation in the design of
maintenance and monitoring arrangements.
2. Overview
(a) Program Objectives. The Program involves a series of specific
and complementary interventions that the Parties expect will achieve
the Infrastructure Objective and the Institutional Strengthening
Objective and advance the progress of Vanuatu toward the Compact Goal.
(b) Project. The Parties have identified the Transport
Infrastructure Project, which they intend for the Government to
implement, or cause to be implemented, using MCC Funding. Schedule I to
this Program Annex identifies the activities that will be undertaken in
furtherance of the Transport Infrastructure Project (each, a ``Project
Activity''). Notwithstanding anything to the contrary in this Compact,
the Parties may agree to amend, terminate or suspend the Transport
Infrastructure Project or the Project Activities or create a new
project by written agreement signed by the Principal Representative of
each Party without amending this Compact; provided, however, any such
amendment of the Transport Infrastructure Project or any Project
Activity or creation of a new project is (i) consistent with the
Project Objectives; (ii) does not cause the amount of MCC Funding to
exceed the aggregate amount specified in section 2.1(a) of this
Compact; (iii) does not cause the Government's responsibilities or
contribution of resources to be less than specified in section 2.2 of
this Compact or elsewhere in this Compact; and (iv) does not extend the
Compact Term.
(c) Beneficiaries. The intended beneficiaries of the Transport
Infrastructure Project are described in Schedule I to this Program
Annex to the extent identified as of the date hereof. The intended
beneficiaries shall be identified more precisely during the initial
phases of the implementation of the Program. The Parties shall agree
upon the description of the intended beneficiaries of the Program,
including publishing such description on the Web site operated by MCA-
Vanuatu.
(d) Civil Society. Civil society will participate in overseeing the
implementation of the Program through its representation on the MCA-
Vanuatu Steering Committee. In addition, the Work Plans for the
Transport Infrastructure Project shall note the extent to which civil
society will have a role in the implementation of a particular Project
Activity.
(e) Monitoring and Evaluation. Annex III of this Compact generally
describes the plan to measure and evaluate progress toward achievement
of the Project Objectives of this Compact (the ``M&E Plan''). As
outlined in the Disbursement Agreement and other Supplemental
Agreements, continued payment of MCC Funding under this Compact will be
contingent on
[[Page 14314]]
successful achievement of targets set forth in the M&E Plan.
3. Implementation Framework
The implementation framework and the plan for ensuring adequate
governance, oversight, management, monitoring, evaluation and fiscal
accountability for the use of MCC Funding is summarized below and in
Schedule I attached to this Program Annex, or as may otherwise be
agreed in writing by the Parties.
(a) General. The elements of the implementation framework will be
further described in relevant Supplemental Agreements and in a detailed
plan for the implementation of the Program and each Project Activity,
which will be memorialized in one or more documents and shall consist
of a Financial Plan, a Fiscal Accountability Plan, a Procurement Plan,
Work Plans, and an M&E Plan (such documents and plans collectively, the
``Implementation Plan''). MCA-Vanuatu shall adopt each component of the
Implementation Plan in accordance with the requirements and timeframe
as may be specified in this Program Annex, the Disbursement Agreement
or as may otherwise be agreed by the Parties from time to time. MCA-
Vanuatu may amend the Implementation Plan or any component thereof
without amending this Compact, provided any material amendment of the
Implementation Plan or any component thereof has been approved by MCC
and is otherwise consistent with the requirements of this Compact and
any relevant Supplemental Agreement between the Parties. By such time
as may be specified in the Disbursement Agreement or as may otherwise
be agreed by the Parties from time to time, MCA-Vanuatu shall adopt one
or more work plans for the overall administration of the Program and
for the Transport Infrastructure Project (collectively, the ``Work
Plans''). The Work Plan(s) shall set forth the details of each activity
to be undertaken or funded by MCC Funding as well as the allocation of
roles and responsibilities for specific Project Activities, or other
programmatic guidelines, performance requirements, targets, or other
expectations for the Transport Infrastructure Project.
(b) Government. The Government shall promptly take all necessary
and appropriate actions to carry out the Government Responsibilities
and other obligations or responsibilities of the Government under and
in furtherance of this Compact, including undertaking or pursuing such
legal, legislative or regulatory actions, procedural changes and
contractual arrangements as may be necessary or appropriate to achieve
the Project Objectives, to successfully implement the Program, and to
establish MCA-Vanuatu. The Government shall ensure that MCA-Vanuatu is
duly authorized and sufficiently organized, staffed and empowered to
fully carry out the Designated Rights and Responsibilities. Without
limiting the generality of the preceding sentence, MCA-Vanuatu shall be
organized, and have such roles and responsibilities, as described in
section 3(d) of this Program Annex and as provided in the Governance
Agreement and any Governing Documents, which shall be in a form and
substance satisfactory to MCC.
(c) MCC.
(i) Notwithstanding section 3.1 of this Compact or any provision in
this Program Annex to the contrary, and except as may be otherwise
agreed upon by the Parties from time to time, MCC must approve in
writing each of the following transactions, activities, agreements and
documents prior to the execution or carrying out of such transaction,
activity, agreement or document and prior to MCC Disbursements or Re-
Disbursements in connection therewith:
(1) MCC Disbursements;
(2) The Financial Plan and any amendments and supplements thereto;
(3) Agreements (i) between the Government and MCA-Vanuatu, (ii)
between the Government, MCA-Vanuatu or other Government Affiliate, on
the one hand, and any Provider or Affiliate of a Provider, on the other
hand, which require such MCC approval under applicable law, the
Governing Documents, the Procurement Agreement, Procurement Guidelines
or any Supplemental Agreement, or (iii) in which the Government, MCA-
Vanuatu or other Government Affiliate appoints, hires or engages any of
the following in furtherance of this Compact:
(A) Auditor and Reviewer;
(B) Fiscal Agent;
(C) Bank;
(D) Procurement Agent;
(E) Project Manager;
(F) Implementing Entity; and
(G) Director, Observer, analysts and/or other key employee or
contractor of MCA-Vanuatu, including any compensation for such
person.(Any agreement described in clause (i) through (iii) of this
section 3(c)(i)(3) and any amendments and supplements thereto, each, a
``Material Agreement'');
(4) Any modification, termination or suspension of a Material
Agreement, or any action that would have the effect of such a
modification, termination or suspension of a Material Agreement;
(5) Any agreement that is (i) not at arm's length or (ii) with a
party related to the Government, including MCA-Vanuatu, or any of their
respective Affiliates;
(6) Any Re-Disbursement (each, a ``Material Re-Disbursement'') that
requires such MCC approval under applicable law, the Governing
Documents (defined below), the Procurement Agreement, Procurement
Guidelines or any Supplemental Agreement;
(7) Terms of reference for the procurement of goods, services or
works that require such MCC approval under applicable law, the
Governing Documents (defined below), the Procurement Agreement,
Procurement Guidelines or any Supplemental Agreement (each, a
``Material Terms of Reference'');
(8) The Implementation Plan, including each component plan thereto,
and any material amendments and supplements to the Implementation Plan
or any component thereto;
(9) Any pledge of any MCC Funding or any Program Assets or any
guarantee (directly or indirectly) of any indebtedness (each, a
``Pledge'');
(10) Any decree, legislation, contractual arrangement, charter, by-
laws or other document establishing or governing MCA-Vanuatu, including
the governance agreement to be entered into by the Government, MCA-
Vanuatu, and at MCC's option, MCC (the ``Governance Agreement'')
(collectively, the ``Governing Documents''), and any disposition (in
whole or in part), liquidation, dissolution, winding up, reorganization
or other change of (A) MCA-Vanuatu, including any revocation or
modification of, or supplement to, any decree, legislation, contractual
arrangement or other document establishing MCA-Vanuatu, or (B) any
subsidiary or Affiliate of MCA-Vanuatu;
(11) Any change in character or location of any Permitted Account;
(12) Formation or acquisition of any subsidiary (direct or
indirect) or other Affiliate of MCA-Vanuatu;
(13) Any (A) change of the Director, Observer, officer or other key
employee or contractor of MCA-Vanuatu, or in the composition of the
Steering Committee, or (B) filling of any vacant seat of the Chair, the
Director or an Observer or vacant position of an officer or other key
employee or contractor of MCA-Vanuatu;
(14) The selection of the ESI Officer;
(15) The management information system to be developed and
maintained by the Program Management Unit of MCA-Vanuatu, and any
material modifications to such system;
[[Page 14315]]
(16) Any decision to amend, supplement, replace, terminate or
otherwise change any of the foregoing; and
(17) Any other activity, agreement, document or transaction
requiring the approval of MCC in this Compact, applicable law, the
Governing Documents, the Procurement Agreement, Procurement Guidelines,
the Disbursement Agreement, or any other Supplemental Agreement between
the Parties.
The Chair of the Steering Committee (the ``Chair''), or in his
absence the Vice Chair of the Steering Committee (the ``Vice Chair'')
or other designated voting member of the Steering Committee, as
provided in the Governing Documents, shall certify any documents or
reports delivered to MCC in satisfaction of the Government's reporting
requirements under this Compact or any Supplemental Agreement between
the Parties (the ``Compact Reports'').
(ii) MCC shall have the authority to exercise its approval rights
set forth in this section 3(c) in its sole discretion and independent
of any participation or position taken by the MCC Representative at a
meeting of the Steering Committee. MCC retains the right to revoke its
approval of a matter if MCC concludes that its approval was issued on
the basis of incomplete, inaccurate or misleading information furnished
by the Government or MCA-Vanuatu.
(d) MCA-Vanuatu.
(i) General. Unless otherwise agreed by MCC in writing, MCA-Vanuatu
shall be responsible for the oversight and management of the
implementation of this Compact. MCA-Vanuatu shall be governed by the
terms and conditions set forth in the Governing Documents based on the
following principles:
(1) MCA-Vanuatu shall be established by the Government as an
independent unit within the Ministry of Finance and Economic Management
and shall report to the Steering Committee. The Government shall ensure
the independent and proper administration of MCA-Vanuatu in accordance
with the terms of the Compact, the Governing Documents of MCA-Vanuatu
and any relevant Supplemental Agreements;
(2) The Government shall ensure that MCA-Vanuatu shall not assign,
delegate or contract any of the Designated Rights and Responsibilities
without the prior written consent of the Government and MCC. MCA-
Vanuatu shall not establish any Affiliates or subsidiaries (direct or
indirect) without the prior written consent of the Government and MCC;
and
(3) Unless otherwise agreed by MCC in writing, MCA-Vanuatu shall
consist of (a) an independent governing committee (the ``Steering
Committee'') to oversee MCA-Vanuatu's responsibilities and obligations
under this Compact (including any Designated Rights and
Responsibilities) and (b) a management unit (the ``Program Management
Unit'') to have overall management responsibility for the
implementation of the Compact.
(ii) Steering Committee.
(1) Formation. The Government shall ensure that the Steering
Committee shall be formed, constituted, governed, maintained and
operated in accordance with applicable law and the terms and conditions
set forth in this section 3(d), the Governing Documents and the
relevant Supplemental Agreements.
(2) Composition. Unless otherwise agreed by MCC in writing, the
Steering Committee shall consist of twelve (12) voting members (the
``Voting Members''), three (3) non-voting observers (the
``Observers''), each of whom must be acceptable to MCC, taking into
consideration appropriate gender and ethnic representation, and the
Director of the Program Management Unit, who shall serve as an ex
officio non-voting member.
(A) The Voting Members shall be as follows, provided that the
Government members identified in subsection (i) through (x) (the
``Government Members'') may be replaced by another government official
of comparable rank from a ministry or other government body relevant to
the Program activities, subject to approval by the Government and MCC
(such replacement to be referred to thereafter as a Government Member):
(i) Director-General of the Office of the Prime Minister;
(ii) Director-General of the Ministry of Finance and Economic
Management;
(iii) Director-General of the Ministry of Foreign Affairs and
External Trade;
(iv) Director-General of the Ministry of Infrastructure & Public
Utilities;
(v) Director-General of the Ministry of Lands;
(vi) Director of the Public Works Department;
(vii) Director of Finance;
(viii) Director of the Department of Economics and Social
Development;
(ix) Director of the Department of Strategic Management;
(x) Head of Development Cooperation, Ministry of Foreign Affairs;
(xi) General Manager of the Chamber of Commerce (representing the
private sector); and
(xii)Secretary-General, Vanuatu Non-Governmental Organizations
(representing non-state actors) (together with the General Manager of
Chamber of Commerce, the ``Non-Government Members'').
The following provisions shall apply to the Voting Members:
(i) Each Government Member may be replaced by another government
official, subject to approval by the Government and MCC;
(ii) Subject to the Governing Documents, the Parties contemplate
that the Director-General of the Office of the Prime Minister shall
serve as Chair of the Steering Committee and the Director-General,
Ministry of Finance and Economic Management shall serve as the Vice
Chair; and
(iii) Each Government Member position shall be filled by the
individual then holding the office identified and such individuals
shall serve in their capacity as the applicable Government official and
not in their personal capacity.
(B) The Observers shall be (i) a representative appointed by MCC
(the ``MCC Representative''); (ii) the Director of Environment Unit,
Ministry of Lands; and (iii) the General Manager, Vanuatu Tourism
Office. The Observers shall have the right to attend all meetings of
the Steering Committee, participate in discussions of the Steering
Committee, and receive all information and documents provided to the
Steering Committee, together with any other rights of access to
records, employees or facilities as would be granted to a member of the
Steering Committee under the Governance Agreement and any Governing
Document.
(C) The Director of the Program Management Unit shall serve as an
ex officio member of the Steering Committee and shall make reports to
the Steering Committee as required from time to time.
(3) Roles and Responsibilities.
(A) The Steering Committee shall oversee the overall implementation
of the Program and the performance of the Designated Rights and
Responsibilities.
(B) Certain actions may be taken, and certain agreements and other
documents may be executed and delivered, by MCA-Vanuatu only upon the
approval and authorization of the Steering Committee as provided under
applicable law and in the Governing Documents, including each MCC
Disbursement Request, selection or termination of certain Providers,
any component of the Implementation Plan, certain Re-Disbursements and
certain terms of reference.
(C) The Chair shall certify the approval by the Steering Committee
of all Compact Reports or any other
[[Page 14316]]
documents or reports from time to time delivered to MCC by MCA-Vanuatu
(whether or not such documents or reports are required to be delivered
to MCC), and that such documents or reports are true, accurate and
complete.
(D) Without limiting the generality of the Designated Rights and
Responsibilities, and subject to MCC's contractual rights of approval
as set forth in section 3(c) of this Program Annex or elsewhere in this
Compact or any relevant Supplemental Agreement, the Steering Committee
shall have the exclusive authority for all actions defined for the
Steering Committee under applicable law and in the Governing Documents
and which are expressly designated therein as responsibilities that
cannot be delegated further.
(4) Meetings. The Steering Committee shall hold monthly meetings as
well as such other periodic meetings or subcommittee meetings as may be
necessary from time to time.
(5) Indemnification of the Observers; MCC Representative. The
Government shall ensure, at the Government's sole cost and expense,
that appropriate insurance is obtained and appropriate indemnifications
and protections are provided, acceptable to MCC, to ensure that the
Observers shall not be held personally liable for the actions or
omissions of the Steering Committee. Pursuant to section 5.5 and
section 5.8 of this Compact, the Government and MCA-Vanuatu shall hold
harmless the MCC Representative for any liability or action arising out
of the MCC Representative's role as a non-voting observer on the
Steering Committee. The Government hereby waives and releases all
claims related to any such liability. In matters arising under or
relating to the Compact, the MCC Representative is not subject to the
jurisdiction of the courts or other body of Vanuatu.
(iii) Program Management Unit. Unless otherwise agreed in writing
by the Parties, the Program Management Unit shall report, through the
Director or other officer as designated in the Governing Documents,
directly to the Steering Committee, and shall have the composition,
roles and responsibilities described below and set forth more
particularly in the Governing Documents.
(1) Composition. The Government shall ensure that the Program
Management Unit shall be composed of qualified experts from the public
or private sectors, including such officers and staff as may be
necessary to carry out effectively its responsibilities, each with such
powers and responsibilities as set forth in the Governance Agreement,
any Governing Document, and from time to time in any Supplemental
Agreement between the Parties, including without limitation the
following: (i) one Director, (ii) two analysts, and (iii) appropriate
administrative and support personnel.
(2) Appointment of Program Management Unit. Unless otherwise
specified in the Governance Agreement or any Governing Documents, the
Steering Committee shall appoint the Director after an open and
competitive recruitment and selection process, which appointment shall
be subject to the approval of MCC. The remaining officers of the
Program Management Unit shall be appointed by the Director after an
open and competitive recruitment and selection process, which
appointment shall be subject to the approval of the Steering Committee
and MCC.
(3) Roles and Responsibilities.
(A) The Program Management Unit shall assist the Steering Committee
in overseeing the implementation of the Program and shall have
principal responsibility (subject to the direction and oversight of the
Steering Committee and subject to MCC's rights of approval as set forth
in section 3(c) of this Program Annex or elsewhere in this Compact or
any relevant Supplemental Agreement) for the overall management of the
implementation of the Program.
(B) Without limiting the foregoing general responsibilities or the
generality of Designated Rights and Responsibilities that the
Government may designate MCA-Vanuatu, the Program Management Unit shall
develop the components of the Implementation Plan, oversee the
implementation of the Transport Infrastructure Project, manage and
coordinate monitoring and evaluation, maintain internal accounting
records, conduct and oversee certain procurements, and such other
responsibilities as set out in the Governing Documents or delegated to
the Program Management Unit by the Steering Committee from time to
time.
(C) Appropriate officers shall have the authority to contract on
behalf of MCA-Vanuatu for procurement under the Program, as designated
by the Steering Committee.
(D) The Program Management Unit shall have the obligation and right
to approve certain actions and documents or agreements, including
certain Re-Disbursements, MCC Disbursement Requests, Compact Reports,
certain human resources decisions, and certain procurement actions, as
provided in the Governing Documents.
(e) Project Manager. The Department of Public Works will serve as
the Project Manager for the Transport Infrastructure Project and will
be responsible for oversight of the specific activities of the
Transport Infrastructure Project. The duties of the Project Manager
will include certification of receipt of goods and services secured for
the Transport Infrastructure Project. Outside professional services
will be contracted through MCA-Vanuatu to assist the Project Manager in
its functions (the ``Outside Project Manager''). The Department of
Public Works will establish a dedicated unit (the ``PWD Project
Management Unit'') within its headquarters, and within its regional
offices, if appropriate, with a minimum of two full-time staff that are
suitably qualified to support the design and engineering supervision
professionals that are charged with the responsibility to execute its
project management responsibilities. The PWD Project Management Unit
will be guided by the contracted supervision professionals.
(f) Implementing Entities. Subject to the terms and conditions of
this Compact and any other Supplemental Agreement between the Parties,
MCA-Vanuatu may provide MCC Funding (directly or indirectly), through
the Project Manager, to one or more Government Affiliates or to one or
more nongovernmental or other public- or private-sector entities or
persons to implement and carry out the Transport Infrastructure Project
or any other activities to be carried out in furtherance of this
Compact (each, an ``Implementing Entity''). The Government shall ensure
that MCA-Vanuatu (or the Project Manager) enters into an agreement with
each Implementing Entity, in form and substance satisfactory to MCC,
that sets forth the roles and responsibilities of such Implementing
Entity and other appropriate terms and conditions, such as payment of
the Implementing Entity (the ``Implementing Entity Agreement''). An
Implementing Entity shall report directly to MCA-Vanuatu or the Project
Manager, as designated in the applicable Implementing Entity Agreement
or as otherwise agreed by the Parties.
(g) Fiscal Agent. The Department of Finance in the Ministry of
Finance and Economic Management of the Government shall serve as the
fiscal agent on behalf of MCA-Vanuatu (the ``Fiscal Agent''), who shall
be responsible for, among other things, (i) ensuring and certifying
that Re-Disbursements are properly authorized and documented in
accordance with established control procedures set forth in the
Disbursement Agreement, the
[[Page 14317]]
Fiscal Agent Agreement and other relevant Supplemental Agreements, (ii)
instructing a Bank to make Re-Disbursements from a Permitted Account,
following applicable certification by the Fiscal Agent, (iii) providing
applicable certifications for MCC Disbursement Requests, (iv)
maintaining proper accounting of all MCC Funding financial
transactions, and (v) producing reports on MCC Disbursements and Re-
Disbursements (including any requests therefore) in accordance with
established procedures set forth in the Disbursement Agreement, the
Fiscal Agent Agreement or any other relevant Supplemental Agreements.
Upon the written request of MCC, the Government shall ensure that MCA-
Vanuatu terminates the Fiscal Agent, without any liability to MCC, and
the Government shall ensure that MCA-Vanuatu engages a new Fiscal
Agent, subject to the approval by the Steering Committee and MCC. The
Government shall ensure that MCA-Vanuatu enters into an agreement with
each Fiscal Agent, in form and substance satisfactory to MCC, that sets
forth the roles and responsibilities of the Fiscal Agent and other
appropriate terms and conditions, such as payment of the Fiscal Agent
(``Fiscal Agent Agreement'').
(h) Auditors and Reviewers. The Government shall ensure that MCA-
Vanuatu carries out the Government's audit responsibilities as provided
in sections 3.8(d), (e) and (f), including engaging one or more
auditors (each, an ``Auditor'') required by section 3.8(d). As
requested by MCC in writing from time to time, the Government shall
ensure that MCA-Vanuatu shall also engage an independent (i) reviewer
to conduct reviews of performance and compliance under this Compact
pursuant to section 3.8(f), which reviewer shall (1) conduct general
reviews of performance or compliance, (2) conduct environmental audits,
and (3) have the capacity to conduct data quality assessments in
accordance with the M&E Plan, as described more fully in Annex III,
and/or (ii) evaluator to assess performance as required under the M&E
Plan (each, a ``Reviewer''). MCA-Vanuatu shall select the Auditor(s) or
Reviewers in accordance with the Governing Documents or relevant
Supplemental Agreement. The Government shall ensure that MCA-Vanuatu
enters into an agreement with each Auditor or Reviewer, in form and
substance satisfactory to MCC, that sets forth the roles and
responsibilities of the Auditor or Reviewer with respect to the audit,
review or evaluation, including access rights, required form and
content of the applicable audit, review or evaluation and other
appropriate terms and conditions such as payment of the Auditor or
Reviewer (the ``Auditor/Reviewer Agreement''). In the case of a
financial audit required by section 3.8(f), such Auditor/Reviewer
Agreement shall be effective no later than 120 days prior to the end of
the relevant fiscal year or other period to be audited; provided,
however, if MCC requires concurrent audits of financial information or
reviews of performance and compliance under this Compact, then such
Auditor/Reviewer Agreement shall be effective no later than a date
agreed by the Parties.
(i) Procurement Agent. If requested by MCC, the Government shall
ensure that MCA-Vanuatu engages one or more procurement agents (each, a
``Procurement Agent'') to carry out and/or certify specified
procurement activities in furtherance of this Compact on behalf of the
Government, MCA-Vanuatu, the Project Manager or Implementing Entity.
The role and responsibilities of such Procurement Agent and the
criteria for selection of a Procurement Agent shall be as set forth in
the applicable Implementation Letter or Supplemental Agreement. The
Government shall ensure that MCA-Vanuatu enters into an agreement with
the Procurement Agent, in form and substance satisfactory to MCC, that
sets forth the roles and responsibilities of the Procurement Agent with
respect to the conduct, monitoring and review of procurements and other
appropriate terms and conditions, such as payment of the Procurement
Agent (the ``Procurement Agent Agreement''). Any Procurement Agent
shall adhere to the procurement standards set forth in the Procurement
Agreement and Procurement Guidelines and ensure procurements are
consistent with the procurement plan adopted by MCA-Vanuatu pursuant to
the Procurement Agreement (the ``Procurement Plan'').
4. Finances and Fiscal Accountability
(a) Financial Plan.
(i) Financial Plan. The multi-year financial plan for the Program
and for the Transport Infrastructure Project (the ``Multi-Year
Financial Plan'') is summarized in Annex II to this Compact.
(ii) Detailed Financial Plan. During the Compact Term, the
Government shall ensure that MCA-Vanuatu delivers to MCC for approval
timely financial plans that detail the annual and quarterly budget and
projected cash requirements for the Program (including administrative
costs) and the Transport Infrastructure Project, projected both on a
commitment and cash requirement basis (each a ``Detailed Financial
Plan''). Each Detailed Financial Plan shall be delivered by such time
as specified in the Disbursement Agreement or as may otherwise be
agreed by the Parties. The Multi-Year Financial Plan and each Detailed
Financial Plan and each amendment, supplement or other change thereto
are collectively, the ``Financial Plan.''
(iii) Expenditures. No financial commitment involving MCC Funding
shall be made, no obligation of MCC Funding shall be incurred, and no
Re-Disbursement shall be made or MCC Disbursement Request submitted for
any activity or expenditure, unless the expense is provided for in the
Detailed Financial Plan and unless uncommitted funds exist in the
balance of the Detailed Financial Plan for the relevant period or
unless the Parties otherwise agree in writing.
(iv) Modifications to Financial Plan. Notwithstanding anything to
the contrary in this Compact, MCA-Vanuatu may amend or supplement the
Financial Plan or any component thereof without amending this Compact,
provided any material amendment or supplement has been approved by MCC
and is otherwise consistent with the requirements of this Compact and
any relevant Supplemental Agreement between the Parties.
(b) Disbursement and Re-Disbursement. The Disbursement Agreement
(and disbursement schedules thereto), as amended from time to time,
shall specify the terms, conditions and procedures on which MCC
Disbursements and Re-Disbursements shall be made. The obligation of MCC
to make MCC Disbursements or approve Re-Disbursements is subject to the
fulfillment or waiver of any such terms and conditions. The Government
and MCA-Vanuatu shall jointly submit the applicable request for an MCC
Disbursement (the ``MCC Disbursement Request'') as may be specified in
the Disbursement Agreement. MCC will make MCC Disbursements in tranches
to a Permitted Account from time to time as provided in the
Disbursement Agreement or as may otherwise be agreed by the Parties,
subject to Program requirements and performance by the Government, MCA-
Vanuatu and other relevant parties in furtherance of this Compact. Re-
Disbursements will be made from time to time based on requests by an
authorized representative of the appropriate party designated for the
size and type of Re-Disbursement in accordance with the Governing
Documents and Disbursement
[[Page 14318]]
Agreement; provided, however, unless otherwise agreed by the Parties in
writing, no Re-Disbursement shall be made unless and until the written
approvals specified herein or in the Governing Documents and
Disbursement Agreement for such Re-Disbursement have been obtained and
delivered to the Fiscal Agent.
(c) Fiscal Accountability Plan. By such time as specified in the
Disbursement Agreement or as otherwise agreed by the Parties, MCA-
Vanuatu shall adopt as part of the Implementation Plan a fiscal
accountability plan that identifies the principles and mechanisms to
ensure appropriate fiscal accountability for the use of MCC Funding
provided under this Compact, including the process to ensure that open,
fair, and competitive procedures will be used in a transparent manner
in the administration of grants or cooperative agreements and the
procurement of goods and services for the accomplishment of the Project
Objectives (the ``Fiscal Accountability Plan''). The Fiscal
Accountability Plan shall set forth, among other things, requirements
with respect to the following matters: (i) Funds control and
documentation; (ii) separation of duties and internal controls; (iii)
accounting standards and systems; (iv) content and timing of reports;
(v) policies concerning public availability of all financial
information; (vi) cash management practices; (vii) procurement and
contracting practices, including timely payment to vendors; (viii) the
role of independent auditors; and (ix) the roles of fiscal agents and
procurement agents.
(d) Permitted Accounts. The Government shall establish, or cause to
be established, such accounts (each, a ``Permitted Account,'' and
collectively ``Permitted Accounts'') as may be agreed by the Parties in
writing from time to time, including:
(i) A single, completely separate U.S. Dollar interest-bearing
account (the ``Special Account'') at the Reserve Bank of Vanuatu to
receive MCC Disbursements;
(ii) If necessary, an interest-bearing local currency of Vanuatu
account (the ``Local Account'') at a commercial bank that is procured
through a competitive process to which the Fiscal Agent may authorize
transfer from any U.S. Dollar Permitted Account for the purpose of
making Re-Disbursements payable in local currency; and
(iii) Such other interest-bearing accounts to receive MCC
Disbursements in such banks as the Parties mutually agree upon in
writing.
No other funds shall be commingled in a Permitted Account other
than MCC Funding and Accrued Interest thereon. All MCC Funding held in
an interest-bearing Permitted Account shall earn interest at a rate of
no less than such amount as the Parties may agree in the respective
Bank Agreement or otherwise. MCC shall have the right, among other
things, to view any Permitted Account statements and activity directly
on-line or at such other frequency as the Parties may otherwise agree.
By such time as shall be specified in the Disbursement Agreement or as
otherwise agreed by the Parties, the Government shall ensure that MCA-
Vanuatu enters into an agreement with each Bank, respectively,
satisfactory to MCC, that sets forth the signatory authority, access
rights, anti-money laundering and anti-terrorist financing provisions,
and other terms related to the Permitted Account, respectively (each a
``Bank Agreement''). For purposes of this Compact, any bank holding an
account referenced in section 4(d) of this Program Annex are each a
``Bank'' and, are collectively referred to as the ``Banks.''
(e) Currency Exchange. The Bank shall convert MCC Funding to the
currency of Vanuatu at a rate to which the Parties mutually agree with
the Bank in the Bank Agreement.
5. Transparency; Accountability
Transparency and accountability to MCC and to the beneficiaries are
important aspects of the Program and Transport Infrastructure Project.
Without limiting the generality of the foregoing, in an effort to
achieve the goals of transparency and accountability, the Government
shall ensure that MCA-Vanuatu:
(a) Establishes an e-mail suggestion box as well as a means for
other written comments that interested persons may use to communicate
ideas, suggestions or feedback to MCA-Vanuatu;
(b) Considers as a factor in its decision-making the
recommendations of the Observers;
(c) Develops and maintains a Web site (the ``MCA-Vanuatu Web
site'') in a timely, accurate and appropriately comprehensive manner,
such MCA-Vanuatu Web site to include postings of information and
documents in English and French, as appropriate; and
(d) Posts on the MCA-Vanuatu Web site and otherwise makes publicly
available via appropriate public mediums (including radio and print) in
the appropriate language, from time to time, the following documents or
information:
(i) The Compact and all Compact Reports;
(ii) All minutes of the meetings of the Steering Committee;
(iii) The M&E Plan, as amended from time to time, along with
periodic reports on Program performance;
(iv) All relevant environmental assessments and supporting
documents;
(v) All audit reports by an Auditor and any periodic reports or
evaluations by a Reviewer;
(vi) All financial reports provided in accordance with the Compact
and any relevant Supplemental Agreement;
(vii) Disbursement Agreement, as amended from time to time, as well
as the MCC Disbursement Requests submitted thereunder;
(viii) All procurement agreements (including policies, standard
documents, procurement plans, and required procedures), solicitations,
and notices of awarded contracts; and
(ix) A copy of any legislation and other documents related to the
formation, organization and governance of MCA-Vanuatu, including the
Governing Documents, and any amendments thereto.
Schedule 1 to Annex I--Transport Infrastructure Project
This Schedule 1 describes and summarizes the key elements of the
transport infrastructure project that the Parties intend to implement
in furtherance of the Infrastructure Objective and the Institutional
Strengthening Objective (the ``Transport Infrastructure Project'').
Additional details regarding the implementation of the Transport
Infrastructure Project will be included in the Implementation Plan and
in relevant Supplemental Agreements.
1. Background
Overcoming transport infrastructure constraints to poverty
reduction and economic growth, specifically for rural areas, has been
consistently identified through the consultative process as a major
impediment to economic growth in Vanuatu. The Government recognizes the
importance of adequate and reliable transport infrastructure services
as well as the negative impact Vanuatu's poor transportation
infrastructure has had on formal economic activity and investment in
the agriculture and tourism sectors--the two primary sources of growth
and employment in Vanuatu. The Transport Infrastructure Project is
intended to reduce transport costs and improve reliability of access to
prioritized roads, wharfs and airstrips, and thereby, alleviate one of
the
[[Page 14319]]
principal constraints to private sector development.
2. Summary of the Transport Infrastructure Project and Project
Activities
The Transport Infrastructure Project consists of two principal
project activities: (i) Civil works for the reconstruction or
construction of priority infrastructure on eight islands, covering
roads, wharfs, airstrips and warehouses (the ``Infrastructure
Activity''); and (ii) institutional strengthening efforts in the Public
Works Department (``PWD''), including the provision of plant and
equipment for maintenance of the infrastructure (the ``Institutional
Strengthening Activity'').
(a) Infrastructure Activity.
Pursuant to the Infrastructure Activity, MCC Funding will be used
to rehabilitate or construct priority infrastructure, (each an
``Infrastructure Subproject Activity''), including:
(i) Efate--Ring Road. Upgrade 90 km of the Ring Road on Efate, the
most populous of Vanuatu's islands, to a two-lane bitumen seal
standard, with improved drainage systems.
(ii) Santo--East Coast Road. Upgrade the 70 km road from Luganville
to Port Olry on the island of Santo to a two lane, bitumen seal
standard, including associated bridges and other drainage structures.
(iii) Santo--South Coast Road Bridges. Construct an additional five
bridges along the south coast road on the island of Santo, improving
access to the commercial center and markets at Luganville, on a 15 km
section of the road.
(iv) Malekula--Norsup Lakatoro Lits Lits Road. Reconstruct the 11
km of the Norsup-Lakatoro-Lits Lits Road, the administrative and
commercial center of the island of Malekula and the Malampa province,
linking the three nodes to a two lane bitumen seal standard, with
associated drainage works.
(v) Malekula--South West Bay Airstrip. Fill the low lying area
surrounding the South West Bay airstrip on the island of Malekula and
provide some subsurface drainage to reduce the frequency of closings of
the airstrip.
(vi) Pentecost--Loltong Wharf and N-S Road. Construct a wharf in
Loltong on the island of Pentecost, suitable for conventional boats and
barges close to the Loltong village in a sheltered part of the harbor.
The proposed structure will be sufficiently robust to withstand the
most severe weather conditions, and is expected to require minimum
maintenance. Provide a coral pavement over the 8 km length of the new
section of the North South road and an adequate storm water drainage
system. In addition, the North South road, following a ridge from the
north to central Pentecost will be upgraded to significantly improve
access for the productive southeastern sections of the island to
Loltong Wharf.
(vii) Tanna--Whitesands Road. Reconstruct the Whitesands Road on
the island of Tanna, providing a coral pavement, substantial concrete-
lined drains and floodways and sections of concrete pavement where
gradients are very steep.
(viii) Epi--Lamen Bay Wharf. Reinforce the existing causeway of the
Lamen Bay Wharf on the island of Epi to extend the life of the
structure and extend the wharf face further into deeper water away from
the coral reefs to provide a suitable berth for inter island shipping.
(ix) Ambae--Road Creek Crossings. Reconstruct the creek crossings
on a 50 km section of road on the island of Ambae to improve the
overall level of serviceability. Ambae is a relatively populous and
productive island.
(x) Malo--Road Upgrade. Provide better drainage and coral surfacing
of the two roads extending 15 km on the island of Malo to improve the
overall level of serviceability.
(xi) Warehouses (Several Locations). Provide five new warehouses at
various locations throughout the islands for storing outgoing or
incoming freight for the shipping industry in Vanuatu. These warehouses
are proposed to be operated under a management or lease contract,
involving the local private sector.
(b) Institutional Strengthening Activity.
Recognizing the importance of maintenance of transport
infrastructure, the Institutional Strengthening Activity will provide
focused assistance to the PWD, to remove key constraints that face the
institution in effectively delivering maintenance and repair services.
Under the Institutional Strengthening Activity, the Program also
provides support for the sustainability and viability of the PWD
through organizational reform and policy changes (each an
``Institutional Strengthening Subproject Activity'' and together, the
``Institutional Strengthening Subproject Activities''). MCC Funding
will be used to:
(i) Plant and Equipment. Provide essential plant and equipment to
maintain road and airstrip infrastructure (the ``Equipment Subproject
Activity''). Supply of equipment will be made in two ways: (i) Certain
new equipment (value of approximately USD $4.35 million) will be
mobilized under the civil works contract and used initially by the
contractor for civil works funded by MCC Funding, and then delivered in
specified condition for use by PWD at the end of four years; and (ii)
other equipment (value of approximately USD $1.39 million) will be
provided through direct procurement for use by PWD.
(ii) Technical Assistance. Fund the development of the annual PWD
action plans and annual audits of PWD's performance. PWD will enter
into a service performance agreement with the Ministry of
Infrastructure and Public Utilities, by which PWD will be required to
meet specific performance targets through an annual action plan for
maintenance and repair (the ``Technical Assistance Subproject
Activity''). Annual audits will be undertaken to measure PWD's
performance against the targets, which will form the basis for
management accountability.
The M&E Plan (described in Annex III) will set forth anticipated
results and, where appropriate, regular benchmarks at the
Transportation Infrastructure Project and Project Activity levels
(i.e., the Infrastructure Activity and the Institutional Strengthening
Activity) that may be used to monitor implementation progress.
Performance against these benchmarks and the overall impact of the
Transport Infrastructure Project and each Project Activity will be
assessed and reported at regular intervals to be specified in the M&E
Plan or otherwise agreed by the Parties from time to time. The Parties
expect that additional benchmarks will be identified during
implementation of each Project Activity. Conditions precedent to each
Project Activity and sequencing of the Infrastructure Subproject
Activities and the Institutional Strengthening Subproject Activities
shall be set forth in the Disbursement Agreement or other relevant
Supplemental Agreements.
(c) Project Implementation.
PWD will serve as the Project Manager of the Transport
Infrastructure Project, responsible for oversight of the specific
Subproject Activities of the Infrastructure Activity. The duties of PWD
will include certification of receipt of goods and services procured
for the Transport Infrastructure Project. Outside professional services
will be contracted through MCA-Vanuatu to assist the Project Manager.
3. Beneficiaries
The primary beneficiaries (``Beneficiaries'') of the Transport
Infrastructure Project fall into the following two broad categories:
[[Page 14320]]
Providers (and laborers) of tourist-related goods and
services, including hotels, airlines, tour companies, shops,
restaurants, and artisans; and
Local producers (including landowners, lessees, and
processors of primary produce) and inhabitants of remote communities
with limited access to social and other services.
The Transport Infrastructure Project is expected to have a
transformational impact on Vanuatu's economic development, increasing
average income per capita (in real terms) by approximately $200 or 15%
of current income per capita by 2010. GDP is expected to increase by an
additional 3% each year as a result of the MCA Program.
The Program is expected to benefit approximately 65,000 poor, rural
inhabitants living nearby and using the roads to access markets and
social services. The program is also expected to expand the tourism
sector by approximately 15% each year once construction is complete.
Based on the most recent employment data, this translates to the
creation of an estimated 280 additional formal sectors jobs and 25 new
locally-owned businesses each year in this sector, impacting over 1,300
people.
4. Donor Coordination
The majority of donors in Vanuatu have focused more consistently on
the social sectors. Donors such as Australia and New Zealand have
recently committed to enlarging their assistance to the agriculture and
tourism sectors in response to the priorities for growth and poverty
reduction outlined in the Government's PAA. MCC's focus on transport
infrastructure presents a number of mutually beneficial coordination
opportunities with ongoing and planned donor programs, namely: The
European Union (the ``EU'') and France's Agricultural Producers
Organization Project; the EU and the Asian Development Bank's (``ADB'')
Tourism Training and Education project; ADB's Rural Credit
Strengthening and Secured Transaction Framework projects; New Zealand
Agency for International Development's Customary Land Tenure
initiatives; the Australian Agency for International Development's
``AusAID'') Business Climate Reform program; and the EU's Institutional
Strengthening for Infrastructure Maintenance program. Moreover, AusAid
is providing funding for key household data surveys (such as the
Household Income and Expenditure Survey (``HIES''), which will be used
in monitoring Program impacts. The United States Agency for
International Development does not maintain a mission in Vanuatu and is
not currently providing any development assistance programs to Vanuatu.
5. Sustainability
(a) Institutional Sustainability.
PWD is the principal institution responsible for the effectiveness
and sustainability of the Program, including maintenance of the roads,
and outer island wharfs and airstrips.
A lack of suitable equipment is the single most important factor
constraining PWD's road maintenance capacity. Most of the plant is 20
years old. In most provinces, the equipment fleet lacks at least one
essential item, seriously reducing the efficiency of the rest. MCC
Funding will provide equipment that will allow PWD's reformed
institutional capacity to carry out timely maintenance and repairs on
all transport infrastructure under its responsibility. MCC Funding will
expand PWD's capability and capacity in all maintenance and repair
activities, and is expected to reduce its recurrent direct costs
(attributable to maintenance of old equipment) by at least 10% of its
current budget.
Notwithstanding the past improvements made in strengthening PWD, in
order to ensure efficient and timely delivery of services by PWD and to
institute sustainable accountability and management efficiency, MCC
Funding will provide support for the establishment and maintenance of a
Service Performance Contract for PWD. Annual action plans will be
developed by the Government, with the assistance of MCA-Vanuatu, which
will form the basis for annual assessments against the Service
Performance Contract.
(b) Financial Sustainability.
(i) Roads. The Parties agree that an annual budget of about USD
$5.7 million, together with the provision of new plant and equipment
for maintenance (provided by MCC Funding) is considered to be an
appropriate level of funds for road maintenance (the ``Road Maintenance
Budget Allocation''). MCC Funding will be contingent upon the
Government allocating sufficient funds in accordance with the Road
Maintenance Budget Allocation.
(ii) Airstrip. PWD is funded through the Government budget process
for maintenance of airstrips. Two sources of revenue related to
airstrip maintenance are derived from regular air services: (i) A
departure tax; and (ii) a landing charge based on aircraft weight. The
total revenue collected from these two sources is sufficient for
maintenance of the airstrip.
(iii) Sea Ports. Under the Decentralisation Act (1994), the
provincial governments were expected to take over ownership and
operations and maintenance responsibility for the outer island ports.
With no budget allocation for maintenance, the provincial governments
have declined to take such responsibility. As a result, PWD remains as
the agency to perform maintenance works on wharfs at the request of the
provincial governments. Historically, no user fees have been collected
at the port facilities. Shefa Province has announced a tax on
passengers and cargo departing from sea ports in the province. Although
the form of construction or rehabilitation proposed for the wharfs is
robust and requires minimal maintenance, some infrequent maintenance
will be required. MCC Funding for the wharfs will be contingent upon
successful introduction of user charges on shipping to provide a source
of revenue.
(c) Environmental and Social Sustainability.
The key to ensuring environmental and social sustainability of the
Program is ongoing public consultation and attention to environmental
mitigation measures to ensure optimal design and implementation and to
ensure full country-ownership of the Program. The Government will
ensure that environmental and social mitigation measures are followed
for all Project Activities in accordance with Environmental Guidelines
and the provisions set forth in this Compact and relevant Supplemental
Agreements. In agreement with MCC, MCA-Vanuatu will select through an
open and competitive process, subject to the approval of MCC, an
environmental and social impact officer (the ``ESI Officer'') to serve
as the point of contact for comments and concerns of the parties
affected by the Program and the implementation of all Project
Activities. The ESI Officer will be located within the Environment Unit
of the Government. The ESI Officer will lead the effort to find
feasible resolutions to environmental and social issues in connection
with the implantation of Project Activities, and will convene periodic
public meetings to provide implementation updates and to identify and
address public concerns.
Other important sustainability issues involve the provision of
adequate maintenance of infrastructure. Insufficient maintenance of
assets, such as drainage systems, could lead to environmental
degradation and poor performance of the asset. Therefore, institutional
sustainability of PWD and the assurance of management
[[Page 14321]]
effectiveness (through the proposed Service Performance Contract) are
directly linked to environmental sustainability. The Service
Performance Contract for PWD will address environmental and social
impacts. In addition, potential environmental and social impacts of
Program-induced tourism will be evaluated to ensure that Vanuatu has
adequate capacity to manage such impacts.
6. Policy, Legal and Regulatory Reforms
The Parties have identified the following policy actions and
legislative and regulatory reforms that the Government will pursue in
support of the Transport Infrastructure Project to reach its full
benefits. Satisfactory implementation of these reforms may be
conditions precedent to certain MCC Disbursements as provided in the
Disbursement Agreement:
(a) The Government shall, in accordance with World Bank policy on
involuntary resettlement, undertake consultations with land users in
the Whitesands Road project area in order to establish appropriate
locations for drainage lines and shall address any social issues and
claims arising from such consultations to the satisfaction of MCC.
Moreover, any required acquisition rights-of-way and any resettlement
programs shall be amicably settled with compensation in accordance with
World Bank policy on Involuntary Resettlement;
(b) The Government shall ensure that an M&E Implementation Manual
(``M&E Implementation Manual''), describing all data collection,
reporting, and quality assurance mechanisms, must be submitted to and
approved by MCC;
(c) The Government will ensure completion of the Household Income
and Expenditure Survey and collection of baseline data on all
monitoring and evaluation indicators;
(d) PWD shall establish commercially driven maintenance contracts
with community representatives for basic routine maintenance activities
for the following Infrastructure Subproject Activities: Efate Ring Road
(with rural villages), Santo East Coast Road (with rural villages),
Malekula Norsup Lakatoro Lits Lits Road, Pentecost North South Road,
Tanna Whitesands Road, and Malo Roads. These maintenance contracts must
be in effect prior to the commencement of the respective Infrastructure
Subproject Activities;
(e) The Government or the respective province shall develop a
revenue collection mechanism and an implementation plan for the
collection of wharf user fees and their application towards wharf
maintenance. This shall be a condition precedent for initial
disbursement of MCC Funding for the relevant Infrastructure Subproject
Activity;
(f) The Government will fund the mitigation and remediation costs
related to the civil works component of the Transport Infrastructure
Project as identified in the environmental management plans (``EMPs'')
in excess of the budgeted amount in the Detailed Financial Plan for
such costs;
(g) The Government will ensure that a service performance contract
is entered into between PWD and Ministry of Infrastructure and Public
Utilities within six months of Entry into Force. The service
performance contract shall monitor and assess PWD's performance against
an action plan. PWD management shall be held accountable for service
performance in accordance with terms to be specified in the service
performance contract; and
(h) The Government will allocate sufficient funds for road
maintenance activities in accordance with the Road Maintenance Budget
Allocation.
Additionally, the Parties agree that the Government will explore
insurance coverage options to further ensure the sustainability of the
Program Assets.
Annex II--Financial Plan Summary
This Annex II to the Compact (the ``Financial Plan Annex'')
summarizes the Multi-Year Financial Plan for the Program. Except as
defined in this Financial Plan Annex, each capitalized term in this
Financial Plan Annex shall have the same meaning given such term
elsewhere in this Compact.
1. General
A multi-year financial plan summary (``Multi-Year Financial Plan
Summary'') is attached hereto as Exhibit A. By such time as specified
in the Disbursement Agreement, MCA-Vanuatu will adopt, subject to MCC
approval, a Multi-Year Financial Plan that includes, in addition to the
multi-year summary of anticipated estimated MCC Funding and the
Government's contribution of funds and resources, an estimated draw-
down rate for the first year of the Compact based on the achievement of
performance milestones, as appropriate, and the satisfaction or waiver
of conditions precedent. Each year, at least 30 days prior to the
anniversary of the entry into force of the Compact, the Parties shall
mutually agree in writing to a Detailed Financial Plan for the upcoming
year of the Program, which shall include a more detailed plan for such
year, taking into account the status of the Program at such time and
making any necessary adjustments to the Multi-Year Financial Plan.
2. Implementation and Oversight
The Multi-Year Financial Plan and each Detailed Financial Plan
shall be implemented by MCA-Vanuatu, consistent with the approval and
oversight rights of MCC and the Government as provided in this Compact,
the Governance Agreement and the Disbursement Agreement.
3. Estimated Contributions of the Parties
The Multi-Year Financial Plan Summary identifies the estimated
annual contribution of MCC Funding for Program administration,
monitoring and evaluation, the Transport Infrastructure Project, and
each Project Activity. The Government's contribution of resources to
Program administration, monitoring and evaluation, and the Transport
Infrastructure Project shall consist of (i) ``in-kind'' contributions
in the form of Government Responsibilities and any other obligations
and responsibilities of the Government identified in this Compact and
(ii) such other contributions or amounts as may be identified in
relevant Supplemental Agreements between the Parties or as may
otherwise be agreed by the Parties; provided, in no event shall the
Government's contribution of resources be less than the amount, level,
type and quality of resources required to effectively carry out the
Government Responsibilities or any other responsibilities or
obligations of the Government under or in furtherance of this Compact.
4. Modifications
The Parties recognize that the anticipated distribution of MCC
Funding between and among the various Program activities and the
Project and Project Activities will likely require adjustment from time
to time during the Compact Term. In order to preserve flexibility in
the administration of the Program, the Parties may, upon agreement of
the Parties in writing and without amending the Compact, change the
designations and allocations of funds between Program administration
and the Project, between one Project Activity and another Project
Activity, between different activities within the Project, or between a
Project Activity identified as of the Entry into Force and a new
Project Activity, without amending the Compact; provided, however, that
such reallocation (i) is consistent with the Project Objectives, (ii)
does not cause the amount of MCC Funding to exceed the aggregate amount
specified in Section 2.1(a) of this
[[Page 14322]]
Compact, and (iii) does not cause the Government's obligations or
responsibilities or overall contribution of resources to be less than
specified in section 2.2(a) of this Compact, this Annex II or elsewhere
in the Compact.
5. Conditions Precedent; Sequencing
MCC Funding will be disbursed in tranches. The obligation of MCC to
approve MCC Disbursements and Material Re-Disbursements for the
Program, the Transport Infrastructure Project, and each Project
Activity is subject to satisfactory progress in achieving the Project
Objectives and on the fulfillment or waiver of any conditions precedent
specified in the Disbursement Agreement for the relevant Program
activity, Project or Project Activity. The sequencing of Project
Activities and other aspects of how the Parties intend the Transport
Infrastructure Project to be implemented will be set forth in the
Implementation Plan, including Work Plans for the applicable Project
Activities, and MCC Disbursements and Re-Disbursements will be
disbursed consistent with that sequencing.
Exhibit A--Multi-Year Financial Plan
----------------------------------------------------------------------------------------------------------------
Component (in US$ millions) Year 1 Year 2 Year 3 Year 4 Year 5 Total
----------------------------------------------------------------------------------------------------------------
1. Transport Infrastructure Project:
Infrastructure Activity................... 4.00 22.45 25.80 2.21 0.03 54.47
Institutional Strengthening Activity...... 5.47 0.48 0.09 0.09 0.09 6.22
2. Program Management......................... 0.43 0.32 0.28 0.28 0.28 1.59
3. Monitoring and Evaluation.................. 0.28 0.06 0.06 0.06 0.91 1.37
4. Fiscal and Procurement Agents.............. 1.17 0.14 0.14 0.14 0.14 1.71
5. Audit...................................... 0.07 0.07 0.07 0.07 0.07 0.33
-----------------------------------------------------------------
Total MCC Investment...................... 11.42 23.51 26.43 2.85 1.52 65.69
----------------------------------------------------------------------------------------------------------------
Note: Figures are rounded to second decimal place. Foreign exchange rate: USD = 108 Vatu.
Annex III--Description of the M&E Plan
This Annex III to the Compact (the ``M&E Annex'') generally
describes the components of the M&E Plan for the Program. Except as
defined in this M&E Annex, each capitalized term in this Annex III
shall have the same meaning given such term elsewhere in this Compact.
1. Overview
MCC and the Government (or a mutually acceptable Government
Affiliate or Permitted Designee) shall formulate, agree to and the
Government shall implement, or cause to be implemented, an M&E Plan
that specifies (i) how progress toward the Project Objectives and the
intermediate results of each Project Activity (the ``Project Activity
Outcomes'') will be monitored (the ``Monitoring Component''), (ii) a
methodology, process and timeline for the evaluation of planned,
ongoing, or completed Project Activities to determine their efficiency,
effectiveness, impact and sustainability (the ``Evaluation
Component''), and (iii) other components of the M&E Plan described
below. Information regarding the Program's performance, including the
M&E Plan, and any amendments or modifications thereto, as well as
periodically generated reports, will be made publicly available on the
MCA-Vanuatu Web site and elsewhere.
2. Monitoring Component
To monitor progress toward the achievement of the Project
Objectives and Project Activity Outcomes, the Monitoring Component of
the M&E Plan shall identify (i) the Indicators, (ii) the party or
parties responsible, the timeline, and the instrument for collecting
data and reporting on each Indicator to MCA-Vanuatu, and (iii) the
method by which the reported data will be validated.
(a) Indicators. The M&E Plan shall measure the results of the
Program using quantitative, objective and reliable data
(``Indicators''). Each Indicator will have one or more expected results
that specify the expected value and the expected time by which that
result will be achieved (each, a ``Target''). The M&E Plan will measure
and report four types of Indicators. First, Indicators for the Program
as a whole (each, a ``Goal Indicator'') will measure the impact of the
Compact on the incomes and poverty of ni-Vanuatu who are directly or
indirectly affected by the Project Activities anticipated under the
Transport Infrastructure Project. Second, the Indicators for each
Objective (each, an ``Objective Indicator'') will measure whether the
improved infrastructure assets are having the intended impact. Third,
outcome Indicators, (each, an ``Outcome Indicator'') will signal
whether the Transport Infrastructure Project is stimulating the
expected intermediate results. Fourth, Indicators for each Project
Activity (each, a ``Project Activity Indicator'') will measure
implementation success. For each Indicator, the M&E Plan shall define a
strategy for obtaining and validating the value of such Indicator prior
to its being affected by the Program (``Indicator Baseline''). All
Indicators will be disaggregated by gender, income level and age, to
the extent practicable.
(i) Goal Indicator. The highest level of results to be achieved by
the Program, i.e., the Compact Goal, is understood to be the
aggregation of the estimated benefits of the Transport Infrastructure
Project and which are indicative of the overall impact expected from
all of the Project Activities. While these benefits can be estimated,
it is methodologically impossible to attribute with a high degree of
precision changes in income at the end of the Compact Term specifically
to interventions undertaken under or in furtherance of the Program due
to the existence of other factors, unrelated to the Program, that may
affect income changes. However, these estimated benefits may be used to
inform future impact evaluation. The M&E Plan shall contain the Goal
Indicators listed in the table below.
[[Page 14323]]
Compact Goal--Increased Economic Growth and Poverty Reduction
----------------------------------------------------------------------------------------------------------------
Baseline
Goal indicator Indicator definition \1\ Year 5 Year 10
----------------------------------------------------------------------------------------------------------------
Increase cash income per capita of Average cash income per capita $1,206 $1,411 $1,695
Beneficiaries. of residents living within the
catchment area of the
infrastructure sub-projects
listed below (1).
Efate: Round Island Road $804 $1,160 $1,633
Santo: Port Olry Road $784 $1,156 $1,831
Santo: South Coast Bridges $784 $821 $853
Tanna: Whitesands Road $366 $487 $604
Malekula: Lits Lits Road $1,000 $1,069 $1,150
Malekula: SW Bay Airstrip $1,000 $1,010 $1,019
Pentecost: Loltong Wharf/N-S $302 $367 $420
Road
Reduce poverty (as measured by Fraction of individuals TBD TBD TBD
dependence on subsistence activities). receiving more than X percent
of their income (i.e., poverty
threshold) from subsistence
activities. The ``poverty
threshold'' will be defined
during the first year of the
program based on the results
of the Household Income
Expenditure Survey.
Increase tourism employment............. Number of additional formal ........... 560 1,960
tourism jobs created on Efate,
Santo and Tanna.
----------------------------------------------------------------------------------------------------------------
\1\ Baseline cash income estimates are based on 1999 HIES, converted to USD and adjusted to 2005 prices using
provincial estimates where island data was not available. Statistically representative baseline will be
updated during the first year of the Compact.
(ii) Project Objective and Outcome Indicators. The M&E Plan shall
contain the Objective and Outcome Indicators listed in the table below,
with definitions (where necessary). The corresponding Indicator
Baselines and estimated Targets to be achieved are based on the
assumptions from the economic analysis. MCA-Vanuatu may add Objective
Indicators or refine the Targets of existing Objective Indicators prior
to any MCC Disbursement or Re-Disbursement for the Transport
Infrastructure Project or any Project Activity that may influence that
Indicator, or at such other times as may be agreed with MCC, in each
case with prior written approval of MCC.
Vanuatu Transport Infrastructure Project
[Objective: Facilitate transportation to increase tourism and business development \1\]
----------------------------------------------------------------------------------------------------------------
Objective indicators (metric of
project success observable by end Baseline Year 1 \3\ Year 2 \3\ Year 3 \3\ Year 4 \3\ Year 5
of compact) \2\
----------------------------------------------------------------------------------------------------------------
Number of New Hotel Rooms \4\
Constructed (cumulative):
Efate......................... 0 n.t. n.t. n.t. 200 400
Santo......................... 0 n.t. n.t. n.t. 70 140
Number of Tourists (per annum):
Vanuatu....................... 61,453 65,755 70,358 75,283 84,170 87,743
Santo......................... 6,963 7,450 7,972 8,530 11,137 13,744
Tanna......................... 5,000 5,350 5,725 6,125 6,738 7,412
Malekula (South-West Bay)..... 30 30 30 30 80 130
Number of Hotel & Bungalow Bed-
nights \5\ occupied (per annum):
Efate......................... 243,380 260,420 278,650 298,160 377,430 462,250
Santo......................... 64,500 69,015 73,846 79,015 84,546 90,465
Tanna......................... 15,000 16,050 17,174 18,376 20,213 22,235
Malekula (South-West Bay)..... 90 90 90 90 240 390
----------------------------------------------------------------------------------------------------------------
Vanuatu Transport Infrastructure Project
[Objective: Facilitate transportation to increase agriculture production]
----------------------------------------------------------------------------------------------------------------
Objective Indicators (metric of
project success observable by end Baseline Year 1 \3\ Year 2 \3\ Year 3 \3\ Year 4 \3\ Year 5
of compact) \2\
----------------------------------------------------------------------------------------------------------------
Airfreight uplifted from South 35 35 35 35 45 50
West Bay, Malekula (tonnes per
annum)...........................
Cargo shipped from Loltong wharf, 1,000 1,000 1,000 1,000 1,025 1,056
Pentecost (tonnes per annum).....
----------------------------------------------------------------------------------------------------------------
Vanuatu Transport Infrastructure Project
----------------------------------------------------------------------------------------------------------------
Outcome Indicators (indication
that the project is having the Baseline Year 1 \3\ Year 2 \3\ Year 3 \3\ Year 4 \3\ Year 5
intended impact) \2\
----------------------------------------------------------------------------------------------------------------
Traffic volume (average annual
daily traffic): \6\
Santo: South Coast Bridges........ 33 33 n.m. 36 n.m. 40
[[Page 14324]]
Malekula: Lits Lits Road.......... 200 200 n.m. 221 n.m. 244
Pentecost: N-S Road........... 25 25 n.m. 28 n.m. 31
Days road is closed (number per
annum):
Santo: South Coast Bridges.... 90 90 n.m. 90 0 0
Pentecost: North-South Road... 90 90 n.m. 90 0 0
Number of S-W Bay, Malekula 33 33 n.m. 33 7 7
flights cancelled due to
flooding (per annum).........
Time at wharf (hours/vessel).. 8 8 n.m. 4 4 4
----------------------------------------------------------------------------------------------------------------
Vanuatu Transport Infrastructure Project--Road Maintenance Quality
[Objective: Improved road sustainability through increased funding and improved maintenance]
----------------------------------------------------------------------------------------------------------------
Outcome Indicator (Indication that
the Project is having the intended Baseline Year 1 Year 2 Year 3 Year 4 Year 5
impact)
----------------------------------------------------------------------------------------------------------------
Share of road network in ``Good'' TBD TBD n.m. TBD n.m. TBD
or ``Fair'' condition (%)\7\.....
----------------------------------------------------------------------------------------------------------------
Notes:
\1\ Targets for all tourism projects (except South-West Bay) incorporate an assumed without-project rate of
growth of tourism (7%) in addition to program's projected incremental impact beginning in Year 4. Tourism in
South-West Bay, Malekula is not expected to grow until the airstrip is improved.
\2\ The Baseline data presented in these tables was collected during due diligence for the purposes of
estimating the economic impact. Data will be collected and quality checked on all indicators during the first
year of the program (during the design phase and prior to construction) to validate these baseline
assumptions. Hence, Year 1 will become the baseline.
\3\ Targets in intermediate years will depend on precise implementation schedule for specific subprojects.
\4\ Assumes approximately 2 beds per room.
\5\ Based on 40% capacity utilization rate for major hotels. To be updated for all hotels and bungalows during
initial implementation of the Project. Survey data is to be collected on room-nights of accommodation
available and used (to give capacity utilization), and person-nights of accommodation used (to indicate
quantity of tourism), with only the latter to be presented as in Indicator.
\6\ Extent of reduced vehicle operating costs will be a function of the quantity of traffic and delivery of the
improved road. As the latter will be monitored through an Outcome Indicator and technical supervision reports,
only the traffic volume need be measured. Traffic volume is reported as the Average Annual Daily Traffic
(equal to annual traffic divided by 365). Traffic on Round-Island Road (Efate), Port Orly Road (Santo), and
White Sands Road (Tanna) will be monitored for evaluation purposes in the first and last years of the Compact.
However, they are not included here because targets cannot be reasonably estimated as they depend on multiple
factors.
\7\ Based on an audited survey of road conditions conducted as part of the PWD action plan and performance
review. An independent baseline survey will be conducted during the first year of the program to establish
current road conditions. Performance targets will be a function of five year performance plan developed during
the first year of the Compact. Independent audit will be repeated during the third and fifth years of the
program.
All monetary values are reported in constant U.S. Dollars (2005).
n.t. (not targeted) Indicates that the indicator will not be targeted during that year given that the
transportation infrastructure will not be complete until the end of year 3. However, the Indicator will be
monitored for evaluation purposes.
n.m. (not monitored) Signifies that an indicator will not be monitored in a given year due to the lag between
construction, project completion, and commencement of benefits.
(iii) Project Activity Indicators. The M&E Plan shall contain the
Project Activity Outcome Indicators listed in the table below, with
definitions (where necessary). Indicators have been selected to measure
the progress of construction and PWD adherence to action plan
objectives. The Baseline and estimated Targets are notional based on
anticipated implementation schedule. MCA-Vanuatu may add Project
Activity Outcome Indicators or refine the Targets of existing Project
Activity Outcome Indicators prior to any MCC Disbursement or Re-
Disbursement for any Project Activity that may influence that
Indicator, or at such other times as may be agreed with MCC, in each
case with prior written approval of MCC.
Vanuatu Transport Infrastructure Project
----------------------------------------------------------------------------------------------------------------
Activity indicators \1\ (metric of
implementation performance) Year 1 Year 2 Year 3 Year 4 Year 5
----------------------------------------------------------------------------------------------------------------
Kilometers of Roads Upgraded................... ........... 80 213.8 ........... ...........
Efate: Round-Island Road................... ........... 45 90 ........... ...........
Malekula: Norsup-Lits Lits Road............ ........... ........... 10.8 ........... ...........
Malo: Multiple Roads....................... ........... ........... 5 ........... ...........
Pentecost: North-South Road................ ........... ........... 8 ........... ...........
Santo: East Coast Road..................... ........... 35 70 ........... ...........
Tanna: White Sands Road.................... ........... ........... 30 ........... ...........
Number of River Crossings Constructed.......... ........... 40 5 ........... ...........
Ambae: Creek Crossings Reconstruction...... ........... 40 ........... ........... ...........
Santo: South Coast Road Bridges............ ........... ........... 5 ........... ...........
Airstrip Meters Upgraded at S-W Bay, Malekula.. ........... 2,000 ........... ........... ...........
Number of maritime wharves reconstructed....... ........... ........... 2 ........... ...........
Pentecost: Loltong Wharf................... ........... ........... 1 ........... ...........
[[Page 14325]]
Epi: Lamen Bay Wharf....................... ........... ........... 1 ........... ...........
Number of Warehouses Constructed............... ........... ........... 5 ........... ...........
Maintenance Activities: \2\
Equipment delivered (USD millions)......... 1.00 0.39 ........... ........... 4.35
Utilization of equipment \3\............... ........... 50% 75% 80% 80%
Annual PWD Score \4\....................... ........... 60 70 80 90
PWD Budget as a percentage of transport revenue TBD TBD TBD TBD TBD
collected (USD millions at, 2005 prices) \5\..
----------------------------------------------------------------------------------------------------------------
Notes:
\1\ Activity Targets are notional and will depend on the specific implementation timeline provided by the
contractor. These will be finalized during the first year of the Compact.
\2\ Country's performance relative to maintenance activity Targets will be linked to disbursements.
\3\ Time each item of equipment is used relative to work time.
\4\ Audited composite annual score measuring PWD's performance against targets set in the annual action plan.
Maximum score is 100.
\5\ As reported in Government revenues and budget for road maintenance.
(b) Data Collection and Reporting. The M&E Plan shall establish
guidelines for data collection and a reporting framework, including a
schedule of reporting required under the terms of the Compact and the
responsible parties. The Program Management Unit shall conduct regular
assessments of Program performance to inform MCA-Vanuatu, the Project
Manager and MCC of progress under the Program and to alert these
parties to any problems. These assessments will report the actual
results compared to the Targets on the Indicators referenced in the
Monitoring Component, explain deviations between these actual results
and Targets, and in general, serve as a management tool for
implementation of the Program. With respect to any data or reports
received by MCA-Vanuatu, MCA-Vanuatu shall promptly deliver such
reports to MCC along with any other related documents, as specified in
this Annex III or as may be requested from time to time by MCC.
(c) Data Quality Reviews. From time to time, as determined in the
M&E Plan or as otherwise requested by MCC, the quality of the data
gathered through the M&E Plan shall be reviewed to ensure that data
reported are as valid, reliable, and timely as resources will allow.
The objective of any data quality review will be to verify the quality
and the consistency of performance data, across different
implementation units and reporting institutions. Such data quality
reviews also will serve to identify where those levels of quality are
not possible, given the realities of data collection. The data quality
reviewer shall enter into an Auditor/Reviewer Agreement with MCA-
Vanuatu in accordance with Annex I.
3. Evaluation Component
The Program shall be evaluated on the extent to which the
interventions contribute to the Compact Goal. The Evaluation Component
shall contain a methodology, process and timeline for analyzing data in
order to assess planned, ongoing, or completed Project Activities to
determine their efficiency, effectiveness, impact and sustainability.
The Evaluation Component shall contain two types of reports: Final
Evaluations and Ad Hoc Evaluations, and shall be finalized before any
MCC Disbursement or Re-Disbursement for specific Program related
activities or Project Activities.
(a) Final Evaluation. MCA-Vanuatu, with the prior written approval
of MCC, may engage an independent evaluator to conduct an evaluation at
the expiration or termination of the Compact Term (``Final
Evaluation'') or at MCC's election, MCC may engage such independent
evaluator and shall provide notification of such engagement to MCA-
Vanuatu. The Final Evaluation must at a minimum (i) evaluate the
efficiency and effectiveness of the Project Activities (and Subproject
Activities, as appropriate); (ii) estimate, quantitatively and in a
statistically valid way, the causal relationship between the Compact
Goal (to the extent possible), the Project Objectives, Project Outcome
and Project Activities (and Subproject Activities, as appropriate);
(iii) determine if and analyze the reasons why the Compact Goal,
Project Objectives and Project Outcomes and Project Activities were or
were not achieved; (iv) identify positive and negative unintended
results of the Program; (v) provide lessons learned that may be applied
to similar projects; (vi) assess the likelihood that results will be
sustained over time; and (vii) any other guidance and direction that
will be provided in the M&E Plan. To the extent engaged by MCA-Vanuatu,
such independent evaluator shall enter into an Auditor/Reviewer
Agreement with MCA-Vanuatu in accordance with Annex I.
(b) Ad Hoc Evaluations. Either MCC or MCA-Vanuatu may request ad
hoc or interim evaluations or special studies of the Transport
Infrastructure Project, Project Activities, or the Program as a whole
prior to the expiration of the Compact Term. If MCA-Vanuatu engages an
evaluator, the evaluator will be an externally contracted independent
source selected by MCA-Vanuatu, subject to the prior written approval
of MCC, following a tender in accordance with the Procurement
Guidelines, and otherwise in accordance with any relevant
Implementation Letter or Supplemental Agreement. The cost of an
independent evaluation or special study may be paid from MCC Funding.
If MCA-Vanuatu requires an ad hoc independent evaluation or special
study at the request of the Government for any reason, including for
the purpose of contesting an MCC determination with respect to the
Transport Infrastructure Project or any Project Activity or to seek
funding from other donors, no MCC Funding or MCA-Vanuatu resources may
be applied to such evaluation or special study without MCC's prior
written approval.
4. Other Components of the M&E Plan
In addition to the Monitoring and Evaluation Components, the M&E
Plan shall include the following components for the Project Activities,
including, where appropriate, roles and responsibilities of the
relevant parties and Providers:
(a) Costs. A detailed cost estimate for all components of the M&E
Plan.
(b) Assumptions and Risks. Any assumptions and risks external to
the Program that underlie the accomplishment of the Objectives and
Project Activity Outcomes provided, however, such assumptions and risks
[[Page 14326]]
shall not excuse performance of the Parties, unless otherwise expressly
agreed to in writing by the Parties.
5. Implementation of the M&E Plan
(a) Approval and Implementation. The approval and implementation of
the M&E Plan, as amended from time to time, shall be in accordance with
the Program Annex, this M&E Annex, the Governance Agreement, and any
other relevant Supplemental Agreement.
(b) Steering Committee. The completed portions of the M&E Plan will
be presented to the Steering Committee at the Steering Committee's
initial meeting, and any amendments or modifications thereto or any
additional components of the M&E Plan will be presented to the Steering
Committee at appropriate subsequent meetings of the Steering Committee.
Members of the Steering Committee will have the opportunity to present
suggestions on the M&E Plan.
(c) MCC Disbursement and Re-Disbursement for a Project Activity.
Unless the Parties otherwise agree in writing, prior to, and as a
condition precedent to, the initial MCC Disbursement or Re-Disbursement
with respect to certain Project Activities, the baseline data or
report, as applicable and as specified in the Disbursement Agreement,
with respect to such Project or Project Activity must be completed in
form and substance satisfactory to MCC. As a condition to each MCC
Disbursement or Re-Disbursement there shall be satisfactory progress on
the M&E Plan for the Transport Infrastructure Project or any Project
Activity, and substantial compliance with the M&E Plan, including any
reporting requirements.
(d) Modifications. Notwithstanding anything to the contrary in the
Compact, including the requirements of this M&E Annex, MCC and the
Government (or a mutually acceptable Government Affiliate or Permitted
Designee) may modify or amend the M&E Plan or any component thereof,
including those elements described herein, without amending the
Compact; provided, any such modification or amendment of the M&E Plan
has been approved by MCC in writing and is otherwise consistent with
the requirements of this Compact and any relevant Supplemental
Agreement between the Parties.
[FR Doc. 06-2553 Filed 3-20-06; 8:45 am]
BILLING CODE 9210-01-P