Document of The World Bank FOR OFFICIAL USE ONLY Report No: 81241 - KM INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT PAPER ON A PROPOSED ADDITIONAL GRANT IN THE AMOUNT OF SDR 2.3 MILLION (US$3.5 MILLION EQUIVALENT) FOR THE ECONOMIC GOVERNANCE TECHNICAL ASSISTANCE PROJECT TO THE UNION OF THE COMOROS October 16, 2013 Africa Poverty Reduction and Economic Management 1 Country Department AFCS4 Africa Region This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank’s policy on Access to information. CURRENCY EQUIVALENT (Exchange Rate Effective September 30, 2013) Currency Unit = Comorian francs (KMF) 362.5 KMF = US$1 US$ = SDR 0.65185649 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS ABGE The Economic Governance Technical Assistance Project (The Project) AfDB African Development Bank ARMP Autorité de Régulation des Marchés Publics (Procurement Oversight Authority) CPAR Country Procurement Assessment Report CQS Consultant Qualifications Selection CREF Cellule des Réformes Economiques et Financières (Economic and Financial Reforms Unit) CSR Civil Service Reform DAF Directeur Administratif et Financier (Administrative and Finance Director) DC Direct Contracting (continuation of existing contracts) DPO Development Policy Operation DNCMP Direction Nationale du Contrôle des Marches Publics (National Department of Public Procurement Control) FM Financial Management GDP Gross Domestic Product GoC Government of Comoros HAFOP Haute Autorité de la Fonction Publique (High Authority of Public Service) HIPC Highly-Indebted Poor Countries HR Human Resources ICRR Implementation Completion and Results Report ICB International Competitive Bidding IT Information Technology IDA International Development Association IFMIS Integrated Financial Management Information System IFR Interim un-audited Financial Reports ICS Individual Consultants Selection ISN Interim Strategy Note LCS Least-Cost Selection M&E Monitoring and Evaluation MOF Ministry of Finance ORAF Operational Risk Assessment Framework PAD Project Appraisal Document PCU Project Coordination Unit PDO Project Development Objectives PEFA Public Expenditure and Financial Accountability PFM Public Financial Management PRCI Projet pour le Renforcement des Capacités Institutionnelles / Institutional Capacity Building Project (AfDB) RCIP Regional Communication Infrastructures Project (P118213) PRGSP Poverty Reduction and Growth Strategy Paper SDR Special Drawing Rights SIGFE Système Intégré de Gestion des Finances Publiques de l’Etat/ State Integrated Financial Management Information System SSS Single-Source Selection TOFE Tableau des Operations Financières de l’Etat (Financial Operations Table) TSA Treasury Single Account Regional Vice President: Makhtar Diop Country Director: Haleh Z. Bridi Sector Manager: John Panzer Task Team Leader: Anne-Lucie Lefebvre Table of Contents ADDITIONNAL FINANCING DATA SHEET ............................................................................. i I. INTRODUCTION .................................................................................................................. 1 II. BACKGROUND AND RATIONALE FOR AN ADDITIONAL FINANCING IN THE AMOUNT OF US$3.5 MILLION .................................................................................................. 1 A. Country context ................................................................................................................... 1 B. Project achievements and performance .............................................................................. 3 C. Rationale for an additional financing.................................................................................. 3 D. Alternatives to additional financing .................................................................................... 4 III. PROPOSED CHANGES ........................................................................................................ 4 A. Project Development Objective (PDO) and Results Framework ....................................... 4 B. Project components ............................................................................................................. 5 C. Implementation arrangement .............................................................................................. 7 D. Project Extension ................................................................................................................ 8 IV. APPRAISAL SUMMARY ..................................................................................................... 8 A. Economic analysis .............................................................................................................. 8 B. Financial management ........................................................................................................ 9 C. Procurement arrangements.................................................................................................. 9 D. Safeguards ........................................................................................................................... 9 E. Risks.................................................................................................................................. 10 Annex 1: Results Framework and Monitoring............................................................................. 11 Annex 2: Operational Risk Assessment Framework (ORAF) ...................................................... 19 Annex 3: Procurement Arrangements ........................................................................................... 22 Annex 4. Procurement Plan ....................................................................................................... 26 TABLES Table 1: Initial Project allocation by components. ......................................................................... 2 Table 2: Revised targets of the Project. Development Indicators ................................................... 5 Table 3: Proposed Revised Financing Plan with Additional Financing by Component................. 7 Table 4: Proposed Revised Financing Plan with Additional Financing by Category..................... 7 Table 5: Procurement risk assessment and risk mitigation ........................................................... 24 Table 6: Procurement thresholds .................................................................................................. 25 UNION OF THE COMOROS ECONOMIC GOVERNANCE TECHNICAL ASSISTANCE PROJECT ADDITIONNAL FINANCING DATA SHEET Basic Information - Additional Financing (AF) Sectors: Public Financial Management and Public Country Director: Haleh Z. Bridi Administration Sector Manager/Director: John Panzer Themes: Civil Service Management and Budget Team Leader: Anne-Lucie Lefebvre and Public Expenditure Management Project ID: P144381 Environmental category: C Expected Effectiveness Date: Expected Closing Date: 06/30/2016 Lending Instrument: IDA Grant Joint IFC: Additional Financing Type: IDA Grant Joint Level: Basic Information - Original Project Project ID: P102376 Environmental category: C Project Name: ECONOMIC GOVERNANCE Effectiveness Date : 02/28/2011 TECHNICAL ASSISTANCE PROJECT Expected Closing Date:12/31/2013 Lending Instrument: IDA Grant Joint IFC: Joint Level: AF Project Financing Data [ ] Loan [ ] Credit [X] Grant [ ] Guarantee [ ] Other: Proposed terms: X AF Financing Plan (US$M) Source Total Amount (US$M) Total Project Cost: Co-financing : 0.0 Borrower : Union of Comoros Total Bank Financing: 3.5 IBRD IDA New Recommitted 3.5 Client Information i Recipient: Union of the Comoros. Responsible Agency: Cellule Chargée des Reformes Economiques et Financières (CREF)/ Economic and Financial Reform Unit Contact Person: Mr. Oubeidi Mze Chei, Special Advisor to the President Telephone No.: +2697633004 Fax No.: N.A. Email: abououbeidi@gmail.com Implementing Agencies Name: Projet d’Appui à la Bonne Gouvernance Economique (ABGE)/ Economic Governance Technical Assistance Project Contact: Mrs. Moinafatima Charani Title: Coordinator, Tel: +2697739900 Fax N° Email: moinacharani@yahoo.fr AF Estimated Disbursements (Bank FY/US$M) FY 2013 2014 2015 2016 Annual 0.0 1.40 1.75 0.35 Cumulative 0.0 1.40 3.15 3.50 Project Development Objective and Description Original Project Development Objective: To increase the efficiency, accountability and transparency of public financial management, and to improve the management of civil service human resources and wages. Revised Project Development Objective (unchanged): To increase the efficiency, accountability and transparency of public financial management, and to improve the management of civil service human resources and wages. Project description • Rationalizing PFM institutional framework and processes • Supporting civil service reforms • Demand-driven facility • Project management Safeguard and Exception to Policies Safeguard policies triggered: [ ]Yes [ X ] No Environmental Assessment (OP/BP 4.01) [ ]Yes [X] N0 Natural Habitats (OP/BP 4.04) [ ]Yes [X ] No Forests (OP/BP 4.36) [ ]Yes [X ] No Pest Management (OP 4.09) [ ]Yes [X ] No Physical Cultural Resources (OP/BP 4.11) [ ]Yes [X ] No ii Indigenous Peoples (OP/BP 4.10) [ ]Yes [X ] No Involuntary Resettlement (OP/BP 4.12) [ ]Yes [X ] No Safety of Dams (OP/BP 4.37) [ ]Yes [X ] No Projects on International Waterways (OP/BP 7.50) [ ]Yes [X ] No Projects in Disputed Areas (OP/BP 7.60) [ ]Yes [X ] No Does the project require any waivers of Bank policies? [ ]Yes [X] No Have these been endorsed or approved by Bank management? [ ]Yes [ X] No Conditions and Legal Covenants: Financing Description of Condition/Covenant Date Due Agreement Reference 4.01 (a) The Recipient has recruited a senior information Effectiveness technology specialist to head the information technology unit in the Recipient’s ministry responsible for finance, on the basis of terms of reference, qualification and experience acceptable to the Association and in accordance with the provisions of Section III of Schedule 2 to this Agreement. 4.01 (b) The Recipient has revised Decree 09-084 dated July 20, Effectiveness 2009 on budget classification to, inter alia, include a functional classification, in form and substance acceptable to the Association, and the decree revising Decree 09-084 has been published in the Recipient’s official gazette. 4.01 (c) The Recipient has adopted by decree an administrative and Effectiveness financial procedure manual applicable to the institutions of the Recipient’s and the Islands’ Government, in form and substance acceptable to the Association, and such decree has been published in the Recipient’s official gazette. 4.01 (d) The Recipient has adopted a decree on the employment of Effectiveness administration and finance directors of the institutions of the Recipient’s and the Islands’ Governments setting out, inter alia, the criteria and method of selection of said administration and finance directors, in form and substance acceptable to the Association, and such decree has been published in the Recipient’s official gazette. Section I.A.2 of The Recipient shall update the Project Implementation One month after Schedule 2 Manual for the Project, in form and substance satisfactory Effectiveness to the Association. Section I.A.3 of The Recipient shall recruit a public finance reform One month after Schedule 2 specialist, an accounting assistant and procurement Effectiveness except assistant as well as, when it shall have been agreed for the civil reform iii between the Association and the Recipient, a civil service specialist. reform specialist, each on the basis of terms of reference, qualifications and experience satisfactory to the Association. Section II.A.4 The Recipient shall: (a) adopt a monitoring and evaluation One month after of Schedule 2 manual for the Project, in form and substance satisfactory Effectiveness to the Association; and (b) recruit a monitoring and evaluation specialist for the Project, on the basis of terms of reference, qualifications and experience satisfactory to the Association and in accordance with the provisions of Section III of this Schedule. Section II, B.4 The Recipient shall engage independent auditors to carry Three months after of Schedule 2 out an annual audit of the Project’s financial statements. Effectiveness iv UNION OF THE COMOROS ECONOMIC GOVERNANCE TECHNICAL ASSISTANCE PROJECT I. INTRODUCTION 1. This project Paper seeks the approval of the Executive Directors to provide an additional financing of an amount of SDR 2.3 million (equivalent to US$3.5 million) for the Economic Governance Technical Assistance Project. It also proposes to: (i) extend the Project closing date from December 31st, 2013 to June 30th, 2016 and (ii) revise the Results Framework. After the approval of the new closing date, the age of the project will be 5 years and 4 months. 2. The objectives of the additional financing are to expand the scope of activities related to the Project Development Objective (PDO) and cover the cost overrun. (see paragraph 17). 3. The Project does not involve direct co-financing with other donors. However, it works in close cooperation with the AfDB-funded PRCI Project (Projet pour le Renforcement des Capacités Institutionnelles) in supporting the implementation of the IFMIS based on a cost sharing agreement (The AfDB is proposing to finance the hardware while the World Bank will support the purchase and roll-out of the software). Improved coordination between projects should be reached through joint monitoring and supervision. Also, the Project will share operational costs with the Regional Communications Infrastructure Project - RCIP- (P118213) as the two World Bank funded projects will be managed by the same implementation unit 1. 4. The conditions of effectiveness are expected to be met within 45 days after the Date of Approval as the Government has taken critical steps. The drafts of the three proposed Decrees are available and will be submitted for signature by the end of October 2013. The recruitment of the head of the IT unit of the Ministry of Finance is ongoing (Terms of reference ready) and will be completed by the end of November 2013. II. BACKGROUND AND RATIONALE FOR AN ADDITIONAL FINANCING IN THE AMOUNT OF US$3.5 MILLION A. Country context 5. The Government of the Union of the Comoros officially adopted the country’s Poverty Reduction and Growth Strategy Paper - PRGSP (2010-14) in September 2009, confirming a new commitment to reform. The Comoros reached the HIPC Completion Point on December 20, 2012. It represents an important milestone for the Government and confirmed its commitment to implementing the PRGSP. 6. In support of its PRGSP, Government finalized a comprehensive Public Financial Management (PFM) Reform Strategy for the period 2010-19 and adopted a detailed Action Plan for 2010-12. The PFM Reform Strategy is organized around four pillars: (a) modernizing the 1 The closing dates of the two projects are: June 30, 2016 for ABGE while June 30, 2018 for RCIP. The two projects will share the operating cost equitably until ABGE closes. RCIP will bear the full cost thereafter. 1 legislative and regulatory framework and strengthening institutional capacity; (b) rationalizing budget preparation; (c) strengthening budget execution; and (d) increasing transparency through improved internal and external controls. A new detailed action plan for 2014-17 2 is under preparation with the objective of introducing program budgeting by 2018. Public financial management in the Comoros has recorded some improvement with 15 indicators out of 22 scoring D or D+ in 2007 improving their ratings by 2013 3. However, progress remains fragile. Some key PEFA indicators related to basic budget management continue to score at the lowest level and will need more attention to sustain the progress made during the last two years. 7. At the request of Government, the World Bank approved in January 31, 2011, an Economic Governance Technical Assistance (ABGE) Project to increase the efficiency, accountability and transparency of public financial management; and improve the management of human resources and wages within the civil service. The original amount allocated for the ABGE Project is US$1.8 million (equivalent SDR 1.2 million). The Project became effective on February 28, 2011. The original closing date is December 31, 2013. 8. The ABGE Project is aligned with the Bank Interim Strategy Note (ISN) which indicates that the Bank will help the country to consolidate national reconciliation and build capacity. The Project forms an integrated package together with the past and future development policy operations (DPO - P122941 and P131688). While the DPOs focus on strategic aspects of reforms, the Project supports on-the-ground implementation through technical assistance, equipment, training and capacity building. Both DPOs and ABGE put the emphasis on the improvement of transparency by focusing on implementing better budget practices. Table 1: Initial Project allocation by components. Component Amount (US$) Component 1: Rationalizing the Public Financial Management institutional framework and processes 795,300 Component 2: Supporting civil services reforms, including wage bill management 170,220 Component 3: Demand-driven facility 130,000 Component 4: Project Management 274,701 PPF, external audit and contingencies 429,779 Total 1,800,000 2 The 2010-12 action plan continues through 2013 until the 2014-17 action plan is in effect. 3 According to the PEFA assessment, three of the Project indicators, P1-10, P1-11 and P1-18, increased from “D” to “C” respectively thanks to the publication of key public financial documents (Budget execution report, TODE) on the Government website, the achievement of budget time frame for three consecutive years (P1-11) and implementation of the integrated and automated payroll system (GISE) P1-18. 2 B. Project achievements and performance 9. In a relatively short period of time, the Project has supported implementation of key activities: (a) the adoption of a new PFM organic law and related regulations in 2012; (b) the appointment of the accountant general of the Union; (c) the development of the IFMIS master plan, the setting up of the steering committee, and the preparation of the bidding documents supporting the IFMIS implementation; (d) the elaboration of an organic framework completion methodology; and (e) the establishment of a payroll management system. Budget execution reports are published on the Government’s website. Budget circulars were issued in July 2012 and July 2013. Civil servants, except the Army, are paid through the automated, albeit fragmented, payroll system (GISE), which is one of the most important achievements of the Project. 10. Project management is very pro-active and has implemented satisfactorily the 2011 and 2012 budgets and procurement plans. Implementation progress since the beginning of the ABGE Project has been rated “satisfactory”. Timely implementation of the originally planned activities over the past two years was instrumental in the achievement of major policy reforms, including the HIPC Completion Point. With a disbursement rate of 73 percent after 30 months of implementation, the ABGE Project is on track to meet key development objectives. 11. Despite the progress recorded, Government is still facing important challenges. Budget transparency only slightly improved between 2007 and 2013, and citizens have very limited access to budget information and data. The new budget classification decree, adopted in 2009, is not fully implemented yet and needs to be revised to include a functional classification. Despite its legal creation in 2012, offices of the new Direction Générale de la Comptabilité Publique et du Trésor 4 have yet to be established and a new Director needs to be appointed. Limited technical capacity and resistance to change undermine the integration of a well performing automated payroll system undermining Government’s ongoing efforts to sustain the wage bill. C. Rationale for an additional financing 12. Government is committed to pursue the implementation of the 2010-19 PFM Reform Strategy. The recent high level government seminar on civil service reform (September 2013), also reconfirmed stakeholders endorsement of the Project’s objectives and highlighted Government’s engagement to improve public sector management. However, additional urgent and targeted actions are needed to sustain the achievements in both public finance management and civil service reforms and help Government tackle softer aspects of reforms. The proposed change will increase the Project commitment/engagement to support PFM and civil service management reform. 13. The additional financing is needed to continue supporting gradual computerization of public finances and address newly identified financial needs as the initial IFMIS costs were underestimated. The Project will be deeply involved in IFMIS deployment focusing on the software. Indeed, a successful implementation of the IFMIS should bring substantial benefits and savings on Government’s finances and, therefore, improve public sector performance. 4 National Public Accounting and Treasury Department. 3 14. The additional financing is also proposed to broaden the scope of support for civil service reform (CSR) to go beyond the technical fulfillment of the organic frameworks. The Project will launch a comprehensive review and analysis of the overall civil service management institutional framework and will support the design of a new vision for CSR in Comoros. The Project will also improve its demand-driven facility to develop skills, leadership and consensus building capacities related to PFM and CSR while keeping flexibility. 15. Finally, sustained effort for improved budget practices will help increase the fiscal space created during the last two years and lead to better resources allocation and financial sustainability while contributing to enhance service delivery in the medium and long term. D. Alternatives to additional financing 16. Additional financing is the preferred mechanism as additional resources are required to address the higher than anticipated costs of the IFMIS which Government could not absorb due to its limited resources. Preparation of a new project would entail a substantial delay that would disrupt implementation. The technical assistance provided by the Project is also key to support the implementation of complex reforms in a low capacity environment. The use of other lending tools would risk slowing down the implementation of public sector reforms. III. PROPOSED CHANGES A. Project Development Objective (PDO) and Results Framework 17. No changes are proposed for the PDO and for Project components. The Project’s Development Objective is to increase the efficiency, accountability and transparency of public financial management, and improve the management of civil service human resources and wages. More specifically the project will: (a) address the additional financing needs related to the strengthening of the public finance legal, institutional and organizational framework, including the acquisition and deployment of key IFMIS components; (b) develop a comprehensive reform strategy of the civil service management; (c) finance additional demand-driven activities to support the development of leadership skills, consensus building, and change management; and (d) finance additional operational costs to cover the extension of the closing date for 30 months. 18. The additional financing does not involve change in the Project design. Focus on selected key PFM and civil service reforms remains the broader scope of the Project. However, leadership, communication and M&E will be strengthened to increase public awareness and enhance accountability. This includes conducting regular surveys to inform Government and citizens on the outcomes and impact of the reforms. Capacity of implementing agencies (CREF, HAFOP, IT Unit) and of the PCU will be strengthened with additional resources (staffing, equipment, training) to ensure timely implementation and adequate monitoring of the Government’s reform agenda. 19. However, the Project’s Results Framework (Annex 1) has been updated and consolidated to: (i) scale up the cumulative Project target values considering new implementation time frame; and (ii) integrate new indicators to capture the broader scope of Project activities. A new PDO level results indicator has been introduced to monitor progress in public access to key sector 4 fiscal information (indicator C). Two new intermediate results indicators are also proposed to monitor procurement (indicator 1.5) and civil service management reforms (indicator 2.2). Table 2: Revised targets of the Project. Development Indicators Original target Revised target Indicator Changes with AF December 2013 June 2016 A. The composition of budget PI-2 rated D+ P1-2 rated C+ PI-2 rated C + expenditures deviates from the original budget by less than 5%. (PEFA PI-2). B. Budget execution reports published The PI-10 rated B + PI-10 rated B+ (on the web or national media) regularly comprehensiveness (PEFA PI-10) of the reports is improved to include social sectors C. NEW - Public access to key sector New indicator New indicator Sector Budget Reports fiscal information provided accessible for the public on the MoF website on a quarterly basis for Union and Islands Government D. The share of civil servants paid Above 90 % Above 95 % Above 95 % through the automated payroll system is above 90% B. Project components 20. The additional financing will cover the following components and sub-components. The amounts listed below represent the cost of the new activities that will be supported: • Component 1. Rationalizing PFM institutional frameworks and processes - Subcomponent 1.1: Clarifying the legal and institutional framework of public finances (US$368,000). With the ABGE Project’s support, a new PFM Act has been adopted by the Parliament. An action plan to implement the reforms as introduced by the new Act has also been elaborated. The additional financing will strengthen government’s capacity to implement reforms following the adoption of the new legislation. More specifically, it will support the CREF in the steering, monitoring, evaluating and reporting on the progress of PFM and civil service reforms. It will support a communication campaign to inform the public and civil servants, mobilize their support for reform and promote public demand for accountability and transparency. It will also finance a national survey of civil servants and of the population to inform on the outcomes and impact of the public finances reform. - Subcomponent 1.2: Strengthening the budgetary process (US$270,000). The Project has funded the reorganization of Finance managers (Directeurs Administratifs et Financiers - DAF) in line ministries as well as the development of a DAF operations manual. The additional financing will support the implementation of a manual of procedures and of an action plan to permit the adoption of results-oriented program budgets by 2018 as recommended by the 5 new PFM Act. It will also support the strengthening of the capacity of the two recently instituted regulatory bodies in charge of public procurement (Agence de Régulation des Marchés Publics - ARMP, and Direction Nationale du Contrôle des Marchés Publics - DNCMP) through a coaching and training system; and the provision of office furniture and equipment. - Subcomponent 1.3: Supporting gradual computerization of public finances (US$1,656,000). A revised estimate of the IFMIS by an independent consultant showed a financing gap of US$615,560 (the new estimate is US$1,200,000), including the computerization of the budget, accounting processes, and the integration of a Treasury module. The AfDB has also reported a gap for their financing of the hardware. The significant increase of the IFMIS hardware cost is mainly related to the high costs of IT services in the Comoros. The approval of the additional financing will allow the completion of this outstanding activity that is essential to the achievement of the original PDOs. Roll out of IFMIS will be fully covered by the additional financing in a comprehensive package. The additional financing will also support the IT division of the Ministry of Finance to adequately implement the IFMIS. • Component 2. Supporting civil service reform - Subcomponent 2.1: Physical census of the civil servants (US$125,000). The limited resources under the original Project did not permit the proper closing of the human resources census. An additional amount of US$85,000 is needed to complete the census and to update the data, considering the progress made on the fulfillment of Organic Framework. The additional financing will also include a limited support to HAFOP through technical assistance, equipment and training. - Subcomponent 2.2: Preparation of the comprehensive reform strategy for civil service management (US$270,000). This subcomponent will supplement the wage bill management activities that were completed under the original Project. The additional financing will support the preparation of a comprehensive, national reform strategy for civil service reforms that will help Government to develop a more appropriate management framework of civil servants, build Government’s capacity to implement the framework, clarify the role and mission of the civil service institutions and the respective responsibilities of the Union and Island Governments and develop a prospective vision of civil service in the context of the adoption of a results oriented program budget by 2018. • Component 3. Demand-driven Facility (US$160,000). Considering the challenges stemming from the specific structure and political environment of the Comoros this component aims to facilitate inter-governmental dialogue to gain political support for reforms. It will allow key decision-makers (politicians and civil servants) to access, on- demand training, coaching and mentoring in the area of leadership, change management, communication and consensus building. It will also support monitoring and evaluation of reforms to inform policy dialogue. 6 • Component 4. Project Management and External Audit (US$651,000). With the acceleration of the pace and scope of the Project, additional staff (PFM Reform Manager, CSR Manager, M&E Specialist, Accounting Assistant and Procurement Assistant) are required to provide appropriate implementation support and oversight. The additional financing will support the operational costs to cover the extension of the Project by 30 months, including the external audit costs. 21. The proposed revised financing plan will reflect the cost of new Project activities. Table 3 below shows change in project cost per component while Table 4 indicates the proposed revised financing plan with additional financing by category. Table 3: Proposed Revised Financing Plan with Additional Financing by Component Project costs (US$) Components Proposed Current Additional Total Financing Component 1: Rationalizing the PFM institutional framework and processes 795,300 2,294,000 3,089,300 Component 2: Supporting civil service reforms 170,220 395,000 565,220 Component 3: Demand-driven facility 130,000 160,000 290,000 Component 4: Project management 274,701 591,000 865,701 External audit 65,000 60,000 125,000 PPF and contingencies 364,779 0 364,779 Total Project Cost 1,800,000 3,500,000 5,300,000 Table 4: Proposed Revised Financing Plan with Additional Financing by Category Percentage of Amount of the Financing Expenditures to be Allocated (expressed) Category Financed (inclusive of Taxes) SDR US$ (1) Goods, Minor Works and consultants’ services 2,100,000 3,313,500 100 % for the Project and Training (2) Operating Costs 200,000 186,500 100 % (3) Non allocated Total 2,300,000 3,500,000 C. Implementation arrangement 22. Institutional implementation arrangements of the original Economic Governance Technical Assistance Project will be maintained under the additional financing. The existing implementation arrangements include a Project Steering Committee and a Project Coordination Unit. 23. The Project Steering Committee is in charge of the general oversight, monitoring and supervision of the Project, including coordination among Island authorities. The Permanent 7 Secretary of the Ministry of Economy and Finance chairs the Committee. The Project Coordination Unit (PCU) is headed by a Project Coordinator and is in charge of: (a) the preparation of work plans, budgets, procurement plans and progress reports; (b) financial management and reporting; (c) management of procurement, communications and information- sharing functions; and (d) coordination among institutions and agencies involved in the Project. 24. In terms of results monitoring, current arrangements for the Project, which have proven to be satisfactory, remain in place. The Project will, however, strengthen CREF’s capacity to monitor and evaluate the overall PFM and civil service reforms and improve donor coordination. The results of the PEFA assessment published in July 2013 will serve as the basis to implement the overall PFM reform results framework. The Project will adopt a M&E Manual and hire a M&E Specialist to complement the current Project staff team. 25. Outreach efforts and communication are key to the success of the Project, including PFM and civil service reforms. Additional financing also provides for strengthening of CREF’s capacity to: (i) communicate the objectives, motives and progress of reforms, (ii) build support from civil servants and citizens, and (iii) promote public demand for more transparency and accountability from Government. D. Project Extension 26. The Government has reaffirmed its strong commitment to the PFM and civil service reforms. An extension of a 30 months period will be needed to consolidate and enhance already existing reforms. The closing date of the Original Project will be extended from December 31st, 2013 to June 30th, 2016 to ensure full IFMIS implementation. According to the Information Technology (IT) master plan, the acquisition and rolling out of the budget and accounting system will take a minimum of 24 months and is to be supported by the training of users and gradual migration to the new system. The proposed extension will cover this additional period to ensure appropriate support to the Government on both technical and change management fronts. IV. APPRAISAL SUMMARY A. Economic analysis 27. The impact of the project is mostly institutional and cannot be easily isolated or quantified. The direct benefits of budget, treasury, and civil service management reforms are to strengthen the Government’s capability to manage public finances more effectively. Based on the specific country context, the poor quality of budget data and reporting system, economic and financial analysis (such as net profit value or internal rate of return) cannot be completed as and is not appropriate in this case 5. However, as the IFMIS will contribute to the implementation of unified PFM procedures (treasury management, budget classification, human resource management) operational savings and efficiency gains are expected from better budget discipline, improved cash management and close monitoring of the wage bill. 5 There was no economic analysis conducted for the Original Project (not applicable in the PAD). 8 28. Comoros total public expenditure in 2012 was the equivalent of some US$160 million. It is considered that efficiencies of just a 0,75 % of this amount per year (US$1,2 million) would be sufficient to achieve undiscounted payback in four years. With the activities to be supported by the project, it is likely that 3% of savings due to increased efficiency will be generated, far above the 0.75% level. B. Financial management 29. The PCU will retain its current responsibility for the overall financial management of the project. The financial management staff within the PCU has the requisite experience with regard to the Bank Financial Management (FM) procedures and requirements. The Financial Management arrangements of the additional financing will follow the same approach as the implementation arrangements in place for the ongoing phase of the Project and are considered acceptable to IDA. 30. The Interim un-audited Financial Reports (IFR) are prepared every quarter and submitted to the Bank regularly (e.g. one month after the end of each quarter) in a form and substance acceptable to IDA. There is no overdue audit report for the Project or for the sector at the time of preparation of this additional financing. The financial management performance of the Project is rated as Satisfactory. The overall financial management risk rating is Moderate (Rated Average in Annex 3). C. Procurement arrangements 31. The Government has proposed to continue the delegation of Project management, including procurement responsibilities, to the current Project Coordination Unit (PCU). The PCU is experienced with the Bank’s procurement and financial management procedures. Existing Procurement Manuals were approved by the Bank and are being integrated into a full-fledged Administrative, Accounting, and Finance Manual governing all Project activities and updated to reflect specific needs. The Project Coordination Unit will update the preliminary procurement plans that have already been submitted for project implementation. 32. A procurement capacity assessment of the PCU has been carried out and found Satisfactory. The overall procurement risk assessment is Moderate. The Project Implementation Manual will be updated to reflect project specificity. A procurement review will be conducted 6 months after the approval of the additional financing. D. Safeguards 33. The environmental category of the original Project is category C, and this additional financing does not change that category. Identified minor works are linked to rehabilitation of existing buildings (painting, door replacement, roofs) and do not trigger any new safeguard policies. 34. The Project does not trigger exception to Bank policies and procedures. It will not require any waivers of Bank policies. 9 E. Risks 35. The overall risk rating for both preparation and implementation is assessed as High given to the political-economy constraints, stakeholder’s support and limited implementation capacity. Donor coordination also impacted on risk assessment because of shared responsibilities between Bank funded and AfDB funded activities supporting IFMIS implementation. A detailed presentation of the project risks is included in the ORAF (Annex 2). 10 Annex 1: Results Framework and Monitoring. UNION OF THE COMOROS ECONOMIC GOVERNANCE TECHNICAL ASSISTANCE PROJECT Results Framework Comments/ Revisions to the Results Framework Rationale for Change PDO Current (PAD) Proposed change* The Project’s Development Objective No change (PDO) is to increase the efficiency, accountability and transparency of public financial management, and improve the management of civil service human resources and wages. PDO indicators Current (PAD) Proposed change* A. The composition of budget Continued, target revised To account for additional financing. expenditures deviates from the original budget by less than 5% (PEFA PI-2). B. Budget execution reports regularly Continued, no change in target published (on the web or national media) (PEFA PI-10). C. Public access to key sector fiscal New To monitor progress in key selected information improved. sectors. D. The share of civil servants paid Continued, target revised To account for additional financing. through the automated payroll system is above 90%. Intermediate Results indicators Current (PAD) Proposed change* 1.1. A new organic law for PFM Completed With the support of the Project, the prepared for adoption. new PFM Act n°12-009/AU has been adopted on June 21, 2012 and promulgated on August 2, 2012. 1.2. Annual budget prepared in timely Continued manner (PEFA PI-11). 1.3. Limited use of budgetary Continued adjustments during the FY 11 Comments/ Revisions to the Results Framework Rationale for Change (PEFA PI-16). 1.4. Enhanced computerization of Continued budget management and reporting (PEFA PI-24). 1.5. Publication of public tenders New This indicator reflects the targeted procurement notice for any public support to the procurement authority procurement financed by the national and is aimed at improving budget or by donors according to law transparency of public procurement No. 11-027/AU. and budget execution. 2.1. Enhanced efficiency in controls of Continued civil service wage bill accuracy (through cross checks across databases, timely updates and internal controls) (PEFA PI-18). 2.2. A comprehensive strategy for civil New This new indicator reflects the service management reform is adopted. strategic shift of the reform towards enhanced emphasis on civil service reform and the agreement reached with the Government on the need of a new vision and strategy for civil service management. * Indicate if the indicator is Dropped, Continued, New, Revised, or if there is a change in the end of project target value. 12 REVISED PROJECT RESULTS FRAMEWORK Project Development Objective (PDO): Increase the efficiency, accountability and transparency of public financial management, and improve the management of civil service human resources and wages. Baseline Cumulative Target Values Responsi PDO Level Original Progress To Data Core UOM 2014 bility for Results 6 Project Date 2011 2012 2013 2015 2016 Frequency Source/ Comments Data Indicators Start (Sept 2013) Methodology Additional financing Collection (2011) A. The Sectoral Sectoral NA Sectoral PEFA PEFA CREF composition of classification classification classificati survey in survey plus budget could not be still not on is 2013 with consultant expenditures made in 2007 possible for possible. follow up report deviates from PEFA study as 2013. in 2014, the original information was 2015 and budget by less not available for 2016 than 5% Islands. (PEFA PI-2). PEFA PI-2 rated PEFA PI-2 PI-2 rated PI-2 is PI-2 rated P-22 rated P1-2 rated D. rated NS. D+ rated D+ D C C+ B. Budget Budget TOFE are NA Budget The Quarterly Budget CREF execution execution accessible to execution comprehe PEFA reports and reports reports are public reports are nsiveness survey in PEFA published (on produced through the produced of the 2013 with survey the web or quarterly but new MOF quarterly reports is follow up national with only Website. but with improved in 2014 media) summary only 2015 and regularly information and summary 2016 (PEFA PI-10). limited information distribution. and limited distribution . PEFA PI-10 PI-10 rated PI-10 rated PI-10 PI-10 rated PI-10 rated rated D + in C+ C + rated B B+ B+ 2007 6 UOM = Unit of Measurement. 13 Project Development Objective (PDO): Increase the efficiency, accountability and transparency of public financial management, and improve the management of civil service human resources and wages. Baseline Cumulative Target Values Responsi PDO Level Original Progress To Data Core UOM 2014 bility for Results 6 Project Date 2011 2012 2013 2015 2016 Frequency Source/ Comments Data Indicators Start (Sept 2013) Methodology Additional financing Collection (2011) C. NEW. NA NA NA NA NA PI-10 PI-10 rated Sector Quarterly Budget CREF Public access rated B B+ Budget PEFA reports and to key sectoral Reports survey in PEFA fiscal accessible 2013 with survey information for the follow up improved pubic on in 2014; the MOF 2015 and website on 2016 a quarterly basis for Union and Islands Government PI-10 rated B+ D. The share Union The share of The share The share The The share The share The share Monthly Payroll HAFOP of civil Government civil servants of civil of civil share of of civil of civil of civil statements / servants paid payroll is paid through servants servants civil servants servants servants GISE through the managed by the the paid paid servants paid paid paid automated automated automated through through the paid through through the through the payroll system payroll system payroll the automated through the automated automated is above 90%. (GISE). system is automate payroll the automated payroll payroll above 60%. d payroll system is automated payroll system is system is system is above 70 payroll system is above 95%. above 95%. above 50 %. system is above %. above 90 95%. %. Beneficiaries Project Number NA beneficiaries Number of which female Number NA (beneficiaries) 14 Intermediate Results and Indicators Baseline Target Values Data Intermediate U Progress To Responsibility Core Original Project Source/ Results O Date 2014 2015 2016 Frequency for Data Comments Start Methodol Indicators M (sept. 2013) 2011 2012 2013 Collection (2011) Additional financing ogy Intermediate Result 1: (Component 1): Rationalizing the PFM institutional frameworks and process. 1.1 A new Existing texts Completed Studies Draft law Law NA NA NA Yearly Draft laws CREF organic law for (Organic Law With the carried out presented at prepared PFM prepared of Finance, support of the and initial national and for adoption. Decree public Project, the proposals validation submitted accounting, new PFM Act made on workshop. for Classification, n°12-009/AU fundamental adoption Completed Chart of has been principles. to the in 2012. account) taken adopted on Parliament. account of June 21, 2012 Comoros and unique promulgated constitutional on August 2, evolution. 2012. 1.2. Annual Belated budget The budget Study Regulatory Budget PI-11 PI-11 PI-11 PEFA PEFA CREF / budget approval by the Time frame on a new act on preparation rated C+ rated B rated B survey in survey DGB prepared in legislature or was achieved budget budget calendar is 2013 with and timely manner similarly for three preparation preparation followed follow up consultant (PEFA PI-11) mandated continuous schedule and is (FY13). in 2014; report body. years (2011- methodology completed 2015 and Lack of active 2013-2012). conducted . and PI-11 2016. participatory adopted. rated C. involvement of PI-11 rated Union and C+ Island administrations in the preparation of budget submissions. PEFA PI -11 indicator rated D+ in 2007. 1.3. Limited Budgetary Cash NA PI-16 rated PI-16 PI-16 PI-16 PI-16 PEFA PEFA CREF Implemen use of adjustments are management D+ rated C rated C rated C+ rated C+ survey in survey tation of budgetary relatively plan are 2013 with and IMI adjustments frequent during available but follow up consultant should 15 Intermediate Results and Indicators Baseline Target Values Data Intermediate U Progress To Responsibility Results Core O Original Project Date Frequency Source/ for Data Comments Start 2014 2015 2016 Methodol Indicators M (sept. 2013) 2011 2012 2013 Collection (2011) Additional financing ogy during the FY year, reflecting are not used in 2014; report improve (PEFA PI-16). a poor for budget 2015 and cash anticipation of management 2016. managem cash flows and purpose and ent tools inefficient not shared starting tracking of with line 2015 expenditures ministries. during year. Regulatory PI-16 rated D+ framework in 2007. still need to be updated. P1-16 rated D+. 1.4. Enhanced PFM Study Study on the Selection Selection Selection PEFA PEFA CREF computerization information completed computerizat and roll out and roll and roll survey in survey of budget systems are and bidding ion master of out of out of 2013 with and management rudimentary. documents plan budgetary accounting IFMIS follow up consultant and reporting ready for completed module of module of platform in 2014; report. (PEFA PI-24) tendering the applied the and 2015 and process. software. applied operationa 2016. software lization of IT department Publication IT unit. created but of a still not monthly staged with four phase sufficient statement resource. by entities and Indicator PI-24 Indicator PI - Indicator consolidated Indicator Indicator Indicator , rated D in 24 rated D + PI- 24 PI-24 PI-24 PI-24 consistent 2007. rated D+ rated C rated C + Rated with B approved budget 45 days after FY period end. Production of the Closed 16 Intermediate Results and Indicators Baseline Target Values Data Intermediate U Progress To Responsibility Results Core O Original Project Date Frequency Source/ for Data Comments Start 2014 2015 2016 Methodol Indicators M (sept. 2013) 2011 2012 2013 Collection (2011) Additional financing ogy accounts (Compte Général administration Finances) PI-24 rated C+ 1.5. New. No publication No NA NA 20 % (by 50 % 75 % 90 % Quarterly Survey ARMP Publication of publication December) public tenders 50 % of procurement tender on notice for any national public budget procurement financed by the national budget or by donors according to law No. 11- 027/AU Intermediate Result 2: (Component 2): Supporting civil service reforms 2. 1. Enhanced Control ad hoc Implementation Physical Payroll Implemen Yearly PEFA HAFOP efficiency in and manual. of the GISE census managed tation of survey controls of There is no improved of civil Automatically an unified plus civil service automated control. servants and via the new data base consultant wage bill system to Quality of cleaning of tool. and a new report. accuracy detect errors or data remains computerized version of (through cross abuses. weak. roster GISE. checks across A management Completion databases, tool has been PI-18 Rated of user Additional timely updates rolled out (with C+. manuals. PI- 18 is PI-18 census is PI-18 PI-18 and internal PPF support) Validation of rated C. rated C completed rated B rated B+ controls) but it all PI-18 (PEFA PI-18). is not yet compensation rated C+. operationalized. parameters including PEFA PI-18 fringe Indicator rated benefits D in 2007. 17 Intermediate Results and Indicators Baseline Target Values Data Intermediate U Progress To Responsibility Results Core O Original Project Date Frequency Source/ for Data Comments Start 2014 2015 2016 Methodol Indicators M (sept. 2013) 2011 2012 2013 Collection (2011) Additional financing ogy 2.2. New. A No CSR A Government NA Selection The CSR Yearly Draft HAFOP comprehensive strategy. seminar of the strategy is strategy CREF strategy for organized in consultant adopted civil service September in charge and management confirmed the of the disclosed. reform is need of new developm adopted. vision of CSR ent of the new CSR Strategy. 18 Annex 2: Operational Risk Assessment Framework (ORAF) ORAF UNION OF THE COMOROS ECONOMIC GOVERNANCE TECHNICAL ASSISTANCE PROJECT 1. Project Stakeholder Risks Rating: HIGH Description: Risk Management: Implementation of the Project might touch vested interests, Analytical work on political economy of reforms and stakeholder’s mapping has been carried out to especially for activities linked to civil service reform and better understand interest group positions and power. It was done to inform potential bottlenecks and budget transparency. entry points for reforms; and guide the Bank interaction with the client. More specifically, project implementation might affect the Resp.: WB Stage : Design & Due Date : June 2013 Status: Completed interests of the following stakeholders: Implementation • Staff in public financial institutions that operate in an environment open to abuse of office; Risk Management: The Project team will partner with WBI’s Governance and Leadership department to design a custom- • Civil servants affected by reorganization of the civil made Leadership for Results (L4R) Program. The Program will work with traditional, political and service or benefitting from undue advantages; technical reform stakeholders to favor consensus around reforms objectives and expected results. • Island executives or political groups opposing to Development of leadership skills, change management, consensus building will be supported by the increased centralization of resources and/or authority; L4R Program. Communication and outreach activities are included in project design through an open • Traditional elites (Notability) perceiving proposed access demand-driven facility. reforms as a threat to their influence on public sector management and on society in general. Resp.: GoC & WB Stage: Implementation Due Date: June, 2016 Status: In progress 2. Implementing Agency Risks (including fiduciary) 2.1 Capacity Rating: SUBSTANTIAL Description: Risk Management: Weak capacity of beneficiaries, reliance on external expertise The capacity of the Ministry of Finance will be strengthened through direct support to the IT Unit based and insufficient project management skills may bring delays in on lessons learned from small Pacific Islands where mixture of local capacity building and substitution implementation. These can be exacerbated by frequent of key functions were used to address the capacity and skills constraints in PFM reforms. The Cellule en turnover of key staff in both Union and Islands Governments. charge des réformes techniques et financières (CREF), responsible to monitor public sector reforms and the Project coordination unit (PCU) will also be strengthened with additional staff and resource; including the recruitment of local Procurement and M&E specialists. Resp.: GoC Stage: Implementation Due Date: June, 2016 Status: Ongoing 19 2.2 Governance Rating: LOW Description: Risk Management: a. Complex project coordination arrangements: The Project The Bank will increase the number of PCU staff and will strengthen their capacity via mentoring, Coordination Unit (PCU) will manage two Bank funded coaching and training activities. The Bank team will also improve internal coordination by conducting projects: (i) the Economic Governance TA project; and (ii) the joint supervision on project management (procurement and financial management). Regional Communication Infrastructure Project - RCIP (P118213). There is a risk the PCU might become overwhelmed by coordination of two complex projects of very Resp.: WB Stage: Implementation Due Date: June, 2014 Status: Implementation different nature. b. Protracted fragility: Historically, weak governance, difficult Risk Management: inter-islands relations over the use of public resources; The Project envisages a tailored approach to governance issues aiming at implementing civil service and structural weaknesses in PFM and high politicization of civil public financial management reforms, in collaboration with IMF program. Moreover, the Project will service management have been core contributors to the include activities related to leadership, change management, consensus and trust building as tools to country’s political instability. overcome political-economy constraints and governance challenges in general. Resp.: WB Stage: Implementation Due Date: June, 2016 Status: Ongoing 3. Project Risks 3.1. Design Rating: MODERATE Description: Risk Management: High dependency on the AfDB contribution to roll out the The Bank has already engaged with the AfDB during the design stage to ensure complementarity of IFMIS: The AfDB-funded capacity building project will be efforts to support the development of the IFMIS. This is coupled with good communication between the responsible to purchase the IT equipment supporting the two Project Coordination Unit(s). The Bank will also explore the opportunity to conduct joint Integrated Financial Management System (IFMIS), while the supervision missions. Bank will support the procurement and roll-out of the software. This cooperation and complementarity of support is necessary considering the limited funds available to support Public Financial Management (PFM) reforms in the Comoros. Resp.: Client Stage: Design & Due Date: June, 2016 Status: Ongoing Implementation 3.2. Social & Environmental Rating: SUBSTANTIAL Description: Risk Management: The civil service in the Comoros is the country’s main The Additional Financing does not intend to implement the CSR strategy. This limits the risk of social employer. Civil service is perceived as a social safety net to tensions. Nonetheless, outreach efforts and communications will be strengthened in the Project design fight poverty more than an instrument to provide service to and implementation and completed with appropriate surveys and feedback mechanisms at beneficiaries’ citizens. In as much, as the project seeks to support civil level. service reform social issues will inevitably be raised. Potential political capture of the project can trigger misperception of the Resp.: Bank Stage: Design Due Date: June, 2013 Status: Ongoing proposed reforms. 20 3.3. Program & Donor Rating: SUBSTANTIAL Description: Risk Management: There are a limited number of donors active in the Comoros Donor coordination is strengthened through enhanced communication as well as the adoption of a joint and few, including the Bank, have a permanent physical partnership framework under the supervision of the CREF to maximize synergies between the various presence in the country. This may lead to additional challenge projects supporting governance and public sector management in the Comoros. The Project will also to engage with Government on a regular basis at the program strengthen the CREF’s capacity to monitor and evaluate projects, programs and reforms. level. It can also undermine donor coordination. In addition, Government’s monitoring and evaluation capacity is low. Resp.: Bank Stage: Design & Due Date: June, 2016 Status: Ongoing Implementation 3.4. Delivery Monitoring & Sustainability Rating: SUBSTANTIAL Description: Risk Management: Monitoring: There is a lack of sufficient data collection and Monitoring: Strong emphasis of M&E to monitor public sector reforms will be established under the analytical capacity. This undermines the client’s ability to leadership of the CREF. This will include the development of a reform dashboard with robust baseline monitor public sector reforms. surveys. M&E capacity will also be strengthen at the Project level with the recruitment of a local and an international M&E specialists. Sustainability: The successful implementation of the IFMIS Resp.: Client Stage: Design Due Date: June, 2016 Status: Ongoing should improve public sector performance with an expected Risk Management: significant leverage on all sectors. However, the roll-out of the Sustainability: The IT department will be staffed and funded with appropriate resource and a 5 years IFMIS is highly dependent on the Ministry of Economy and business plan will be adopted. This business will include detailed financial plan and budget allocation Finance IT department which is currently staffed with for the proposed period. insufficient skilled resources. Resp.: Client Stage: Implementation Due Date: June, 2016 Status: Implementation 4. Implementation Risk rating.: HIGH. 21 Annex 3: Procurement Arrangements COMOROS ECONOMIC GOVERNANCE TECHNICAL ASSISTANCE PROJECT (P144381) A. General 1. The procurement for the proposed Project will be carried out in accordance with: (i) the World Bank’s “Guidelines: Procurement of Goods, Works, and Non-consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers,” published by the Bank in January 2011; (ii) “Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers,” published by the Bank in January 2011; and (iii) the provisions of the Financial Agreement. 2. Anti-corruption guidelines. The “Guidelines on Preventing and Combating Fraud and Corruption in projects Financed by IBRD Loans and IDA Credits and Grants,” dated October 15, 2006 and updated in January 2011, shall apply to this project. 3. Procurement Documents. Procurement transactions will be carried out using the Bank’s Standard Bidding Documents or Standard Request for Proposal, respectively, for all International Competitive Bidding (ICB) for goods and for selection of consultants. B. Procurement Methods 4. Procurement of Works. Works to be financed by IDA would include small works for rehabilitation of offices. All contracts estimated to cost less than US$100,000 equivalent per contract may be procured through shopping procedures. For shopping, the Project procurement officer will keep a register of suppliers updated at least every year. 5. Procurement of Goods. The Goods to be financed by IDA would include: office furniture and equipment (including IT equipment); office supplies; and so on. Similar Goods that could be provided by the same vendor would be grouped in bid packages estimated to cost at least US$50,000 per contract and would be procured through ICB. Goods estimated to cost less than US$50,000 equivalent per contract may be procured through shopping procedures. For shopping, the Project procurement officer will keep a register of suppliers updated at least every six months. With prior approval of the Bank, Goods may also be procured through Direct Contracting, using Procurement from United Nations agencies such as UNOPS for purchase of vehicles and IT equipment, and/or by the use of the services of Procurement Agents. 6. Selection of Consultants. The Project will finance Consultant Services such as surveys, technical and financial audits, technical assistance and supervision of service delivery, trainers and workshop facilitators. Consultant firms will be selected through the following methods: (a) Quality and Cost Based Selection (QCBS); (b) selection based on the Consultant’s Qualification (CQS) for contracts that amount to less than US$ 200,000 equivalent and are relative to exceptional studies and research which require specific and 22 very strong expertise; (c) Least Cost Selection (LCS) for standard tasks such as insurance and financial and technical audits costing less than US$200,000; (d) Single Source Selection (SSS), with prior agreement of IDA, for services in accordance with paragraphs 3.10–3.12 of the Consultant Guidelines. Individual Consultant (ICs) will be hired in accordance with paragraphs 5.1–5.4 of Bank Guidelines; Sole Source may be used only with prior approval of the Bank. 7. Short lists of consultants for services estimated to cost less than US$200,000 equivalent per contract may be composed entirely of national consultants, in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines, if a sufficient number of qualified individuals or firms are available. However, if foreign firms express interest, they would not be excluded from consideration. 8. For the procurement of services other than consulting services covered by Consultant Guidelines, ICB or shopping will be used. 9. Training, Workshops, and Conferences. The training (including training material and support), workshops, and conference attendance will be carried out on the basis of an approved annual training and workshop/conference plan. A detailed plan giving the nature of the training/workshop, number of trainees/participants, duration, staff months, timing and estimated cost will be submitted to IDA for review and approval prior to initiating the process. The appropriate methods of selection will be derived from the detailed schedule. After the training, the beneficiaries will be requested to submit a brief report indicating which skills have been acquired and how these skills will contribute to enhance their performance and contribute to the attainment of the Project objective. 10. Operational Costs. Operating costs financed by the Project are incremental expenses, including office supplies, vehicle operation and maintenance, maintenance of equipment, communication costs, staff supervision costs (specifically transport, accommodation, and per diem), and salaries of locally contracted staff. They will be procured using the procurement procedures specified in the Project Financial and Accounting Manual. C. Assessment of the Agency’s Capacity to Implement Procurement 11. The Government has proposed to continue the delegation of project management, including procurement responsibilities, to ABGE, which has demonstrated experience under the current Project financed by the Bank. The agency is experienced in the Bank’s procurement procedures. 12. Existing Procurement Manuals were approved by the Bank and are being integrated into a full-fledged Administrative, Accounting, and Finance Manual governing all ABGE activities and updated to reflect specific Project needs. The implementing agency will update the preliminary procurement plans that have already been submitted for the project implementation. 13. A procurement capacity assessment of the PCU has been carried out (Table 5) and found satisfactory with the following recommendations: - The Project Implementation Manual will be updated to reflect project specificity. 23 Table 5: Procurement risk assessment and risk mitigation Designation Concerns Risk Mitigation Due Date Establishment of Terms of Interpretation and Technical assistance for Before program Reference and technical formatting of documents the Procurement Staff of implementation specifications coming from technical the PCU units Program management Lack of clarity on roles Project Implementation One month after and responsibilities for the Manual to be updated and effectiveness new project training to be held at all levels Other Mitigation Measures: 14. Apart from identifying the minimum required staffing (one Procurement Specialist with qualifications acceptable to IDA) needed for a procurement unit satisfactory to IDA, no other mitigation measures can be identified at this time. Given that Bank’s procurement specialists is based in Madagascar, however, close supervision and support will be undertaken to propose any additional mitigation measures if and when needed. 15. Frequency of procurement reviews and supervision. The Bank’s prior and post reviews will be carried out on the basis of thresholds indicated in Table 2. The Bank will conduct six- monthly supervision missions and annual Post Procurement Reviews (PPRs), with the ratio of post review at least 1 to 5 contracts. The Bank may also conduct an Independent Procurement Review (IPR) at any time until two years after the closing date of the Project. Overall Procurement Risk Assessment: High Average X Low Procurement Review Thresholds 16. Prior-review and procurement methods thresholds for the Project are indicated in the procurement plan and guided by the Table below. 24 Table 6: Procurement thresholds Contract value threshold Procurement Contracts subject to Expenditure category (US$) method prior review 1. Works <100,000 Shopping None 2. Goods and Services ≥ 50,000 ICB All (other than Consultants’ < 50,000 Shopping None Services) Direct Contracting All 3. Consulting Firms ≥ 200,000 QCBS All <200,000 CQS and LCS All Single Source All 4. Individual Consultants ≥ 100,000 IC All <100,000 IC None Single Source All 25 Annex 4. Procurement Plan A draft procurement plan for the first 18 months of project implementation was prepared and submitted for Bank review and approval on September 26, 2013. It will be updated at least annually or as required to reflect project implementation. Items to be procured Procurement & Selection Methods C: Consultant services CQS : Consultant Qualifications Selection G: Goods DC : Direct contracting (continuation of existing W: Works contracts) SSS: Single source Selection ICB : International Competitive Bidding ICS : Individual consultants selection LCS : Least cost selection QCBS :Quality cost based selection SHOP :Shopping ITE N° N° Beneficiary Activity MODE TOT Exec. Start Launch Sub Activity Activity M Réf activity USD (mo) DAO/DP DAO/DP offers start end C 1 A.1.a CREF NTA PF reform ICS 36 000 24 01/11/13 01/12/13 01/01/14 01/02/14 31/01/16 C 2 A.1.a CREF NTA Communications ICS 36 000 24 01/11/13 01/12/13 01/01/14 01/02/14 31/01/16 C 3 A.1.a CREF NTA Economics ICS 36 000 24 01/11/13 01/12/13 01/01/14 01/02/14 31/01/16 C 4 A.1.b CREF Preparation and QCBS 75 000 01/01/14 01/02/14 01/03/14 01/04/14 31/03/16 implementation of the 24 national communication strategy on the reform C 5 A.1.c CREF Preparation and ICS 25 000 01/02/14 01/03/14 01/04/14 01/05/14 30/06/14 implementation of the 2 national M&E strategy on the reform C 6 A.1.c CREF National survey of the QCBS 50 000 01/10/15 01/11/15 01/12/15 01/01/16 31/03/16 3 reform (end of project) C 7 A.2.a DG Budget Study to strengthen the QCBS 150 000 01/01/14 01/02/14 01/03/14 01/04/14 30/09/14 budgetary process toward a 6 program budget C 8 A.2.b ARMP/DNCM Audit and recommendation ICS 30 000 01/01/14 01/02/14 01/03/14 01/04/14 30/06/14 P of a 3 year strategic plan for 3 the ARMP and the DNCMP C 9 A.2.b ARMP/DNCM Implementation of a CQS 50 000 01/07/14 01/08/14 01/09/14 01/10/14 31/12/14 3 P procurement MIS C 10 A.3.1 Centre SSS 72 000 01/01/14 01/01/14 01/01/14 01/01/14 31/12/15 TA: Head of IT cell 24 informatique C 11 A.3.1 Centre TA: Technical Officers (2 ICS 54 000 01/01/14 01/02/14 01/03/14 01/04/14 30/06/15 15 informatique pers.) C 12 A.3.1 Centre Computer and security ICS 10 000 01/04/14 01/05/14 01/06/14 01/07/14 31/07/14 1 informatique training C 13 A.3.2 Budget/Trésor Acquisition of the PF MIS ICB 1 200 01/01/14 01/02/14 01/04/14 01/06/14 31/01/15 8 Budget / Treasury software 000 C 14 A.3.2 Budget/Trésor TA project management QCBS 90 000 12 01/11/13 01/12/13 01/01/14 01/02/14 31/01/15 26 C 15 B.1.a MinFOP Status and technical QCBS 80 000 01/01/14 01/02/14 01/03/14 01/04/14 30/09/14 6 assistance for the closing C 16 B.1.b HAFOP Consultant ICS 30 000 2 01/11/13 01/12/13 01/01/14 01/02/14 31/03/14 C 17 B.2.a MinFOP Strategic, legal, institutional, QCBS 250 000 01/11/13 01/12/13 01/01/14 01/02/14 31/07/14 functional and organizational study of the management of 6 the Public Service and development of the HR MIS C 19 D.1.a ABGE Project Coordinator SSS 90 000 30 01/01/14 01/01/14 01/01/14 01/01/14 30/06/16 C 20 D.1.a ABGE Public Finance Manager SSS 45 000 30 01/01/14 01/01/14 01/01/14 01/01/14 30/06/16 C 21 D.1.a ABGE M&E specialist ICS 45 000 30 01/11/13 01/12/13 01/01/14 01/02/14 31/07/16 C 22 D.1.a ABGE Procurement Assistant ICS 30 000 30 01/11/13 01/12/13 01/01/14 01/02/14 31/07/16 C 23 D.1.a ABGE Accountant SSS 30 000 30 01/01/14 01/01/14 01/01/14 01/01/14 30/06/16 C D.1.b ABGE Financial management SSS 22 500 01/01/14 01/01/14 01/01/14 01/01/14 30/06/16 24 30 consultant C 25 D.1.b ABGE Communication consultant SSS 6 000 30 01/01/14 01/01/14 01/01/14 01/01/14 30/06/16 C D.1.b ABGE Project management ICS 75 000 01/01/14 01/02/14 01/03/14 01/04/14 31/03/16 26 24 consultants C 27 D.2.a ABGE External audit LCS 60 000 24 01/04/14 01/05/14 01/06/14 01/07/14 30/06/16 G 1 A.1.a CREF Office furniture and SHOP 10 000 01/11/13 01/12/13 01/01/14 01/02/14 28/02/14 1 equipments G 2 A.2.b ARMP/DNCM Office furniture and SHOP 10 000 01/11/13 01/12/13 01/01/14 01/02/14 28/02/14 1 P equipments G 3 A.3.1 Centre Office furniture and SHOP 10 000 01/11/13 01/12/13 01/01/14 01/02/14 28/02/14 1 informatique equipments G 4 A.3.2 Budget/Trésor Contribution to the financing ICB 150 000 01/11/13 01/12/13 01/01/14 01/02/14 31/05/14 4 of IT equipment G 5 B.1.b HAFOP Office furniture and SHOP 10 000 01/11/13 01/12/13 01/01/14 01/02/14 28/02/14 1 equipments G 6 C.1.a Government Office furniture and SHOP 10 000 01/04/14 01/05/14 01/06/14 01/07/14 31/07/14 1 equipments G 7 D.1.d ABGE Office furniture and SHOP 10 000 01/01/14 01/02/14 01/03/14 01/04/14 30/04/14 1 equipments W 1 A.1.a CREF Office rehabilitation SHOP 10 000 3 01/11/13 01/12/13 01/01/14 01/02/14 30/04/14 W 2 A.2.b ARMP/DNCM Office rehabilitation SHOP 10 000 3 01/11/13 01/12/13 01/01/14 01/02/14 30/04/14 P W 3 A.3.2 Budget/Trésor Office rehabilitation SHOP 50 000 3 01/11/13 01/12/13 01/01/14 01/02/14 30/04/14 27 Training Plan T 1 A.1.b CREF Workshops to prepare and 20 000 01/03/14 01/03/14 01/03/14 01/04/14 31/03/16 24 implement the plan T 2 A.1.b CREF Communication budget 50 000 24 01/03/14 01/03/14 01/03/14 01/04/14 31/03/16 T 3 A.1.c CREF Workshops to prepare and 20 000 01/06/14 01/06/14 01/06/14 01/07/14 31/07/14 1 implement the plan T 4 A.2.a DG Budget Study tours, trainings, 20 000 01/04/14 01/04/14 01/04/14 01/05/14 31/08/14 4 workshops T 5 A.3.2 Budget/Trésor User training on SIGFP 20 000 2 01/10/14 01/10/14 01/10/14 01/11/14 31/12/14 T 6 B.1.a MinFOP Workshops, seminars 5 000 2 01/04/14 01/04/14 01/04/14 01/05/14 30/06/14 T 7 B.2.a MinFOP Workshops, seminars 20 000 4 01/03/14 01/03/14 01/03/14 01/04/14 31/07/14 T 8 C.1.a Government Workshops, trainings, 75 000 01/04/14 01/04/14 01/04/14 01/05/14 30/04/16 24 seminars O 9 D.1.c ABGE Travel, training, workshops, 75 000 01/01/14 01/01/14 01/01/14 01/01/14 30/06/16 30 seminars 28