, JFO(4 OPPICtAL . 000 JMENTS B ;' - Atci- The World Bank 1818 H Street N.W. 11)2) 77-134 INTERNATIONA BANK FOR RECONSTRUCTION AND DE /ELOl MENT Washington, D.C. 20433 Cable Address: INTBAFRAD INTERNATIONA. DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS January 10, 2013 H.E. Bedri Hamza Minister Ministry of Finance 10000 Pristina Republic of Kosovo Re: Republic of Ko;ovo: IDF Grant for Enhancing the Implementation of Public Proc,uret ient Project IDF Grant No. rF013655 Your Excellency: In response to the request for financial assistance made on behalf of the Republic of Kosovo ("Recipient"), I am pleased to ii form you that the International Bank for Reconstruction and Development ("World Bank" pro oses to extend to the Recipient a grant from the World Bank's Institutional Development lund ("IDF") in an amount not to exceed four hundred ninety three thousand United States Dollar- (U! .$493,000) ("Grant") on the terms and conditions set forth or referred to in this letter agreement (", Agreement"), which includes the attached Annex, to assist in the financing of the project described in the Annex ("Project"). The Recipient represents, by co ifirming its agreement below, that it is authorized to enter into this Agreement and to carry o it th Project in accordance with the terms and conditions set forti or referred to in this Agreemer t. Please confirm the Recip ent'; agreement to the foregoing by having an authorized official of the Recipient sign and cate 1he enclosed copy of this Agreement, and return it to the World Bank. Upon receipt by the Wor d Bank of this countersigned copy, this Agreement shall become effective as of the date of he c )untersignature; provided, however, that the offer of this Agreement shall be deemed withcrawn if the World Bank has not received the countersigned copy of this Agreemeni within nin -ty ()0) days after the date of signature of this Agreement by the World Bank, unless the World Bani shall have established a later date for such purpose. Very truly yours, INTERNATIONAL BANK FOR', RECONSTRUCTION AND DEVELOPMENT Gerard m Act ng Country irector foi South East Europe Eur pe and Central Asia AGREED: REPUBLIC OF OSOVO By: e Represe tive Name: TAfWDM 8 DI) Title: -CT{t#JG H im-Tec OF f=/OUAkuCe Date: 2' /0 4 20 4Z Enclosures: :1) Standard Conditions for Giants Made by the World Bank Out of Various Funds, dated February 15, 2012 (2) Disbursement Letter of the ;ame date as this Agreement, together with World Bank Disbursement Guidelin-s fcr Projects, dated May 1, 2006 2 IDF Grant No. TF013655 ANNEX Article I Standar I Conditions; Definitions 1.01. Standard Conditions. The Star dard Conditions for Grants Made by the World Bank Out of Various Funds dated February 15, 21,12 ("Standard Conditions") constitute an integral part of this Agreement. 1.02. Definitions. Unless the conte t requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed o them in the Standard Conditions or in this Agreement. Article II I Project Execution 2.01. Project Objectives and L'escription. The objective of the Project is to support the Recipient to enhance rronitoring camp iance with the procurement law, investigating fraud and corruption, and audit capacity in proourer ient of public contracts in Kosovo. The Project consists of the following part;: Part 1: Procurement Performance and Compliance Monitoring (a) Developing procur ,mer t performance indices to enable the Public Procurement Regulatory Commis;sion ("PPRC") to test methodology to measure the performance of government inslitutions and procurement officers in the area of procurement, through the provision of technical assistance and Training; (b) Strengthening monitoring of compliance with the Public Procurement Law ("PPL") by assisting the PPRC s aff in conducting ex-post reviews of contracts covering all key procuring entities and providing training on conducting post reviews and monitoring the peiforn ance of procurement officers and procuring entities in accordance with the per:rmance indices prepared under the Part 1(a) of the Project. Part II: Preparation of Good;, Works, and Services Database Prices Preparing a database of g:ods works, and services unit prices that can be published quarterly and enhancing capacily of PPRC staff to collect the data and analyze it in the database, through the provision c f technical assistance and Training. 3 Part III: Capacily Building for t. ie Anti-Corruption Agency ("ACA") Staff in Investigating Procurement Fraud and CorNption Strengthening tl e capacity of ACA staff in investigating procurement fraud and corruption, including an ass-ssment of (apacity gaps that undermine performance, through the provision of technical assistance and Train ng. Part IV: Developing Professiona Expertise in Procurement Audit (a) Developing professional expertise in procurement auditing in the Office of Auditor General ("OAG") by pieparing a training program and materials on international best practices in tho are of public procurement auditing, through the provision of technicdl assistance and fraining; (b) Conducting joint pilot p ocurement audits with OAG staff and revising the relevant sections of the OAG Au jit Manual on public procurement, through the provision of technicdl assistance 2.02. Project Execution Generady. The Recipient c eclares its -omi nitment to the objectives of the Project. To this end, the Recipient shall carry out the Proje.t thiDugh the Central Procurement Agency in the Ministry of Finance ("Project Implementing Unit") in accordance with the provisions of: (a) Article 11 of the Standard Conditions; (b) the "Guidelint s on Preventing and Combating Fraud and Corruption in Projects Financed by I3RD Loans anc IDA Credits and Grants", dated October 15, 2006 and revised in January 2011 ("Anti-Cor-upti:n Guidelines"); and (c) this Article II. 2.03. Institutional and Other Ar,ang ?ments. At all times during Project im )lementation, the Recipient shall ensure that the PIU is implementing the Project for the benefi. of the three agencies (PPRC, OAG, and ACA), who are the beneficiaries of the 'roject. The Re( ipient shall ensure that the Ministry of Finance maintains the PIU with adequate finds, facilities, ! ervices and other resources. 2.04. Project Monitoring, Reporting 7nd Evaluation. (a) The Recipient shal mo iitor and evaluate the progress of the Project and prepare Project Reports, in accordance with the )rovisions of Section 2.06 of the Standard Conditions and on the basis of indicators acceptafle t) the World Bank. Each Project Report shall cover the period of one calendar semester and siall be furnished to the World Bank not later than one month after the date of such requesi. (b) The Rccipient shu1 p-epare the Completion Report in accordance with the provisions of Section 2.)6 of the Standard Conditions. The Completion Report shall be furnished to the World Bank not later than fi've m< nths after the Closing Date. 4 2.05. Financial Management. (a) The Relipient shall enure that a financial management system is maintained in accordance with the provisions of Sectihn 2.07 of the Standard Conditions. (b) The Recipient shal ens ire that interim unaudited financial reports for the Project are prepared and furnished to the Worli I Bank not later than forty five (45) days after the end of each calendar semester, covering tie srmester, in form and substance satisfactory to the World Ban'. (c) The Reipient shall ha 'e the Grant Financial Statements audited in accordance with the provisions of Section 2.7(bi of the Standard Conditions. Each such audit of the Financial Statements shall cover he (ntire period during which withdrawals from the Grant Account were made. The audit shall b. furnished to the World Bank not later than six months after the end of such period. 2.06. Procurement (a) General. All const Itan s' services required for the Project and to be financed out of the proceeds of the Grant shall be p-ocured in accordance with the requirements set forth or refened to in: (i) Sections I and IV of the "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits & Grants by World Bank Borrowers" dated January 2011 ("Consultant Guidelines"); and (ii) the provisions of this Section, as the same shall be elaborated in the procurement plan prepared and urdatei from time to time by the Recipient for the Project in accordance with paragraph 1.25 of :he ( onsultant Guidelines ("Procurement Plan"). (b) Definitions. The capi alized terms used in the following paragraphs of this Section to describe particular methods of review by the World Bank of particular contracts, refer to the corresponding mthod described n Sections II, III, IV and V of the Consultant Guidelines, as the case may be. (c) Particular Methods of P-ocu ement of Consultants' Services (i) Except as othe vise provided in item (ii) below, consultants' services shall be procured under contracts award,-d on the basis of Quality- and Cost-based Selection. (ii) The follow ing methods may be used for the procurement of consultants' services for those assignments wl ich ire specified in the Procurement Plan: (A) Least Cost Selection; (B) Consultants' Qualificatins; (C) Single-Source Selection; and (D) Selection of Individual Consultants. (d) Review by the World 3ank of Procurement Decisions. The Procurement Plan shall set forth those con:racts whicl sha I be subject to the World Bank's Prior Review. All terms of reference for all consultants' service; must be subject to Prior review by the World Bank. All other contracts shall be subject to Pcst F eview by the World Bank 5 Article III Wi thdi awal of Grant Proceeds 3.01. Eligible Expenditures. The Recipient may withdraw th. proceeds of the Grant in accordance with the provisions of: (i) Article III of the Standard Condit ons; (ii) this Section; and (iii) such additional instructions as the World Bank may specify by notice to the Recipient (including the "World Bank Disbursement Guidelines for Projocts" dated May 2006, as revised from time to time by the World Bank and as made applicab e to this Agreement pursuant to such instructions), to finance Eligible Expenditures as set forth in tt e following table. The table specifies the categories of Eligible Expenditures that may be financed out of the proceeds of the Grant ("Category"), the allocations of the amounts of the Grani to each Category, and the percentage of expenditures to be financed for Eligible Expenditures in each Category: Category Ai mount of the Grant Percentage of Allocated Expenditures to be (xpressed in USD) Financed (inclusive of Taxes) (1) Consultants' services 493,000 100% (including audit, commercial bank charges, and advertising costs) TOTAL AMOUNT 493,000 100% 3.02. Withdrawal Conditions. No:withstanding the provisions of Section 3.01 of this Agreement, no withdrawal shall be mace for payments made prior to the date of countersignature of this Agreement by the Recipient 3.03. Withdrawal Period. The Clo! ing Date referred to in Section 3.06(c) of the Standard Conditions is three years after the date c f countersignature of this Agreement by the Recipient. Article IV Recipi ent' . Representative; Addresses 4.01. Recipient's Representativi. T ie Recipient's Representative referred to in Section 7.02 of the Standard Conditions is the M inist -y of Finance. 4.02. Recipient's Address. The Zeci )ient's Address referred to in Section 7.01 of the Standard Conditions is: Ministry of Finance Mother Teresa Str(et 6 10000 Pristina Republic of Kosov) Facsimile: +38 138 213 113 4.03. World Bank's Address. The World Bank's Address referred to in Section 7.01 of the Standard Conditions is: International Bank for Reconstr iction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable: Telex: Facsimile: INTBAFRAD 24942 (MCI) or 1-202-477-6391 Washington, D.C. 64145 MCI) 7