OFFICIAL DOCUMENTS Principles of Collaboration (Bosnia and Herzegovina Federation Road Sector Modernization Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and EUROPEAN INVESTMENT BANK Dated 41 iJ;K4A , 2018 -1- PRINCIPLES OF COLLABORATION Principles of Collaboration ("PoC") dated 18 , 2018 among the International Bank for Reconstruction and Development ("World Bank") and the European Investment Bank ("EIB") (collectively, the "Financiers" and individually each and any of them the "Financier"). WHEREAS (A) Bosnia and Herzegovina ("Borrower") has requested EIB and World Bank ("Financiers") to assist in the financing of parts of the "Roads Modernization Federation BiH" Project (the "Project") and has entered into, or will enter into, an agreement or agreements with each Financier setting forth the relevant terms and conditions of the financing (each such agreement being hereinafter referred to as a "Financing Agreement"); (B) the Financiers consider it appropriate and advisable, in the interest of the Project and in their own interest, to cooperate in certain matters of common interest relating to the implementation of the parts of the Project that are expected to be jointly co-financed by the Financiers (the "Co-Financed Parts"), as described in this PoC; (C) unless otherwise expressly specified in this PoC, each Financier's applicable policies (including, without limitation, environmental, complaints, and anti-fraud and anti-corruption policies) will be applied by such Financier on the basis of the relevant Financing Agreement. NOW, THEREFORE, the Financiers hereby set out the following Principles of Collaboration: 1. Co-Financed Parts (a) Without limitation to the description of the Project set forth in the Financiers' respective Financing Agreements, the Financiers acknowledge that the Project comprises those common components of each Financing Agreement as will be set forth in the agreed Procurement Plan for the Co- Financed Parts as defined in Section 3(d) below. (b) The amount of financing that each Financier intends to provide to the Borrower in respect of one or more Co-Financed Parts is set forth in their respective Financing Agreements, as the same may be amended from time to time (including to increase or decrease the amount of the corresponding financing). (c) The Financiers will jointly co-finance eligible expenditures in respect of the costs of works, goods, non-consulting and consulting services of the -2- Co-Financed Parts, and following their corresponding disbursement mechanisms, in accordance with the terms and conditions set forth or referred to in their respective Financing Agreements. 2. General Cooperation and Coordination on Implementation of Co-Financed Parts (a) Each of the Financiers will use reasonable efforts to: (i) ensure the prompt channeling of information regarding the Co- Financed Parts and their progress with the other Financier (subject to the applicable policies of each Financier regarding access to information); (ii) arrange and organize regular joint Co-Financed Parts review missions and other joint missions, as and when they consider it necessary or advisable (provided that one joint supervision mission per year should in any case be organized); (iii) arrange and organize meetings of the Financiers, as and when they consider it necessary or advisable, to discuss and resolve any issues arising during the implementation of the Co-Financed Parts; and (iv) ensure timely review of financial reports and annual audited Project financial statements and promptly communicate and discuss such results with the other Financier in order to coordinate a joint response to the Borrower. (b) To ensure the smooth operation and efficient monitoring of the Co- Financed Parts, the Financiers hereby agree that: (i) the World Bank shall act as the coordinator for all matters related to the technical, procurement, environmental and social safeguards ("Safeguards"). In that capacity the World Bank will coordinate the Relevant Procurement (as defined in Section 3(a) below) and Safeguards aspects of the Co-Financed Parts in accordance with the provisions of Sections 3 and 4 of this PoC, respectively, and coordinate the response to the Borrower with the results of the review of financial reports and annual audited Project financial statements in accordance with the provision of paragraph (a)(iv) of this Section; (ii) the Financiers shall nominate one (1) representative of each Financier to liaise with the other Financier (including attendance of meetings at the request of any of the Financiers to facilitate the -3- smooth implementation of the Co-Financed Parts). The Financiers shall promptly advise each other of the staff member nominated as its representative; and (iii) each Financier will bear the costs of its own employees' missions. 3. Procurement Arrangements Independently and without prejudice to the terms and conditions of each respective Financing Agreement, the Financiers agree to cooperate and coordinate their respective arrangements in relation to procurement and implementation of the Co-Financed Parts. Without limitation to the provisions of Section 2 of this PoC, the Financiers will endeavor to cooperate in accordance with the following: (a) The Financiers confirm that the World Bank's Procurement Guidelines ("Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers", dated January 2011 and Revised July 2014) and the World Bank Consulting Guidelines ("Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers", dated January 2011 and Revised July 2014) will apply to the procurement of all goods and works, non-consulting services and consulting services relating to the Co-Financed Parts (the "Relevant Procurement"). The Financiers further confirm that the World Bank will be responsible for the supervision of the Borrower's administration of the Relevant Procurement. (b) The Financiers acknowledge that EIB will not finance its respective part of a contract to a bidder or consultant who is on any of the EU financial or commercial sanctions lists. (c) The Financiers agree that all Relevant Procurement processes will use the World Bank's Standard Bidding Documents or, as the case may be, national bidding documents acceptable to the World Bank (the "Bidding Documents"), including without limitation, the fraud and corruption provisions incorporated in said Bidding Documents. The World Bank will request the Borrower to include in such Bidding Documents EIB's covenant of integrity set out at Annex I of this PoC, and for contracts subject to prior review, will confirm the covenant's signature by the relevant appointed contractor, as part of the Borrower's furnishing to the Bank of a conformed copy of the contract. In addition, the Bidding Documents will contain a provision permitting each of the Financiers, and/or persons appointed by them, and/or entities authorized according to their respective policies, to inspect and copy all accounts, records, and other documents relating to the procurement process and performance of the Project activities and to inspect or audit the records and accounts of -4- any bidders, contractors, suppliers or service providers relating to the procurement process and performance of the Project activities, all in accordance with their respective policies and procedures. (d) The Financiers will jointly review the procurement plan applying to the Co-Financed Parts, as prepared and submitted by the Borrower (the "Procurement Plan", attached hereto). The Financiers acknowledge that the Procurement Plan shall define the thresholds for the procurement methods and the World Bank's review requirements, identifying those contracts that will be subject to World Bank's prior review and post review. The Procurement Plan will be periodically updated by the Borrower to reflect actual project implementation needs and each submitted update of the Procurement Plan will be jointly reviewed by the Financiers. The World Bank will be responsible, for prior- reviewing procurement documents for all those contracts as so identified in the Procurement Plan, and post reviewing on yearly basis a sample of those contracts subject to the World Bank's post-review as set forth in the Procurement Plan. (e) For all contracts relating to the Relevant Procurement, the World Bank will provide EIB, upon request, access to copies of all procurement documents reviewed and cleared by the World Bank and of all procurement reports. The World Bank will also inform EIB of any complex or delicate procurement decisions (including without limitation those related to procurement processes in which any complaint or any allegation as referenced under Section 5(a) of this PoC has been received or it is expected to be received and those in which a tenderer is excluded on the basis of a debarment) related to said contracts before the World Bank issues a no-objection on behalf of the Financiers. The EIB will have the right to seek information and/or clarifications or provide recommendations to the World Bank on any stage of the Relevant Procurement process. (f) For complaints against the Borrower's handling of procurement, the Financiers agree that, consistent with the rules and procedures of the respective institutions, the World Bank will normally take the lead in the response. If a complaint against the Borrower's handling of procurement is submitted to EIB, it shall be promptly forwarded to the World Bank for its review and final decision. Notwithstanding that the World Bank is designated as "leading" the complaint treatment, all complaints against the Borrower's handling of procurement will be dealt with on a collaborative basis. (g) To allow the EIB to comply with its own procurement policies, the World Bank undertakes to notify the EIB or to ensure that the Borrower notifies the EIB of any contracts to be procured above an amount of EUR -5- 5,000,000 for contracts relating to works and EUR 200,000 for contracts relating to services, in order to enable publication by the EIB of the relevant procurement notices for the jointly co-financed contracts in the Official Journal of the European Union. (h) Without limitation to the provisions of their respective Financing Agreements and, in any case, without prejudice to the provision under Section 7(b) below, the Financiers will endeavor to inform each other as to the grounds to exercise remedies under their respective Financing Agreements in respect of Relevant Procurement, including declarations of misprocurement. 4. Cooperation on Safeguards Requirements (a) The Financiers recognize the importance of environmental and social safeguards compliance requirements under the Project and will endeavor to cooperate with each other in the coordination, implementation and monitoring of the requirements of each of the Safeguards documents prepared in respect of the Co-Financed Parts (the "Safeguard Documents"). (b) In accordance with the Financing Agreements of each of the Financiers, the Financiers expect that the Co-Financed Parts shall be carried out pursuant to, and in compliance with, the environmental and social policies, practices, procedures and guidelines of both Financiers. To this end, the Financiers will endeavor to verify that any new environmental and/or social documentation to be developed and adopted by the Borrower during preparation and implementation of the Co-Financed Parts (e.g., site- specific environmental and social impact assessments or management plans and site-specific resettlement action plans) will be prepared pursuant to, and in compliance with, the policies, practices, procedures and guidelines of both Financiers. (c) Each Financier will independently review drafts of the Safeguard Documents, with the aim of forming a joint, mutually acceptable position; provided, however, that no Financier shall be obliged to appraise, supervise and/or monitor any requirement of the other Financier's policies, practices, procedures and guidelines which the first Financier deems is beyond the scope of its mandate. The Financiers will coordinate terms of reference of the consultants to be hired for the Project supervision, including verification of safeguards, to include any specificities of the relevant safeguard policies of each Financier. (d) In the event the Financiers cannot form a mutually acceptable position on any of the aforementioned matters, the procedure set forth in Section 8 of this PoC shall apply. -6- 5. Integrity Matters (a) In accordance with their respective Financing Agreements, and subject to their respective applicable policies and guidelines, the Financiers agree to pursue their best efforts to consult and inform each other in the case that a material and credible allegation of fraud, corruption, collusion, coercion or obstruction (collectively "fraud or corruption") or a material and credible allegation of money laundering, financing of terrorism relating to the procurement process, and/or the Project activities and/or Project implementation occurs, with a view to agreeing on a coordinated approach to such allegations, including, where appropriate, joint or parallel investigations. (b) The Financiers will, subject to their respective policies on access to information, promptly exchange information in relation to any such allegation of fraud or corruption, and investigations relating to such allegations, in accordance with Section 6 of this PoC. (c) Without limiting their rights under their respective Financing Agreement, and subject to their respective applicable policies (and, in any case, without prejudice to the provision under Section 7(b) below), the Financiers will endeavor to inform each other when exercising contractual remedies arising from fraud or corruption in connection with the Project. The Financiers may explore how sanctions or other results of investigations taken by one Financier can be supported by the other Financier. 6. Cooperation, Coordination and Exchange of Information Subject to their respective applicable policies, in particular those on access to information, and their rights and obligations under their respective Financing Agreement, the Financiers will endeavor to: (a) coordinate, cooperate and, subject to the requirements of their respective policies on access to information, exchange information in relation to fraud or corruption relating to the Relevant Procurement process. (b) inform the other Financier, as soon as practicable, of any substantial breach committed by the Borrower under their respective Financing Agreement. (c) inform the other Financier, as soon as practicable, of any complaint in relation to the Co-Financed Parts brought to the World Bank Inspection Panel or the FIB Complaints Mechanism. -7- 7. Resolution of Differences (a) Without prejudice to the provision under Section 8(c) below, the Financiers will, to the extent possible, strive to resolve promptly and amicably questions of interpretation and application of this PoC and any disputes arising out of or in relation to this PoC. Any material differences on the implementation of the Project, and the interpretation and application of this PoC will be resolved through consultation and dialogue between the Financiers' representatives. If the representatives are not able to resolve any such differences in a reasonable period of time, the differences will be referred to the Financiers' senior management. In the event of a continuing unremedied dispute after ninety (90) days as from referral to the Financiers' senior management, this PoC shall be ipso facto terminated without any responsibility or liability whatsoever arising for either Party. (b) Each Financier hereby expressly acknowledges and agrees that nothing in this PoC shall to any extent exclude, limit or otherwise adversely affect each Financier's ability to exercise all remedies available to it under the relevant Financing Agreement at any time (with no need to seek for any prior approval and/or clearance whatsoever by the other Financier). Notwithstanding any other provision of this PoC, each Financier reserves the right to enforce all its rights under its respective Financing Agreement. In case of any conflict between this PoC and the respective Financing Agreement, the latter shall take precedence. 8. Execution, Effectiveness, Termination, Amendments, and Miscellaneous (a) This PoC may be signed in several counterparts, all of which will be an original. (b) This PoC will come into operation upon signature by the last signatory of the Financiers. This PoC sets forth principles and actions that the Financiers intend to implement and follow in relation to the Project, and shall not constitute and is not intended to establish any legally binding contractual obligation between the Financiers. As a consequence, nothing in this PoC shall give rise to any liability on either Financier's part. (c) This PoC will terminate in respect of a Financier on the earlier of: (i) the date that the Financier has notified the other Financier of its decision not to proceed with its proposed financing of the Co-Financed Parts; (ii) the closing date as set forth in its Financing Agreement; (iii) the date of termination under Section 7(a) above; and (iv) the date of termination as per the following sentence of this Section 8(c). Should either Financier determine, at its sole discretion, that the continuation of this PoC is no longer appropriate, such Financier will notify the other its concerns and the rationale for requesting termination. If such concerns cannot be -8- resolved in a mutually satisfactory manner within thirty (30) days, either Financier has the right to withdraw from this PoC at any time by giving prior thirty (30) days' written notice to the other Financier. (d) All additions, amendments or variations to this PoC will be taken into consideration only if in writing and signed by the duly authorized representative(s) of the Financiers. (e) Nothing in this PoC will operate or will be construed as a waiver, renunciation or any other modification of any of the privileges, immunities or exemptions of any Financier under its organizational documents, or any international convention, or any applicable law, including, without limiting the generality of the foregoing, the privileges, immunities and exemptions of: (i) the World Bank under the Articles of Agreement of the International Bank for Reconstruction and Development; and (ii) the EIB under its Statute and under the European Union Treaties. (f) The World Bank will exercise the same care in the discharge of its role of coordinator of the Relevant Procurement under this PoC as it exercises with respect to the administration and management of its own affairs, and will have no further responsibility in respect thereof to the ElB. (g) This PoC may be disclosed by any of the Financiers in accordance with such Financier's policy on transparency and disclosure of information as in force from time to time. (h) This PoC is not intended to be, and shall not constitute, a commitment or undertaking by any Financier to approve, organize and/or underwrite or commit to approve, organize and/or underwrite the funding of (in full or in part) of the Project and nothing in this PoC will be construed as imposing any financial obligation on the part of the Financiers. (i) No provision of this PoC shall be construed so as to run counter to, or modify, the respective statutory or charter obligations of any Financier, per such Financier's applicable regulatory framework. 9. Notices Any notice of request required or permitted to be given or made under this PoC will be in writing. Such notice or request will be deemed to have been duly given or made when it will be delivered by hand or mail, facsimile or electronic mail to the party to which it is required to permitted to be given or made at such party's address specified below: -9- For World Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Phone: 1- 202-473-1000 Fax: 1-202-477-6391 For EIB: European Investment Bank Attention: PJ - Mobility Department 98-100, boulevard Konrad Adenauer L-2950 Luxembourg Phone: (+352) 43 79 1 Fax: (+352) 43 77 04 [N WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this PoC to be signed in their respective names as of the date first hereinabove mentioned. EUROPEAN INVESTMENT BANK INTERNATIONAL BA FOR RECON STkUCTIO ND DEVE P T By By Name: Name: U L 'V 1164 w42 Title: GWoIL T-r"Ql)WC Title: (Oll"rFl-v /147w ' &R 1818 H Street, NW Washington, D.C. By 20433 USA ame: MASS)MO NOi/O Title: 00oU L0 ',Si0 98-100 Avenue Konrad Adenauer L-2950 Luxembourg - 10 - Annex 1: EIB's Covenant of Integrity for co-financed projects COVENANT OF INTEGRITY to the Borrower / Promoter from a Tenderer, Contractor, Supplier or Consultant to be attached to its Tender "We declare and covenant that neither we nor anyone, including any of our directors, employees, agents, joint venture partners or sub-contractors, where these exist, acting on our behalf with due authority or with our knowledge or consent, or facilitated by us, has engaged, or will engage, in any Prohibited Conduct in connection with the tendering process or in the execution or supply of any works, goods or services for [ ] (the "Contract") and covenant to so inform you if any instance of any such Prohibited Conduct shall come to the attention of any person in our organisation having responsibility for ensuring compliance with this Covenant. We shall, for the duration of the tender process and, if we are successful in our tender, for the duration of the Contract, appoint and maintain in office an officer, who shall be a person reasonably satisfactory to you and to whom you shall have full and immediate access, having the duty, and the necessary powers, to ensure compliance with this Covenant. If (i) we have been, or any such director, employee, agent or joint venture partner, where this exists, acting as aforesaid has been, convicted in any court of any offence involving a Prohibited Conduct in connection with any tendering process or provision of works, goods or services during the five years immediately preceding the date of this Covenant, or (ii) any such director, employee, agent or a representative of a joint venture partner, where this exists, has been dismissed or has resigned from any employment on the grounds of being implicated in any Prohibited Conduct, or (iii) we have been, or any of our directors, employees, agents or joint venture partners, where these exist, acting as aforesaid has been excluded by the EU Institutions or any major Multi-lateral Development Bank (including World Bank Group, African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, European Investment Bank or Inter- American Development Bank) from participation in a tendering procedure on the grounds of Prohibited Conduct, we give details of that conviction, dismissal or resignation, or exclusion below, together with details of the measures that we have taken, or shall take, to ensure that neither this company nor any of our directors, employees or agents commits any Prohibited Conduct in connection with the Contract. In the event that we are awarded the Contract, we grant the Project Owner, the European Investment Bank (EIB) and auditors appointed by either of them, as well as any authority or European Union institution or body having competence under European Union law, the right of inspection of our records and those of all our sub-contractors under the Contract. We accept to preserve these records generally in accordance with applicable law but in any case for at least six years from the date of substantial performance of the Contract." For the purpose of this Covenant, all capitalized terms have the meaning ascribed to them in EIB's Guide to Procurement, Annex 3 (June 2011 version)a a http://www.eib.orq/attachments/thematic/procurement en.pdf - 11 - Annex 2 - Procurement Plan 0 (U~ 0 z ) 0 w 0 cc L_ oNAME U DE CL 0" 0 .11 - g Component 1. & 2. Road Upgrade and Rehabilitation and Road Safety Interventions Stari Neum- Ottrovac L=2,4km Pavement of Road and Tunnel O§trovac 0,19km 3.31 1 O§trovac - Brodanac L=4,1km Construction of Road W 3.30 1 2 1.1. Construction of Tunnel 2aba 0,975km (Hutovo) 10.46 10.46 ICB W 1 Prior 17.3. Brodanac - Prapratnica L=4,085 Construction of Road 5.50 1 3 W 11.00 ICB W Prior Hutovo - Cerovica, L = 4,475 Construction of Road 5.50 1 Cerovica - Stolovi, L = 7,00km Construction of Road 6.00 1 4 1.2 W 12.79 ICB W Prior Stolovi - Drenovac L=8,30km Construction of Road 6.79 1 2017 BID I 7 M18 5.21. Improvements to Bridge over Ljubina River 0.15 8 M5 5.8. Improvements to Bridge over Sana River, KIjud 0.25 9 M5 5.9. Improvements to Bridge over Pliva River, Jajce W 0.24 1.38 NCB SW 1 Prior 10 M5 5.12. Improvements to Bridge Komar, across deep obstacle 0.20 11 M16.4 5.16. Improvements to Bridge over Vrbas River, Bugojno 0.54 2017 BID II 29 M17 4.4. Konjic - Jablanica 1 (Crnaja) Improvements to Tunnel W 4.70 4.70 ICB SW 1 BID III 12 M4.2 6.1. Skokovi - Srbljani "Mala Lisa" km 11+230 Black Spots 0.20 SW 1 13 M5 6.2. Granica BiH/RH (Izadid) - Bihad roundabout Kamenica R403a Black Spots 0.42 20 M 5 2.1. Ripa6 - Dubovsko Construction Slow Lane W 2.50 SW 1 21 M 5 2.2. Bos. Petrovac - Kljud - Prevoj Lanitte Construction Slow Lane W 2.17 SW 1 2018 BID IV 5 M17 4.3. Top6id polje - La§va (Vranduk II) Improvements to Tunnel W 4.60 SW 1 6 M17 5.17. Bridge over Bosna River, Bosna IV 0.55 24 M19.2 3.5. Vitalj - Vlasenica (Gran.entiteta) Road Pavement and axis corrections W 1.00 ___7.66 ICB SW 1 Post 25 M18 6.8. Vitalj - Olovo "Nula" km 20+600 Black Spots W 0.10 26 M1.8 4.2. Pelagidevo - Srebrenik (Ormanica) Improvements to Tunnel W 0.90 27 M18 6.7. Sidki Brod 3 - ?ivinicel km 2+500 roundabout "Husino" Black Spots W 0.51 BID V 14 M17 5.19. Improvements to Bridge over Bregava River, Tasovcii 0.18 15 M17 6.3. Tardin - Konjic km 16+800 - km 17+600 Black Spots 0.46 16 M17 6.5. Mostar centar - Gnojnice sout Mostar km 1+640 Black Spots 0.26 17 M17 6.6. | Tasovdidi - Capljina roundabout M6 and M17 km 0+000 Black Spots 0.55 ICB - 12- 2018 4~ 00 . 09 M ..Jieig-DniVkf1Ra aeetadai orcin W 3.53 1 0 z NAE .w *m 0) NA'E 0 .03 I S Po 28 M 2.8--0 2 0 00 18 M20 3.4. Ustikolina - Gora2de 8 Roundabout Vitkovidi Road Pavement and axis corrections W 1.48 1.48 SW 1 23 M 6.1 2.4. Posu§je - Grude - Siroki Brijeg Construction Slow Lane w 3.20 3.20 ____Sw 1 i _ 2018 19 M5 3.2. Jajce jug - Donji Vakuf 1 Road Pavement and axis corrections W 3.53 60 IC SW 1 Ps 22 M 5 2.3. Donji Vakuf - Turbe (Komar) Construction Slow Lane W 2.50 60 1B SW 1 Ps 28 M15 2.8. Borova Glava + Trivunove krivine L=2,3+2,4+1,6km L=1,Okm Construction Slow W 2.80 2.80 NCB SW 1 Post Lines 30 MS 2.9. Kobilja6a Construction Slow Lines W 2.50 1 '2.76 NCB SW Post 31 M17 6.4. Potoci - Mostar centar, nort Mostar km 7+800 Black Spots W 0.26 1 32 M5 3.1. Bihad 4 - Ripad Road Pavement and axis corrections W 0.26 0.26 NCB SW 1 Post M 33 12 2.5. Bosanski Petrovac - Drvar Construction Slow Lane W 1.00 1 14.2 4O M NCB SWPost 34 1. 2.6. Drvar - Resanovci Construction Slow Lane W 0.80 1 14 .2 35 M 18 2.7. Banj Brdo - Simin Han Construction Slow Lane W 1.30 1.30 1 Component 4. Project Management and Implementation 43 Engineer-supervision of works Construction of Road Stari Neum - Drenovac CS 2.04 2.04 QCBS TBC 1 Prior 44 Supervision of Works Road Upgrade and Rehabilitation and Road Safety CS 2.94 2.94 QCBS TBC 1 Prior Interventions Technical audit/External Quality Control for Construction of Road Stari Neum - CS 0.80 0.80 LCS LS 1 Prior Drenovac 46 Technical Audit/External Quality Control for Road Upgrade and Rehabilitation and CS 0.53 0.53 LCS LS 1 Prior Road Safety Interventions 47 Monitoring (Tunnel Crnaja) CS 0.25 0.25 QBS LS 1 Post 48.1 Consultant for PIMT - EIB CS 0.28 0.28 IC LS 1 Prior 48.2 Consultant for preparation ESMP for Stolac-Neum CS 0.02 0.02 CQ LS 1 Post 49 Project Financial Audit CS 0.02 0.02 LCS LS 1 Post