Document o f The World Bank FOR OFFICIAL USE ONLY Report No: 43424-MN PROJECT PAPER ON PROPOSED ADDITIONAL FINANCING IN THE AMOUNT OF SDR 0.62 MILLION ( U S $ l .O MILLION EQUIVALENT) TO MONGOLIA FOR THE RURAL EDUCATION AND DEVELOPMENT PROJECT (READ) M A Y 12,2008 Human Development Unit East Asia and Pacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. I t s contents may not otherwise be disclosed without World Bank authorization. FOR OFFICIAL USE ONLY MONGOLIA RURAL EDUCATION AND DEVELOPMENT (READ) PROJECT ADDITIONAL FINANCING I . Introductory Statement ................................................................................................................. 1 I1 . Background Issues ...................................................................................................................... 1 I11 . Proposed Changes ..................................................................................................................... 5 I V. Consistency with CAS .............................................................................................................. 6 V . Appraisal of Scaled-Up Project Activities ................................................................................. 7 V I. Expected Outcomes ................................................................................................................... 8 VI1. Benefits and Risks ................................................................................................................... 9 VI11. Financial Terms and Conditions for the Additional Financing ............................................ 10 Annex 1: Procurement Arrangements for Activities under Additional Financing.,...................... 11 Annex 2: Financial Management and Disbursement Arrangements for Activities under Additional Financing ..................................................................................................................... 15 Annex 3: Critical Risk Table for Activities under Additional Financing ..................................... 21 Annex 4: Results Framework and Monitoring for Activities under Additional Financing ..........22 This document has a restricted distribution and may be used by recipients only in the performance o f their official duties . I t s contents may not be otherwise disclosed without World Bank authorization . MONGOLIA RURAL EDUCATION AND DEVELOPMENT PROJECT (ADDITIONAL FINANCING) PROJECT PAPER EAST ASIA AND PACIFIC EASHD Sector Director: Emmanuel Jimenez Country Director: D a v i d Dollar Development Project Environmental Category: C Responsible agency: Ministry o f Education, Culture, and Science Mr. Mishigjav Buurunkhii, Government Building 111, Baga toiruu - 44, Ulaanbaatar, Mongolia 1- av @ mecs .pmis.gov.mn oYes XNo Revised project development objectives/outcomes: The Project development objectives remain unchanged. Does the scaled-up or restructured project trigger any new safeguard policies? No P For Additional Financing [ ] Loan [ ] Credit [XI Grant For LoandCreditdGrants: Total Bank financing (US$m.): U S $ l .O M i l l i o n equivalent Proposed terms: 100% IDA Grant Financing Plan (US$m.) Source Local Foreign Total Borrower 0.0 0.0 0.0 [BRD/IDA 0.0 1.o 1.o rota1 0.0 1.o 1.o I.Introductory Statement 1. This Project Paper seeks the approval o f the Executive Directors to provide an additional IDA Grant in the amount o f SDR 0.62 M i l l i o n (US$l.O M i l l i o n equivalent) to the Government o f Mongolia for the Rural Education and Development Project (READ). 2. The proposed additional resources would help finance the costs associated with scaling up activities under READ in rural schools. Specifically, the additional financing would support the distribution o f learning materials (customized children’s laptop computers with Mongolia-specific educational content) to children in selected pilot rural primary schools, in addition to the training o f teachers and students around these materials as well as a rigorous impact evaluation o f the pilot. These resources w i l l also examine the role o f information technology in improving the overall quality and effectiveness o f education. 3. The new closing date o f the scaled-up project w i l l be February 28, 2013. 11. Background Issues 4. Country and sector context. The Government o f Mongolia (GOM) has in recent years worked hard to protect public spending on education and to recover from a drop in enrollments that occurred in the mid-1990s. Education remains a high priority within the Government’s overall action plan. The Government Action Plan (GAP) and the Government’s Economic Growth Support and Poverty Reduction Strategy (EGSPRS) support strengthening basic education in Mongolia by raising the capacity o f education administrators and teachers and fostering competition. 5. The Ministry o f Education, Culture and Science (MECS) has developed an Education Sector Master Plan (ESMP2) for 2006-2015. The ESMP2 builds on the General Guideline for Socio-Economic Development o f Mongolia for 2006-2008 (GGSEDM). The primary aim o f ESMP2 i s to establish an accessible and high quality education system that w i l l nourish the intellectual development o f Mongolian citizens while supporting the country’s economic development. The ESMP2 reflects the work o f the Education for All (EFA) Action Plan and reflects an effort to sequence government priorities. In education, there are three main policies: (1) to upgrade education quality at all levels o f schooling and produce citizens who can function effectively in a modern market economy; (2) to provide education services that can be accessed by children in all parts o f the country, including rural areas, and b y poor and vulnerable groups; and (3) to improve the management capacity o f central and local educational institutions at all levels. 6. Project Background, Performance, and Status of Implementation. The overall objectives o f READ are threefold: (i) to assist the G O M in enhancing the quality o f education in rural primary schools (grades 1 - 5) b y improving students’ access to and use o f quality learning materials and b y improving teachers’ s k i l l s through the promotion o f professional networks; (ii)to strengthen the government’s capacity to monitor student 1 learning through participation in national and international assessments; and ( i ii)to provide financial and technical support for the management and monitoring of the project. Under the original project, all primary grade classrooms in soum and bagh schools receive grade-specific classroom libraries, and all primary grade teachers in these schools receive training. The existing project also aims to build the policy strength, monitoring, and evaluation capacity o f MECS in support o f the implementation o f Mongolia’s Education Sector Master Plan 2005-2015. 7. READ was approved by the Board on M a y 23, 2006 for a US$4 M i l l i o n sector Grant (SDR 2.787 M i l l i o n equivalent) under IDA 14. The project became effective on August 10, 2006. I t i s scheduled to close on February 29, 2012, and this additional financing w i l l require extending the closing date by one year. 8. Within i t s first year, the project has succeeded in putting more than 200 titles of children’s books on the market, establishing libraries in all rural schools o f 11 aimags, and training hundreds o f teachers. The books included in the classroom libraries were chosen through a competitive process that reviewed over 900 manuscripts. The books are included in the International Children’s Digital Library. The distributions o f books and the provision o f training to all rural schools w i l l be completed b y September 2008. For the second phase o f the project, rural schools w i l l be provided with non-cash vouchers to replace some of the titles in the classroom libraries. An impact evaluation o f the classroom libraries i s part o f the project design, and baseline data was collected in April 2007. Additional data w i l l be collected in April 2008 which w i l l provide information on information and communication technology (ICT) use and children’s s k i l l s related to listening, reading, writing, and math. The evidence from the ground has shown the tremendous excitement among children, parents and teachers around the libraries, as well as the quality o f all the activities that have already taken place around the distributed books. Members o f the Ministry are beginning to explore opportunities for project expansion to support reading materials for student in higher grades. 9. As o f Quarter 3 o f Fiscal Year 2008, SDR 1.54 M i l l i o n (US$2.38 Million), or 56%, o f the available IDA Grant of SDR 2.79 M i l l i o n had been disbursed. Project performance to date i s proceeding very well, with all time bound actions being met, and i s in full compliance with all covenants. The public reception of the project has also been very positive. The project has thus far been rated “Satisfactory” on i t s implementation and achievement o f i t s development objectives and has met all relevant World Bank disbursement, procurement, and fiduciary obligations; all current and planned activities are within the project’s development objectives. The proposed activities also build on the current work o f the Ministry to work in a few schools with children having access to the books in digital format, which i s part o f the original READ project design. 10. Proposed Additional Financing Activities. The additional financing would be used to support activities under READ by purchasing children’s laptops, i.e. XO laptop computers, a proprietary item produced only by the One Laptop Per Child (OLPC) organization, for READ-participating schools to improve the overall quality and effectiveness o f education in rural Mongolia. The XO laptop computer was designed b y 2 OLPC as an educational device to be implemented in developing countries. I t i s aimed at countries where infrastructure, teachers, and other critical inputs for the education sector are lacking. The machine i s sized for children and includes a number o f innovations not offered b y i t s competitors. These include open-source software, energy efficiency that accommodates solar or human power, mesh networking which facilitates online peer interaction, and a hermetic seal making i t resistant to water and dirt. The OLPC organization i s the sole manufacturer and distributor o f the XO laptop computer. 11. The OLPC organization shipped i t s first deployment of XO laptop computers in October 2007. I t currently has projects in Mexico, Peru, the United States, and Uruguay, with approximately 435,000 XO laptop computers currently under deployment throughout these countries. In addition, OLPC recently began an initiative in H a i t i that i s being supported by the Inter-American Development Bank. The W o r l d Bank i s also supporting a deployment o f XO laptop computers in nine primary schools in rural Sri Lanka through the Education Sector Development Project. 12. In October 2007, a Memorandum o f Understanding was established between the Government of Mongolia and OLPC to introduce 20,000 XO laptop computers into the country. The initial date o f delivery was expected this school year. 10,000 XO laptop computers were procured b y the Government o f Mongolia, and 10,000 were procured b y the OLPC Foundation. 1,000 have already been deployed in two schools in urban areas. 19,000 are being manufactured and are set to be deployed in spring 2008. The Cabinet has added additional resources for this initiative to the state budget. 13. Within this context, the Government o f Mongolia has requested additional financing under READ to support the distribution o f a new deployment o f XO laptop computers with Mongolia-specific educational content to children and teachers in selected pilot READ-participating primary schools. This additional financing w i l l therefore fall under Objective ( Iof READ: “to assist the Government o f Mongolia in ) enhancing the quality o f education in rural primary schools (grades 1 - 5) by improving students’ access to and use o f quality learning materials.” More specifically, the additional financing w i l l support: (i) The procurement of approximately 2,000 XO laptop computers from OLPC: The procurement o f these XO laptop computers w i l l require investments in their purchase, storage, transport and distribution, as well as investments in the implementation o f servers, hardware, internet connections, spare parts, and other peripherals. The Government i s already working with OLPC in urban areas and i s seeking World Bank support to focus on rural schools and bring the experience of the READ project to bear on the implementation o f this Government priority. The procurement method w i l l be direct contracting due to the proprietary nature o f the XO laptop computers and due to i t s innovative features that READ w i l l leverage. Direct contracting i s justified in accordance to paragraphs 3.6 (b) and (c) o f the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits” o f 2004, as amended in 2006, as i t w i l l be a continuation o f an investment choice already 3 made by the GOM and w i l l leverage this investment related to content and training materials, and the XO laptop computers are proprietary items and only obtainable from one source, i.e. OLPC. The XO laptop computer i s also unique in other aspects related to cost, durability, and features (e.g., power usage and screen quality). All software applications are also open source allowing for local modification and adaptation. (ii) The provision of Mongolia-specific educational content on the XO laptop computers through a n improved and adapted version of ICDL software: A Mongolian version o f I C D L has already been developed under READ. I t includes all the titles selected under READ and can be accessed through the internet or via local servers in a few pilot rural schools. Under this component, investments w i l l be made to improve the readability o f ICDL in XO laptop computers and to add other features such as the capability o f translation o f text into English. The XO laptop computers w i l l be able to access the improved version o f ICDL through local servers making the text more readable, which will be supported by the additional financing under component (i), The additional financing w i l l also support supplementary investments in applications that improve the accessibility of XO laptop computers. Because o f the existing implementation arrangements with I C D L under READ and because I C D L already has licenses for the READ books to use in this context and have already incorporated those books into the I C D L system, Single Source Selection w i l l be used to procure the Mongolia-specific content integration with the XO laptop computer. Under section 3.10 (a) and (d) o f the Bank’s Consultant Guidelines, this contract w i l l represent continuation o f earlier work under READ, and the I C D L Foundation has unique experience to support this effort. ( iii) The training of teachers and students in the successful use of the XO laptop computers to optimize their effect on students’ learning: Technical assistance w i l l be provided to teach the effective use of the XO laptop computers and I C D L both to students and teachers extending the training done already under READ and leveraging the training materials used under the existing OLPC effort. Teachers w i l l also receive training in effective lesson plan design and curriculum integration using the XO laptop computers. This training will support teachers in creating lesson plans that can be enhanced with the use o f the laptop’s software activities andor the Internet and also train them in regards to their role on operation and maintenance and troubleshooting. This activity will not be limited to READ-participating schools and w i l l build on the ongoing FTI-funded training of all primary school teachers on information and communication technologies. (iv) The design of a n effective monitoring and evaluation system to extract relevant lessons from the pilot and adjust the project design as necessary: The additional financing w i l l only cover selected pilot rural schools, which w i l l be drawn from the original five pilot aimags that received books and training in M a y 2007 (four o f which are connected to the power grid). T o ensure that the training i s not a one-off event, and to exploit efficiencies, school clusters w i l l be selected. Selecting clusters o f schools from these 4 aimags w i l l provide the monitoring and evaluation framework with a set of schools with a common experience o f having received books and training and where the project team w i l l have two years o f baseline data. Under this arrangement, the project team w i l l be able to examine the merits and value added of XO laptop computers on learning as compared to a similar set of schools in the area that do not have XO laptop computers. The monitoring and evaluation w i l l thus be designed so as to be able to evaluate the interventions’ impact on teaching and learning. Technical assistance w i l l be provided for designing and implementingthe impact evaluation of the pilot, as well as developing the appropriate monitoring tools to ensure that XO laptop computers reach their intended beneficiaries. 14. The additional financing needs amount to US$1 M i l l i o n (see below for estimated project costs). Despite full rationalization and prioritization o f project activities, and due to the advanced disbursement and commitment rate of the project, currently available resources under READ are insufficient to address the identified demand and request from the Government. The additional resources are intended to enhance the Government’s existing investment choice to distribute XO laptop computers from the OLPC organization. 15. Rationale for Proposed Approach. The project team considered several possible approaches for financing the project, including a new operation, a Learning and Innovation Loan (LIL), or a repeater project. Additional financing appears to be the optimal instrument in order to maximize cost effectiveness and timeliness in processing. Using additional financing would also enable the scaled up activities to supplement READ’S ongoing successful activities. Finally, an additional financing arrangement in accordance with OP 13.20 would leverage the use o f the government’s existing implementation capacity and utilize the strong existing implementation arrangements for the project. 111. Proposed Changes 16. Development Objectives and Scope. The original development objectives of the project are proposed to remain unchanged, as i s the project design. The proposed additional financing w i l l complement the original project activities by investing in rural schools. These activities were already appraised at the time of project preparation and approval. The proposed activities under additional financing are expected to be completed by February 28,2013. 17. Institutional Arrangements. MECS w i l l continue to be the principal executing agency for the project, and implementation w i l l continue to be supported b y a small Project Management Unit (PMU). The PMU, which i s attached to MECS, w i l l monitor and coordinate the implementation o f the additional financing. The management o f the proposed activities can be accommodated b y the existing implementation capacity, led by the Project Coordinator, a Finance Officer, a Procurement Officer, a Project Assistant, 5 and a translator. The work w i l l be done in coordination w i t h the Department o f Basic Education. 18. Financing Plan. Table 1 shows the proposed cost estimates and the indicative financing plan for the project components. Table 1: Estimated Project Costs and Indicative Financing Plan MONGOLIA: Rural Education and Development Project Estimated Additional Financing Local USD Foreign Total USD USD Project Cost By Component and/or Activity Million USD Million Million Million Improving Teaching and Learning in Rural Schools Increasing Availability of Learning Materials 2.12 0.09 2.21 0.70 Promoting Reading through Public Campaigns and Professional Networks 0.52 0.00 0.52 Improving National Monitoring of Quality and Efficiency Strengthening National Assessment 0.23 0.10 0.33 Improving Efficiency of Child Benefits Development Policy Analysis 0.02 0.00 0.02 Project Management and Evaluation 0.30 Project Management and Oversight 0.39 0.05 0.44 Monitoring and Evaluation 0.22 0.03 0.25 Total Baseline Cost 3.50 0.27 3.77 1 .oo Contingencies 0.22 0.01 0.23 0.00 Total Project Costs 3.72 0.28 4.00 1.oo Total Financing Required 3.72 0.28 4.00 1.oo 19. Disbursement. T o facilitate timely project implementation, the PMU would use the ongoing project’s Designated Account. The Designated Account would disburse against all eligible project expenditures under the activities financed by these additional resources. The ceiling o f the Designated Account w i l l be specified in the Disbursement Letter issued b y the Bank. IV. Consistency with CAS 20. The proposed scaled-up activities are in full support o f the current Country Assistance Strategy (CAS) goal o f reducing rural-urban disparities. L o w levels o f educational attainment are key determinants o f poverty, while at the same time poverty can be a key factor that l i m i t s access to and quality o f schooling. Thus, investments in improving educational quality can break the intergenerational transmission o f poverty. The Government’s EGSPRS has also set as a priority improving the quality and access to basic education services, and in particular meeting the needs o f poor and vulnerable groups. The EGSPRS i s an important pillar o f W o r l d Bank support as articulated in the CAS, and the proposed investments in improving educational quality will promote child- 6 friendly schools and support teachers with professional development and learning materials. Further, the scaled-up activities are fully consistent with the proposed CAS currently being discussed with the Government, one pillar o f which focuses on reducing rural vulnerabilities. V. Appraisal o f Scaled-Up Project Activities 21. Economic. Rigorous ex-ante cost-benefit analysis does not appear feasible for the kinds o f activities proposed under additional financing. However, the economic literature has shown that there are high returns to investing in learning materials at an early age. Research also suggests that the effectiveness o f these investments in school inputs i s enhanced by training teachers on how to use these resources in the classroom. 22. With specific reference to READ, the proposed activities w i l l have several further benefits. While i t i s difficult to quantify these benefits (as well as related costs) because o f a lack o f data, the pilot has the capability to provide evidence o f the potential role of this new learning tool to promote and develop positive attitudes to learning as well as a set o f “twenty-first century s k i l l s ” related to critical thinking, information evaluation and reasoning, collaboration, and international awareness, all issues that have been identified as priority areas in the education sector by the Government. Further, where internet access i s available, the pilot will provide information as to the whether the use o f these XO laptop computers have multiplier effects for intermediaries - in this case teachers - and reduce the isolation o f remote, rural teachers and students, and thus raise the quality o f their work. The design o f deployment w i l l also be done in such a way as to measure not only educational effectiveness o f different distribution mechanisms (e.g., such as the sharing o f XO laptop computers among several students), but also the costs associated with these different distribution schemes. Finally, b y virtue o f having the entire I C D L library on the XO laptop computer readily accessible at any given time, a student would not have to borrow books one-by-one physically from the classroom library as often. This i s particularly significant in a country with such a l o w population density as Mongolia. 23. A rigorous ex-post economic analysis w i l l be conducted as part o f the monitoring and evaluation o f the pilot and has been budgeted under the additional financing. This monitoring and evaluation w i l l analyze the potential impact of the XO laptop computers on knowledge dissemination, effective learning, and the development o f more efficient education services, all issues requiring a greater evidence base than i s currently documented in the literature. The analysis w i l l ultimately help the Government assess the net economic benefit o f i t s entire I C T strategy, including the procurement o f other XO laptop computers. 24. Financial. The additional financing should not incur any financial difficulties for the Government. The payment o f any associated fees and/or commitment charges for the Grant should not pose any hardship, given the revenues from mining taxation and the strong domestic resources available to the Government. 7 25. Institutional. The successful performance o f READ to date i s strong justification for using the existing organizational structures for the additional financing, which have been described above. 26. Fiduciary. The existing PMU would continue to have overall coordinating responsibility for the financial management aspects o f implementation with oversight provided b y the existing READ Steering Committee (SC). The PMU systems and controls include project accounting, financial reporting, management o f flow o f funds, staffing, internal controls, and auditing arrangements. The PMU w i l l continue to submit interim unaudited financial reports to the World Bank as part o f the Financial Monitoring Reports. The annual audit report o f READ w i l l include the activities under additional financing and w i l l be made available to IDA within six months o f the close o f the recipient’s fiscal year. 27. Social. The activities under additional financing w i l l focus on rural bagh and soum schools. As a result, they w i l l improve some o f the educational inequities between rural and urban schools through teacher development and improved access to learning materials. They w i l l also extend the existing OLPC effort underway in Mongolia which i s targeted to urban schools to allow for experience serving rural students. 28. Environment. The project raises no specific environmental or other safeguard issues. The design o f the XO laptop computer complies with the European Union’s directive on the “Restriction o f the Use o f Certain Hazardous Substances in Electrical and Electronic Equipment” (RoHS). The original project has been rated category C, and no Environmental Management Plan i s necessary. There are no civil works supported under the additional financing. VI. Expected Outcomes 29. As stated, the original development objectives o f the project are proposed to remain unchanged, and the outcome and output indicators proposed in the original appraisal are to be maintained. The proposed additional financing w i l l complement the original project activities. Specifically, the activities supported by the additional financing are expected to contribute to the original project objective of improving access to and use o f learning materials b y using technology. Students w i l l be able to access the I C D L library through the XO laptop computers rather than having to visit the classroom physically. In areas where there i s internet access, students w i l l have the potential to access broader knowledge. Moreover, teachers and students w i l l be able to enhance the teaching o f the curriculum by providing students with access to additional learning material. 30. In the context o f these expected benefits, new indicators w i l l be included in the Financing Agreement to monitor outputs that are specific to the proposed additional financing. While a full l i s t of indicators i s described in Annex 4, selected indicators to be added include: 8 Approximately 1,800 students in selected rural bagh and soum primary schools that benefited from laptops connected to servers and with the improved and adapted Mongolian version o f I C D L software installed. 0 Approximately 200 teachers in selected rural bagh and soum primary schools that received integrated training in effective use o f laptops and I C D L software including basic hardware and software troubleshooting. Approximately 5 hours o f usage per week on XO laptop computer by students for classroom-related activities and exploration. Approximately Shours o f usage per week on XO laptop computer by teachers for classroom-related activities. VII. Benefits and Risks 31. Since OLPC emphasizes child ownership o f the XO laptop computer, several issues emerge that w i l l have to be addressed by the Government to ensure the effective deployment o f these learning materials. First i s the issue o f sustainability. While OLPC envisions the procurement o f XO laptop computers as a recurrent expenditure (every year, each new second-grader w i l l receive an XO laptop computer), the Government o f Mongolia must place this investment within i t s long-term investment priorities for the education sector: the Government must decide whether this w i l l only be a one-time investment or part o f i t s core educational expenditures. The World Bank has received a commitment from MECS that this initiative w i l l be a long-term investment. Currently, the Ministry i s looking to secure additional resources for this project through the state budget as well as the Mongolia Development Fund. MECS i s also examining the cost- effectiveness of different distribution schemes (e.g., sharing XO laptop computers among students). The country team and sector unit did not support the Government’s request for retroactive financing as the team did not feel the current PMU was prepared to implement prior to the full development o f the proposal for additional financing. The team in consultation with the Sector Anchor does feel there i s added value by the additional financing to bring Mongolian content to the XO laptop computer and put in place a plan to evaluate this innovative activity. 32. Second, accountability and oversight mechanisms to ensure that the laptops reach and remain with their intended beneficiaries w i l l need to be maintained. A covenant on the plan for deployment and an impact evaluation that are acceptable to IDA w i l l be established. Further, in order to promote active use, MECS plans to issue a decree that the use o f XO laptop computer should be integrated into all subjects. The PMU has experience with the delivery o f learning materials and verification o f use from the existing project. The PMU also has experience using public media as an accountability tool. 33. Third, the project builds on an existing relationship between the OLPC Foundation and the Government o f Mongolia. Recently, OLPC has restructured i t s management team, with the CEO resigning, as i t scales up i t s operations. While this restructuring may reflect short-term changes in the OLPC organization, the risk i s not 9 high, and the project team expects the commitment o f OLPC to i t s ongoing relation with Mongolia to continue. 34. Fourth, since the software o f the XO laptop computer i s a “beta” version, i s dependent on the operation o f school servers, and i s constantly being updated, there i s a risk that the software itself w i l l not work effectively. T o mitigate this risk, spare parts for the XO laptop computers w i l l be provided to schools and IT staff in aimags w i l l be trained on effective use and operation and maintenance o f the XO laptop computers. 35. Finally, the investment under additional financing could be associated indirectly with the on-going effort to deploy 20,000 XO laptop computers this spring. The World Bank i s not supervising this ongoing effort and cannot ensure the quality o f the Government’s management o f this deployment. T o distinguish the activities under additional financing from this initial Government investment, the P M U will leverage existing project’s media strategy. Nevertheless, the project team hopes and expects the investment to bring Mongolian content to the existing effort and enhance the Government’s existing initiative. 36. The project team i s in dialogue with the Government of Mongolia on these issues. During appraisal, the project team examined these risks and also reviewed OLPC’s previous experience in adapting their projects to local environments. Furthermore, the Bank’s Sector has agreed to work to mobilize resources outside o f the additional financing to support the impact evaluation effort. Moreover, to mitigate r i s k s and ensure effective implementation, each school w i l l have a training manager and prepare quarterly progress reports to the PMU. The PMU w i l l also visit project sites frequently and be in regular communication with each school. 37. Despite these risks and considering the measures by which they will be addressed, the project team believes that the initiative should be financed and implemented because of the added value o f the project. In particular, the benefits o f the project are myriad: the additional financing w i l l contribute Mongolian-specific content to the XO laptop computers; the open-source nature o f the XO laptop computer can encourage the Government o f Mongolia to create more Mongolian content; the project w i l l capitalize on Mongolian students’ interest in using technology (a finding from initial feedback from the existing READ project); the World Bank w i l l be able to learn a great deal about this innovation and i t s effects on student learning; and the project w i l l help the Government learn more about how to use ICT, including information on appropriate implementation architecture and efforts o f Ministry, to enhance the educational impact of READ and other educational projects. VIII. Financial Terms and Conditions for the Additional Financing 38. The additional financing o f U S $ 1 M i l l i o n would be provided by an IDA Grant on the same terms applicable for the original operation. The terms o f the Grant w i l l be standard. 10 Annex 1: Procurement Arrangements for Activities under Additional Financing A) General 1. Procurement for the proposed project would be carried out in accordance with the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits” o f 2004 as amended in 2006; and “Guidelines: Selection and Employment o f Consultants by World Bank Borrowers” o f 2004, as amended in 2006, and the provisions stipulated in the Legal Agreement. The general descriptions o f various items under different expenditure categories are described below. For each contract to be financed by the additional resources, the different procurement methods or consultant selection methods, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank project team in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. 2. Procurement o f Works: N o civil works would be required and financed under the Additional Financing (AF) for this READ Project. 3. Procurement o f Goods: Goods procured under this AF would include: XO laptop computers, supporting peripherals, and computer servers. Direct Contracting: Procurement of XO laptop computers, peripherals, and supporting servers w i l l be carried out following the Direct Contracting procedure as XO laptop computers are considered equipment of a proprietary nature and can be obtained only from one source as specified in Paragraph 3.6 o f the Procurement Guidelines. Shopping: A n y contract for goods with a cost estimate o f less than US$lOO,OOO equivalent per contract would be procured under the Shopping procedure as specified in Paragraph 3.5 o f the Procurement Guidelines. 4. Procurement of non-consulting services: The project would be required to finance contracts for transportation and deployment o f XO laptop computers. Shopping: Any contract for non-consulting services with a cost estimate of less than US$lOO,OOO equivalent per contract would be procured under Shopping procedures as specified in Paragraph 3.5 o f the Procurement Guidelines. 5. Selection o f Consultants: The consulting services would include improving the readability o f ICDL in XO laptop computers, the training o f teachers and students in use 11 of these computers, the design o f an effective monitoring and evaluation system, as specified in the Project Paper. Single Source Selection: Uploading o f I C D L in XO laptop computers w i l l be carried out following the Single Source Selection method as only one firm i s qualified to deliver the services, (cf: Paragraph 3.10 (d) o f the Consultant Guidelines). Selection of Consulting Firms: Most consulting services contracts to be provided b y f i r m s are estimated under US$lOO,OOO equivalent per contract. The Selection Based on Consultants Qualifications (CQ) method would be used for these contracts in conformity with Paragraph 3.7 o f the Guidelines. Selection of Individual Consultants: Individual consultants would be selected and awarded in accordance with the provisions o f Paragraphs 5.2 through 5.3 o f the Consultants Guidelines. Under the circumstances described in Paragraph 5.4 o f the Consultants Guidelines, individual consultants may be selected and awarded on a sole-source basis, subject to the Bank’s prior approval. 6. Operational Costs: A total o f about US$33,000 (subject to change) would be required for the project operational cost. These costs are largely related to logistical costs for workshops and other miscellaneous activities. B) Assessment of the Anencv’s Capacitv to Implement Procurement 7. Procurement activities w i l l be carried out by the Ministry of Education, Science, and Culture (MECS). The agency established the Project Management Unit (PMU) and i t would be responsible for the daily functions o f project coordination. Procurement activities would be carried out b y MECS through i t s PMU. 8. An assessment o f the capacity o f the Implementing Agency to implement procurement actions for the project has been carried out by the World Bank Ulaanbaatar office in December 2005. The assessment reviewed the organizational structure for implementing the project and the interaction between the project’s staff responsible for procurement and the Ministry’s relevant central unit for administration and finance. 9. Most o f the issues andor risks concerning the procurement component for the implementation o f the project were identified during the initial project preparation and included the need to have experienced procurement staff in the PMU and the need for a Project Implementation Manual (PIM). The PMU has gained experience under READ to date and has implemented a large part o f the major activities under the initial procurement plan. The corrective measures were undertaken since the start of the READ project in June 2006, and there have been no significant procurement issues to date. The overall project risk for procurement i s AVERAGE. 12 C. Procurement Plan 10. The Borrower, at appraisal, developed an initial Procurement Plan for project implementation which provides the basis for the procurement methods. This plan has been prepared and discussed during Appraisal between the Borrower and the Project Team, with final agreement to be reached before the Board Date. I t will be available at the P M U M i n i s t r y o f Education, Science, and Culture and in the project’s database and on the Bank’s external website. The Procurement Plan w i l l be updated in agreement with the project team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. 11. All Goods, Learning Materials, and Consulting Services, including those procured under direct contracting, w i l l be subject to the following prior review thresholds: Abbreviations: ICB International Competitive Bidding Shopping Procurement method as specified in article 3.5 of the Bank’s Procurement Guidelines Direct contracting Procurement method as specified in article 3.6 of the Bank’s Procurement Guidelines QCBS Quality- and Cost- Based Selection QBS Quality-Based Selection CQS Selection Based on the Consultants’ Qualifications sss Single-Source Selection LCS Least-Cost Selection IC Selection of Individual Consultants ProcurementMethod Threshold Prior Review Threshold Goods (except learning ICB ~us$loo,ooo For goods, all contracts materials) above US$80,000 and Shopping US$IOO.OOO US$50,000 for f m , US$ZO,OOO for QBS Assignments which meet para. 3.2 of the individual, and first two Consultant Guidelines. contracts for firm and CQS