Notice of Entering Into a Compact With the Government of the Republic of Vanuatu, 14296-14326 [06-2553]
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Federal Register / Vol. 71, No. 54 / Tuesday, March 21, 2006 / Notices
MILLENNIUM CHALLENGE
CORPORATION
[MCC FR 06–06]
Notice of Entering Into a Compact With
the Government of the Republic of
Vanuatu
Millennium Challenge
Corporation.
ACTION: Notice.
AGENCY:
SUMMARY: In accordance with section
610(b)(2) of the Millennium Challenge
Act of 2003 (Pub. L. 108–199, Division
D), the Millennium Challenge
Corporation (MCC) is publishing a
summary and the complete text of the
Millennium Challenge Compact
between the United States of America,
acting through the Millennium
Challenge Corporation, and the
Government of the Republic of Vanuatu.
Representatives of the United States
Government and the Government of the
Republic of Vanuatu executed the
Compact documents on March, 2, 2006.
Dated: March 13, 2006.
John C. Mantini,
Assistant General Counsel, Millennium
Challenge Corporation.
Summary of Millennium Challenge
Compact With the Government of the
Republic of Vanuatu
I. Introduction
Vanuatu is a small island nation in
the South Pacific comprised of 83
separate islands, where approximately
half of the population lives in poverty.
As a small, open, island economy,
agriculture and tourism are central to
Vanuatu’s growth. These two sectors
together employ more than 70% of
Vanuatu’s working population 1 and
represent approximately 34% of
Vanuatu’s GDP.2 Vanuatu’s poor
transportation infrastructure, however,
continues to hinder formal economic
activity and investment in the
agriculture and tourism sectors, thereby
constraining private-sector led
economic growth. Vanuatu’s capital
outlays, at 7% of national expenditures,
are the lowest in the Pacific region.3
The five-year, $65.69 million Vanuatu
Compact provides an in-depth focus on
one economic development priority:
overcoming transport infrastructure
constraints to poverty reduction and
economic growth, specifically for rural
areas. Consisting of eleven
infrastructure projects—including roads,
wharves, an airstrip, and warehouses, as
well as institutional strengthening
initiatives for enhanced maintenance
capacity, the program aims to benefit
poor, rural agricultural producers and
providers of tourist-related goods and
services by reducing transportation
costs and improving the reliability of
access to transportation services (the
‘‘MCA Program’’).
II. Program Overview and Budget
Vanuatu’s MCA Program consists of
two principal components: (i) Civil
works for the reconstruction of priority
transport infrastructure on eight islands,
covering roads, wharfs, airstrips, and
warehouses (the ‘‘Transport
Infrastructure Project’’); and (ii)
institutional strengthening efforts in
Vanuatu’s Public Works Department
(‘‘PWD’’), including the provision of
plant and equipment for maintenance,
in order to facilitate enhanced
sustainability and maintenance of
infrastructure assets (the ‘‘Institutional
Strengthening Project’’). Technical,
economic, environmental, and social
assessments were completed on each of
the eleven civil works subprojects and
institutional strengthening components
contained in the MCA Program.
The following eleven sub-projects are
included as part of the U.S. $54.47
million Transport Infrastructure Project:
1. Efate island—Upgrade 90km of the
Ring Road;
2. Santo island—Upgrade 70km of the
East Coast Road from Luganville to Port
Orly;
3. Santo island—Upgrade South Coast
Road Bridges (5);
4. Malekula island—Reconstruct
11km of the Norsup Lakatoro Lits Lits
Road;
5. Malekula island—Upgrade South
West Bay Airstrip;
6. Pentecost island—Construct the
Loltong Wharf and Upgrade of NorthSouth Road to Wharf;
7. Tanna island—Reconstruct the
Whitesands Road;
8. Epi island—Upgrade Lamen Bay
Wharf;
9. Ambae island—Reconstruct Creek
Crossings on 50km Road section;
10. Malo island—Upgrade 15km of
Roads; and
11. Warehouses (for produce and
freight storage):
(i) Ambae island (Lolowai).
(ii) Epi island (Lamen Bay).
(iii) Pentecost island (Loltong).
(iv) Malo island (Nunuka).
(v) Malekula island (South West Bay).
Recognizing the importance of the
maintenance of transport infrastructure
in meeting program objectives, the
Vanuatu Compact will provide focused
assistance of U.S. $6.22 million to the
principal institution in the Transport
Infrastructure Project, namely PWD, to
remove key constraints that face the
institution in effectively delivering
maintenance and repair services. The
MCA Program also provides support for
the sustainability and viability of the
institution through organizational
reform and policy changes. (Refer to
Sections V. C. Government Commitment
and Effectiveness and D. Sustainability,
for further information on these
maintenance initiatives.) The following
table presents the total Compact cost, by
component:
Timeline
Description
CY1
($US mil)
CY2
($US mil)
CY3
($US mil)
CY4
($US mil)
CY5
($US mil)
Total
4.00
5.47
1.67
0.28
22.45
0.48
0.53
0.06
25.80
0.09
0.49
0.06
2.21
0.09
0.49
0.06
0.03
0.09
0.49
0.91
54.47
6.22
3.63
1.37
Total ..........................................................................
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Transport Infrastructure Project .......................................
Institutional Strengthening for sustainability/Maintenance
Program Administration & Audits .....................................
Monitoring & Evaluation ...................................................
11.42
23.51
26.43
2.85
1.52
65.69
1 Source:
Vanuatu Labor Market Survey (2000).
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2 Derived from IMF Article IV Consultation
statistics and WTTC Satellite Account data.
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III. Impact
The Transport Infrastructure Project is
expected to have a transformational
impact on Vanuatu’s economic
development, increasing average income
per capita (in real terms) by
approximately $200, or 15% of current
income per capita, by 2010. GDP is
expected to increase by an additional
3% a year as a result of the program.
Based on the areas covered by the
transport assets, the program can be
expected to benefit approximately
65,000 poor, rural inhabitants living
nearby and using the roads to access
markets and social services. The
program is also expected to expand the
tourism sector by approximately 15%
once construction is complete. Based on
the most recent employment data 4 this
translates to the creation of 280
additional formal sector jobs and 25
new locally-owned businesses each year
in this sector, impacting the lives of
over 1,300 people. The total number of
beneficiaries would be higher if the
spillover impact of tourism activities on
agriculture, fishery and construction
sectors—as well as impact of the
national maintenance strengthening
component—could be measured.
IV. Program Management
The Government of Vanuatu (‘‘GOV’’)
is creating an independent entity, MCAVanuatu, housed within the Ministry of
Finance and Economic Management,
with primary responsibility for
oversight and management of Compact
implementation, particularly all
monitoring and evaluation activities. To
oversee MCA-Vanuatu, the GOV has
established a Steering Committee
consisting of five Director General-level
and four Director-level civil servants,
one private sector representative
(General Manager of Vanuatu Chamber
of Commerce), and one civil society
representative (Secretary General of
Vanuatu Association of NGOs), with all
members of the Steering Committee
possessing voting rights. Observers to
the Steering Committee will include two
Government Directors and an MCC
representative.
The PWD will serve as the project
manager, holding responsibility for
oversight of the specific activities of the
Transport Infrastructure Project.
External professional services (for
construction supervision) will be
contracted through MCA-Vanuatu to
assist PWD in its functions.
The Department of Finance in the
Ministry of Finance and Economic
4 National Tourism Development Office (2000)
and assuming 2% growth rate based on labor force
growth.
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Management will serve as the fiscal
agent on behalf of MCA-Vanuatu. For
procurements, an external procurement
agent will be used, and is currently
being selected through a competitive
process. Procurements will be
conducted in accordance with MCCmodified World Bank Procurement
Guidelines. A special U.S. Dollar
account will be established at the
Reserve Bank of Vanuatu for receipt of
MCC disbursements.
V. Assessment
A. Economic Analysis
The economic internal rate of return
(‘‘ERR’’) for the overall program is
estimated to be 25%, calculated over a
twenty-year time horizon. Expected
benefits include: Increased agricultural
and fisheries production, induced
tourism investment and expenditures,
reduced transport operating costs,
reduced infrastructure closures, reduced
freight spoilage, value-added from
storage warehouses, and maintenance
cost savings.
In addition to the quantifiable benefits
described above, the upgraded road
network is expected to improve the
quality of life of all ni-Vanuatu living
within the vicinity of the road by
improving access (via lower costs and
shorter travel times) to social services,
such as health centers and schools.
B. Consultative Process
Vanuatu engaged in a comprehensive
consultative process, consisting of: (i)
Ongoing national and provincial public
forums, such as the Comprehensive
Reform Program Summit, National
Business Forum, Rural Economic
Development Initiative, and
Government Investment Program
workshops, which included specific
discussion on priorities and projects for
the MCA proposal; and (ii) public
outreach meetings in four of Vanuatu’s
six provinces. Consulted groups
included Vanuatu’s council of chiefs,
women’s group leaders, the private
sector, NGOs, church leaders, and
government officials from Vanuatu’s
provinces. The proposed projects for
MCC consideration were derived from
each province’s Rural Economic
Development Plan, which included
extensive local-level stakeholder
consultation forums in each of
Vanuatu’s six provinces.
To sustain public awareness and
participation in the Compact
development process, the GOV held
MCA public outreach meetings in
various provinces and engaged local
media regarding proposal due diligence,
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project selection, and Compact
development.
C. Government Commitment and
Effectiveness
The GOV is undertaking several major
policy changes as a part of the MCA
Program. These include:
Policy changes to ensure sufficient
budget allocations for road maintenance
activities by the GOV. This policy
change will provide PWD with
sufficient means to maintain all new
and existing transport infrastructure.
The GOV or the respective province
will develop a revenue collection
mechanism and an implementation plan
for the collection of wharf user fees and
their application towards wharf
maintenance. This policy change would
provide sufficient funds for
maintenance of the wharves, thereby
preserving their useful life and ability to
contribute to economic growth and
higher incomes.
D. Sustainability
In addition to the efforts mentioned
above, the program will support the
following major institutional changes to
promote enhanced maintenance and
sustainability of infrastructure assets:
Establishment of a service
performance contract between the
Ministry of Infrastructure and Public
Utilities and PWD in order to make
PWD accountable for service delivery
against targets set on an annual basis
(the ‘‘Service Performance Contract’’).
The Service Performance Contract is
expected to reduce the overall cost of
maintenance on an annual basis, and
assure proper and timely maintenance
of infrastructure assets.
Establishment of maintenance
contracts with community
representatives for various sub-projects
to involve local communities (users) in
maintenance activities.
E. Environment and Social Impacts
Initial environmental and social
assessment of each of the eleven
proposed projects included in the
Transport Infrastructure Project has
been completed. Impacts associated
with these projects, which primarily
involve the rehabilitation of existing
infrastructure, are likely to be sitespecific and readily mitigable, and are
therefore screened as Category B
activities in accordance with the MCC
Environmental Guidelines. No
significant adverse environmental or
social impacts, such as the need for
resettlement, were identified in the
initial assessment. However, further
environmental and social assessment
will be required during the design stage
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to confirm the findings of the initial
assessment and to address design
alternatives. Project-specific
environmental management plans will
be completed prior to construction.
To address environmental and social
issues during program implementation,
MCA-Vanuatu will select in an open
and competitive process, subject to the
approval of MCC, an environmental and
social impact officer (‘‘ESI Officer’’).
The ESI Officer will provide MCAVanuatu with expertise in
environmental, social, and gender
impact assessment, and will be
responsible for ensuring that the
activities related to the Transport
Infrastructure Project and Institutional
Strengthening Project are undertaken in
accordance with the MCC
Environmental Guidelines and
safeguard policies. The ESI Officer will
be located within the Environmental
Unit of the Government, but will be
dedicated to the management of
environmental and social issues
associated with implementation of the
Transport Infrastructure Project and
Institutional Strengthening Project. The
ESI Officer will convene periodic public
meetings to provide implementation
updates to identify and address public
concerns.
F. Donor Coordination
The GOV and MCC have convened
various meetings with donor partners
such as Australia, New Zealand, France,
the European Union, Japan, the Asian
Development Bank (‘‘ADB’’), the World
Bank, and the IMF to discuss potential
project-level coordination opportunities
and collaborative partnerships for
implementation and monitoring. It is
widely accepted among donors that
Vanuatu has a substantial need for
investments in transport infrastructure,
particularly for rural areas and the outer
islands. The MCA Program builds upon
analytical work previously conducted
by the ADB on outer island transport
infrastructure development in Vanuatu.
Donors such as Australia and New
Zealand have recently committed to
enlarging their assistance to the
productive sectors in response to the
priorities for growth and poverty
reduction outlined in the GOV’s
National Priorities and Action Agenda.
MCC’s focus on transport infrastructure
presents a number of mutually
beneficial coordination opportunities
with ongoing and planned donor
programs, such as: The EU and France’s
Agricultural Producers Organization
Project; the EU and ADB’s Tourism
Training and Education project; ADB’s
Rural Credit Strengthening and Secured
Transaction Framework projects;
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AusAID’s Business Climate Reform
program; the EU and France’s
International Airport upgrading; and the
EU and JICA’s Institutional
Strengthening for Infrastructure
Maintenance programs. Moreover,
AusAID is providing funding for key
household data surveys (such as the
Household Income and Expenditure
Survey), which will be used in
monitoring program impacts.
Millennium Challenge Compact
Between the United States of America
Acting Through the Millennium
Challenge Corporation and the
Government of the Republic of Vanuatu
Table of Contents
Article I. Purpose and Term
Section 1.1 Project Objectives
Section 1.2 Projects
Section 1.3 Entry into Force; Compact
Term
Article II. Funding and Resources
Section 2.1 MCC Funding
Section 2.2 Government Resources
Section 2.3 Limitations on the Use of
Treatment of MCC Funding
Section 2.4 Incorporation; Notice;
Clarification
Section 2.5 Refunds; Violations
Article III. Implementation
Section 3.1 Implementation Framework
Section 3.2 Government Responsibilities
Section 3.3 Government Deliveries
Section 3.4 Government Assurances
Section 3.5 Implementation Letters;
Supplemental Agreements
Section 3.6 Procurement; Awards of
Assistance
Section 3.7 Policy Performance; Policy
Reforms
Section 3.8 Records and Information;
Access; Audits; Reviews
Section 3.9 Insurance
Section 3.10 Domestic Requirements
Section 3.11 No Conflict
Section 3.12 Reports
Article IV. Conditions Precedent; Deliveries
Section 4.1 Conditions Prior to the Entry
into Force and Deliveries
Section 4.2 Conditions Precedent to MCC
Disbursements or Re-Disbursements
Article V. Final Clauses
Section 5.1 Communications
Section 5.2 Representatives
Section 5.3 Amendments
Section 5.4 Termination; Suspension
Section 5.5 Privileges and Immunities
Section 5.6 Attachments
Section 5.7 Inconsistencies
Section 5.8 Indemnification
Section 5.9 Headings
Section 5.10 Interpretation; Definitions
Section 5.11 Signatures
Section 5.12 Designation
Section 5.13 Survival
Section 5.14 Consultation
Section 5.15 MCC Status
Section 5.16 Language
Section 5.17 Publicity; Information and
Marking
Exhibit A: Definitions
Exhibit B: List of Certain Supplemental
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Agreements
Annex I: Program Description
Schedule 1: Transport Infrastructure
Project
Annex II: Financial Plan Summary
Annex III: Description of the M&E Plan
Millennium Challenge Compact
This Millennium Challenge Compact
(the ‘‘Compact’’) is made between the
United States of America, acting
through the Millennium Challenge
Corporation, a United States
Government corporation (‘‘MCC’’), and
the Government of the Republic of
Vanuatu (the ‘‘Government’’) (referred to
herein individually as a ‘‘Party’’ and
collectively, the ‘‘Parties’’). A
compendium of capitalized terms
defined herein is included in Exhibit A
attached hereto.
Recitals
Whereas, MCC, acting through its
Board of Directors, has selected Vanuatu
as eligible to present to MCC a proposal
for the use of Millennium Challenge
Account (‘‘MCA’’) assistance to help
facilitate poverty reduction through
economic growth in Vanuatu;
Whereas, the Government has carried
out a consultative process with the
country’s private sector and civil society
to outline the country’s priorities for the
use of MCA assistance and developed a
proposal, which was submitted to MCC
on March 31, 2005 (the ‘‘Proposal’’);
Whereas, the Proposal focused on,
among other things, increasing
economic activity and incomes in rural
areas through comprehensive
investments in transport infrastructure,
including roads, wharfs, airstrips and
warehouses;
Whereas, MCC has evaluated the
Proposal and related documents to
determine whether the Proposal is
consistent with core MCA principles
and includes proposed activities and
projects that will advance the progress
of Vanuatu towards achieving economic
growth and poverty reduction; and
Whereas, based on MCC’s evaluation
of the Proposal and related documents
and subsequent discussions and
negotiations between the Parties, the
Government and MCC determined to
enter into this Compact to implement a
program using MCC Funding to advance
Vanuatu’s progress towards economic
growth and poverty reduction (the
‘‘Program’’);
Now, therefore, in consideration of
the foregoing and the mutual covenants
and agreements set forth herein, the
Parties hereby agree as follows:
Article I. Purpose and Term
Section 1.1 Project Objectives. The
overall objective of this Compact is to
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reduce poverty and increase incomes in
rural areas by stimulating economic
activity in the tourism and agricultural
sectors through the improvement of
transport infrastructure, which is key to
economic growth and poverty reduction
in Vanuatu (the ‘‘Compact Goal’’). The
Parties have identified the following
project-level objectives (each a ‘‘Project
Objective’’ and together the ‘‘Project
Objectives’’) to advance the Compact
Goal, each of which is described in
more detail in the Annexes attached
hereto:
(a) Provide improved or new priority
transport infrastructure in rural areas
and outer islands, including roads,
wharfs, airstrips and warehouses (the
‘‘Infrastructure Objective’’); and
(b) Strengthen the ability of the
Government, specifically the capacity
and capability of the Department of
Public Works, to maintain and sustain
Vanuatu’s infrastructure assets (the
‘‘Institutional Strengthening Objective’’).
The Government expects to achieve,
and shall use its best efforts to ensure
the achievement of, these Project
Objectives during the Compact Term.
Section 1.2 Projects. The Annexes
attached hereto describe the specific
projects and the policy reforms and
other activities related thereto (each, a
‘‘Project’’) that the Government will
carry out, or cause to be carried out, in
furtherance of this Compact to achieve
the Project Objectives.
Section 1.3 Entry into Force;
Compact Term. This Compact shall
enter into force on the date of the last
letter in an exchange of letters between
the Principal Representatives of each
Party confirming that each Party has
completed its domestic requirements for
entry into force of this Compact and that
all conditions set forth in section 4.1
have been satisfied by the Government
and MCC (such date, the ‘‘Entry into
Force’’). This Compact shall remain in
force for five (5) years from the date of
the entry into force of this Compact,
unless earlier terminated in accordance
with section 5.4 (the ‘‘Compact Term’’).
Article II. Funding and Resources
Section 2.1 MCC Funding.
(a) MCC’s Contribution. MCC hereby
grants to the Government, subject to the
terms and conditions of this Compact,
an amount not to exceed Sixty-Five
Million Six Hundred Ninety Thousand
United States Dollars (USD $65,690,000)
( ‘‘MCC Funding’’) during the Compact
Term to enable the Government to
implement the Program and achieve the
Project Objectives.
(i) Subject to sections 2.1(a)(ii), 2.2.(b)
and 5.4, the allocation of MCC Funding
within the Program and among and
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within the Projects shall be as generally
described in Annex II or as otherwise
agreed upon by the Parties from time to
time.
(ii) If at any time MCC determines that
a condition precedent to an MCC
Disbursement has not been satisfied,
MCC may, upon written notice to the
Government, reduce the total amount of
MCC Funding by an amount equal to the
amount estimated in the applicable
Detailed Financial Plan for the Program
or Project activity for which such
condition precedent has not been met.
Upon the expiration or termination of
this Compact, (1) any amounts of MCC
Funding not disbursed by MCC to the
Government shall be automatically
released from any obligation in
connection with this Compact and (2)
any amounts of MCC Funding disbursed
by MCC to the Government as provided
in section 2.1(b)(i), but not re-disbursed
as provided in section 2.1(b)(ii) or
otherwise incurred as permitted
pursuant to section 5.4(e) prior to the
expiration or termination of this
Compact, shall be returned to MCC in
accordance with section 2.5(a)(ii).
(b) Disbursements.
(i) Disbursements of MCC Funding.
MCC shall from time to time make
disbursements of MCC Funding (each
such disbursement, an ‘‘MCC
Disbursement’’) to a Permitted Account
or through such other mechanism
agreed by the Parties under and in
accordance with the procedures and
requirements set forth in Annex I, the
Disbursement Agreement or as
otherwise provided in any other
relevant Supplemental Agreement.
(ii) Re-Disbursements of MCC
Funding. The release of MCC Funding
from a Permitted Account (each such
release, a ‘‘Re-Disbursement’’), shall be
made in accordance with the procedures
and requirements set forth in Annex I,
the Disbursement Agreement or as
otherwise provided in any other
relevant Supplemental Agreement.
(c) Interest. Unless the Parties agree
otherwise in writing, any interest or
other earnings on MCC Funding that
accrue (collectively, ‘‘Accrued Interest’’)
shall be held in a Permitted Account
and accrue in accordance with the
requirements for the accrual and
treatment of Accrued Interest as
specified in Annex I or any relevant
Supplemental Agreement. On a
quarterly basis and upon the
termination or expiration of this
Compact, the Government shall return,
or ensure the return of, all Accrued
Interest to any United States
Government account designated by
MCC.
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(d) Conversion; Exchange Rate. The
Government shall ensure that all MCC
Funding that is held in the Permitted
Account(s) shall be denominated in the
currency of the United States of
America (‘‘United States Dollars’’) prior
to Re-Disbursement; provided, that a
certain portion of MCC Funding may be
transferred to a Local Account and may
be held in such Local Account in the
currency of Vanuatu prior to ReDisbursement in accordance with the
requirements of Annex I and any
relevant Supplemental Agreement. To
the extent that any amount of MCC
Funding held in United States Dollars
must be converted into the currency of
the Republic of Vanuatu for any
purpose, including for any ReDisbursement or any transfer of MCC
Funding into a Local Account, the
Government shall ensure that such
amount is converted consistent with
Annex I, including the rate and manner
set forth in Annex I, and the
requirements of the Disbursement
Agreement or any other Supplemental
Agreement between the Parties.
(e) Guidance. From time to time, MCC
may provide guidance to the
Government through Implementation
Letters on the frequency, form and
content of requests for MCC
Disbursements and Re-Disbursements or
any other matter relating to MCC
Funding. The Government shall apply
such guidance in implementing this
Compact.
Section 2.2 Government Resources.
(a) The Government shall provide or
cause to be provided such Government
funds and other resources, and shall
take or cause to be taken such actions,
including obtaining all necessary
approvals and consents, as are specified
in this Compact or in any Supplemental
Agreement to which the Government is
a party or as are otherwise necessary
and appropriate to effectively carry out
the Government Responsibilities or
other responsibilities or obligations of
the Government under or in furtherance
of this Compact during the Compact
Term and through the completion of any
post-Compact Term activities, audits or
other responsibilities.
(b) If at any time during the Compact
Term, the Government materially
reallocates or reduces the allocation in
its national budget or any other niVanuatu governmental authority at a
departmental, municipal, regional or
other jurisdictional level materially
reallocates or reduces the allocation of
its respective budget, of the normal and
expected resources that the Government
or such other governmental authority, as
applicable, would have otherwise
received or budgeted, from external or
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domestic sources, for the activities
contemplated herein, the Government
shall notify MCC in writing within
fifteen (15) days of such reallocation or
reduction, such notification to contain
information regarding the amount of the
reallocation or reduction, the affected
activities, and an explanation for the
reallocation or reduction. In the event
that MCC independently determines
upon review of the executed national
annual budget that such a material
reallocation or reduction of resources
has occurred, MCC shall notify the
Government and, following such
notification, the Government shall
provide a written explanation for such
reallocation or reduction and MCC may
(i) reduce, in its sole discretion, the total
amount of MCC Funding or any MCC
Disbursement by an amount equal to the
amount estimated in the applicable
Detailed Financial Plan for the activity
for which funds were reduced or
reallocated or (ii) otherwise suspend or
terminate MCC Funding in accordance
with section 5.4(b).
(c) The Government shall use its best
efforts to ensure that all MCC Funding
is fully reflected and accounted for in
the annual budget of Vanuatu on a
multi-year basis.
(d) The Government shall establish an
independent unit within the Ministry of
Finance and Economic Management, or
such other entity as may be acceptable
to MCC, which shall be responsible for
the oversight and management of the
Program as specified in Annex I (‘‘MCAVanuatu’’). The Government shall
ensure the independent and proper
administration of MCA-Vanuatu in
accordance with the terms of the
Compact, the Governing Documents of
MCA-Vanuatu and any relevant
Supplemental Agreements.
Section 2.3 Limitations on the Use
or Treatment of MCC Funding.
(a) Abortions and Involuntary
Sterilizations. The Government shall
ensure that MCC Funding shall not be
used to undertake, fund or otherwise
support any activity that is subject to
prohibitions on use of funds contained
in (i) paragraphs (1) through (3) of
section 104(f) of the Foreign Assistance
Act of 1961 (22 U.S.C. 2151b(f)(1)–(3), a
United States statute, which
prohibitions shall apply to the same
extent and in the same manner as such
prohibitions apply to funds made
available to carry out Part I of such Act;
or (ii) any provision of law comparable
to the eleventh and fourteenth provisos
under the heading ‘‘Child Survival and
Health Programs Fund’’ of division E of
Public Law 108–7 (117 Stat. 162), a
United States statute.
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(b) United States Job Loss or
Displacement of Production. The
Government shall ensure that MCC
Funding shall not be used to undertake,
fund or otherwise support any activity
that is likely to cause a substantial loss
of United States jobs or a substantial
displacement of United States
production, including:
(i) Providing financial incentives to
relocate a substantial number of United
States jobs or cause a substantial
displacement of production outside the
United States;
(ii) Supporting investment promotion
missions or other travel to the United
States with the intention of inducing
United States firms to relocate a
substantial number of United States jobs
or a substantial amount of production
outside the United States;
(iii) Conducting feasibility studies,
research services, studies, travel to or
from the United States, or providing
insurance or technical and management
assistance, with the intention of
inducing United States firms to relocate
a substantial number of United States
jobs or cause a substantial displacement
of production outside the United States;
(iv) Advertising in the United States
to encourage United States firms to
relocate a substantial number of United
States jobs or cause a substantial
displacement of production outside the
United States;
(v) Training workers for firms that
intend to relocate a substantial number
of United States jobs or cause a
substantial displacement of production
outside the United States;
(vi) Supporting a United States office
of an organization that offers incentives
for United States firms to relocate a
substantial number of United States jobs
or cause a substantial displacement of
production outside the United States; or
(vii) Providing general budget support
for an organization that engages in any
activity prohibited above.
(c) Military Assistance and Training.
The Government shall ensure that MCC
Funding shall not be used to undertake,
fund or otherwise support the purchase
or use of goods or services for military
purposes, including military training, or
to provide any assistance to the military,
police, militia, national guard or other
quasi-military organization or unit.
(d) Prohibition of Assistance Relating
to Environmental, Health or Safety
Hazards. The Government shall ensure
that MCC Funding shall not be used to
undertake, fund or otherwise support
any activity that is likely to cause a
significant environmental, health, or
safety hazard. Unless MCC and the
Government agree otherwise in writing,
the Government shall ensure that
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activities undertaken, funded or
otherwise supported in whole or in part
(directly or indirectly) by MCC Funding
comply with environmental guidelines
delivered by MCC to the Government or
posted by MCC on its Web-site or
otherwise publicly made available, as
such guidelines may be amended from
time to time (the ‘‘Environmental
Guidelines’’), including any definition
of ‘‘likely to cause a significant
environmental, health, or safety hazard’’
as may be set forth in such
Environmental Guidelines.
(e) Taxation.
(i) Taxes. As required by applicable
United States law and consistent with
the applicable requirement of Vanuatu
law that international cooperation
assistance shall be exempt from taxes,
the Government shall ensure that the
Program, all Program Assets, MCC
Funding and Accrued Interest shall be
free from any taxes imposed under laws
currently or hereafter in effect in
Vanuatu during the Compact Term. This
exemption shall apply to any use of any
Program Asset, MCC Funding and
Accrued Interest, including any Exempt
Uses, and to any work performed under
or activities undertaken in furtherance
of this Compact by any person or entity
(including contractors and grantees)
funded by MCC Funding, and shall
apply to all taxes, tariffs, duties, and
other levies (each a ‘‘Tax’’ and
collectively, ‘‘Taxes’’), including:
(1) To the extent attributable to MCC
Funding, income taxes and other taxes
on profit or businesses imposed on
organizations or entities, other than
nationals of Vanuatu, receiving MCC
Funding, including taxes on the
acquisition, ownership, rental,
disposition or other use of real or
personal property, taxes on investment
or deposit requirements and currency
controls in Vanuatu, or any other tax,
duty, charge or fee of whatever nature,
except fees for specific services
rendered; for purposes of this section
2.3(e), the term ‘‘national’’ refers to
organizations established under the
laws of Vanuatu, other than MCAVanuatu or any other entity established
solely for purposes of managing or
overseeing the implementation of the
Program or any wholly-owned
subsidiaries, divisions, or Affiliates of
entities not registered or established
under the laws of Vanuatu;
(2) Customs duties, tariffs, import and
export taxes, or other levies on the
importation, use and re-exportation of
goods, services, or the personal
belongings and effects, including
personally-owned automobiles, for
Program use or the personal use of
individuals who are neither citizens nor
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permanent residents of Vanuatu and
who are present in Vanuatu for
purposes of carrying out the Program or
their family members, including all
charges based on the value of such
imported goods;
(3) Taxes on the income or personal
property of all individuals who are
neither citizens nor permanent residents
of Vanuatu, including income and social
security taxes of all types and all taxes
on the personal property owned by such
individuals, to the extent such income
or property are attributable to MCC
Funding; and
(4) Taxes or duties levied on the
purchase of goods or services funded by
MCC Funding, including sales taxes,
tourism taxes, value-added taxes (VAT),
or other similar charges.
(ii) This section 2.3(e) shall apply, but
is not limited to (1) any transaction,
service, activity, contract, grant or other
implementing agreement funded in
whole or in part by MCC Funding; (2)
any supplies, equipment, materials,
property or other goods (referred to
herein collectively as ‘‘goods’’) or funds
introduced into, acquired in, used or
disposed of in, or imported into or
exported from, Vanuatu by MCC, or by
any person or entity (including
contractors and grantees) as part of, or
in conjunction with, MCC Funding or
the Program; (3) any contractor, grantee,
or other organization carrying out
activities funded in whole or in part by
MCC Funding; and (4) any employee of
such organizations (the uses set forth in
clauses (1) through (4) are collectively
referred to herein as ‘‘Exempt Uses’’).
(iii) If a Tax has been levied and paid
contrary to the requirements of this
section 2.3(e), whether inadvertently,
due to the impracticality of
implementation of this provision with
respect to certain types or amounts of
taxes, or otherwise, the Government
shall refund promptly to MCC to an
account designated by MCC the amount
of such Tax in the currency of Vanuatu,
within thirty (30) days (or such other
period as may be agreed in writing by
the Parties) after the Government is
notified in writing according to
procedures agreed by the Parties,
whether by MCC or otherwise, of such
levy and tax payment; provided,
however, the Government shall apply
national funds to satisfy its obligations
under this section 2.3(e)(iii) and no
MCC Funding, Accrued Interest, or any
assets, goods, or property (real, tangible,
or intangible) purchased or financed in
whole or in part (directly or indirectly)
by MCC Funding (‘‘Program Assets’’)
may be applied by the Government in
satisfaction of its obligations under this
paragraph.
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(iv) The Parties shall memorialize in
a mutually acceptable Supplemental
Agreement or other suitable document
the mechanisms for implementing this
section 2.3(e), including (1) a formula
for determining refunds for Taxes paid,
the amount of which is not susceptible
to precise determination, (2) a
mechanism for ensuring the tax-free
importation, use, and re-exportation of
goods, services, or the personal
belongings of individuals (including all
Providers) described in paragraph (i)(2)
of this section 2.3(e), and (3) any other
appropriate Government action to
facilitate the administration of this
section 2.3(e).
(f) Alteration. The Government shall
ensure that neither MCC Funding nor
Accrued Interest or Program Assets shall
be subject to any impoundment,
rescission, sequestration or any
provision of law now or hereafter in
effect in Vanuatu that would have the
effect of requiring or allowing any
impoundment, rescission or
sequestration of any MCC Funding,
Accrued Interest or Program Asset.
(g) Liens or Encumbrances. The
Government shall ensure that no MCC
Funding, Accrued Interest or Program
Assets shall be subject to any lien,
attachment, enforcement of judgment,
pledge, or encumbrance of any kind
(each a ‘‘Lien’’), except with the prior
approval of MCC in accordance with
section 3(c) of Annex I, and in the event
of the imposition of any Lien not so
approved, the Government shall
promptly seek the release of such Lien
and shall promptly pay any amounts
owed to obtain such release; provided,
however, the Government shall satisfy
its obligations under this section 2.3(g)
at its own expense and no MCC
Funding, Accrued Interest or Program
Assets may be applied by the
Government in satisfaction of its
obligations under this section 2.3(g).
(h) Other Limitations. The
Government shall ensure that the use or
treatment of MCC Funding shall be
subject to such other limitations (i) as
required by the applicable law of the
United States of America now or
hereafter in effect during the Compact
Term, (ii) as advisable under or required
by applicable United States Government
policies now or hereafter in effect
during the Compact Term, or (iii) to
which the Parties may otherwise agree
in writing.
(i) Utilization of Goods, Services and
Works. The Government shall ensure
that any Program Assets, services,
facilities or works funded in whole or in
part (directly or indirectly) by MCC
Funding, unless otherwise agreed by the
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14301
Parties in writing, shall be used solely
in furtherance of this Compact.
(j) Notification of Applicable Laws
and Policies. MCC shall notify the
Government of any applicable United
States law or policy affecting the use or
treatment of MCC Funding, whether or
not specifically identified in this section
2.3, and shall provide to the
Government a copy of the text of any
such applicable law and a written
explanation of any such applicable
policy.
Section 2.4 Incorporation; Notice;
Clarification.
(a) The Government shall include, or
ensure the inclusion of, all of the
requirements set forth in section 2.3 in
all Supplemental Agreements to which
MCC is not a party and shall use its best
efforts to ensure that no such
Supplemental Agreement is
implemented in violation of the
prohibitions set forth in section 2.3.
(b) The Government shall ensure
notification of all of the requirements
set forth in section 2.3 to any Provider
and all relevant officers, directors,
employees, agents, representatives,
Affiliates, contractors, sub-contractors,
grantees and sub-grantees of any
Provider. The term ‘‘Provider’’ shall
mean (i) MCA-Vanuatu and any
Government Affiliate or Permitted
Designee involved in any activities in
furtherance of this Compact or (ii) any
third party who receives at least USD
$50,000 in the aggregate of MCC
Funding (other than employees of MCAVanuatu) during the Compact Term or
such other amount as the Parties may
agree in writing, whether directly from
MCC, indirectly through ReDisbursements, or otherwise.
(c) In the event the Government or
any Provider requires clarification from
MCC as to whether an activity
contemplated to be undertaken in
furtherance of this Compact violates or
may violate any provision of section 2.3,
the Government shall notify, or ensure
that such Provider notifies, MCC in
writing and provide in such notification
a detailed description of the activity in
question. In such event, the Government
shall not proceed, and shall use its best
efforts to ensure that no relevant
Provider proceeds, with such activity,
and the Government shall ensure that
no Re-Disbursements shall be made for
such activity, until MCC advises the
Government or such Provider in writing
that the activity is permissible.
Section 2.5 Refunds; Violation.
(a) Notwithstanding the availability to
MCC, or exercise by MCC of, any other
remedies, including under international
law, this Compact, or any Supplemental
Agreement:
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(i) If any amount of MCC Funding or
Accrued Interest, or any Program Asset,
is used for any purpose prohibited
under this Article II or otherwise in
violation of any of the terms and
conditions of this Compact, any
guidance in any Implementation Letter,
or any Supplemental Agreement
between the Parties, MCC may require
the Government to repay promptly to
MCC to an account designated by MCC
or to others as MCC may direct the
amount of such misused MCC Funding
or Accrued Interest, or the cash
equivalent of the value of any misused
Program Asset, in United States Dollars,
plus any interest that accrued or would
have accrued thereon, within thirty (30)
days (or such other period as may be
agreed in writing by the Parties) after
the Government is notified, whether by
MCC or otherwise, of such prohibited
use; provided, however, the Government
shall apply national funds to satisfy its
obligations under this section 2.5(a)(i)
and no MCC Funding, Accrued Interest,
nor Program Assets may be applied by
the Government in satisfaction of its
obligations under this section 2.5(a)(i);
and
(ii) If all or any portion of this
Compact is terminated or suspended
and upon the expiration of this
Compact, the Government shall, subject
to the requirements of sections 5.4(e)
and 5.4(f), refund, or ensure the refund,
to MCC to such account(s) designated by
MCC the amount of any MCC Funding,
plus any Accrued Interest, promptly,
but in no event later than thirty (30)
days after the Government receives
MCC’s request for such refund;
provided, that if this Compact is
terminated or suspended in part, MCC
may request a refund for only the
amount of MCC Funding, plus any
Accrued Interest, then allocated to the
terminated or suspended portion;
provided, further, that any refund of
MCC Funding or Accrued Interest shall
be to such account(s) as designated by
MCC.
(b) Notwithstanding any other
provision in this Compact or any other
agreement to the contrary, MCC’s right
under this section 2.5 for a refund shall
continue during the Compact Term and
for a period of (i) five (5) years thereafter
or (ii) one (1) year after MCC receives
actual knowledge of such violation,
whichever is later.
(c) If MCC determines that any
activity or failure to act violates, or may
violate, any section in this Article II,
MCC may refuse any further MCC
Disbursements for or conditioned upon
such activity, and may take any action
to prevent any Re-Disbursement related
to such activity.
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Article III. Implementation
Section 3.1 Implementation
Framework. This Compact shall be
implemented by the Parties in
accordance with this Article III and as
further specified in the Annexes and in
relevant Supplemental Agreements.
Section 3.2 Government
Responsibilities.
(a) The Government shall have
principal responsibility for oversight
and management of the implementation
of the Program (i) in accordance with
the terms and conditions specified in
this Compact and relevant
Supplemental Agreements, (ii) in
accordance with all applicable laws
then in effect in the Republic of
Vanuatu, and (iii) in a timely and costeffective manner and in conformity with
sound technical, financial and
management practices (collectively, the
‘‘Government Responsibilities’’). Unless
otherwise expressly provided, any
reference to the Government
Responsibilities or any other
responsibilities or obligations of the
Government herein shall be deemed to
apply to any Government Affiliate and
any of their respective directors,
officers, employees, contractors, subcontractors, grantees, sub-grantees,
agents or representatives.
(b) The Government shall ensure that
no person or entity shall participate in
the selection, award, administration or
oversight of a contract, grant or other
benefit or transaction funded in whole
or in part (directly or indirectly) by
MCC Funding, in which (i) the entity,
the person, members of the person’s
immediate family or household or his or
her business partners, or organizations
controlled by or substantially involving
such person or entity, has or have a
financial or other interest or (ii) the
person or entity is negotiating or has
any arrangement concerning prospective
employment, unless such person or
entity has first disclosed in writing to
the Government the conflict of interest
and, following such disclosure, the
Parties agreed in writing to proceed
notwithstanding such conflict. The
Government shall ensure that no person
or entity involved in the selection,
award, administration, oversight or
implementation of any contract, grant or
other benefit or transaction funded in
whole or in part (directly or indirectly)
by MCC Funding shall solicit or accept
from or offer to a third party or seek or
be promised (directly or indirectly) for
itself or for another person or entity any
gift, gratuity, favor or benefit, other than
items of de minimis value and otherwise
consistent with such guidance as MCC
may provide from time to time.
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(c) The Government shall not
designate any person or entity,
including any Government Affiliate, to
implement, in whole or in part, this
Compact or any Supplemental
Agreement between the Parties
(including any Government
Responsibilities or any other
responsibilities or obligations of the
Government under this Compact or any
Supplemental Agreement between the
Parties) or to exercise any rights of the
Government under this Compact or any
Supplemental Agreement between the
Parties, except as expressly provided
herein or with the prior written consent
of MCC; provided, however, the
Government may designate MCAVanuatu or, with the prior written
consent of MCC, such other mutually
acceptable persons or entities, to
implement some or all of the
Government Responsibilities or any
other responsibilities or obligations of
the Government or to exercise any rights
of the Government under this Compact
or any Supplemental Agreement
between the Parties (referred to herein
collectively as ‘‘Designated Rights and
Responsibilities’’), in accordance with
the terms and conditions set forth in
this Compact or such Supplemental
Agreement (each, a ‘‘Permitted
Designee’’). Notwithstanding any
provision herein or any other agreement
to the contrary, no such designation
shall relieve the Government of such
Designated Rights and Responsibilities,
for which the Government shall retain
ultimate responsibility. In the event that
the Government designates any person
or entity, including any Government
Affiliate, to implement any portion of
the Government Responsibilities or
other responsibilities or obligations of
the Government, or to exercise any
rights of the Government under this
Compact or any Supplemental
Agreement between the Parties, in
accordance with this section 3.2(c), then
the Government shall (i) cause such
person or entity to perform such
Designated Rights and Responsibilities
in the same manner and to the full
extent to which the Government is
obligated to perform such Designated
Rights and Responsibilities, (ii) ensure
that such person or entity does not
assign, delegate, or contract (or
otherwise transfer) any of such
Designated Rights and Responsibilities
to any other person or entity and (iii)
cause such person or entity to certify to
MCC in writing that it will so perform
such Designated Rights and
Responsibilities and will not assign,
delegate, or contract (or otherwise
transfer) any of such Designated Rights
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and Responsibilities to any person or
entity without the prior written consent
of MCC.
(d) The Government shall, upon a
request from MCC, execute, or ensure
the execution of, an assignment to MCC
of any cause of action which may accrue
to the benefit of the Government, a
Government Affiliate or any Permitted
Designee including MCA-Vanuatu in
connection with or arising out of any
activities funded in whole or in part
(directly or indirectly) by MCC Funding.
(e) The Government shall ensure that
(i) no decision of MCA-Vanuatu is
modified, supplemented, unduly
influenced or rescinded by any
governmental authority, except by a
non-appealable judicial decision or any
judicial decision which MCA-Vanuatu,
with the agreement of MCC, decides not
to appeal, and (ii) the authority of MCAVanuatu shall not be expanded,
restricted, or otherwise modified, except
in accordance with this Compact, the
Governance Agreement, or any other
Supplemental Agreement between the
Parties.
(f) The Government shall ensure that
all persons and individuals that enter
into agreements to provide goods,
services or works under the Program or
in furtherance of this Compact shall do
so in accordance with the Procurement
Guidelines and shall obtain all
necessary immigration, business and
other permits, licenses, consents and
approvals to enable them and their
personnel to fully perform under such
agreements.
Section 3.3 Government Deliveries.
The Government shall proceed, and
cause others to proceed, in a timely
manner to deliver to MCC all
Government deliveries required to be
delivered by the Government under this
Compact or any Supplemental
Agreement between the Parties, in form
and substance as set forth in this
Compact or in any such Supplemental
Agreement.
Section 3.4 Government Assurances.
The Government hereby provides the
following assurances to MCC that as of
the date this Compact is signed:
(a) The information contained in the
Proposal and any agreement, report,
statement, communication, document or
otherwise delivered or otherwise
communicated to MCC by or on behalf
of the Government on or after the date
of the submission of the Proposal (i) are
true, correct and complete in all
material respects and (ii) do not omit
any fact known to the Government that
if disclosed would (1) alter in any
material respect the information
delivered, (2) likely have a material
adverse effect on the Government’s
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ability to effectively implement, or
ensure the effective implementation of,
the Program or any Project or to
otherwise carry out its responsibilities
or obligations under or in furtherance of
this Compact, or (3) have likely
adversely affected MCC’s determination
to enter into this Compact or any
Supplemental Agreement between the
Parties;
(b) Unless otherwise disclosed in
writing to MCC, the MCC Funding made
available hereunder is in addition to the
normal and expected resources that the
Government usually receives or budgets
for the activities contemplated herein
from external or domestic sources;
(c) This Compact does not conflict
and will not conflict with any
international agreement or obligation to
which the Government is a party or by
which it is bound; and
(d) No payments have been (i)
received by any official of the
Government or any other government
body in connection with the
procurement of goods, services or works
to be undertaken or funded in whole or
in part (directly or indirectly) by MCC
Funding, except fees, taxes, or similar
payments legally established in Vanuatu
or (ii) made to any third party, in
connection with or in furtherance of this
Compact, in violation of the United
States Foreign Corrupt Practices Act of
1977, as amended (15 U.S.C. 78a et
seq.).
Section 3.5 Implementation Letters;
Supplemental Agreements.
(a) MCC may, from time to time, issue
one or more letters to furnish additional
information or guidance to assist the
Government in the implementation of
this Compact (each, an ‘‘Implementation
Letter’’). The Government shall apply
such guidance in implementing this
Compact.
(b) The details of any funding,
implementing and other arrangements
in furtherance of this Compact may be
memorialized in one or more
agreements between (i) the Government
(or any Government Affiliate or
Permitted Designee) and MCC, (ii) MCC
and/or the Government (or any
Government Affiliate or Permitted
Designee) and any third party, including
any of the Providers or Permitted
Designee or (iii) any third parties where
neither MCC nor the Government is a
party, before, on or after the Entry into
Force (each, a ‘‘Supplemental
Agreement’’). The Government shall
deliver, or cause to be delivered, to MCC
within five (5) days of its execution a
copy of any Supplemental Agreement to
which MCC is not a party.
Section 3.6 Procurement; Awards of
Assistance.
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(a) The Government shall ensure that
the procurement of all goods, services
and works by the Government or any
Provider in furtherance of this Compact
shall be consistent with the
procurement guidelines (the
‘‘Procurement Guidelines’’) reflected in
a Supplemental Agreement between
MCC and MCA-Vanuatu (the
‘‘Procurement Agreement’’), which
Procurement Guidelines shall include
the following requirements:
(i) Internationally accepted
procurement rules with open, fair and
competitive procedures are used in a
transparent manner to solicit, award and
administer contracts, grants, and other
agreements and to procure goods,
services and works;
(ii) Solicitations for goods, services,
and works shall be based upon a clear
and accurate description of the goods,
services or works to be acquired;
(iii) Contracts shall be awarded only
to qualified and capable contractors that
have the capability and willingness to
perform the contracts in accordance
with the terms and conditions of the
applicable contracts and on a cost
effective and timely basis; and
(iv) No more than a commercially
reasonable price, as determined, for
example, by a comparison of price
quotations and market prices, shall be
paid to procure goods, services, and
works.
(b) The Government shall maintain,
and shall use its best efforts to ensure
that all Providers maintain, records
regarding the receipt and use of goods,
services and works acquired in
furtherance of this Compact, the nature
and extent of solicitations of prospective
suppliers of goods, services and works
acquired in furtherance of this Compact,
and the basis of award of contracts,
grants and other agreements in
furtherance of this Compact.
(c) The Government shall use its best
efforts to ensure that information,
including solicitations, regarding
procurement, grant and other agreement
actions funded (or to be funded) in
whole or in part (directly or indirectly)
by MCC Funding shall be made publicly
available in the manner outlined in the
Procurement Guidelines or in any other
manner agreed upon by the Parties in
writing.
(d) The Government shall ensure that
no goods, services or works funded in
whole or in part (directly or indirectly)
by MCC Funding are procured pursuant
to orders or contracts firmly placed or
entered into prior to the Entry into
Force, except as the Parties may
otherwise agree in writing.
(e) The Government shall ensure that
MCA-Vanuatu and any other Permitted
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Designee follows, and uses its best
efforts to ensure that all Providers
follow, the Procurement Guidelines in
procuring (including soliciting) goods,
services and works and in awarding and
administering contracts, grants and
other agreements in furtherance of this
Compact, and shall furnish MCC
evidence of the adoption of the
Procurement Guidelines by MCAVanuatu no later than the time specified
in the Disbursement Agreement.
(f) The Government shall include, or
ensure the inclusion of, the
requirements of this section 3.6 into all
Supplemental Agreements between the
Government or any Government
Affiliate or Permitted Designee or any of
their respective directors, officers,
employees, Affiliates, contractors, subcontractors, grantees, sub-grantees,
representatives or agents, on the one
hand, and a Provider, on the other hand.
Section 3.7 Policy Performance;
Policy Reforms. In addition to the
specific policy and legal reform
commitments identified in Annex I and
the Schedules thereto, the Government
shall seek to maintain and improve its
level of performance under the policy
criteria identified in section 607 of the
Millennium Challenge Act of 2003, as
amended (the ‘‘Act’’), and the MCA
selection criteria and methodology
published by MCC pursuant to section
607 of the Act from time to time (‘‘MCA
Eligibility Criteria’’).
Section 3.8 Records and
Information; Access; Audits; Reviews.
(a) Reports and Information. The
Government shall furnish to MCC, and
shall use its best efforts to ensure that
all Providers and any other third party
receiving MCC Funding, as appropriate,
furnish to the Government (and the
Government shall provide to MCC), any
records and other information required
to be maintained under this section 3.8
and such other information, documents
and reports as may be necessary or
appropriate for the Government to
effectively carry out its obligations
under this Compact, including under
section 3.12.
(b) Government Books and Records.
The Government shall maintain, and
shall use its best efforts to ensure that
all Providers maintain, accounting
books, records, documents and other
evidence relating to this Compact
adequate to show, to the satisfaction of
MCC, without limitation, the use of all
MCC Funding, including all costs
incurred by the Government and the
Providers in furtherance of this
Compact, the receipt, acceptance and
use of goods, services and works
acquired in furtherance of this Compact
by the Government and the Providers,
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agreed-upon cost sharing requirements,
the nature and extent of solicitations of
prospective suppliers of goods, services
and works acquired by the Government
and the Providers in furtherance of this
Compact, the basis of award of
Government and other contracts and
orders in furtherance of this Compact,
the overall progress of the
implementation of the Program, and any
documents required by this Compact or
any Supplemental Agreement between
the Parties or reasonably requested by
MCC upon reasonable notice (‘‘Compact
Records’’). The Government shall
maintain, and shall use its best efforts
to ensure that all Covered Providers
maintain, Compact Records in
accordance with generally accepted
accounting principles prevailing in the
United States, or at the Government’s
option and with the prior written
approval by MCC, other accounting
principles, such as those (i) prescribed
by the International Accounting
Standards Committee (an affiliate of the
International Federation of
Accountants) or (ii) then prevailing in
Vanuatu. Compact Records shall be
maintained for at least five (5) years
after the end of the Compact Term or for
such longer period, if any, required to
resolve any litigation, claims or audit
findings or any statutory requirements.
(c) Access. At the request of MCC, the
Government, at all reasonable times,
shall permit, or cause to be permitted,
authorized representatives of MCC, the
Inspector General, the United States
Government Accountability Office, any
auditor responsible for an audit
contemplated herein or otherwise
conducted in furtherance of this
Compact, and any agents or
representatives engaged by MCC or a
Permitted Designee to conduct any
assessment, review or evaluation of the
Program, at all reasonable times the
opportunity to audit, review, evaluate or
inspect activities funded in whole or in
part (directly or indirectly) by MCC
Funding or undertaken in connection
with the Program, the utilization of
goods and services purchased or funded
in whole or in part (directly or
indirectly) by MCC Funding, and
Compact Records, including of the
Government or any Provider, relating to
activities funded or undertaken in
furtherance of, or otherwise relating to,
this Compact, and shall use its best
efforts to ensure access by MCC, the
Inspector General, the United States
Government Accountability Office or
relevant auditor, reviewer or evaluator
or their respective representatives or
agents to all relevant directors, officers,
employees, Affiliates, contractors,
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representatives and agents of the
Government or any Provider.
(d) Audits.
(i) Government Audits. The
Government shall, on at least an annual
basis and as the Parties may otherwise
agree in writing, conduct, or cause to be
conducted, financial audits of all MCC
Disbursements and Re-Disbursements
during the year since the Entry into
Force or since the prior anniversary of
the Entry into Force in accordance with
the following terms, except as the
Parties may otherwise agree in writing.
As requested by MCC in writing, the
Government shall use, or cause to be
used, or select, or cause to be selected,
an auditor named on the approved list
of auditors in accordance with the
Guidelines for Financial Audits
Contracted by Foreign Recipients (the
‘‘Audit Guidelines’’) issued by the
Inspector General of the United States
Agency for International Development
(the ‘‘Inspector General’’), and as
approved by MCC, to conduct such
annual audits. Such audits shall be
performed in accordance with such
Audit Guidelines and be subject to
quality assurance oversight by the
Inspector General in accordance with
such Audit Guidelines. An audit shall
be completed no later than 90 days after
the first anniversary of the Entry into
Force of this Compact and no later than
90 days after each anniversary of the
Entry into Force of this Compact
thereafter, or such other period as the
Parties may otherwise agree in writing.
(ii) Audits of U.S. Entities. The
Government shall ensure that
Supplemental Agreements between the
Government or any Provider, on the one
hand, and a United States nonprofit
organization, on the other hand, state
that the United States organization is
subject to the applicable audit
requirements contained in OMB
Circular A–133, notwithstanding any
other provision of this Compact to the
contrary. The Government shall ensure
that Supplemental Agreements between
the Government or any Provider, on the
one hand, and a United States for-profit
Covered Provider, on the other hand,
state that the United States organization
is subject to audit by the cognizant
United States Government agency,
unless the Government and MCC agree
otherwise in writing.
(iii) Audit Plan. The Government
shall submit, or cause to be submitted,
to MCC, no later than twenty (20) days
prior to the date of its adoption, in form
and substance satisfactory to MCC, a
plan, in accordance with the Audit
Guidelines, for the audit of the
expenditures of any Covered Providers,
which audit plan, in the form and
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substance as approved by MCAVanuatu, the Government shall adopt,
or cause to be adopted, no later than
sixty (60) days prior to the end of the
first anniversary of the Entry into Force
of this Compact or prior to the end of
the first period to be audited.
(iv) Covered Provider. A ‘‘Covered
Provider’’ is (1) a non-United States
Provider that receives (other than
pursuant to a direct contract or
agreement with MCC) USD $300,000 or
more of MCC Funding in any MCAVanuatu fiscal year or any other nonUnited States person or entity that
receives (directly or indirectly) USD
$300,000 or more of MCC Funding from
any Provider in such fiscal year or (2)
any United States Provider that receives
(other than pursuant to a direct contract
or agreement with MCC) USD $500,000
or more of MCC Funding in any MCAVanuatu fiscal year or any other United
States person or entity that receives
(directly or indirectly) USD $500,000 or
more of MCC Funding from any
Provider in such fiscal year.
(v) Corrective Actions. The
Government shall use its best efforts to
ensure that Covered Providers take,
where necessary, appropriate and timely
corrective actions in response to audits,
consider whether a Covered Provider’s
audit necessitates adjustment of its own
records, and require each such Covered
Provider to permit independent auditors
to have access to its records and
financial statements as necessary.
(vi) Audit Reports. The Government
shall furnish, or use its best efforts to
cause to be furnished, to MCC an audit
report in a form satisfactory to MCC for
each audit required by this section 3.8,
other than audits arranged for by MCC,
no later than 90 days after the end of the
period under audit, or such other time
as may be agreed by the Parties from
time to time.
(vii) Other Providers. For Providers
who receive MCC Funding under this
Compact pursuant to direct contracts or
agreements with MCC, MCC shall
include appropriate audit requirements
in such contracts or agreements and
shall, on behalf of the Government,
unless otherwise agreed by the Parties,
conduct the follow-up activities with
regard to the audit reports furnished
pursuant to such requirements.
(viii) Audit by MCC. MCC retains the
right to perform, or cause to be
performed, the audits required under
this section 3.8 by utilizing MCC
Funding or other resources available to
MCC for this purpose, and to audit,
conduct a financial review, or otherwise
ensure accountability of any Provider or
any other third party receiving MCC
Funding, regardless of the requirements
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of this section 3.8. MCC will provide
notice to the Government of its intent to
exercise such right.
(e) Application to Providers. The
Government shall include, or ensure the
inclusion of, at a minimum, the
requirements of:
(i) Paragraphs (a), (b), (c), (d)(ii),
(d)(iii), (d)(v), (d)(vi), and (d)(viii) of this
section 3.8 into all Supplemental
Agreements between the Government,
any Government Affiliate, any Permitted
Designee or any of their respective
directors, officers, employees, Affiliates,
contractors, sub-contractors, grantees,
sub-grantees, representatives or agents
(each, a ‘‘Government Party’’), on the
one hand, and a Covered Provider that
is not a non-profit organization
domiciled in the United States, on the
other hand;
(ii) Paragraphs (a), (b), (c), (d)(ii), and
(d)(viii) of this section 3.8 into all
Supplemental Agreements between a
Government Party and a Provider that
does not meet the definition of a
Covered Provider; and
(iii) Paragraphs (a), (b), (c), (d)(ii),
(d)(v) and (d)(viii) of this section 3.8
into all Supplemental Agreements
between a Government Party and a
Covered Provider that is a non-profit
organization domiciled in the United
States.
(f) Reviews or Evaluations. The
Government shall conduct, or cause to
be conducted, such performance
reviews, data quality reviews,
environmental audits, or program
evaluations during the Compact Term or
otherwise and in accordance with the
M&E Plan or as otherwise agreed in
writing by the Parties.
(g) Cost of Audits, Reviews or
Evaluations. MCC Funding may be used
to fund the costs of any Audits, reviews
or evaluations required under this
Compact, including as reflected on
Exhibit A to Annex II, and in no event
shall the Government be responsible for
the costs of any such Audits, reviews or
evaluations from financial sources other
than MCC Funding.
Section 3.9 Insurance. The
Government shall, to MCC’s satisfaction,
insure or cause to be insured all
Program Assets and shall obtain or
cause to be obtained such other
appropriate insurance and other
protections to cover against risks or
liabilities associated with the operations
of the Program, including by requiring
Providers to obtain adequate insurance
and post adequate performance bonds or
other guarantees. MCA-Vanuatu or the
Implementing Entity, as applicable,
shall be named as the payee on any such
insurance and the beneficiary of any
such guarantee, including performance
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bonds. MCC and, to the extent it is not
named as the insured party, MCAVanuatu shall be named as additional
insured on any such insurance or other
guarantee, to the extent permissible
under applicable laws. The Government
shall ensure that any proceeds from
claims paid under such insurance or
any other form of guarantee shall be
used to replace or repair any loss of
Program Assets or to pursue the
procurement of the covered goods,
services or works; provided, however, at
MCC’s election, such proceeds shall be
deposited in a Permitted Account as
designated by MCA-Vanuatu and
acceptable to MCC or otherwise as
directed by MCC. To the extent MCAVanuatu is held liable under any
indemnification or other similar
provision of any agreement between
MCA-Vanuatu, on the one hand, and
any other Provider or other third party,
on the other hand, the Government shall
pay in full on behalf of MCA-Vanuatu
any such obligation; provided, further,
the Government shall apply national
funds to satisfy its obligations under
this section 3.9 and no MCC Funding,
Accrued Interest, or Program Asset may
be applied by the Government in
satisfaction of its obligations under this
section 3.9.
Section 3.10 Domestic
Requirements. The Government shall
proceed in a timely manner to seek any
required ratification of this Compact or
similar domestic requirement, which
process the Government shall initiate
promptly after the conclusion of this
Compact. Notwithstanding anything to
the contrary in this Compact, this
section 3.10 shall provisionally apply
prior to the Entry into Force.
Section 3.11 No Conflict. The
Government shall undertake not to enter
into any agreement in conflict with this
Compact or any Supplemental
Agreement during the Compact Term.
Section 3.12 Reports. The
Government shall provide, or cause to
be provided, to MCC at least on each
anniversary of the Entry Into Force and
otherwise within thirty (30) days of any
written request by MCC, or as otherwise
agreed in writing by the Parties, the
following information:
(a) The name of each entity to which
MCC Funding has been provided;
(b) The amount of MCC Funding
provided to such entity;
(c) A description of the Program and
each Project funded in furtherance of
this Compact, including:
(i) A statement of whether the
Program or any Project was solicited or
unsolicited; and
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(ii) A detailed description of the
objectives and measures for results of
the Program or Project;
(d) The progress made by Vanuatu
toward achieving the Compact Goal and
Project Objectives;
(e) A description of the extent to
which MCC Funding has been effective
in helping Vanuatu to achieve the
Compact Goal and Project Objectives;
(f) A description of the coordination
of MCC Funding with other United
States foreign assistance and other
related trade policies;
(g) A description of the coordination
of MCC Funding with assistance
provided by other donor countries,
subject to the relevant protocols
governing such assistance;
(h) Any report, document or filing
that the Government, any Government
Affiliate or any Permitted Designee
submits to any government body in
connection with this Compact;
(i) Any report or document required
to be delivered to MCC under the
Environmental Guidelines, any Audit
Plan, or any component of the
Implementation Plan; and
(j) Any other report, document or
information requested by MCC or
required by this Compact or any
Supplemental Agreement between the
Parties.
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Article IV. Conditions Precedent;
Deliveries
Section 4.1 Conditions Prior to the
Entry into Force and Deliveries. As
conditions precedent to the Entry into
Force, the Parties shall satisfy the
conditions set forth in this section 4.1.
(a) The Government (or a mutually
acceptable Government Affiliate) and
MCC shall execute a Disbursement
Agreement, which agreement shall be in
full force and effect as of the Entry into
Force.
(b) The Government (or a mutually
acceptable Government Affiliate) and
MCC shall execute one or more of the
Supplemental Agreements identified in
Exhibit B attached hereto, which
agreements shall be in full force and
effect as of the Entry into Force, or
execute one or more term sheets that set
forth the material and principal terms
and conditions that will be included in
any such Supplemental Agreement that
has not been entered into as of the Entry
into Force (the ‘‘Supplemental
Agreement Term Sheets’’).
(c) The Government (or mutually
acceptable Government Affiliate) and
MCC shall execute a Procurement
Agreement, which agreement shall be in
full force and effect as of the Entry into
Force.
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(d) The Government shall deliver a
written statement as to the incumbency
and specimen signature of the Principal
Representative and each Additional
Representative executing any document
under this Compact, such written
statement to be signed by a duly
authorized official of the Government
other than the Principal Representative
or any such Additional Representative.
(e) The Government shall deliver a
certificate signed and dated by the
Principal Representative of the
Government certifying:
(i) That the Government has
completed all of its domestic
requirements for this Compact to be
fully enforceable under Vanuatu law;
and
(ii) That attached thereto are true,
correct and complete copies of any
decree, legislation, regulation or other
governmental document relating to its
domestic requirements for this Compact
to enter into force, which MCC may post
on its Web site or otherwise make
publicly available.
(f) MCC shall deliver a certificate
signed and dated by the Principal
Representative of MCC certifying that
MCC has completed its domestic
requirements for this Compact to enter
into force.
(g) MCC shall deliver a written
statement as to the incumbency and
specimen signature of the Principal
Representative and each Additional
Representative executing any document
under this Compact such written
statement to be signed by a duly
authorized officer of MCC other than the
Principal Representative or any such
Additional Representative.
Section 4.2
Conditions Precedent
to MCC Disbursements or ReDisbursements. Prior to, and as
condition precedent to, any MCC
Disbursement or Re-Disbursement, the
Government shall satisfy, or ensure the
satisfaction of, all applicable conditions
precedent in the Disbursement
Agreement.
Article V. Final Clauses
Section 5.1 Communications. Unless
otherwise expressly stated in this
Compact or otherwise agreed in writing
by the Parties, any notice, certificate,
request, report, document or other
communication required, permitted, or
submitted by either Party to the other
under this Compact shall be: (a) In
writing; (b) in English; and (c) deemed
duly given: (i) Upon personal delivery
to the Party to be notified; (ii) when sent
by confirmed facsimile or electronic
mail, if sent during normal business
hours of the recipient Party, if not, then
on the next business day; or (iii) two (2)
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business days after deposit with an
internationally recognized overnight
courier, specifying next day delivery,
with written verification of receipt to
the Party to be notified at the address
indicated below, or at such other
address as such Party may designate:
To MCC:
Millennium Challenge Corporation,
Attention: Vice President of Operations,
(with a copy to the Vice President and
General Counsel), 875 Fifteenth Street,
NW., Washington, DC 20005, United
States of America, Facsimile: (202) 521–
3700, E-mail: VPOperations@mcc.gov
(Vice President of Operations);
VPGeneralCounsel@mcc.gov (Vice
President and General Counsel)
To the Government:
Office of the Prime Minister,
Attention: Director-General, Office of
the Prime Minister, PMB 9053 Port Vila,
Republic of Vanuatu, Facsimile: (678)
26708.
Notwithstanding the foregoing, any
audit report delivered pursuant to
section 3.8, if delivered by facsimile or
electronic mail, shall be followed by an
original in overnight express mail. This
section 5.1 shall not apply to the
exchange of letters contemplated in
section 1.3 or any amendments under
section 5.3.
Section 5.2 Representatives. Unless
otherwise agreed in writing by MCC, for
all purposes relevant to this Compact,
the Government shall be represented by
the Director-General of the Prime
Minister’s Office, or in his absence the
relevant designated Additional
Representative, and MCC shall be
represented by the individual holding
the position of, or acting as, Vice
President, Department of Operations
(each, a ‘‘Principal Representative’’),
each of whom, by written notice, may
designate one or more additional
representatives (each, an ‘‘Additional
Representative’’) for all purposes other
than signing amendments to this
Compact. The names of the Principal
Representative and any Additional
Representative of each of the Parties
shall be provided, with specimen
signatures, to the other Party, and the
Parties may accept as duly authorized
any instrument signed by such
representatives relating to the
implementation of this Compact, until
receipt of written notice of revocation of
their authority. MCC may change its
Principal Representative to a new
representative of equivalent or higher
rank upon written notice to the
Government, which notice shall include
the specimen signature of the new
Principal Representative.
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Section 5.3 Amendments. The
Parties may amend this Compact only
by a written agreement signed by the
Principal Representatives of the Parties
and subject to the respective domestic
approval requirements to which this
Compact was subject.
Section 5.4 Termination;
Suspension.
(a) Subject to section 2.5 and
paragraphs (e) through (h) of this section
5.4, either Party may terminate this
Compact in its entirety by giving the
other Party thirty (30) days’ written
notice.
(b) Notwithstanding any other
provision of this Compact, including
section 2.1, or any Supplemental
Agreement between the Parties, MCC
may suspend or terminate this Compact
or MCC Funding, in whole or in part,
and any obligation or sub-obligation
related thereto, upon giving the
Government written notice, if MCC
determines, in its sole discretion that:
(i) Any use or proposed use of MCC
Funding or Program Assets or continued
implementation of the Compact would
be in violation of applicable law or
United States Government policy,
whether now or hereafter in effect;
(ii) The Government, any Provider, or
any other third party receiving MCC
Funding or using Program Assets is
engaged in activities that are contrary to
the national security interests of the
United States;
(iii) The Government or any Permitted
Designee has committed an act or
omission or an event has occurred that
would render Vanuatu ineligible to
receive United States economic
assistance under Part I of the Foreign
Assistance Act of 1961, as amended (22
U.S.C 2151 et seq.), by reason of the
application of any provision of the
Foreign Assistance Act of 1961 or any
other provision of law;
(iv) The Government or any Permitted
Designee has engaged in a pattern of
actions or omissions inconsistent with
the MCA Eligibility Criteria, or there has
occurred a significant decline in the
performance of Vanuatu on one or more
of the eligibility indicators contained
therein;
(v) The Government or any Provider
has materially breached one or more of
its assurances or any covenants,
obligations or responsibilities under this
Compact or any Supplemental
Agreement;
(vi) An audit, review, report or any
other document or other evidence
reveals that actual expenditures for the
Program or any Project or any Project
Activity were greater than the projected
expenditure for such activities
identified in the applicable Detailed
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Financial Plan or are projected to be
greater than projected expenditures for
such activities;
(vii) If the Government (1) materially
reduces the allocation in its national
budget or any other Government budget
of the normal and expected resources
that the Government would have
otherwise received or budgeted, from
external or domestic sources, for the
activities contemplated herein; (2) fails
to contribute or provide the amount,
level, type and quality of resources
required to effectively carry out the
Government Responsibilities or any
other responsibilities or obligations of
the Government under or in furtherance
of this Compact; or (3) fails to pay any
of its obligations as required under this
Compact or any Supplemental
Agreement, including such obligations
which shall be paid solely out of
national funds;
(viii) If the Government, any Provider,
or any other third party receiving MCC
Funding or using Program Assets, or any
of their respective directors, officers,
employees, Affiliates, contractors, subcontractors, grantees, sub-grantees,
representatives or agents, is found to
have been convicted of a narcotics
offense or to have been engaged in drug
trafficking;
(ix) Any MCC Funding or Program
Assets are applied (directly or
indirectly) to the provision of resources
and support to, individuals and
organizations associated with terrorism,
sex trafficking or prostitution;
(x) An event or condition of any
character has occurred that: (1)
Materially and adversely affects, or is
likely to materially and adversely affect,
the ability of the Government or any
other party to effectively implement, or
ensure the effective implementation of,
the Program or any Project or to
otherwise carry out its responsibilities
or obligations under or in furtherance of
this Compact or any Supplemental
Agreement or to perform its obligations
under or in furtherance of this Compact
or any Supplemental Agreement or to
exercise its rights thereunder; (2) makes
it improbable that the Project Objectives
will be achieved during the Compact
Term; (3) materially and adversely
affects the Program Assets or any
Permitted Account; or (4) constitutes
misconduct injurious to MCC, or
constitutes a fraud or a felony, by the
Government, any Government Affiliate,
Permitted Designee or Provider, or any
officer, director, employee, agent,
representative, Affiliate, contractor,
grantee, subcontractor or sub-grantee
thereof;
(xi) The Government or any Permitted
Designee or Provider has taken any
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action or omission or engaged in any
activity in violation of, or inconsistent
with, the requirements of this Compact
or any Supplemental Agreement to
which the Government or any Permitted
Designee or Provider is a party;
(xii) There has occurred a failure to
meet a condition precedent or series of
conditions precedent or any other
requirements or conditions in
connection with MCC Disbursement as
set out in and in accordance with any
Supplemental Agreement between the
Parties; or
(xiii) Any MCC Funding, Accrued
Interest or Program Asset becomes
subject to a Lien without the prior
approval of MCC, and the Government
fails to (i) obtain the release of such Lien
and (ii) pay solely with national funds
(and not with MCC Funding, Accrued
Interest or Program Assets) any amounts
owed to obtain such release, all within
30 days after the imposition of such
Lien.
(c) MCC may reinstate any suspended
or terminated MCC Funding under this
Compact or any Supplemental
Agreement if MCC determines, in its
sole discretion, that the Government or
other relevant party has demonstrated a
commitment to correcting each
condition for which MCC Funding was
suspended or terminated.
(d) The authority to suspend or
terminate this Compact or any MCC
Funding under this section 5.4 includes
the authority to suspend or terminate
any obligations or sub-obligations
relating to MCC Funding under any
Supplemental Agreement without any
liability to MCC whatsoever.
(e) All MCC Disbursements and ReDisbursements shall cease upon
expiration, suspension, or termination
of this Compact; provided, however, (i)
reasonable expenditures for goods,
services and works that are properly
incurred under or in furtherance of this
Compact before expiration, suspension
or termination of the Compact and (ii)
reasonable expenditures for goods and
services (including administrative
expenses) properly incurred within one
hundred twenty (120) days after the
expiration, suspension or termination of
the Compact in connection with the
winding up of the Program may be paid
from MCC Funding, provided that in the
case of clauses (i) and (ii) the request for
such payment is (A) properly submitted
within ninety (90) days after the
expiration, suspension or termination of
the Compact and (B) subject to the prior
written consent of MCC.
(f) Except for payments which the
Parties are committed to make under
noncancelable commitments entered
into with third parties before such
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suspension or termination, the
suspension or termination of this
Compact or any Supplemental
Agreement, in whole or in part, shall
suspend, for the period of the
suspension, or terminate, or ensure the
suspension or termination of, as
applicable, any obligation or subobligation of the Parties to provide
financial or other resources under this
Compact or any Supplemental
Agreement, or to the suspended or
terminated portion of this Compact or
such Supplemental Agreement, as
applicable. In the event of such
suspension or termination, the
Government shall use its best efforts to
suspend or terminate, or ensure the
suspension or termination of, as
applicable, all such noncancelable
commitments related to the suspended
or terminated MCC Funding. Any
portion of this Compact or any such
Supplemental Agreement that is not
suspended or terminated shall remain in
full force and effect.
(g) Upon the full or partial suspension
or termination of this Compact or any
MCC Funding, MCC may, at its expense,
direct that title to Program Assets be
transferred to MCC if such Program
Assets are in a deliverable state;
provided, for any Program Asset(s)
partially purchased or funded (directly
or indirectly) by MCC Funding, the
Government shall reimburse to a United
States Government account designated
by MCC the cash equivalent of the
portion of the value of such Program
Asset(s).
(h) Prior to the expiration of this
Compact or upon the termination of this
Compact, the Parties shall consult in
good faith with a view to reaching an
agreement in writing on (i) the postCompact Term treatment of MCAVanuatu, (ii) the process for ensuring
the refunds of MCC Disbursements that
have not yet been released from a
Permitted Account through a valid ReDisbursement nor otherwise committed
in accordance with section 5.4(e), or (iii)
any other matter related to the winding
up of the Program and this Compact.
Section 5.5 Privileges and
Immunities. MCC is an agency of the
Government of the United States of
America and its personnel assigned to
Vanuatu will be notified pursuant to the
Vienna Convention on Diplomatic
Relations as members of the mission of
the Embassy of the United States of
America. The Government shall ensure
that any personnel of MCC, including
individuals detailed to or contracted by
MCC, and the members of the families
of such personnel, while such personnel
are performing duties in Vanuatu, shall
enjoy the privileges and immunities that
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are enjoyed by a member of the United
States Foreign Service, or the family of
a member of the United States Foreign
Service, as appropriate, of comparable
rank and salary of such personnel, if
such personnel or the members of the
families of such personnel are not a
national of, or permanently resident in
Vanuatu.
Section 5.6 Attachments. Any
annex, schedule, exhibit, table,
appendix or other attachment expressly
attached hereto (collectively, the
‘‘Attachments’’) is incorporated herein
by reference and shall constitute an
integral part of this Compact.
Section 5.7 Inconsistencies.
(a) Conflicts or inconsistencies
between any parts of this Compact shall
be resolved by applying the following
descending order of precedence:
(i) Articles I through V; and
(ii) Any Attachments.
(b) In the event of any conflict or
inconsistency between this Compact
and any Supplemental Agreement
between the Parties, the terms of this
Compact shall prevail. In the event of
any conflict or inconsistency between
any Supplemental Agreement between
the Parties and any other Supplemental
Agreement, the terms of the
Supplemental Agreement between the
Parties shall prevail. In the event of any
conflict or inconsistency between
Supplemental Agreements between any
parties, the terms of a more recently
executed Supplemental Agreement
between such parties shall take
precedence over a previously executed
Supplemental Agreement between such
parties. In the event of any
inconsistency between a Supplemental
Agreement between the Parties and any
component of the Implementation Plan,
the terms of the relevant Supplemental
Agreement shall prevail.
Section 5.8 Indemnification. The
Government shall indemnify and hold
MCC and any MCC officer, director,
employee, Affiliate, contractor, agent or
representative (each of MCC and any
such persons, an ‘‘MCC Indemnified
Party’’) harmless from and against, and
shall compensate, reimburse and pay
such MCC Indemnified Party for, any
liability or other damages which (i) are
(directly or indirectly) suffered or
incurred by such MCC Indemnified
Party, or to which any MCC Indemnified
Party may otherwise become subject,
regardless of whether or not such
damages relate to any third-party claim,
and (ii) arise from or as a result of the
negligence or willful misconduct of the
Government, any Government Affiliate,
or any Permitted Designee, (directly or
indirectly) connected with, any
activities (including acts or omissions)
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undertaken in furtherance of this
Compact; provided, however, the
Government shall apply national funds
to satisfy its obligations under this
Section 5.8 and no MCC Funding,
Accrued Interest, or Program Asset may
be applied by the Government in
satisfaction of its obligations under this
section 5.8.
Section 5.9 Headings. The section
and subsection headings used in this
Compact are included for convenience
only and are not to be considered in
construing or interpreting this Compact.
Section 5.10 Interpretation;
Definitions.
(a) Any reference to the term
‘‘including’’ in this Compact shall be
deemed to mean ‘‘including without
limitation’’ except as expressly provided
otherwise.
(b) Any reference to activities
undertaken ‘‘in furtherance of this
Compact’’ or similar language shall
include activities undertaken by the
Government, any Government Affiliate
or Permitted Designee, any Provider or
any other third party receiving MCC
Funding involved in carrying out the
purposes of this Compact or any
Supplemental Agreement, including
their respective directors, officers,
employees, Affiliates, contractors, subcontractors, grantees, sub-grantees,
representatives or agents, whether
pursuant to the terms of this Compact,
any Supplemental Agreement or
otherwise.
(c) References to ‘‘day’’ or ‘‘days’’
shall be calendar days unless provided
otherwise.
(d) The term ‘‘United States
Government’’ shall, for the purposes of
this Compact, mean any branch, agency,
bureau, government corporation,
government chartered entity or other
body of the Federal government of the
United States.
(e) The term ‘‘Affiliate’’ of a party is
a person or entity that controls, is
controlled by, or is under the same
control as the party in question, whether
by ownership or by voting, financial or
other power or means of influence.
(f) The term ‘‘Government Affiliate’’ is
an Affiliate, ministry, bureau,
department, agency, government
corporation or any other entity
chartered or established by the
Government.
(g) References to any Affiliate or
Government Affiliate herein shall
include any of their respective directors,
officers, employees, affiliates,
contractors, sub-contractors, grantees,
sub-grantees, representatives, and
agents.
(h) Any references to ‘‘Supplemental
Agreement between the Parties’’ shall
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mean any agreement between MCC on
the one hand, and the Government or
any Government Affiliate or Permitted
Designee on the other hand.
Section 5.11 Signatures. Other than
a signature to this Compact or an
amendment to this Compact pursuant to
section 5.3, a signature delivered by
facsimile or electronic mail in
accordance with section 5.1 shall be
deemed an original signature, and the
Parties hereby waive any objection to
such signature or to the validity of the
underlying document, certificate,
notice, instrument or agreement on the
basis of the signature’s legal effect,
validity or enforceability solely because
it is in facsimile or electronic form.
Such signature shall be accepted by the
receiving Party as an original signature
and shall be binding on the Party
delivering such signature.
Section 5.12 Designation. MCC may
designate any Affiliate, agent, or
representative to implement, in whole
or in part, its obligations, and exercise
any of its rights, under this Compact or
any Supplemental Agreement between
the Parties.
Section 5.13 Survival. Any
Government Responsibilities,
covenants, or obligations or other
responsibilities to be performed by the
Government after the Compact Term
shall survive the termination or
expiration of this Compact and expire in
accordance with their respective terms.
Notwithstanding the termination or
expiration of this Compact, the
following provisions shall remain in
force: Sections 2.2, 2.3, 2.5, 3.2, 3.3, 3.4,
3.5, 3.8, 3.9 (for one year), 3.12, 5.1, 5.2,
5.4(d), 5.4(e) (for sixty days), 5.4(f),
5.4(g), 5.4(h), 5.5, 5.6, 5.7, 5.8, 5.9, 5.10,
5.11, 5.12, this section 5.13, 5.14, and
5.15.
Section 5.14 Consultation. Either
Party may, at any time, request
consultations relating to the
interpretation or implementation of this
Compact or any Supplemental
Agreement between the Parties. Such
consultations shall begin at the earliest
possible date. The request for
consultations shall designate a
representative for the requesting Party
with the authority to enter consultations
and the other Party shall endeavor to
designate a representative of equal or
comparable rank. If such representatives
are unable to resolve the matter within
20 days from the commencement of the
consultations then each Party shall
forward the consultation to the
Principal Representative or such other
representative of comparable or higher
rank. The consultations shall last no
longer than 45 days from date of
commencement. If the matter is not
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resolved within such time period, either
Party may terminate this Compact
pursuant to section 5.4(a). The Parties
shall enter any such consultations
guided by the principle of achieving the
Compact Goal in a timely and costeffective manner.
Section 5.15 MCC Status. MCC is a
United States government corporation
acting on behalf of the United States
Government in the implementation of
this Compact. As such, MCC has no
liability under this Compact, is immune
from any action or proceeding arising
under or relating to this Compact and
the Government hereby waives and
releases all claims related to any such
liability. In matters arising under or
relating to this Compact, MCC is not
subject to the jurisdiction of the courts
or other body of Vanuatu.
Section 5.16 Language. This
Compact is prepared in English and in
the event of any ambiguity or conflict
between this official English version
and any other version translated into
any language for the convenience of the
Parties, this official English version
shall prevail.
Section 5.17 Publicity; Information
and Marking. The Government shall
give appropriate publicity to this
Compact as a program to which the
United States, through MCC, has
contributed, including by posting this
Compact, and any amendments thereto,
on the MCA-Vanuatu Web site,
identifying Program activity sites, and
marking Program Assets; provided, any
announcement, press release or
statement regarding MCC or the fact that
MCC is funding the Program or any
other publicity materials referencing
MCC, including the publicity described
in this section 5.17, shall be subject to
prior approval by MCC and shall be
consistent with any instructions
provided by MCC from time to time in
relevant Implementation Letters. Upon
the termination or expiration of this
Compact, MCC may request the removal
of, and the Government shall, upon
such request, remove, or cause the
removal of, any such markings and any
references to MCC in any publicity
materials or on the MCA-Vanuatu Web
site.
In Witness Whereof, the undersigned,
duly authorized by their respective
governments, have signed this Compact
this 2nd day of March, 2006 and this
Compact shall enter into force in
accordance with section 1.3.
Done at Port Vila, Vanuatu in the
English language.
For the United States of America,
acting through the Millennium
Challenge Corporation, Name: Charles
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O. Sethness, Title: Vice President,
Accountability.
For the Government of The Republic
of Vanuatu, Name: Ham Lini, Title:
Prime Minister of the Republic of
Vanuatu.
Exhibit A—Definitions
The following compendium of
capitalized terms that are used herein is
provided for the convenience of the
reader. To the extent that there is a
conflict or inconsistency between the
definitions in this Exhibit A and the
definitions elsewhere in the text of this
Compact, the definition elsewhere in
this Compact shall prevail over the
definition in this Exhibit A.
Accrued Interest is any interest or
other earnings on MCC Funding that
accrues or are earned.
Act means the Millennium Challenge
Act of 2003, as amended.
ADB means the Asian Development
Bank.
Additional Representative is a
representative as may be designated by
a Principal Representative, by written
notice, for all purposes other than
signing amendments to this Compact.
Affiliate means the affiliate of a party,
which is a person or entity that controls,
is controlled by, or is under the same
control as the party in question, whether
by ownership or by voting, financial or
other power or means of influence.
References to Affiliate herein shall
include any of their respective directors,
officers, employees, affiliates,
contractors, sub-contractors, grantees,
sub-grantees, representatives, and
agents.
Attachments means any annex,
schedule, exhibit, table, appendix or
other attachment to this Compact.
Audit Guidelines means the
‘‘Guidelines for Financial Audits
Contracted by Foreign Recipients’’
issued by the Inspector General of the
United States Agency for International
Development.
Auditor means the auditor(s) as
defined in, and engaged pursuant to,
section 3(h) of Annex I and as required
by section 3.8(d) of the Compact.
Auditor/Reviewer Agreement is an
agreement between MCA-Vanuatu and
each Auditor or Reviewer, in form and
substance satisfactory to MCC, that sets
forth the roles and responsibilities of the
Auditor or Reviewer with respect to the
audit, review or evaluation, including
access rights, required form and content
of the applicable audit, review or
evaluation and other appropriate terms
and conditions such as payment of the
Auditor or Reviewer.
AusAID means the Australian Agency
for International Development.
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Bank(s) means each individually and
collectively, any bank holding an
account referenced in section 4(d) of
Annex I.
Bank Agreement means an agreement
between MCA-Vanuatu and a Bank,
satisfactory to MCC, that sets forth the
signatory authority, access rights, antimoney laundering and anti-terrorist
financing provisions, and other terms
related to the Permitted Account.
Beneficiaries means the intended
beneficiaries identified in accordance
with section 3 of Schedule 1 of Annex
I.
Chair means the Chair of the Steering
Committee.
Compact means the Millennium
Challenge Compact made between the
United States of America, acting
through the Millennium Challenge
Corporation, and the Government of the
Republic of Vanuatu.
Compact Goal means reducing
poverty and increasing incomes in rural
areas by stimulating economic activity
in the tourism and agricultural sectors
through the improvement of transport
infrastructure in Vanuatu.
Compact Records shall have the
meaning set forth in section 3.8(b).
Compact Reports means any
documents or reports delivered to MCC
in satisfaction of the Government’s
reporting requirements under this
Compact or any Supplemental
Agreement between the Parties.
Compact Term means the term for
which this Compact shall remain in
force, which shall be the five (5) year
period from the Entry into Force, unless
earlier terminated in accordance with
section 5.4.
Covered Provider shall have the
meaning set forth in section 3.8(d)(iv).
Designated Rights and
Responsibilities shall have the meaning
set forth in section 3.2(c).
Detailed Financial Plan means the
financial plans that detail the annual
and quarterly budget and projected cash
requirements for the Program (including
administrative costs) and the Transport
Infrastructure Project, projected both on
a commitment and cash requirement
basis.
Disbursement Agreement is a
Supplemental Agreement that MCC, the
Government (or a mutually acceptable
Government Affiliate) and MCAVanuatu shall enter into that (i) further
specifies the terms and conditions of
any MCC Disbursements and ReDisbursements, (ii) is in a form and
substance mutually satisfactory to the
Parties, and (iii) is signed by the
Principal Representative of each Party
(or in the case of the Government, the
principal representative of the
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applicable Government Affiliate) and of
MCA-Vanuatu.
EMPs means environmental
management plans.
Entry into Force means the entry into
force of this Compact, which shall be on
the date of the last letter in an exchange
of letters between the Principal
Representatives of each Party
confirming that all conditions set forth
in section 4.1 have been satisfied by the
Government and MCC.
Environmental Guidelines means the
environmental guidelines delivered by
MCC to the Government or posted by
MCC on its Web site or otherwise
publicly made available, as such
guidelines may be amended from time
to time.
Equipment Subproject Activity shall
have the meaning set forth in section
2(b)(i) of Schedule 1 of Annex 1.
ESI Officer means Environmental and
Social Impact Officer.
EU means the European Union.
Evaluation Component means the
component of the M&E Plan that
specifies a methodology, process and
timeline for the evaluation of planned,
ongoing, or completed Project Activities
to determine their efficiency,
effectiveness, impact and sustainability.
Exempt Uses shall have the meaning
set forth in section 2.3(e)(ii).
Final Evaluation shall have the
meaning set forth in section 3(a) of
Annex III.
Financial Plan means collectively, the
Multi-Year Financial Plan, each
Detailed Financial Plan, and each
amendment, supplement or other
change thereto.
Financial Plan Annex means Annex II
of this Compact, which summarizes the
Multi-Year Financial Plan for the
Program.
Fiscal Accountability Plan shall have
the meaning set forth in section 4(c) of
Annex I.
Fiscal Agent shall have the mean set
forth in section 3(g) of Annex I.
Fiscal Agent Agreement is an
agreement between MCA-Vanuatu and
each Fiscal Agent, in form and
substance satisfactory to MCC, that sets
forth the roles and responsibilities of the
Fiscal Agent and other appropriate
terms and conditions, such as payment
of the Fiscal Agent.
GDP means gross domestic product.
Goal Indicator means the Indicator in
the M&E Plan that will measure results
for the overall Program. A table of
Compact Goal Indicator definitions is
set forth at section 2(a)(i) of Annex III.
Governance Agreement is the
governance agreement to be entered into
by the Government and MCA-Vanuatu
and, at MCC’s option, MCC, that, in
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addition to the Governing Documents,
sets forth the terms and conditions to
govern MCA-Vanuatu.
Governing Documents shall have the
meaning set forth in section 3(c)(i)(10)
of Annex I.
Government means the Government of
the Republic of Vanuatu.
Government Affiliate is an Affiliate,
ministry, bureau, department, agency,
government corporation or any other
entity chartered or established by the
Government. References to Government
Affiliate shall include any of their
respective directors, officers, employees,
affiliates, contractors, sub-contractors,
grantees, sub-grantees, representatives,
and agents.
Government Members are the
government members identified in
section 3(d)(ii)(2)(A)(i–x) of Annex I
serving as voting members on the
Steering Committee, and any
replacements thereof in accordance with
section 3(d)(ii)(2)(A) of Annex I.
Government Party means the
Government, any Government Affiliate,
any Permitted Designee or any of their
respective directors, officers, employees,
Affiliates, contractors, sub-contractors,
grantees, sub-grantees, representatives
or agents.
Government Responsibilities shall
have the meaning set forth in section
3.2(a).
HIES means the Household Income
and Expenditure Survey.
Implementation Letter is a letter that
may be issued by MCC from time to
time to furnish additional information
or guidance to assist the Government in
the implementation of this Compact.
Implementation Plan is a detailed
plan for the implementation of the
Program and each Project activity,
which will be memorialized in one or
more documents and shall consist of: (i)
A Financial Plan, (ii) a Fiscal
Accountability Plan, (iii) a Procurement
Plan, (iv) Work Plans, and (v) an M&E
Plan.
Implementing Entity means a
Government agency, nongovernmental
organization or other public- or privatesector entity or persons to which MCAVanuatu may provide MCC Funding,
directly or indirectly, through the
Outside Project Manager to implement
and carry out the Transport
Infrastructure Project or any other
activities to be carried out in
furtherance of this Compact.
Implementing Entity Agreement is an
agreement between MCA-Vanuatu and
an Implementing Entity, in form and
substance satisfactory to MCC, that sets
forth the roles and responsibilities of
such Implementing Entity and other
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appropriate terms and conditions, such
as payment of the Implementing Entity.
Indicator(s) means the quantitative,
objective and reliable data that the M&E
Plan will use to measure the results of
the Program.
Indicator Baseline shall have the
meaning set forth in section 2(a) of
Annex III.
Infrastructure Activity is the Project
Activity described in section 2(a) of
Schedule 1 of Annex I.
Infrastructure Objective means the
Project Objective to provide improved
or new priority transport infrastructure
in rural areas and outer islands,
including roads, wharfs, airstrips and
warehouses.
Infrastructure Subproject Activity
shall have the meaning set forth in
section 2(a) of Schedule 1 of Annex 1.
Inspector General means the Inspector
General of the United States Agency for
International Development.
Institutional Strengthening Activity
shall have the meaning set forth in
section 2(b) of Schedule 1 of Annex 1.
Institutional Strengthening Objective
means the Project Objective to
strengthen the ability of the
Government, specifically the capacity
and capability of the Department of
Public Works, to maintain and sustain
Vanuatu’s infrastructure assets.
Institutional Strengthening Subproject
Activity shall have the meaning set forth
in Section 2(b) of Schedule 1 of Annex
1.
Lien means any lien, attachment,
enforcement of judgment, pledge, or
encumbrance of any kind.
Local Account shall have the meaning
set forth in section 4(d)(ii) of Annex I.
M&E Annex means Annex III of this
Compact, which generally describes the
components of the M&E Plan for the
Program.
M&E Implementation Manual means
the implementation manual to be
developed by MCA-Vanuatu and
approved by MCC consistent with the
M&E Plan.
M&E Plan means the plan to measure
and evaluate progress toward
achievement of the Compact Goal and
Objectives of this Compact.
Managing Director means the
Managing Director of MCA-Vanuatu.
Material Agreement shall have the
meaning set forth in section 3(c)(i)(3) of
Annex I.
Material Re-Disbursement means any
Re-Disbursement that requires MCC
approval under applicable law, the
Governing Documents, the Procurement
Agreement, Procurement Guidelines, or
any Supplemental Agreement.
Material Terms of Reference means
any terms of reference for the
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procurement of goods, services or works
that require MCC approval under
applicable law, the Governing
Documents, the Procurement
Agreement, Procurement Guidelines, or
any Supplemental Agreement.
MCA means the Millennium
Challenge Account.
MCA Eligibility Criteria means the
MCA selection criteria and methodology
published by MCC pursuant to section
607 of the Act from time to time.
MCA-Vanuatu shall have the meaning
set forth in section 2.2(d) of this
Compact and as is further described in
section 3(d) of Annex I.
MCA-Vanuatu Web site means the
Web site operated by MCA-Vanuatu.
MCC means the Millennium
Challenge Corporation.
MCC Disbursement means the
disbursement of MCC Funding by MCC
to a Permitted Account or through such
other mechanism agreed by the Parties
as defined in and in accordance with
section 2.1(b)(i) of this Compact.
MCC Disbursement Request means the
applicable request that the Government
and MCA-Vanuatu will jointly submit
for an MCC Disbursement as may be
specified in the Disbursement
Agreement.
MCC Funding shall have the meaning
set forth in section 2.1(a).
MCC Indemnified Party means MCC
and any MCC officer, director,
employee, Affiliate, contractor, agent or
representative.
MCC Representative is a
representative appointed by MCC to
serve as an Observer on the Steering
Committee.
Monitoring Component means the
component of the M&E Plan that
specifies how progress toward the
Project Objectives and intermediate
results of the Transport Infrastructure
Project will be monitored and as set
forth in section 2 of Annex III.
Multi-Year Financial Plan means the
multi-year financial plan for the
Program and for the Transport
Infrastructure Project, which is
summarized in Annex II.
Multi-Year Financial Plan Summary
means a multi-year Financial plan
summary attached to this Compact as
Exhibit A of Annex II.
NGOs means non-governmental
organizations.
Non-Government Members are the
General Manager of the Chamber of
Commerce and the Secretary-General of
the Vanuatu Non-Governmental
Organization serving as Voting Members
on the Steering Committee.
Objective Indicator means the
Indicator in the M&E Plan for each
Project Objective that will measure the
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final results of the Transport
Infrastructure Project in order to
monitor its success in meeting each of
the Project Objectives. A table of
Objective Indicator definitions is set
forth at section 2(a)(ii) of Annex III.
Observers means the non-voting
observers of the Steering Committee
described in section 3(d)(ii)(2) of Annex
I.
Outcome Indicator means the
Indicator in the M&E Plan that will
measure the intermediate results
achieved under each of the Project
Activities to provide an early measure of
the likely impact of the Transport
Infrastructure Project. A table of
Outcome Indicator definitions is set
forth at section 2(a)(ii) of Annex III.
Outside Project Manager means the
qualified persons or entities engaged by
MCA-Vanuatu, to serve as outside
project managers in accordance with
section 3(e) of Annex I.
PAA is the Government’s National
Priorities and Action Agenda.
Parties means the United States,
acting through MCC, and the
Government.
Party means (i) the United States,
acting through MCC or (ii) the
Government.
Permitted Account(s) shall have the
meaning set forth in section 4(d) of
Annex I.
Permitted Designee shall have the
meaning set forth in section 3.2(c).
Pledge means any pledge of any MCC
Funding or any Program Assets, or any
guarantee (directly or indirectly) of any
indebtedness.
Principal Representative means (i) for
the Government, the individual holding
the position of the Director-General of
the Prime Minister’s Office, or in his
absence the relevant designated
Additional Representative and (ii) for
MCC, the individual holding the
position of, or acting as, the Vice
President of Operations.
Procurement Agent are the
procurement agents that MCA-Vanuatu
will engage to carry out and/or certify
specified procurement activities in
furtherance of this Compact on behalf of
the Government, MCA-Vanuatu, the
Project Manager or Implementing Entity.
Procurement Agent Agreement is the
agreement that MCA-Vanuatu enters
into with the Procurement Agent, in
form and substance satisfactory to MCC,
that sets forth the roles and
responsibilities of the Procurement
Agent with respect to the conduct,
monitoring and review of procurements
and other appropriate terms and
conditions, such as payment of the
Procurement Agent.
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Procurement Agreement is a
Supplemental Agreement between MCC
and MCA-Vanuatu, which includes the
Procurement Guidelines, and governs
the procurement of all goods, services
and works by the Government or any
Provider in furtherance of this Compact.
Procurement Guidelines shall have
the meaning set forth in section 3.6(a).
Procurement Plan shall have the
meaning set forth in section 3(i) of
Annex I.
Program means a program, to be
implemented under this Compact, using
MCC Funding to advance Vanuatu’s
progress towards economic growth and
poverty reduction.
Program Annex means Annex I to this
Compact, which generally describes the
Program that MCC Funding will support
in Vanuatu during the Compact Term
and the results to be achieved from the
investment of MCC Funding.
Program Assets means (i) MCC
Funding, (ii) Accrued Interest, or (iii)
any assets, goods, or property (real,
tangible, or intangible) purchased or
financed in whole or in part (directly or
indirectly) by MCC Funding.
Program Management Unit means a
management unit of MCA-Vanuatu to
have overall management responsibility
for the implementation of this Compact.
Project means the Transport
Infrastructure Project, and the policy
reforms and other activities related
thereto that the Government will carry
out, or cause to be carried out in
furtherance of this Compact to achieve
the Objectives and the Compact Goal.
Project Activity means the activities
that will be undertaken in furtherance of
the Transport Infrastructure Project.
Project Activity Indicator shall have
the meaning set forth in section 2(a)(iii)
of Annex III.
Project Activity Outcomes is the
progress made toward the Project
Objectives and the intermediate results
of the Transport Infrastructure Project
and each Project Activity.
Project Objective(s) means the
Infrastructure Objective and the
Institutional Strengthening Objective.
Proposal is the proposal for use of
MCA assistance submitted to MCC by
the Government on March 31, 2005.
Provider shall have the meaning set
forth in section 2.4(b).
PWD means the Public Works
Department.
PWD Project Management Unit shall
have the meaning set for in section 3(e)
of Annex 1.
REDI means the Rural Economic
Development Initiative coordinated by
the Department of Strategic
Management of the Government.
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Re-Disbursement is the release of
MCC Funding from a Permitted
Account.
Reviewer shall have the meaning set
forth in section 3(h) of Annex I.
Road Maintenance Budget Allocation
shall have the meaning set forth in
section 5(b)(i) of Schedule 1 of Annex
1.
Special Account shall have the
meaning set forth in section 4(d(i) of
Annex I.
Steering Committee means an
independent Steering Committee of
MCA-Vanuatu to oversee MCAVanuatu’s responsibilities and
obligations under this Compact.
Supplemental Agreement shall have
the meaning set forth in section 3.5(b).
Supplemental Agreement Between the
Parties means any agreement between
MCC on the one hand, and the
Government or any Government
Affiliate or Permitted Designee on the
other hand.
Supplemental Agreement Term
Sheets shall have the meaning set forth
in section 4.1(b).
Target means one or more expected
results that specify the expected value
and the expected time by which that
result will be achieved.
Tax(es) shall have the meaning set
forth in section 2.3(e)(i).
Transport Infrastructure Project
means the Project and Project Activities
that the Parties intend to implement in
furtherance of the Infrastructure
Objective and the Institutional
Strengthening Objective and as further
described in Schedule I to Annex I.
Technical Assistance Subproject
Activity shall have the meaning set forth
in section 2(b)(ii) of Schedule 1 of
Annex I.
United States Dollars (USD) means
the currency of the United States of
America.
United States Government means any
branch, agency, bureau, government
corporation, government chartered
entity or other body of the Federal
government of the United States.
Vice Chair means the Vice Chair of
the Steering Committee.
Voting Members are the voting
members on the Steering Committee
described in section 3(d)(ii)(2) of Annex
I.
Work Plans means work plans for the
overall administration of the Program
and for the Transport Infrastructure
Project.
Exhibit B—List of Certain Supplemental
Agreements
1. Governance Agreement.
2. Fiscal Agent Agreement.
3. Implementing Entity Agreements.
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4. Bank Agreement.
5. Procurement Agent Agreement.
Annex I—Program Description
This Annex I to the Compact (the
‘‘Program Annex’’) generally describes
the Program that MCC Funding will
support in Vanuatu during the Compact
Term and the results to be achieved
from the investment of MCC Funding.
Prior to any MCC Disbursement or ReDisbursement, including for the
Transport Infrastructure Project
(described in Schedule I to this Program
Annex), MCC, the Government (or a
mutually acceptable Government
Affiliate) and MCA-Vanuatu shall enter
into a Supplemental Agreement that (i)
further specifies the terms and
conditions of such MCC Disbursements
and Re-Disbursements, (ii) is in a form
and substance mutually satisfactory to
the Parties, and (iii) is signed by the
Principal Representative of each Party
(or in the case of the Government, the
principal representative of the
applicable Government Affiliate) and of
MCA-Vanuatu (the ‘‘Disbursement
Agreement’’).
Except as specifically provided
herein, the Parties may amend this
Program Annex only by written
agreement signed by the Principal
Representative of each Party. Except as
defined in this Program Annex, each
capitalized term in this Program Annex
shall have the same meaning given such
term elsewhere in this Compact. Unless
otherwise expressly stated, each Section
reference herein is to the relevant
Section of the main body of the
Compact.
1. Background; Consultative Process
(a) Background. Over the past decade,
Vanuatu’s economic growth has fallen
short of its population growth. From
1994 to 2003, annual real gross domestic
product (‘‘GDP’’) growth in Vanuatu has
averaged 1.0% while annual population
growth has averaged 2.6% and average
per capita income in real terms declined
by 15.4%. Although the Government
has fostered macroeconomic stability by
reducing fiscal deficits and maintaining
prudent levels of external debt over the
past five years, this progress has largely
come at the expense of capital
expenditures. Vanuatu’s capital outlays
are the lowest in the Pacific region
(whereas, in contrast, Vanuatu’s budget
allocation for education from 2000 to
2003 was significantly higher than most
Pacific countries).
The Government has identified the
major constraints to economic
development as the lack of an attractive
investment climate for private sector
investment, a lack of income earning
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opportunities for a fast growing
population due to the high cost of doing
business, and poor access to basic
health and primary education services
in rural areas. The Government needs to
spend considerably more on
infrastructure in order to reduce
business costs and therefore improve
the environment for private sector-led
economic growth.
The current state of Vanuatu’s
transportation infrastructure is
hindering formal economic activity and
investment in the agriculture and
tourism sector—the two primary sources
of growth and employment in Vanuatu.
These two sectors together employ 92%
of Vanuatu’s working population and
represent approximately 32% of
Vanuatu’s GDP. Furthermore, smallscale agriculture is the mainstay of
Vanuatu’s rural areas, where 80% of the
population resides and 51% of the
population in such rural areas lives in
hardship. Consequently, specific
policies and investments aimed at
reducing the transport cost burden faced
by those engaged in economic activity
within these sectors are key to bringing
about a reduction in rural hardship.
(b) National Development Plan. The
Government’s National Priorities and
Action Agenda (‘‘PAA’’) serves as the
country’s national development strategy
and integrates and prioritizes the action
plans for economic development. The
PAA is intended to more effectively link
these plans with the Government’s
medium-term investment program and
annual budget. Moreover, the PAA has
been subject to broad stakeholder
consultation through public
consultative workshops with the
provincial governments, nongovernmental organizations (‘‘NGOs’’),
private sector, and civil society.
The top two priorities in the latest
PAA include: (i) ‘‘Improving the lives of
people in rural areas by improving
service delivery, expanding market
access to rural produce, lowering costs
of credit and transportation, and
ensuring sustainable use of natural
resources;’’ and (ii) ‘‘raising private
investment by lowering obstacles to
growth of private enterprise including
lowering costs of doing business,
facilitating long-term secure access to
land, and providing better support
services to businesses.’’ The Program’s
focus on transport infrastructure, with
the goals of reducing transport costs of
doing business and stimulating
agricultural and tourism-based
economic activity in the rural areas, is
consistent with the key priorities
contained in the PAA for reducing
poverty and increasing economic
growth.
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(c) Consultative Process. Vanuatu
engaged in a comprehensive
consultative process, which included:
(i) Ongoing national and provincial
public forums, such as the CRP Summit,
National Business Forum, and REDI
workshops which included specific
discussion on priorities and projects for
the Proposal; (ii) one MCA-specific
public awareness meeting on the outer
island of Ambrym; and (iii) public
outreach meetings in four of Vanuatu’s
six provinces. Consulted groups
included the Republic of Vanuatu’s
council of chiefs, women’s group
leaders, the private sector, NGOs,
church leaders, and provincial
government officials. During the
consultation process, the lack of
adequate transport infrastructure
repeatedly surfaced as a priority (and
even served as a barrier to meeting
attendance). With respect to selection of
specific transport infrastructure projects
for MCC consideration, all projects in
Vanuatu’s Proposal were derived from
previous local-level stakeholder
consultation forums in each of six
provinces. In these forums, government
provincial leaders met with
representative groups of civil society,
NGOs, and private sector to identify
economic opportunities limited by a
lack of adequate infrastructure and
proposing infrastructure projects. This
process resulted in a pool of projects
from which specific selection criteria
(such as economic and poverty impact)
were used to select a short-list of
projects to be subjected to detailed
feasibility studies. Subsequently, in
each province’s ongoing consultation
workshops, it was confirmed that a
number of the priority infrastructure
projects remained unfunded.
The Government recently conducted a
significant public outreach campaign, in
which the short-list of projects subject
to MCC due diligence were released to
local newspaper and radio media,
discussed in provincial ‘‘public
outreach meetings’’ (led by the
Government’s MCA transaction team),
and sent to civil society, private sector
organizations, and donors for comment
and input. The Government intends to
continue these modes of outreach in
order to sustain public awareness and
foster stakeholder participation in the
design of maintenance and monitoring
arrangements.
2. Overview
(a) Program Objectives. The Program
involves a series of specific and
complementary interventions that the
Parties expect will achieve the
Infrastructure Objective and the
Institutional Strengthening Objective
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and advance the progress of Vanuatu
toward the Compact Goal.
(b) Project. The Parties have identified
the Transport Infrastructure Project,
which they intend for the Government
to implement, or cause to be
implemented, using MCC Funding.
Schedule I to this Program Annex
identifies the activities that will be
undertaken in furtherance of the
Transport Infrastructure Project (each, a
‘‘Project Activity’’). Notwithstanding
anything to the contrary in this
Compact, the Parties may agree to
amend, terminate or suspend the
Transport Infrastructure Project or the
Project Activities or create a new project
by written agreement signed by the
Principal Representative of each Party
without amending this Compact;
provided, however, any such
amendment of the Transport
Infrastructure Project or any Project
Activity or creation of a new project is
(i) consistent with the Project
Objectives; (ii) does not cause the
amount of MCC Funding to exceed the
aggregate amount specified in section
2.1(a) of this Compact; (iii) does not
cause the Government’s responsibilities
or contribution of resources to be less
than specified in section 2.2 of this
Compact or elsewhere in this Compact;
and (iv) does not extend the Compact
Term.
(c) Beneficiaries. The intended
beneficiaries of the Transport
Infrastructure Project are described in
Schedule I to this Program Annex to the
extent identified as of the date hereof.
The intended beneficiaries shall be
identified more precisely during the
initial phases of the implementation of
the Program. The Parties shall agree
upon the description of the intended
beneficiaries of the Program, including
publishing such description on the Web
site operated by MCA-Vanuatu.
(d) Civil Society. Civil society will
participate in overseeing the
implementation of the Program through
its representation on the MCA-Vanuatu
Steering Committee. In addition, the
Work Plans for the Transport
Infrastructure Project shall note the
extent to which civil society will have
a role in the implementation of a
particular Project Activity.
(e) Monitoring and Evaluation. Annex
III of this Compact generally describes
the plan to measure and evaluate
progress toward achievement of the
Project Objectives of this Compact (the
‘‘M&E Plan’’). As outlined in the
Disbursement Agreement and other
Supplemental Agreements, continued
payment of MCC Funding under this
Compact will be contingent on
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successful achievement of targets set
forth in the M&E Plan.
3. Implementation Framework
The implementation framework and
the plan for ensuring adequate
governance, oversight, management,
monitoring, evaluation and fiscal
accountability for the use of MCC
Funding is summarized below and in
Schedule I attached to this Program
Annex, or as may otherwise be agreed
in writing by the Parties.
(a) General. The elements of the
implementation framework will be
further described in relevant
Supplemental Agreements and in a
detailed plan for the implementation of
the Program and each Project Activity,
which will be memorialized in one or
more documents and shall consist of a
Financial Plan, a Fiscal Accountability
Plan, a Procurement Plan, Work Plans,
and an M&E Plan (such documents and
plans collectively, the ‘‘Implementation
Plan’’). MCA-Vanuatu shall adopt each
component of the Implementation Plan
in accordance with the requirements
and timeframe as may be specified in
this Program Annex, the Disbursement
Agreement or as may otherwise be
agreed by the Parties from time to time.
MCA-Vanuatu may amend the
Implementation Plan or any component
thereof without amending this Compact,
provided any material amendment of
the Implementation Plan or any
component thereof has been approved
by MCC and is otherwise consistent
with the requirements of this Compact
and any relevant Supplemental
Agreement between the Parties. By such
time as may be specified in the
Disbursement Agreement or as may
otherwise be agreed by the Parties from
time to time, MCA-Vanuatu shall adopt
one or more work plans for the overall
administration of the Program and for
the Transport Infrastructure Project
(collectively, the ‘‘Work Plans’’). The
Work Plan(s) shall set forth the details
of each activity to be undertaken or
funded by MCC Funding as well as the
allocation of roles and responsibilities
for specific Project Activities, or other
programmatic guidelines, performance
requirements, targets, or other
expectations for the Transport
Infrastructure Project.
(b) Government. The Government
shall promptly take all necessary and
appropriate actions to carry out the
Government Responsibilities and other
obligations or responsibilities of the
Government under and in furtherance of
this Compact, including undertaking or
pursuing such legal, legislative or
regulatory actions, procedural changes
and contractual arrangements as may be
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necessary or appropriate to achieve the
Project Objectives, to successfully
implement the Program, and to establish
MCA-Vanuatu. The Government shall
ensure that MCA-Vanuatu is duly
authorized and sufficiently organized,
staffed and empowered to fully carry
out the Designated Rights and
Responsibilities. Without limiting the
generality of the preceding sentence,
MCA-Vanuatu shall be organized, and
have such roles and responsibilities, as
described in section 3(d) of this Program
Annex and as provided in the
Governance Agreement and any
Governing Documents, which shall be
in a form and substance satisfactory to
MCC.
(c) MCC.
(i) Notwithstanding section 3.1 of this
Compact or any provision in this
Program Annex to the contrary, and
except as may be otherwise agreed upon
by the Parties from time to time, MCC
must approve in writing each of the
following transactions, activities,
agreements and documents prior to the
execution or carrying out of such
transaction, activity, agreement or
document and prior to MCC
Disbursements or Re-Disbursements in
connection therewith:
(1) MCC Disbursements;
(2) The Financial Plan and any
amendments and supplements thereto;
(3) Agreements (i) between the
Government and MCA-Vanuatu, (ii)
between the Government, MCA-Vanuatu
or other Government Affiliate, on the
one hand, and any Provider or Affiliate
of a Provider, on the other hand, which
require such MCC approval under
applicable law, the Governing
Documents, the Procurement
Agreement, Procurement Guidelines or
any Supplemental Agreement, or (iii) in
which the Government, MCA-Vanuatu
or other Government Affiliate appoints,
hires or engages any of the following in
furtherance of this Compact:
(A) Auditor and Reviewer;
(B) Fiscal Agent;
(C) Bank;
(D) Procurement Agent;
(E) Project Manager;
(F) Implementing Entity; and
(G) Director, Observer, analysts and/or
other key employee or contractor of
MCA-Vanuatu, including any
compensation for such person.(Any
agreement described in clause (i)
through (iii) of this section 3(c)(i)(3) and
any amendments and supplements
thereto, each, a ‘‘Material Agreement’’);
(4) Any modification, termination or
suspension of a Material Agreement, or
any action that would have the effect of
such a modification, termination or
suspension of a Material Agreement;
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(5) Any agreement that is (i) not at
arm’s length or (ii) with a party related
to the Government, including MCAVanuatu, or any of their respective
Affiliates;
(6) Any Re-Disbursement (each, a
‘‘Material Re-Disbursement’’) that
requires such MCC approval under
applicable law, the Governing
Documents (defined below), the
Procurement Agreement, Procurement
Guidelines or any Supplemental
Agreement;
(7) Terms of reference for the
procurement of goods, services or works
that require such MCC approval under
applicable law, the Governing
Documents (defined below), the
Procurement Agreement, Procurement
Guidelines or any Supplemental
Agreement (each, a ‘‘Material Terms of
Reference’’);
(8) The Implementation Plan,
including each component plan thereto,
and any material amendments and
supplements to the Implementation
Plan or any component thereto;
(9) Any pledge of any MCC Funding
or any Program Assets or any guarantee
(directly or indirectly) of any
indebtedness (each, a ‘‘Pledge’’);
(10) Any decree, legislation,
contractual arrangement, charter, bylaws or other document establishing or
governing MCA-Vanuatu, including the
governance agreement to be entered into
by the Government, MCA-Vanuatu, and
at MCC’s option, MCC (the ‘‘Governance
Agreement’’) (collectively, the
‘‘Governing Documents’’), and any
disposition (in whole or in part),
liquidation, dissolution, winding up,
reorganization or other change of (A)
MCA-Vanuatu, including any revocation
or modification of, or supplement to,
any decree, legislation, contractual
arrangement or other document
establishing MCA-Vanuatu, or (B) any
subsidiary or Affiliate of MCA-Vanuatu;
(11) Any change in character or
location of any Permitted Account;
(12) Formation or acquisition of any
subsidiary (direct or indirect) or other
Affiliate of MCA-Vanuatu;
(13) Any (A) change of the Director,
Observer, officer or other key employee
or contractor of MCA-Vanuatu, or in the
composition of the Steering Committee,
or (B) filling of any vacant seat of the
Chair, the Director or an Observer or
vacant position of an officer or other key
employee or contractor of MCAVanuatu;
(14) The selection of the ESI Officer;
(15) The management information
system to be developed and maintained
by the Program Management Unit of
MCA-Vanuatu, and any material
modifications to such system;
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(16) Any decision to amend,
supplement, replace, terminate or
otherwise change any of the foregoing;
and
(17) Any other activity, agreement,
document or transaction requiring the
approval of MCC in this Compact,
applicable law, the Governing
Documents, the Procurement
Agreement, Procurement Guidelines,
the Disbursement Agreement, or any
other Supplemental Agreement between
the Parties.
The Chair of the Steering Committee
(the ‘‘Chair’’), or in his absence the Vice
Chair of the Steering Committee (the
‘‘Vice Chair’’) or other designated voting
member of the Steering Committee, as
provided in the Governing Documents,
shall certify any documents or reports
delivered to MCC in satisfaction of the
Government’s reporting requirements
under this Compact or any
Supplemental Agreement between the
Parties (the ‘‘Compact Reports’’).
(ii) MCC shall have the authority to
exercise its approval rights set forth in
this section 3(c) in its sole discretion
and independent of any participation or
position taken by the MCC
Representative at a meeting of the
Steering Committee. MCC retains the
right to revoke its approval of a matter
if MCC concludes that its approval was
issued on the basis of incomplete,
inaccurate or misleading information
furnished by the Government or MCAVanuatu.
(d) MCA-Vanuatu.
(i) General. Unless otherwise agreed
by MCC in writing, MCA-Vanuatu shall
be responsible for the oversight and
management of the implementation of
this Compact. MCA-Vanuatu shall be
governed by the terms and conditions
set forth in the Governing Documents
based on the following principles:
(1) MCA-Vanuatu shall be established
by the Government as an independent
unit within the Ministry of Finance and
Economic Management and shall report
to the Steering Committee. The
Government shall ensure the
independent and proper administration
of MCA-Vanuatu in accordance with the
terms of the Compact, the Governing
Documents of MCA-Vanuatu and any
relevant Supplemental Agreements;
(2) The Government shall ensure that
MCA-Vanuatu shall not assign, delegate
or contract any of the Designated Rights
and Responsibilities without the prior
written consent of the Government and
MCC. MCA-Vanuatu shall not establish
any Affiliates or subsidiaries (direct or
indirect) without the prior written
consent of the Government and MCC;
and
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(3) Unless otherwise agreed by MCC
in writing, MCA-Vanuatu shall consist
of (a) an independent governing
committee (the ‘‘Steering Committee’’)
to oversee MCA-Vanuatu’s
responsibilities and obligations under
this Compact (including any Designated
Rights and Responsibilities) and (b) a
management unit (the ‘‘Program
Management Unit’’) to have overall
management responsibility for the
implementation of the Compact.
(ii) Steering Committee.
(1) Formation. The Government shall
ensure that the Steering Committee shall
be formed, constituted, governed,
maintained and operated in accordance
with applicable law and the terms and
conditions set forth in this section 3(d),
the Governing Documents and the
relevant Supplemental Agreements.
(2) Composition. Unless otherwise
agreed by MCC in writing, the Steering
Committee shall consist of twelve (12)
voting members (the ‘‘Voting
Members’’), three (3) non-voting
observers (the ‘‘Observers’’), each of
whom must be acceptable to MCC,
taking into consideration appropriate
gender and ethnic representation, and
the Director of the Program Management
Unit, who shall serve as an ex officio
non-voting member.
(A) The Voting Members shall be as
follows, provided that the Government
members identified in subsection (i)
through (x) (the ‘‘Government
Members’’) may be replaced by another
government official of comparable rank
from a ministry or other government
body relevant to the Program activities,
subject to approval by the Government
and MCC (such replacement to be
referred to thereafter as a Government
Member):
(i) Director-General of the Office of
the Prime Minister;
(ii) Director-General of the Ministry of
Finance and Economic Management;
(iii) Director-General of the Ministry
of Foreign Affairs and External Trade;
(iv) Director-General of the Ministry
of Infrastructure & Public Utilities;
(v) Director-General of the Ministry of
Lands;
(vi) Director of the Public Works
Department;
(vii) Director of Finance;
(viii) Director of the Department of
Economics and Social Development;
(ix) Director of the Department of
Strategic Management;
(x) Head of Development Cooperation,
Ministry of Foreign Affairs;
(xi) General Manager of the Chamber
of Commerce (representing the private
sector); and
(xii)Secretary-General, Vanuatu NonGovernmental Organizations
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(representing non-state actors) (together
with the General Manager of Chamber of
Commerce, the ‘‘Non-Government
Members’’).
The following provisions shall apply
to the Voting Members:
(i) Each Government Member may be
replaced by another government official,
subject to approval by the Government
and MCC;
(ii) Subject to the Governing
Documents, the Parties contemplate that
the Director-General of the Office of the
Prime Minister shall serve as Chair of
the Steering Committee and the
Director-General, Ministry of Finance
and Economic Management shall serve
as the Vice Chair; and
(iii) Each Government Member
position shall be filled by the individual
then holding the office identified and
such individuals shall serve in their
capacity as the applicable Government
official and not in their personal
capacity.
(B) The Observers shall be (i) a
representative appointed by MCC (the
‘‘MCC Representative’’); (ii) the Director
of Environment Unit, Ministry of Lands;
and (iii) the General Manager, Vanuatu
Tourism Office. The Observers shall
have the right to attend all meetings of
the Steering Committee, participate in
discussions of the Steering Committee,
and receive all information and
documents provided to the Steering
Committee, together with any other
rights of access to records, employees or
facilities as would be granted to a
member of the Steering Committee
under the Governance Agreement and
any Governing Document.
(C) The Director of the Program
Management Unit shall serve as an ex
officio member of the Steering
Committee and shall make reports to the
Steering Committee as required from
time to time.
(3) Roles and Responsibilities.
(A) The Steering Committee shall
oversee the overall implementation of
the Program and the performance of the
Designated Rights and Responsibilities.
(B) Certain actions may be taken, and
certain agreements and other documents
may be executed and delivered, by
MCA-Vanuatu only upon the approval
and authorization of the Steering
Committee as provided under
applicable law and in the Governing
Documents, including each MCC
Disbursement Request, selection or
termination of certain Providers, any
component of the Implementation Plan,
certain Re-Disbursements and certain
terms of reference.
(C) The Chair shall certify the
approval by the Steering Committee of
all Compact Reports or any other
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documents or reports from time to time
delivered to MCC by MCA-Vanuatu
(whether or not such documents or
reports are required to be delivered to
MCC), and that such documents or
reports are true, accurate and complete.
(D) Without limiting the generality of
the Designated Rights and
Responsibilities, and subject to MCC’s
contractual rights of approval as set
forth in section 3(c) of this Program
Annex or elsewhere in this Compact or
any relevant Supplemental Agreement,
the Steering Committee shall have the
exclusive authority for all actions
defined for the Steering Committee
under applicable law and in the
Governing Documents and which are
expressly designated therein as
responsibilities that cannot be delegated
further.
(4) Meetings. The Steering Committee
shall hold monthly meetings as well as
such other periodic meetings or
subcommittee meetings as may be
necessary from time to time.
(5) Indemnification of the Observers;
MCC Representative. The Government
shall ensure, at the Government’s sole
cost and expense, that appropriate
insurance is obtained and appropriate
indemnifications and protections are
provided, acceptable to MCC, to ensure
that the Observers shall not be held
personally liable for the actions or
omissions of the Steering Committee.
Pursuant to section 5.5 and section 5.8
of this Compact, the Government and
MCA-Vanuatu shall hold harmless the
MCC Representative for any liability or
action arising out of the MCC
Representative’s role as a non-voting
observer on the Steering Committee.
The Government hereby waives and
releases all claims related to any such
liability. In matters arising under or
relating to the Compact, the MCC
Representative is not subject to the
jurisdiction of the courts or other body
of Vanuatu.
(iii) Program Management Unit.
Unless otherwise agreed in writing by
the Parties, the Program Management
Unit shall report, through the Director
or other officer as designated in the
Governing Documents, directly to the
Steering Committee, and shall have the
composition, roles and responsibilities
described below and set forth more
particularly in the Governing
Documents.
(1) Composition. The Government
shall ensure that the Program
Management Unit shall be composed of
qualified experts from the public or
private sectors, including such officers
and staff as may be necessary to carry
out effectively its responsibilities, each
with such powers and responsibilities
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as set forth in the Governance
Agreement, any Governing Document,
and from time to time in any
Supplemental Agreement between the
Parties, including without limitation the
following: (i) one Director, (ii) two
analysts, and (iii) appropriate
administrative and support personnel.
(2) Appointment of Program
Management Unit. Unless otherwise
specified in the Governance Agreement
or any Governing Documents, the
Steering Committee shall appoint the
Director after an open and competitive
recruitment and selection process,
which appointment shall be subject to
the approval of MCC. The remaining
officers of the Program Management
Unit shall be appointed by the Director
after an open and competitive
recruitment and selection process,
which appointment shall be subject to
the approval of the Steering Committee
and MCC.
(3) Roles and Responsibilities.
(A) The Program Management Unit
shall assist the Steering Committee in
overseeing the implementation of the
Program and shall have principal
responsibility (subject to the direction
and oversight of the Steering Committee
and subject to MCC’s rights of approval
as set forth in section 3(c) of this
Program Annex or elsewhere in this
Compact or any relevant Supplemental
Agreement) for the overall management
of the implementation of the Program.
(B) Without limiting the foregoing
general responsibilities or the generality
of Designated Rights and
Responsibilities that the Government
may designate MCA-Vanuatu, the
Program Management Unit shall
develop the components of the
Implementation Plan, oversee the
implementation of the Transport
Infrastructure Project, manage and
coordinate monitoring and evaluation,
maintain internal accounting records,
conduct and oversee certain
procurements, and such other
responsibilities as set out in the
Governing Documents or delegated to
the Program Management Unit by the
Steering Committee from time to time.
(C) Appropriate officers shall have the
authority to contract on behalf of MCAVanuatu for procurement under the
Program, as designated by the Steering
Committee.
(D) The Program Management Unit
shall have the obligation and right to
approve certain actions and documents
or agreements, including certain ReDisbursements, MCC Disbursement
Requests, Compact Reports, certain
human resources decisions, and certain
procurement actions, as provided in the
Governing Documents.
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(e) Project Manager. The Department
of Public Works will serve as the Project
Manager for the Transport Infrastructure
Project and will be responsible for
oversight of the specific activities of the
Transport Infrastructure Project. The
duties of the Project Manager will
include certification of receipt of goods
and services secured for the Transport
Infrastructure Project. Outside
professional services will be contracted
through MCA-Vanuatu to assist the
Project Manager in its functions (the
‘‘Outside Project Manager’’). The
Department of Public Works will
establish a dedicated unit (the ‘‘PWD
Project Management Unit’’) within its
headquarters, and within its regional
offices, if appropriate, with a minimum
of two full-time staff that are suitably
qualified to support the design and
engineering supervision professionals
that are charged with the responsibility
to execute its project management
responsibilities. The PWD Project
Management Unit will be guided by the
contracted supervision professionals.
(f) Implementing Entities. Subject to
the terms and conditions of this
Compact and any other Supplemental
Agreement between the Parties, MCAVanuatu may provide MCC Funding
(directly or indirectly), through the
Project Manager, to one or more
Government Affiliates or to one or more
nongovernmental or other public- or
private-sector entities or persons to
implement and carry out the Transport
Infrastructure Project or any other
activities to be carried out in
furtherance of this Compact (each, an
‘‘Implementing Entity’’). The
Government shall ensure that MCAVanuatu (or the Project Manager) enters
into an agreement with each
Implementing Entity, in form and
substance satisfactory to MCC, that sets
forth the roles and responsibilities of
such Implementing Entity and other
appropriate terms and conditions, such
as payment of the Implementing Entity
(the ‘‘Implementing Entity Agreement’’).
An Implementing Entity shall report
directly to MCA-Vanuatu or the Project
Manager, as designated in the applicable
Implementing Entity Agreement or as
otherwise agreed by the Parties.
(g) Fiscal Agent. The Department of
Finance in the Ministry of Finance and
Economic Management of the
Government shall serve as the fiscal
agent on behalf of MCA-Vanuatu (the
‘‘Fiscal Agent’’), who shall be
responsible for, among other things, (i)
ensuring and certifying that ReDisbursements are properly authorized
and documented in accordance with
established control procedures set forth
in the Disbursement Agreement, the
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Fiscal Agent Agreement and other
relevant Supplemental Agreements, (ii)
instructing a Bank to make ReDisbursements from a Permitted
Account, following applicable
certification by the Fiscal Agent, (iii)
providing applicable certifications for
MCC Disbursement Requests, (iv)
maintaining proper accounting of all
MCC Funding financial transactions,
and (v) producing reports on MCC
Disbursements and Re-Disbursements
(including any requests therefore) in
accordance with established procedures
set forth in the Disbursement
Agreement, the Fiscal Agent Agreement
or any other relevant Supplemental
Agreements. Upon the written request of
MCC, the Government shall ensure that
MCA-Vanuatu terminates the Fiscal
Agent, without any liability to MCC,
and the Government shall ensure that
MCA-Vanuatu engages a new Fiscal
Agent, subject to the approval by the
Steering Committee and MCC. The
Government shall ensure that MCAVanuatu enters into an agreement with
each Fiscal Agent, in form and
substance satisfactory to MCC, that sets
forth the roles and responsibilities of the
Fiscal Agent and other appropriate
terms and conditions, such as payment
of the Fiscal Agent (‘‘Fiscal Agent
Agreement’’).
(h) Auditors and Reviewers. The
Government shall ensure that MCAVanuatu carries out the Government’s
audit responsibilities as provided in
sections 3.8(d), (e) and (f), including
engaging one or more auditors (each, an
‘‘Auditor’’) required by section 3.8(d).
As requested by MCC in writing from
time to time, the Government shall
ensure that MCA-Vanuatu shall also
engage an independent (i) reviewer to
conduct reviews of performance and
compliance under this Compact
pursuant to section 3.8(f), which
reviewer shall (1) conduct general
reviews of performance or compliance,
(2) conduct environmental audits, and
(3) have the capacity to conduct data
quality assessments in accordance with
the M&E Plan, as described more fully
in Annex III, and/or (ii) evaluator to
assess performance as required under
the M&E Plan (each, a ‘‘Reviewer’’).
MCA-Vanuatu shall select the
Auditor(s) or Reviewers in accordance
with the Governing Documents or
relevant Supplemental Agreement. The
Government shall ensure that MCAVanuatu enters into an agreement with
each Auditor or Reviewer, in form and
substance satisfactory to MCC, that sets
forth the roles and responsibilities of the
Auditor or Reviewer with respect to the
audit, review or evaluation, including
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access rights, required form and content
of the applicable audit, review or
evaluation and other appropriate terms
and conditions such as payment of the
Auditor or Reviewer (the ‘‘Auditor/
Reviewer Agreement’’). In the case of a
financial audit required by section
3.8(f), such Auditor/Reviewer
Agreement shall be effective no later
than 120 days prior to the end of the
relevant fiscal year or other period to be
audited; provided, however, if MCC
requires concurrent audits of financial
information or reviews of performance
and compliance under this Compact,
then such Auditor/Reviewer Agreement
shall be effective no later than a date
agreed by the Parties.
(i) Procurement Agent. If requested by
MCC, the Government shall ensure that
MCA-Vanuatu engages one or more
procurement agents (each, a
‘‘Procurement Agent’’) to carry out and/
or certify specified procurement
activities in furtherance of this Compact
on behalf of the Government, MCAVanuatu, the Project Manager or
Implementing Entity. The role and
responsibilities of such Procurement
Agent and the criteria for selection of a
Procurement Agent shall be as set forth
in the applicable Implementation Letter
or Supplemental Agreement. The
Government shall ensure that MCAVanuatu enters into an agreement with
the Procurement Agent, in form and
substance satisfactory to MCC, that sets
forth the roles and responsibilities of the
Procurement Agent with respect to the
conduct, monitoring and review of
procurements and other appropriate
terms and conditions, such as payment
of the Procurement Agent (the
‘‘Procurement Agent Agreement’’). Any
Procurement Agent shall adhere to the
procurement standards set forth in the
Procurement Agreement and
Procurement Guidelines and ensure
procurements are consistent with the
procurement plan adopted by MCAVanuatu pursuant to the Procurement
Agreement (the ‘‘Procurement Plan’’).
4. Finances and Fiscal Accountability
(a) Financial Plan.
(i) Financial Plan. The multi-year
financial plan for the Program and for
the Transport Infrastructure Project (the
‘‘Multi-Year Financial Plan’’) is
summarized in Annex II to this
Compact.
(ii) Detailed Financial Plan. During
the Compact Term, the Government
shall ensure that MCA-Vanuatu delivers
to MCC for approval timely financial
plans that detail the annual and
quarterly budget and projected cash
requirements for the Program (including
administrative costs) and the Transport
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Infrastructure Project, projected both on
a commitment and cash requirement
basis (each a ‘‘Detailed Financial Plan’’).
Each Detailed Financial Plan shall be
delivered by such time as specified in
the Disbursement Agreement or as may
otherwise be agreed by the Parties. The
Multi-Year Financial Plan and each
Detailed Financial Plan and each
amendment, supplement or other
change thereto are collectively, the
‘‘Financial Plan.’’
(iii) Expenditures. No financial
commitment involving MCC Funding
shall be made, no obligation of MCC
Funding shall be incurred, and no ReDisbursement shall be made or MCC
Disbursement Request submitted for any
activity or expenditure, unless the
expense is provided for in the Detailed
Financial Plan and unless uncommitted
funds exist in the balance of the
Detailed Financial Plan for the relevant
period or unless the Parties otherwise
agree in writing.
(iv) Modifications to Financial Plan.
Notwithstanding anything to the
contrary in this Compact, MCA-Vanuatu
may amend or supplement the Financial
Plan or any component thereof without
amending this Compact, provided any
material amendment or supplement has
been approved by MCC and is otherwise
consistent with the requirements of this
Compact and any relevant
Supplemental Agreement between the
Parties.
(b) Disbursement and ReDisbursement. The Disbursement
Agreement (and disbursement schedules
thereto), as amended from time to time,
shall specify the terms, conditions and
procedures on which MCC
Disbursements and Re-Disbursements
shall be made. The obligation of MCC to
make MCC Disbursements or approve
Re-Disbursements is subject to the
fulfillment or waiver of any such terms
and conditions. The Government and
MCA-Vanuatu shall jointly submit the
applicable request for an MCC
Disbursement (the ‘‘MCC Disbursement
Request’’) as may be specified in the
Disbursement Agreement. MCC will
make MCC Disbursements in tranches to
a Permitted Account from time to time
as provided in the Disbursement
Agreement or as may otherwise be
agreed by the Parties, subject to Program
requirements and performance by the
Government, MCA-Vanuatu and other
relevant parties in furtherance of this
Compact. Re-Disbursements will be
made from time to time based on
requests by an authorized representative
of the appropriate party designated for
the size and type of Re-Disbursement in
accordance with the Governing
Documents and Disbursement
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Agreement; provided, however, unless
otherwise agreed by the Parties in
writing, no Re-Disbursement shall be
made unless and until the written
approvals specified herein or in the
Governing Documents and
Disbursement Agreement for such ReDisbursement have been obtained and
delivered to the Fiscal Agent.
(c) Fiscal Accountability Plan. By
such time as specified in the
Disbursement Agreement or as
otherwise agreed by the Parties, MCAVanuatu shall adopt as part of the
Implementation Plan a fiscal
accountability plan that identifies the
principles and mechanisms to ensure
appropriate fiscal accountability for the
use of MCC Funding provided under
this Compact, including the process to
ensure that open, fair, and competitive
procedures will be used in a transparent
manner in the administration of grants
or cooperative agreements and the
procurement of goods and services for
the accomplishment of the Project
Objectives (the ‘‘Fiscal Accountability
Plan’’). The Fiscal Accountability Plan
shall set forth, among other things,
requirements with respect to the
following matters: (i) Funds control and
documentation; (ii) separation of duties
and internal controls; (iii) accounting
standards and systems; (iv) content and
timing of reports; (v) policies
concerning public availability of all
financial information; (vi) cash
management practices; (vii)
procurement and contracting practices,
including timely payment to vendors;
(viii) the role of independent auditors;
and (ix) the roles of fiscal agents and
procurement agents.
(d) Permitted Accounts. The
Government shall establish, or cause to
be established, such accounts (each, a
‘‘Permitted Account,’’ and collectively
‘‘Permitted Accounts’’) as may be agreed
by the Parties in writing from time to
time, including:
(i) A single, completely separate U.S.
Dollar interest-bearing account (the
‘‘Special Account’’) at the Reserve Bank
of Vanuatu to receive MCC
Disbursements;
(ii) If necessary, an interest-bearing
local currency of Vanuatu account (the
‘‘Local Account’’) at a commercial bank
that is procured through a competitive
process to which the Fiscal Agent may
authorize transfer from any U.S. Dollar
Permitted Account for the purpose of
making Re-Disbursements payable in
local currency; and
(iii) Such other interest-bearing
accounts to receive MCC Disbursements
in such banks as the Parties mutually
agree upon in writing.
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No other funds shall be commingled
in a Permitted Account other than MCC
Funding and Accrued Interest thereon.
All MCC Funding held in an interestbearing Permitted Account shall earn
interest at a rate of no less than such
amount as the Parties may agree in the
respective Bank Agreement or
otherwise. MCC shall have the right,
among other things, to view any
Permitted Account statements and
activity directly on-line or at such other
frequency as the Parties may otherwise
agree. By such time as shall be specified
in the Disbursement Agreement or as
otherwise agreed by the Parties, the
Government shall ensure that MCAVanuatu enters into an agreement with
each Bank, respectively, satisfactory to
MCC, that sets forth the signatory
authority, access rights, anti-money
laundering and anti-terrorist financing
provisions, and other terms related to
the Permitted Account, respectively
(each a ‘‘Bank Agreement’’). For
purposes of this Compact, any bank
holding an account referenced in
section 4(d) of this Program Annex are
each a ‘‘Bank’’ and, are collectively
referred to as the ‘‘Banks.’’
(e) Currency Exchange. The Bank
shall convert MCC Funding to the
currency of Vanuatu at a rate to which
the Parties mutually agree with the Bank
in the Bank Agreement.
5. Transparency; Accountability
Transparency and accountability to
MCC and to the beneficiaries are
important aspects of the Program and
Transport Infrastructure Project.
Without limiting the generality of the
foregoing, in an effort to achieve the
goals of transparency and
accountability, the Government shall
ensure that MCA-Vanuatu:
(a) Establishes an e-mail suggestion
box as well as a means for other written
comments that interested persons may
use to communicate ideas, suggestions
or feedback to MCA-Vanuatu;
(b) Considers as a factor in its
decision-making the recommendations
of the Observers;
(c) Develops and maintains a Web site
(the ‘‘MCA-Vanuatu Web site’’) in a
timely, accurate and appropriately
comprehensive manner, such MCAVanuatu Web site to include postings of
information and documents in English
and French, as appropriate; and
(d) Posts on the MCA-Vanuatu Web
site and otherwise makes publicly
available via appropriate public
mediums (including radio and print) in
the appropriate language, from time to
time, the following documents or
information:
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(i) The Compact and all Compact
Reports;
(ii) All minutes of the meetings of the
Steering Committee;
(iii) The M&E Plan, as amended from
time to time, along with periodic reports
on Program performance;
(iv) All relevant environmental
assessments and supporting documents;
(v) All audit reports by an Auditor
and any periodic reports or evaluations
by a Reviewer;
(vi) All financial reports provided in
accordance with the Compact and any
relevant Supplemental Agreement;
(vii) Disbursement Agreement, as
amended from time to time, as well as
the MCC Disbursement Requests
submitted thereunder;
(viii) All procurement agreements
(including policies, standard
documents, procurement plans, and
required procedures), solicitations, and
notices of awarded contracts; and
(ix) A copy of any legislation and
other documents related to the
formation, organization and governance
of MCA-Vanuatu, including the
Governing Documents, and any
amendments thereto.
Schedule 1 to Annex I—Transport
Infrastructure Project
This Schedule 1 describes and
summarizes the key elements of the
transport infrastructure project that the
Parties intend to implement in
furtherance of the Infrastructure
Objective and the Institutional
Strengthening Objective (the ‘‘Transport
Infrastructure Project’’). Additional
details regarding the implementation of
the Transport Infrastructure Project will
be included in the Implementation Plan
and in relevant Supplemental
Agreements.
1. Background
Overcoming transport infrastructure
constraints to poverty reduction and
economic growth, specifically for rural
areas, has been consistently identified
through the consultative process as a
major impediment to economic growth
in Vanuatu. The Government recognizes
the importance of adequate and reliable
transport infrastructure services as well
as the negative impact Vanuatu’s poor
transportation infrastructure has had on
formal economic activity and
investment in the agriculture and
tourism sectors—the two primary
sources of growth and employment in
Vanuatu. The Transport Infrastructure
Project is intended to reduce transport
costs and improve reliability of access to
prioritized roads, wharfs and airstrips,
and thereby, alleviate one of the
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principal constraints to private sector
development.
2. Summary of the Transport
Infrastructure Project and Project
Activities
The Transport Infrastructure Project
consists of two principal project
activities: (i) Civil works for the
reconstruction or construction of
priority infrastructure on eight islands,
covering roads, wharfs, airstrips and
warehouses (the ‘‘Infrastructure
Activity’’); and (ii) institutional
strengthening efforts in the Public
Works Department (‘‘PWD’’), including
the provision of plant and equipment
for maintenance of the infrastructure
(the ‘‘Institutional Strengthening
Activity’’).
(a) Infrastructure Activity.
Pursuant to the Infrastructure
Activity, MCC Funding will be used to
rehabilitate or construct priority
infrastructure, (each an ‘‘Infrastructure
Subproject Activity’’), including:
(i) Efate—Ring Road. Upgrade 90 km
of the Ring Road on Efate, the most
populous of Vanuatu’s islands, to a twolane bitumen seal standard, with
improved drainage systems.
(ii) Santo—East Coast Road. Upgrade
the 70 km road from Luganville to Port
Olry on the island of Santo to a two
lane, bitumen seal standard, including
associated bridges and other drainage
structures.
(iii) Santo—South Coast Road Bridges.
Construct an additional five bridges
along the south coast road on the island
of Santo, improving access to the
commercial center and markets at
Luganville, on a 15 km section of the
road.
(iv) Malekula—Norsup Lakatoro Lits
Lits Road. Reconstruct the 11 km of the
Norsup-Lakatoro-Lits Lits Road, the
administrative and commercial center of
the island of Malekula and the Malampa
province, linking the three nodes to a
two lane bitumen seal standard, with
associated drainage works.
(v) Malekula—South West Bay
Airstrip. Fill the low lying area
surrounding the South West Bay airstrip
on the island of Malekula and provide
some subsurface drainage to reduce the
frequency of closings of the airstrip.
(vi) Pentecost—Loltong Wharf and NS Road. Construct a wharf in Loltong on
the island of Pentecost, suitable for
conventional boats and barges close to
the Loltong village in a sheltered part of
the harbor. The proposed structure will
be sufficiently robust to withstand the
most severe weather conditions, and is
expected to require minimum
maintenance. Provide a coral pavement
over the 8 km length of the new section
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of the North South road and an adequate
storm water drainage system. In
addition, the North South road,
following a ridge from the north to
central Pentecost will be upgraded to
significantly improve access for the
productive southeastern sections of the
island to Loltong Wharf.
(vii) Tanna—Whitesands Road.
Reconstruct the Whitesands Road on the
island of Tanna, providing a coral
pavement, substantial concrete-lined
drains and floodways and sections of
concrete pavement where gradients are
very steep.
(viii) Epi—Lamen Bay Wharf.
Reinforce the existing causeway of the
Lamen Bay Wharf on the island of Epi
to extend the life of the structure and
extend the wharf face further into
deeper water away from the coral reefs
to provide a suitable berth for inter
island shipping.
(ix) Ambae—Road Creek Crossings.
Reconstruct the creek crossings on a 50
km section of road on the island of
Ambae to improve the overall level of
serviceability. Ambae is a relatively
populous and productive island.
(x) Malo—Road Upgrade. Provide
better drainage and coral surfacing of
the two roads extending 15 km on the
island of Malo to improve the overall
level of serviceability.
(xi) Warehouses (Several Locations).
Provide five new warehouses at various
locations throughout the islands for
storing outgoing or incoming freight for
the shipping industry in Vanuatu. These
warehouses are proposed to be operated
under a management or lease contract,
involving the local private sector.
(b) Institutional Strengthening
Activity.
Recognizing the importance of
maintenance of transport infrastructure,
the Institutional Strengthening Activity
will provide focused assistance to the
PWD, to remove key constraints that
face the institution in effectively
delivering maintenance and repair
services. Under the Institutional
Strengthening Activity, the Program also
provides support for the sustainability
and viability of the PWD through
organizational reform and policy
changes (each an ‘‘Institutional
Strengthening Subproject Activity’’ and
together, the ‘‘Institutional
Strengthening Subproject Activities’’).
MCC Funding will be used to:
(i) Plant and Equipment. Provide
essential plant and equipment to
maintain road and airstrip infrastructure
(the ‘‘Equipment Subproject Activity’’).
Supply of equipment will be made in
two ways: (i) Certain new equipment
(value of approximately USD $4.35
million) will be mobilized under the
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civil works contract and used initially
by the contractor for civil works funded
by MCC Funding, and then delivered in
specified condition for use by PWD at
the end of four years; and (ii) other
equipment (value of approximately USD
$1.39 million) will be provided through
direct procurement for use by PWD.
(ii) Technical Assistance. Fund the
development of the annual PWD action
plans and annual audits of PWD’s
performance. PWD will enter into a
service performance agreement with the
Ministry of Infrastructure and Public
Utilities, by which PWD will be
required to meet specific performance
targets through an annual action plan
for maintenance and repair (the
‘‘Technical Assistance Subproject
Activity’’). Annual audits will be
undertaken to measure PWD’s
performance against the targets, which
will form the basis for management
accountability.
The M&E Plan (described in Annex
III) will set forth anticipated results and,
where appropriate, regular benchmarks
at the Transportation Infrastructure
Project and Project Activity levels (i.e.,
the Infrastructure Activity and the
Institutional Strengthening Activity)
that may be used to monitor
implementation progress. Performance
against these benchmarks and the
overall impact of the Transport
Infrastructure Project and each Project
Activity will be assessed and reported at
regular intervals to be specified in the
M&E Plan or otherwise agreed by the
Parties from time to time. The Parties
expect that additional benchmarks will
be identified during implementation of
each Project Activity. Conditions
precedent to each Project Activity and
sequencing of the Infrastructure
Subproject Activities and the
Institutional Strengthening Subproject
Activities shall be set forth in the
Disbursement Agreement or other
relevant Supplemental Agreements.
(c) Project Implementation.
PWD will serve as the Project
Manager of the Transport Infrastructure
Project, responsible for oversight of the
specific Subproject Activities of the
Infrastructure Activity. The duties of
PWD will include certification of receipt
of goods and services procured for the
Transport Infrastructure Project. Outside
professional services will be contracted
through MCA-Vanuatu to assist the
Project Manager.
3. Beneficiaries
The primary beneficiaries
(‘‘Beneficiaries’’) of the Transport
Infrastructure Project fall into the
following two broad categories:
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• Providers (and laborers) of touristrelated goods and services, including
hotels, airlines, tour companies, shops,
restaurants, and artisans; and
• Local producers (including
landowners, lessees, and processors of
primary produce) and inhabitants of
remote communities with limited access
to social and other services.
The Transport Infrastructure Project is
expected to have a transformational
impact on Vanuatu’s economic
development, increasing average income
per capita (in real terms) by
approximately $200 or 15% of current
income per capita by 2010. GDP is
expected to increase by an additional
3% each year as a result of the MCA
Program.
The Program is expected to benefit
approximately 65,000 poor, rural
inhabitants living nearby and using the
roads to access markets and social
services. The program is also expected
to expand the tourism sector by
approximately 15% each year once
construction is complete. Based on the
most recent employment data, this
translates to the creation of an estimated
280 additional formal sectors jobs and
25 new locally-owned businesses each
year in this sector, impacting over 1,300
people.
4. Donor Coordination
The majority of donors in Vanuatu
have focused more consistently on the
social sectors. Donors such as Australia
and New Zealand have recently
committed to enlarging their assistance
to the agriculture and tourism sectors in
response to the priorities for growth and
poverty reduction outlined in the
Government’s PAA. MCC’s focus on
transport infrastructure presents a
number of mutually beneficial
coordination opportunities with
ongoing and planned donor programs,
namely: The European Union (the
‘‘EU’’) and France’s Agricultural
Producers Organization Project; the EU
and the Asian Development Bank’s
(‘‘ADB’’) Tourism Training and
Education project; ADB’s Rural Credit
Strengthening and Secured Transaction
Framework projects; New Zealand
Agency for International Development’s
Customary Land Tenure initiatives; the
Australian Agency for International
Development’s ‘‘AusAID’’) Business
Climate Reform program; and the EU’s
Institutional Strengthening for
Infrastructure Maintenance program.
Moreover, AusAid is providing funding
for key household data surveys (such as
the Household Income and Expenditure
Survey (‘‘HIES’’), which will be used in
monitoring Program impacts. The
United States Agency for International
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Development does not maintain a
mission in Vanuatu and is not currently
providing any development assistance
programs to Vanuatu.
5. Sustainability
(a) Institutional Sustainability.
PWD is the principal institution
responsible for the effectiveness and
sustainability of the Program, including
maintenance of the roads, and outer
island wharfs and airstrips.
A lack of suitable equipment is the
single most important factor
constraining PWD’s road maintenance
capacity. Most of the plant is 20 years
old. In most provinces, the equipment
fleet lacks at least one essential item,
seriously reducing the efficiency of the
rest. MCC Funding will provide
equipment that will allow PWD’s
reformed institutional capacity to carry
out timely maintenance and repairs on
all transport infrastructure under its
responsibility. MCC Funding will
expand PWD’s capability and capacity
in all maintenance and repair activities,
and is expected to reduce its recurrent
direct costs (attributable to maintenance
of old equipment) by at least 10% of its
current budget.
Notwithstanding the past
improvements made in strengthening
PWD, in order to ensure efficient and
timely delivery of services by PWD and
to institute sustainable accountability
and management efficiency, MCC
Funding will provide support for the
establishment and maintenance of a
Service Performance Contract for PWD.
Annual action plans will be developed
by the Government, with the assistance
of MCA-Vanuatu, which will form the
basis for annual assessments against the
Service Performance Contract.
(b) Financial Sustainability.
(i) Roads. The Parties agree that an
annual budget of about USD $5.7
million, together with the provision of
new plant and equipment for
maintenance (provided by MCC
Funding) is considered to be an
appropriate level of funds for road
maintenance (the ‘‘Road Maintenance
Budget Allocation’’). MCC Funding will
be contingent upon the Government
allocating sufficient funds in accordance
with the Road Maintenance Budget
Allocation.
(ii) Airstrip. PWD is funded through
the Government budget process for
maintenance of airstrips. Two sources of
revenue related to airstrip maintenance
are derived from regular air services: (i)
A departure tax; and (ii) a landing
charge based on aircraft weight. The
total revenue collected from these two
sources is sufficient for maintenance of
the airstrip.
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(iii) Sea Ports. Under the
Decentralisation Act (1994), the
provincial governments were expected
to take over ownership and operations
and maintenance responsibility for the
outer island ports. With no budget
allocation for maintenance, the
provincial governments have declined
to take such responsibility. As a result,
PWD remains as the agency to perform
maintenance works on wharfs at the
request of the provincial governments.
Historically, no user fees have been
collected at the port facilities. Shefa
Province has announced a tax on
passengers and cargo departing from sea
ports in the province. Although the form
of construction or rehabilitation
proposed for the wharfs is robust and
requires minimal maintenance, some
infrequent maintenance will be
required. MCC Funding for the wharfs
will be contingent upon successful
introduction of user charges on shipping
to provide a source of revenue.
(c) Environmental and Social
Sustainability.
The key to ensuring environmental
and social sustainability of the Program
is ongoing public consultation and
attention to environmental mitigation
measures to ensure optimal design and
implementation and to ensure full
country-ownership of the Program. The
Government will ensure that
environmental and social mitigation
measures are followed for all Project
Activities in accordance with
Environmental Guidelines and the
provisions set forth in this Compact and
relevant Supplemental Agreements. In
agreement with MCC, MCA-Vanuatu
will select through an open and
competitive process, subject to the
approval of MCC, an environmental and
social impact officer (the ‘‘ESI Officer’’)
to serve as the point of contact for
comments and concerns of the parties
affected by the Program and the
implementation of all Project Activities.
The ESI Officer will be located within
the Environment Unit of the
Government. The ESI Officer will lead
the effort to find feasible resolutions to
environmental and social issues in
connection with the implantation of
Project Activities, and will convene
periodic public meetings to provide
implementation updates and to identify
and address public concerns.
Other important sustainability issues
involve the provision of adequate
maintenance of infrastructure.
Insufficient maintenance of assets, such
as drainage systems, could lead to
environmental degradation and poor
performance of the asset. Therefore,
institutional sustainability of PWD and
the assurance of management
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effectiveness (through the proposed
Service Performance Contract) are
directly linked to environmental
sustainability. The Service Performance
Contract for PWD will address
environmental and social impacts. In
addition, potential environmental and
social impacts of Program-induced
tourism will be evaluated to ensure that
Vanuatu has adequate capacity to
manage such impacts.
6. Policy, Legal and Regulatory Reforms
The Parties have identified the
following policy actions and legislative
and regulatory reforms that the
Government will pursue in support of
the Transport Infrastructure Project to
reach its full benefits. Satisfactory
implementation of these reforms may be
conditions precedent to certain MCC
Disbursements as provided in the
Disbursement Agreement:
(a) The Government shall, in
accordance with World Bank policy on
involuntary resettlement, undertake
consultations with land users in the
Whitesands Road project area in order
to establish appropriate locations for
drainage lines and shall address any
social issues and claims arising from
such consultations to the satisfaction of
MCC. Moreover, any required
acquisition rights-of-way and any
resettlement programs shall be amicably
settled with compensation in
accordance with World Bank policy on
Involuntary Resettlement;
(b) The Government shall ensure that
an M&E Implementation Manual (‘‘M&E
Implementation Manual’’), describing
all data collection, reporting, and
quality assurance mechanisms, must be
submitted to and approved by MCC;
(c) The Government will ensure
completion of the Household Income
and Expenditure Survey and collection
of baseline data on all monitoring and
evaluation indicators;
(d) PWD shall establish commercially
driven maintenance contracts with
community representatives for basic
routine maintenance activities for the
following Infrastructure Subproject
Activities: Efate Ring Road (with rural
villages), Santo East Coast Road (with
rural villages), Malekula Norsup
Lakatoro Lits Lits Road, Pentecost North
South Road, Tanna Whitesands Road,
and Malo Roads. These maintenance
contracts must be in effect prior to the
commencement of the respective
Infrastructure Subproject Activities;
(e) The Government or the respective
province shall develop a revenue
collection mechanism and an
implementation plan for the collection
of wharf user fees and their application
towards wharf maintenance. This shall
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be a condition precedent for initial
disbursement of MCC Funding for the
relevant Infrastructure Subproject
Activity;
(f) The Government will fund the
mitigation and remediation costs related
to the civil works component of the
Transport Infrastructure Project as
identified in the environmental
management plans (‘‘EMPs’’) in excess
of the budgeted amount in the Detailed
Financial Plan for such costs;
(g) The Government will ensure that
a service performance contract is
entered into between PWD and Ministry
of Infrastructure and Public Utilities
within six months of Entry into Force.
The service performance contract shall
monitor and assess PWD’s performance
against an action plan. PWD
management shall be held accountable
for service performance in accordance
with terms to be specified in the service
performance contract; and
(h) The Government will allocate
sufficient funds for road maintenance
activities in accordance with the Road
Maintenance Budget Allocation.
Additionally, the Parties agree that
the Government will explore insurance
coverage options to further ensure the
sustainability of the Program Assets.
Annex II—Financial Plan Summary
This Annex II to the Compact (the
‘‘Financial Plan Annex’’) summarizes
the Multi-Year Financial Plan for the
Program. Except as defined in this
Financial Plan Annex, each capitalized
term in this Financial Plan Annex shall
have the same meaning given such term
elsewhere in this Compact.
1. General
A multi-year financial plan summary
(‘‘Multi-Year Financial Plan Summary’’)
is attached hereto as Exhibit A. By such
time as specified in the Disbursement
Agreement, MCA-Vanuatu will adopt,
subject to MCC approval, a Multi-Year
Financial Plan that includes, in addition
to the multi-year summary of
anticipated estimated MCC Funding and
the Government’s contribution of funds
and resources, an estimated draw-down
rate for the first year of the Compact
based on the achievement of
performance milestones, as appropriate,
and the satisfaction or waiver of
conditions precedent. Each year, at least
30 days prior to the anniversary of the
entry into force of the Compact, the
Parties shall mutually agree in writing
to a Detailed Financial Plan for the
upcoming year of the Program, which
shall include a more detailed plan for
such year, taking into account the status
of the Program at such time and making
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14321
any necessary adjustments to the MultiYear Financial Plan.
2. Implementation and Oversight
The Multi-Year Financial Plan and
each Detailed Financial Plan shall be
implemented by MCA-Vanuatu,
consistent with the approval and
oversight rights of MCC and the
Government as provided in this
Compact, the Governance Agreement
and the Disbursement Agreement.
3. Estimated Contributions of the Parties
The Multi-Year Financial Plan
Summary identifies the estimated
annual contribution of MCC Funding for
Program administration, monitoring and
evaluation, the Transport Infrastructure
Project, and each Project Activity. The
Government’s contribution of resources
to Program administration, monitoring
and evaluation, and the Transport
Infrastructure Project shall consist of (i)
‘‘in-kind’’ contributions in the form of
Government Responsibilities and any
other obligations and responsibilities of
the Government identified in this
Compact and (ii) such other
contributions or amounts as may be
identified in relevant Supplemental
Agreements between the Parties or as
may otherwise be agreed by the Parties;
provided, in no event shall the
Government’s contribution of resources
be less than the amount, level, type and
quality of resources required to
effectively carry out the Government
Responsibilities or any other
responsibilities or obligations of the
Government under or in furtherance of
this Compact.
4. Modifications
The Parties recognize that the
anticipated distribution of MCC
Funding between and among the
various Program activities and the
Project and Project Activities will likely
require adjustment from time to time
during the Compact Term. In order to
preserve flexibility in the administration
of the Program, the Parties may, upon
agreement of the Parties in writing and
without amending the Compact, change
the designations and allocations of
funds between Program administration
and the Project, between one Project
Activity and another Project Activity,
between different activities within the
Project, or between a Project Activity
identified as of the Entry into Force and
a new Project Activity, without
amending the Compact; provided,
however, that such reallocation (i) is
consistent with the Project Objectives,
(ii) does not cause the amount of MCC
Funding to exceed the aggregate amount
specified in Section 2.1(a) of this
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Compact, and (iii) does not cause the
Government’s obligations or
responsibilities or overall contribution
of resources to be less than specified in
section 2.2(a) of this Compact, this
Annex II or elsewhere in the Compact.
5. Conditions Precedent; Sequencing
MCC Funding will be disbursed in
tranches. The obligation of MCC to
approve MCC Disbursements and
Material Re-Disbursements for the
Program, the Transport Infrastructure
Project, and each Project Activity is
subject to satisfactory progress in
achieving the Project Objectives and on
the fulfillment or waiver of any
conditions precedent specified in the
Disbursement Agreement for the
relevant Program activity, Project or
Project Activity. The sequencing of
Project Activities and other aspects of
how the Parties intend the Transport
Infrastructure Project to be implemented
will be set forth in the Implementation
Plan, including Work Plans for the
applicable Project Activities, and MCC
Disbursements and Re-Disbursements
will be disbursed consistent with that
sequencing.
EXHIBIT A—MULTI-YEAR FINANCIAL PLAN
Component (in US$ millions)
Year 1
Year 2
Year 3
Year 4
Year 5
Total
1. Transport Infrastructure Project:
Infrastructure Activity ........................................................................
Institutional Strengthening Activity ....................................................
2. Program Management .........................................................................
3. Monitoring and Evaluation ...................................................................
4. Fiscal and Procurement Agents ..........................................................
5. Audit .....................................................................................................
4.00
5.47
0.43
0.28
1.17
0.07
22.45
0.48
0.32
0.06
0.14
0.07
25.80
0.09
0.28
0.06
0.14
0.07
2.21
0.09
0.28
0.06
0.14
0.07
0.03
0.09
0.28
0.91
0.14
0.07
54.47
6.22
1.59
1.37
1.71
0.33
Total MCC Investment ......................................................................
11.42
23.51
26.43
2.85
1.52
65.69
Note: Figures are rounded to second decimal place. Foreign exchange rate: USD = 108 Vatu.
Annex III—Description of the M&E Plan
This Annex III to the Compact (the
‘‘M&E Annex’’) generally describes the
components of the M&E Plan for the
Program. Except as defined in this M&E
Annex, each capitalized term in this
Annex III shall have the same meaning
given such term elsewhere in this
Compact.
1. Overview
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MCC and the Government (or a
mutually acceptable Government
Affiliate or Permitted Designee) shall
formulate, agree to and the Government
shall implement, or cause to be
implemented, an M&E Plan that
specifies (i) how progress toward the
Project Objectives and the intermediate
results of each Project Activity (the
‘‘Project Activity Outcomes’’) will be
monitored (the ‘‘Monitoring
Component’’), (ii) a methodology,
process and timeline for the evaluation
of planned, ongoing, or completed
Project Activities to determine their
efficiency, effectiveness, impact and
sustainability (the ‘‘Evaluation
Component’’), and (iii) other
components of the M&E Plan described
below. Information regarding the
Program’s performance, including the
M&E Plan, and any amendments or
modifications thereto, as well as
periodically generated reports, will be
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made publicly available on the MCAVanuatu Web site and elsewhere.
2. Monitoring Component
To monitor progress toward the
achievement of the Project Objectives
and Project Activity Outcomes, the
Monitoring Component of the M&E Plan
shall identify (i) the Indicators, (ii) the
party or parties responsible, the
timeline, and the instrument for
collecting data and reporting on each
Indicator to MCA-Vanuatu, and (iii) the
method by which the reported data will
be validated.
(a) Indicators. The M&E Plan shall
measure the results of the Program using
quantitative, objective and reliable data
(‘‘Indicators’’). Each Indicator will have
one or more expected results that
specify the expected value and the
expected time by which that result will
be achieved (each, a ‘‘Target’’). The
M&E Plan will measure and report four
types of Indicators. First, Indicators for
the Program as a whole (each, a ‘‘Goal
Indicator’’) will measure the impact of
the Compact on the incomes and
poverty of ni-Vanuatu who are directly
or indirectly affected by the Project
Activities anticipated under the
Transport Infrastructure Project.
Second, the Indicators for each
Objective (each, an ‘‘Objective
Indicator’’) will measure whether the
improved infrastructure assets are
having the intended impact. Third,
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outcome Indicators, (each, an ‘‘Outcome
Indicator’’) will signal whether the
Transport Infrastructure Project is
stimulating the expected intermediate
results. Fourth, Indicators for each
Project Activity (each, a ‘‘Project
Activity Indicator’’) will measure
implementation success. For each
Indicator, the M&E Plan shall define a
strategy for obtaining and validating the
value of such Indicator prior to its being
affected by the Program (‘‘Indicator
Baseline’’). All Indicators will be
disaggregated by gender, income level
and age, to the extent practicable.
(i) Goal Indicator. The highest level of
results to be achieved by the Program,
i.e., the Compact Goal, is understood to
be the aggregation of the estimated
benefits of the Transport Infrastructure
Project and which are indicative of the
overall impact expected from all of the
Project Activities. While these benefits
can be estimated, it is methodologically
impossible to attribute with a high
degree of precision changes in income at
the end of the Compact Term
specifically to interventions undertaken
under or in furtherance of the Program
due to the existence of other factors,
unrelated to the Program, that may
affect income changes. However, these
estimated benefits may be used to
inform future impact evaluation. The
M&E Plan shall contain the Goal
Indicators listed in the table below.
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COMPACT GOAL—INCREASED ECONOMIC GROWTH AND POVERTY REDUCTION
Baseline 1
Goal indicator
Indicator definition
Increase cash income per capita
of Beneficiaries.
Average cash income per capita of residents living within the
catchment area of the infrastructure sub-projects listed below
(1).
Efate: Round Island Road ..........................................................
Santo: Port Olry Road ................................................................
Santo: South Coast Bridges .......................................................
Tanna: Whitesands Road ...........................................................
Malekula: Lits Lits Road .............................................................
Malekula: SW Bay Airstrip ..........................................................
Pentecost: Loltong Wharf/N–S Road ..........................................
Fraction of individuals receiving more than X percent of their income (i.e., poverty threshold) from subsistence activities. The
‘‘poverty threshold’’ will be defined during the first year of the
program based on the results of the Household Income Expenditure Survey.
Number of additional formal tourism jobs created on Efate, Santo
and Tanna.
Reduce poverty (as measured
by dependence on subsistence activities).
Increase tourism employment ....
Year 5
Year 10
$1,206
$1,411
$1,695
$804
$784
$784
$366
$1,000
$1,000
$302
TBD
$1,160
$1,156
$821
$487
$1,069
$1,010
$367
TBD
$1,633
$1,831
$853
$604
$1,150
$1,019
$420
TBD
....................
560
1,960
1 Baseline cash income estimates are based on 1999 HIES, converted to USD and adjusted to 2005 prices using provincial estimates where
island data was not available. Statistically representative baseline will be updated during the first year of the Compact.
(ii) Project Objective and Outcome
Indicators. The M&E Plan shall contain
the Objective and Outcome Indicators
listed in the table below, with
definitions (where necessary). The
corresponding Indicator Baselines and
estimated Targets to be achieved are
based on the assumptions from the
economic analysis. MCA-Vanuatu may
add Objective Indicators or refine the
Targets of existing Objective Indicators
prior to any MCC Disbursement or Re-
Disbursement for the Transport
Infrastructure Project or any Project
Activity that may influence that
Indicator, or at such other times as may
be agreed with MCC, in each case with
prior written approval of MCC.
VANUATU TRANSPORT INFRASTRUCTURE PROJECT
[Objective: Facilitate transportation to increase tourism and business development 1]
Objective indicators (metric of project success observable by end of compact)
Baseline 2
Number of New Hotel Rooms 4 Constructed (cumulative):
Efate ..........................................................................
Santo .........................................................................
Number of Tourists (per annum):
Vanuatu .....................................................................
Santo .........................................................................
Tanna ........................................................................
Malekula (South-West Bay) ......................................
Number of Hotel & Bungalow Bed-nights 5 occupied
(per annum):
Efate ..........................................................................
Santo .........................................................................
Tanna ........................................................................
Malekula (South-West Bay) ......................................
Year 1 3
Year 2 3
Year 3 3
Year 4 3
Year 5
0
0
n.t.
n.t.
n.t.
n.t.
n.t.
n.t.
200
70
400
140
61,453
6,963
5,000
30
65,755
7,450
5,350
30
70,358
7,972
5,725
30
75,283
8,530
6,125
30
84,170
11,137
6,738
80
87,743
13,744
7,412
130
243,380
64,500
15,000
90
260,420
69,015
16,050
90
278,650
73,846
17,174
90
298,160
79,015
18,376
90
377,430
84,546
20,213
240
462,250
90,465
22,235
390
VANUATU TRANSPORT INFRASTRUCTURE PROJECT
[Objective: Facilitate transportation to increase agriculture production]
Objective Indicators (metric of project success observable by end of compact)
Baseline 2
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Airfreight uplifted from South West Bay, Malekula
(tonnes per annum) ......................................................
Cargo shipped from Loltong wharf, Pentecost (tonnes
per annum) ...................................................................
Year 1 3
Year 2 3
Year 3 3
Year 4 3
Year 5
35
35
35
35
45
50
1,000
1,000
1,000
1,000
1,025
1,056
VANUATU TRANSPORT INFRASTRUCTURE PROJECT
Outcome Indicators (indication that the project is having
the intended impact)
Baseline 2
Traffic volume (average annual daily traffic): 6
Santo: South Coast Bridges ............................................
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33
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33
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36
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Year 4 3
n.m.
Year 5
40
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VANUATU TRANSPORT INFRASTRUCTURE PROJECT—Continued
Outcome Indicators (indication that the project is having
the intended impact)
Baseline 2
Malekula: Lits Lits Road ..................................................
Pentecost: N-S Road ................................................
Days road is closed (number per annum):
Santo: South Coast Bridges .....................................
Pentecost: North-South Road ...................................
Number of S-W Bay, Malekula flights cancelled due
to flooding (per annum) .........................................
Time at wharf (hours/vessel) ....................................
Year 1 3
Year 2 3
Year 3 3
Year 4 3
Year 5
200
25
200
25
n.m.
n.m.
221
28
n.m.
n.m.
244
31
90
90
90
90
n.m.
n.m.
90
90
0
0
0
0
33
8
33
8
n.m.
n.m.
33
4
7
4
7
4
VANUATU TRANSPORT INFRASTRUCTURE PROJECT—ROAD MAINTENANCE QUALITY
[Objective: Improved road sustainability through increased funding and improved maintenance]
Outcome Indicator (Indication that the Project is having
the intended impact)
Baseline
Share of road network in ‘‘Good’’ or ‘‘Fair’’ condition
(%)7 ..............................................................................
TBD
Year 1
Year 2
TBD
Year 3
n.m.
TBD
Year 4
n.m.
Year 5
TBD
Notes:
1 Targets for all tourism projects (except South-West Bay) incorporate an assumed without-project rate of growth of tourism (7%) in addition to
program’s projected incremental impact beginning in Year 4. Tourism in South-West Bay, Malekula is not expected to grow until the airstrip is improved.
2 The Baseline data presented in these tables was collected during due diligence for the purposes of estimating the economic impact. Data will
be collected and quality checked on all indicators during the first year of the program (during the design phase and prior to construction) to validate these baseline assumptions. Hence, Year 1 will become the baseline.
3 Targets in intermediate years will depend on precise implementation schedule for specific subprojects.
4 Assumes approximately 2 beds per room.
5 Based on 40% capacity utilization rate for major hotels. To be updated for all hotels and bungalows during initial implementation of the
Project. Survey data is to be collected on room-nights of accommodation available and used (to give capacity utilization), and person-nights of
accommodation used (to indicate quantity of tourism), with only the latter to be presented as in Indicator.
6 Extent of reduced vehicle operating costs will be a function of the quantity of traffic and delivery of the improved road. As the latter will be
monitored through an Outcome Indicator and technical supervision reports, only the traffic volume need be measured. Traffic volume is reported
as the Average Annual Daily Traffic (equal to annual traffic divided by 365). Traffic on Round-Island Road (Efate), Port Orly Road (Santo), and
White Sands Road (Tanna) will be monitored for evaluation purposes in the first and last years of the Compact. However, they are not included
here because targets cannot be reasonably estimated as they depend on multiple factors.
7 Based on an audited survey of road conditions conducted as part of the PWD action plan and performance review. An independent baseline
survey will be conducted during the first year of the program to establish current road conditions. Performance targets will be a function of five
year performance plan developed during the first year of the Compact. Independent audit will be repeated during the third and fifth years of the
program.
All monetary values are reported in constant U.S. Dollars (2005).
n.t. (not targeted) Indicates that the indicator will not be targeted during that year given that the transportation infrastructure will not be complete until the end of year 3. However, the Indicator will be monitored for evaluation purposes.
n.m. (not monitored) Signifies that an indicator will not be monitored in a given year due to the lag between construction, project completion,
and commencement of benefits.
(iii) Project Activity Indicators. The
M&E Plan shall contain the Project
Activity Outcome Indicators listed in
the table below, with definitions (where
necessary). Indicators have been
selected to measure the progress of
construction and PWD adherence to
action plan objectives. The Baseline and
estimated Targets are notional based on
anticipated implementation schedule.
MCA-Vanuatu may add Project Activity
Outcome Indicators or refine the Targets
of existing Project Activity Outcome
Indicators prior to any MCC
Disbursement or Re-Disbursement for
any Project Activity that may influence
that Indicator, or at such other times as
may be agreed with MCC, in each case
with prior written approval of MCC.
VANUATU TRANSPORT INFRASTRUCTURE PROJECT
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Activity indicators 1
(metric of implementation performance)
Year 1
Year 2
Year 3
Year 4
Year 5
Kilometers of Roads Upgraded ...............................................................
Efate: Round-Island Road ................................................................
Malekula: Norsup-Lits Lits Road ......................................................
Malo: Multiple Roads ........................................................................
Pentecost: North-South Road ...........................................................
Santo: East Coast Road ...................................................................
Tanna: White Sands Road ...............................................................
Number of River Crossings Constructed .................................................
Ambae: Creek Crossings Reconstruction ........................................
Santo: South Coast Road Bridges ...................................................
Airstrip Meters Upgraded at S–W Bay, Malekula ....................................
Number of maritime wharves reconstructed ............................................
Pentecost: Loltong Wharf .................................................................
....................
....................
....................
....................
....................
....................
....................
....................
....................
....................
....................
....................
....................
80
45
....................
....................
....................
35
....................
40
40
....................
2,000
....................
....................
213.8
90
10.8
5
8
70
30
5
....................
5
....................
2
1
....................
....................
....................
....................
....................
....................
....................
....................
....................
....................
....................
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Federal Register / Vol. 71, No. 54 / Tuesday, March 21, 2006 / Notices
VANUATU TRANSPORT INFRASTRUCTURE PROJECT—Continued
Activity indicators 1
(metric of implementation performance)
Year 1
Year 2
Epi: Lamen Bay Wharf .....................................................................
Number of Warehouses Constructed ......................................................
Maintenance Activities: 2
Equipment delivered (USD millions) .................................................
Utilization of equipment 3 ..................................................................
Annual PWD Score 4 ........................................................................
PWD Budget as a percentage of transport revenue collected (USD millions at, 2005 prices) 5 ..........................................................................
....................
....................
....................
....................
1.00
....................
....................
TBD
Year 3
Year 4
Year 5
1
5
....................
....................
....................
....................
0.39
50%
60
....................
75%
70
....................
80%
80
4.35
80%
90
TBD
TBD
TBD
TBD
wwhite on PROD1PC65 with NOTICES2
Notes:
1 Activity Targets are notional and will depend on the specific implementation timeline provided by the contractor. These will be finalized during
the first year of the Compact.
2 Country’s performance relative to maintenance activity Targets will be linked to disbursements.
3 Time each item of equipment is used relative to work time.
4 Audited composite annual score measuring PWD’s performance against targets set in the annual action plan. Maximum score is 100.
5 As reported in Government revenues and budget for road maintenance.
(b) Data Collection and Reporting. The
M&E Plan shall establish guidelines for
data collection and a reporting
framework, including a schedule of
reporting required under the terms of
the Compact and the responsible
parties. The Program Management Unit
shall conduct regular assessments of
Program performance to inform MCAVanuatu, the Project Manager and MCC
of progress under the Program and to
alert these parties to any problems.
These assessments will report the actual
results compared to the Targets on the
Indicators referenced in the Monitoring
Component, explain deviations between
these actual results and Targets, and in
general, serve as a management tool for
implementation of the Program. With
respect to any data or reports received
by MCA-Vanuatu, MCA-Vanuatu shall
promptly deliver such reports to MCC
along with any other related documents,
as specified in this Annex III or as may
be requested from time to time by MCC.
(c) Data Quality Reviews. From time
to time, as determined in the M&E Plan
or as otherwise requested by MCC, the
quality of the data gathered through the
M&E Plan shall be reviewed to ensure
that data reported are as valid, reliable,
and timely as resources will allow. The
objective of any data quality review will
be to verify the quality and the
consistency of performance data, across
different implementation units and
reporting institutions. Such data quality
reviews also will serve to identify where
those levels of quality are not possible,
given the realities of data collection.
The data quality reviewer shall enter
into an Auditor/Reviewer Agreement
with MCA-Vanuatu in accordance with
Annex I.
3. Evaluation Component
The Program shall be evaluated on the
extent to which the interventions
contribute to the Compact Goal. The
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Evaluation Component shall contain a
methodology, process and timeline for
analyzing data in order to assess
planned, ongoing, or completed Project
Activities to determine their efficiency,
effectiveness, impact and sustainability.
The Evaluation Component shall
contain two types of reports: Final
Evaluations and Ad Hoc Evaluations,
and shall be finalized before any MCC
Disbursement or Re-Disbursement for
specific Program related activities or
Project Activities.
(a) Final Evaluation. MCA-Vanuatu,
with the prior written approval of MCC,
may engage an independent evaluator to
conduct an evaluation at the expiration
or termination of the Compact Term
(‘‘Final Evaluation’’) or at MCC’s
election, MCC may engage such
independent evaluator and shall
provide notification of such engagement
to MCA-Vanuatu. The Final Evaluation
must at a minimum (i) evaluate the
efficiency and effectiveness of the
Project Activities (and Subproject
Activities, as appropriate); (ii) estimate,
quantitatively and in a statistically valid
way, the causal relationship between
the Compact Goal (to the extent
possible), the Project Objectives, Project
Outcome and Project Activities (and
Subproject Activities, as appropriate);
(iii) determine if and analyze the
reasons why the Compact Goal, Project
Objectives and Project Outcomes and
Project Activities were or were not
achieved; (iv) identify positive and
negative unintended results of the
Program; (v) provide lessons learned
that may be applied to similar projects;
(vi) assess the likelihood that results
will be sustained over time; and (vii)
any other guidance and direction that
will be provided in the M&E Plan. To
the extent engaged by MCA-Vanuatu,
such independent evaluator shall enter
into an Auditor/Reviewer Agreement
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with MCA-Vanuatu in accordance with
Annex I.
(b) Ad Hoc Evaluations. Either MCC
or MCA-Vanuatu may request ad hoc or
interim evaluations or special studies of
the Transport Infrastructure Project,
Project Activities, or the Program as a
whole prior to the expiration of the
Compact Term. If MCA-Vanuatu
engages an evaluator, the evaluator will
be an externally contracted independent
source selected by MCA-Vanuatu,
subject to the prior written approval of
MCC, following a tender in accordance
with the Procurement Guidelines, and
otherwise in accordance with any
relevant Implementation Letter or
Supplemental Agreement. The cost of
an independent evaluation or special
study may be paid from MCC Funding.
If MCA-Vanuatu requires an ad hoc
independent evaluation or special study
at the request of the Government for any
reason, including for the purpose of
contesting an MCC determination with
respect to the Transport Infrastructure
Project or any Project Activity or to seek
funding from other donors, no MCC
Funding or MCA-Vanuatu resources
may be applied to such evaluation or
special study without MCC’s prior
written approval.
4. Other Components of the M&E Plan
In addition to the Monitoring and
Evaluation Components, the M&E Plan
shall include the following components
for the Project Activities, including,
where appropriate, roles and
responsibilities of the relevant parties
and Providers:
(a) Costs. A detailed cost estimate for
all components of the M&E Plan.
(b) Assumptions and Risks. Any
assumptions and risks external to the
Program that underlie the
accomplishment of the Objectives and
Project Activity Outcomes provided,
however, such assumptions and risks
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shall not excuse performance of the
Parties, unless otherwise expressly
agreed to in writing by the Parties.
5. Implementation of the M&E Plan
wwhite on PROD1PC65 with NOTICES2
(a) Approval and Implementation.
The approval and implementation of the
M&E Plan, as amended from time to
time, shall be in accordance with the
Program Annex, this M&E Annex, the
Governance Agreement, and any other
relevant Supplemental Agreement.
(b) Steering Committee. The
completed portions of the M&E Plan
will be presented to the Steering
Committee at the Steering Committee’s
initial meeting, and any amendments or
modifications thereto or any additional
components of the M&E Plan will be
presented to the Steering Committee at
appropriate subsequent meetings of the
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Steering Committee. Members of the
Steering Committee will have the
opportunity to present suggestions on
the M&E Plan.
(c) MCC Disbursement and ReDisbursement for a Project Activity.
Unless the Parties otherwise agree in
writing, prior to, and as a condition
precedent to, the initial MCC
Disbursement or Re-Disbursement with
respect to certain Project Activities, the
baseline data or report, as applicable
and as specified in the Disbursement
Agreement, with respect to such Project
or Project Activity must be completed in
form and substance satisfactory to MCC.
As a condition to each MCC
Disbursement or Re-Disbursement there
shall be satisfactory progress on the
M&E Plan for the Transport
Infrastructure Project or any Project
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Activity, and substantial compliance
with the M&E Plan, including any
reporting requirements.
(d) Modifications. Notwithstanding
anything to the contrary in the Compact,
including the requirements of this M&E
Annex, MCC and the Government (or a
mutually acceptable Government
Affiliate or Permitted Designee) may
modify or amend the M&E Plan or any
component thereof, including those
elements described herein, without
amending the Compact; provided, any
such modification or amendment of the
M&E Plan has been approved by MCC
in writing and is otherwise consistent
with the requirements of this Compact
and any relevant Supplemental
Agreement between the Parties.
[FR Doc. 06–2553 Filed 3–20–06; 8:45 am]
BILLING CODE 9210–01–P
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[Federal Register Volume 71, Number 54 (Tuesday, March 21, 2006)]
[Notices]
[Pages 14296-14326]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-2553]
[[Page 14295]]
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Part II
Millennium Challenge Corporation
-----------------------------------------------------------------------
Notice of Entering Into a Compact With the Government of the Republic
of Vanuatu; Notice
Federal Register / Vol. 71, No. 54 / Tuesday, March 21, 2006 /
Notices
[[Page 14296]]
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MILLENNIUM CHALLENGE CORPORATION
[MCC FR 06-06]
Notice of Entering Into a Compact With the Government of the
Republic of Vanuatu
AGENCY: Millennium Challenge Corporation.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: In accordance with section 610(b)(2) of the Millennium
Challenge Act of 2003 (Pub. L. 108-199, Division D), the Millennium
Challenge Corporation (MCC) is publishing a summary and the complete
text of the Millennium Challenge Compact between the United States of
America, acting through the Millennium Challenge Corporation, and the
Government of the Republic of Vanuatu. Representatives of the United
States Government and the Government of the Republic of Vanuatu
executed the Compact documents on March, 2, 2006.
Dated: March 13, 2006.
John C. Mantini,
Assistant General Counsel, Millennium Challenge Corporation.
Summary of Millennium Challenge Compact With the Government of the
Republic of Vanuatu
I. Introduction
Vanuatu is a small island nation in the South Pacific comprised of
83 separate islands, where approximately half of the population lives
in poverty. As a small, open, island economy, agriculture and tourism
are central to Vanuatu's growth. These two sectors together employ more
than 70% of Vanuatu's working population \1\ and represent
approximately 34% of Vanuatu's GDP.\2\ Vanuatu's poor transportation
infrastructure, however, continues to hinder formal economic activity
and investment in the agriculture and tourism sectors, thereby
constraining private-sector led economic growth. Vanuatu's capital
outlays, at 7% of national expenditures, are the lowest in the Pacific
region.\3\
---------------------------------------------------------------------------
\1\ Source: Vanuatu Labor Market Survey (2000).
\2\ Derived from IMF Article IV Consultation statistics and WTTC
Satellite Account data.
\3\ IMF Article IV Consultation (2005).
---------------------------------------------------------------------------
The five-year, $65.69 million Vanuatu Compact provides an in-depth
focus on one economic development priority: overcoming transport
infrastructure constraints to poverty reduction and economic growth,
specifically for rural areas. Consisting of eleven infrastructure
projects--including roads, wharves, an airstrip, and warehouses, as
well as institutional strengthening initiatives for enhanced
maintenance capacity, the program aims to benefit poor, rural
agricultural producers and providers of tourist-related goods and
services by reducing transportation costs and improving the reliability
of access to transportation services (the ``MCA Program'').
II. Program Overview and Budget
Vanuatu's MCA Program consists of two principal components: (i)
Civil works for the reconstruction of priority transport infrastructure
on eight islands, covering roads, wharfs, airstrips, and warehouses
(the ``Transport Infrastructure Project''); and (ii) institutional
strengthening efforts in Vanuatu's Public Works Department (``PWD''),
including the provision of plant and equipment for maintenance, in
order to facilitate enhanced sustainability and maintenance of
infrastructure assets (the ``Institutional Strengthening Project'').
Technical, economic, environmental, and social assessments were
completed on each of the eleven civil works subprojects and
institutional strengthening components contained in the MCA Program.
The following eleven sub-projects are included as part of the U.S.
$54.47 million Transport Infrastructure Project:
1. Efate island--Upgrade 90km of the Ring Road;
2. Santo island--Upgrade 70km of the East Coast Road from
Luganville to Port Orly;
3. Santo island--Upgrade South Coast Road Bridges (5);
4. Malekula island--Reconstruct 11km of the Norsup Lakatoro Lits
Lits Road;
5. Malekula island--Upgrade South West Bay Airstrip;
6. Pentecost island--Construct the Loltong Wharf and Upgrade of
North-South Road to Wharf;
7. Tanna island--Reconstruct the Whitesands Road;
8. Epi island--Upgrade Lamen Bay Wharf;
9. Ambae island--Reconstruct Creek Crossings on 50km Road section;
10. Malo island--Upgrade 15km of Roads; and
11. Warehouses (for produce and freight storage):
(i) Ambae island (Lolowai).
(ii) Epi island (Lamen Bay).
(iii) Pentecost island (Loltong).
(iv) Malo island (Nunuka).
(v) Malekula island (South West Bay).
Recognizing the importance of the maintenance of transport
infrastructure in meeting program objectives, the Vanuatu Compact will
provide focused assistance of U.S. $6.22 million to the principal
institution in the Transport Infrastructure Project, namely PWD, to
remove key constraints that face the institution in effectively
delivering maintenance and repair services. The MCA Program also
provides support for the sustainability and viability of the
institution through organizational reform and policy changes. (Refer to
Sections V. C. Government Commitment and Effectiveness and D.
Sustainability, for further information on these maintenance
initiatives.) The following table presents the total Compact cost, by
component:
----------------------------------------------------------------------------------------------------------------
Timeline
-----------------------------------------------------------------
Description CY1 ($US CY2 ($US CY3 ($US CY4 ($US CY5 ($US Total
mil) mil) mil) mil) mil)
----------------------------------------------------------------------------------------------------------------
Transport Infrastructure Project.. 4.00 22.45 25.80 2.21 0.03 54.47
Institutional Strengthening for 5.47 0.48 0.09 0.09 0.09 6.22
sustainability/Maintenance.......
Program Administration & Audits... 1.67 0.53 0.49 0.49 0.49 3.63
Monitoring & Evaluation........... 0.28 0.06 0.06 0.06 0.91 1.37
-----------------------------------------------------------------------------
Total......................... 11.42 23.51 26.43 2.85 1.52 65.69
----------------------------------------------------------------------------------------------------------------
[[Page 14297]]
III. Impact
The Transport Infrastructure Project is expected to have a
transformational impact on Vanuatu's economic development, increasing
average income per capita (in real terms) by approximately $200, or 15%
of current income per capita, by 2010. GDP is expected to increase by
an additional 3% a year as a result of the program.
Based on the areas covered by the transport assets, the program can
be expected to benefit approximately 65,000 poor, rural inhabitants
living nearby and using the roads to access markets and social
services. The program is also expected to expand the tourism sector by
approximately 15% once construction is complete. Based on the most
recent employment data \4\ this translates to the creation of 280
additional formal sector jobs and 25 new locally-owned businesses each
year in this sector, impacting the lives of over 1,300 people. The
total number of beneficiaries would be higher if the spillover impact
of tourism activities on agriculture, fishery and construction
sectors--as well as impact of the national maintenance strengthening
component--could be measured.
---------------------------------------------------------------------------
\4\ National Tourism Development Office (2000) and assuming 2%
growth rate based on labor force growth.
---------------------------------------------------------------------------
IV. Program Management
The Government of Vanuatu (``GOV'') is creating an independent
entity, MCA-Vanuatu, housed within the Ministry of Finance and Economic
Management, with primary responsibility for oversight and management of
Compact implementation, particularly all monitoring and evaluation
activities. To oversee MCA-Vanuatu, the GOV has established a Steering
Committee consisting of five Director General-level and four Director-
level civil servants, one private sector representative (General
Manager of Vanuatu Chamber of Commerce), and one civil society
representative (Secretary General of Vanuatu Association of NGOs), with
all members of the Steering Committee possessing voting rights.
Observers to the Steering Committee will include two Government
Directors and an MCC representative.
The PWD will serve as the project manager, holding responsibility
for oversight of the specific activities of the Transport
Infrastructure Project. External professional services (for
construction supervision) will be contracted through MCA-Vanuatu to
assist PWD in its functions.
The Department of Finance in the Ministry of Finance and Economic
Management will serve as the fiscal agent on behalf of MCA-Vanuatu. For
procurements, an external procurement agent will be used, and is
currently being selected through a competitive process. Procurements
will be conducted in accordance with MCC-modified World Bank
Procurement Guidelines. A special U.S. Dollar account will be
established at the Reserve Bank of Vanuatu for receipt of MCC
disbursements.
V. Assessment
A. Economic Analysis
The economic internal rate of return (``ERR'') for the overall
program is estimated to be 25%, calculated over a twenty-year time
horizon. Expected benefits include: Increased agricultural and
fisheries production, induced tourism investment and expenditures,
reduced transport operating costs, reduced infrastructure closures,
reduced freight spoilage, value-added from storage warehouses, and
maintenance cost savings.
In addition to the quantifiable benefits described above, the
upgraded road network is expected to improve the quality of life of all
ni-Vanuatu living within the vicinity of the road by improving access
(via lower costs and shorter travel times) to social services, such as
health centers and schools.
B. Consultative Process
Vanuatu engaged in a comprehensive consultative process, consisting
of: (i) Ongoing national and provincial public forums, such as the
Comprehensive Reform Program Summit, National Business Forum, Rural
Economic Development Initiative, and Government Investment Program
workshops, which included specific discussion on priorities and
projects for the MCA proposal; and (ii) public outreach meetings in
four of Vanuatu's six provinces. Consulted groups included Vanuatu's
council of chiefs, women's group leaders, the private sector, NGOs,
church leaders, and government officials from Vanuatu's provinces. The
proposed projects for MCC consideration were derived from each
province's Rural Economic Development Plan, which included extensive
local-level stakeholder consultation forums in each of Vanuatu's six
provinces.
To sustain public awareness and participation in the Compact
development process, the GOV held MCA public outreach meetings in
various provinces and engaged local media regarding proposal due
diligence, project selection, and Compact development.
C. Government Commitment and Effectiveness
The GOV is undertaking several major policy changes as a part of
the MCA Program. These include:
Policy changes to ensure sufficient budget allocations for road
maintenance activities by the GOV. This policy change will provide PWD
with sufficient means to maintain all new and existing transport
infrastructure.
The GOV or the respective province will develop a revenue
collection mechanism and an implementation plan for the collection of
wharf user fees and their application towards wharf maintenance. This
policy change would provide sufficient funds for maintenance of the
wharves, thereby preserving their useful life and ability to contribute
to economic growth and higher incomes.
D. Sustainability
In addition to the efforts mentioned above, the program will
support the following major institutional changes to promote enhanced
maintenance and sustainability of infrastructure assets:
Establishment of a service performance contract between the
Ministry of Infrastructure and Public Utilities and PWD in order to
make PWD accountable for service delivery against targets set on an
annual basis (the ``Service Performance Contract''). The Service
Performance Contract is expected to reduce the overall cost of
maintenance on an annual basis, and assure proper and timely
maintenance of infrastructure assets.
Establishment of maintenance contracts with community
representatives for various sub-projects to involve local communities
(users) in maintenance activities.
E. Environment and Social Impacts
Initial environmental and social assessment of each of the eleven
proposed projects included in the Transport Infrastructure Project has
been completed. Impacts associated with these projects, which primarily
involve the rehabilitation of existing infrastructure, are likely to be
site-specific and readily mitigable, and are therefore screened as
Category B activities in accordance with the MCC Environmental
Guidelines. No significant adverse environmental or social impacts,
such as the need for resettlement, were identified in the initial
assessment. However, further environmental and social assessment will
be required during the design stage
[[Page 14298]]
to confirm the findings of the initial assessment and to address design
alternatives. Project-specific environmental management plans will be
completed prior to construction.
To address environmental and social issues during program
implementation, MCA-Vanuatu will select in an open and competitive
process, subject to the approval of MCC, an environmental and social
impact officer (``ESI Officer''). The ESI Officer will provide MCA-
Vanuatu with expertise in environmental, social, and gender impact
assessment, and will be responsible for ensuring that the activities
related to the Transport Infrastructure Project and Institutional
Strengthening Project are undertaken in accordance with the MCC
Environmental Guidelines and safeguard policies. The ESI Officer will
be located within the Environmental Unit of the Government, but will be
dedicated to the management of environmental and social issues
associated with implementation of the Transport Infrastructure Project
and Institutional Strengthening Project. The ESI Officer will convene
periodic public meetings to provide implementation updates to identify
and address public concerns.
F. Donor Coordination
The GOV and MCC have convened various meetings with donor partners
such as Australia, New Zealand, France, the European Union, Japan, the
Asian Development Bank (``ADB''), the World Bank, and the IMF to
discuss potential project-level coordination opportunities and
collaborative partnerships for implementation and monitoring. It is
widely accepted among donors that Vanuatu has a substantial need for
investments in transport infrastructure, particularly for rural areas
and the outer islands. The MCA Program builds upon analytical work
previously conducted by the ADB on outer island transport
infrastructure development in Vanuatu.
Donors such as Australia and New Zealand have recently committed to
enlarging their assistance to the productive sectors in response to the
priorities for growth and poverty reduction outlined in the GOV's
National Priorities and Action Agenda. MCC's focus on transport
infrastructure presents a number of mutually beneficial coordination
opportunities with ongoing and planned donor programs, such as: The EU
and France's Agricultural Producers Organization Project; the EU and
ADB's Tourism Training and Education project; ADB's Rural Credit
Strengthening and Secured Transaction Framework projects; AusAID's
Business Climate Reform program; the EU and France's International
Airport upgrading; and the EU and JICA's Institutional Strengthening
for Infrastructure Maintenance programs. Moreover, AusAID is providing
funding for key household data surveys (such as the Household Income
and Expenditure Survey), which will be used in monitoring program
impacts.
Millennium Challenge Compact Between the United States of America
Acting Through the Millennium Challenge Corporation and the Government
of the Republic of Vanuatu
Table of Contents
Article I. Purpose and Term
Section 1.1 Project Objectives
Section 1.2 Projects
Section 1.3 Entry into Force; Compact Term
Article II. Funding and Resources
Section 2.1 MCC Funding
Section 2.2 Government Resources
Section 2.3 Limitations on the Use of Treatment of MCC Funding
Section 2.4 Incorporation; Notice; Clarification
Section 2.5 Refunds; Violations
Article III. Implementation
Section 3.1 Implementation Framework
Section 3.2 Government Responsibilities
Section 3.3 Government Deliveries
Section 3.4 Government Assurances
Section 3.5 Implementation Letters; Supplemental Agreements
Section 3.6 Procurement; Awards of Assistance
Section 3.7 Policy Performance; Policy Reforms
Section 3.8 Records and Information; Access; Audits; Reviews
Section 3.9 Insurance
Section 3.10 Domestic Requirements
Section 3.11 No Conflict
Section 3.12 Reports
Article IV. Conditions Precedent; Deliveries
Section 4.1 Conditions Prior to the Entry into Force and
Deliveries
Section 4.2 Conditions Precedent to MCC Disbursements or Re-
Disbursements
Article V. Final Clauses
Section 5.1 Communications
Section 5.2 Representatives
Section 5.3 Amendments
Section 5.4 Termination; Suspension
Section 5.5 Privileges and Immunities
Section 5.6 Attachments
Section 5.7 Inconsistencies
Section 5.8 Indemnification
Section 5.9 Headings
Section 5.10 Interpretation; Definitions
Section 5.11 Signatures
Section 5.12 Designation
Section 5.13 Survival
Section 5.14 Consultation
Section 5.15 MCC Status
Section 5.16 Language
Section 5.17 Publicity; Information and Marking
Exhibit A: Definitions
Exhibit B: List of Certain Supplemental Agreements
Annex I: Program Description
Schedule 1: Transport Infrastructure Project
Annex II: Financial Plan Summary
Annex III: Description of the M&E Plan
Millennium Challenge Compact
This Millennium Challenge Compact (the ``Compact'') is made between
the United States of America, acting through the Millennium Challenge
Corporation, a United States Government corporation (``MCC''), and the
Government of the Republic of Vanuatu (the ``Government'') (referred to
herein individually as a ``Party'' and collectively, the ``Parties'').
A compendium of capitalized terms defined herein is included in Exhibit
A attached hereto.
Recitals
Whereas, MCC, acting through its Board of Directors, has selected
Vanuatu as eligible to present to MCC a proposal for the use of
Millennium Challenge Account (``MCA'') assistance to help facilitate
poverty reduction through economic growth in Vanuatu;
Whereas, the Government has carried out a consultative process with
the country's private sector and civil society to outline the country's
priorities for the use of MCA assistance and developed a proposal,
which was submitted to MCC on March 31, 2005 (the ``Proposal'');
Whereas, the Proposal focused on, among other things, increasing
economic activity and incomes in rural areas through comprehensive
investments in transport infrastructure, including roads, wharfs,
airstrips and warehouses;
Whereas, MCC has evaluated the Proposal and related documents to
determine whether the Proposal is consistent with core MCA principles
and includes proposed activities and projects that will advance the
progress of Vanuatu towards achieving economic growth and poverty
reduction; and
Whereas, based on MCC's evaluation of the Proposal and related
documents and subsequent discussions and negotiations between the
Parties, the Government and MCC determined to enter into this Compact
to implement a program using MCC Funding to advance Vanuatu's progress
towards economic growth and poverty reduction (the ``Program'');
Now, therefore, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, the Parties hereby agree as
follows:
Article I. Purpose and Term
Section 1.1 Project Objectives. The overall objective of this
Compact is to
[[Page 14299]]
reduce poverty and increase incomes in rural areas by stimulating
economic activity in the tourism and agricultural sectors through the
improvement of transport infrastructure, which is key to economic
growth and poverty reduction in Vanuatu (the ``Compact Goal''). The
Parties have identified the following project-level objectives (each a
``Project Objective'' and together the ``Project Objectives'') to
advance the Compact Goal, each of which is described in more detail in
the Annexes attached hereto:
(a) Provide improved or new priority transport infrastructure in
rural areas and outer islands, including roads, wharfs, airstrips and
warehouses (the ``Infrastructure Objective''); and
(b) Strengthen the ability of the Government, specifically the
capacity and capability of the Department of Public Works, to maintain
and sustain Vanuatu's infrastructure assets (the ``Institutional
Strengthening Objective'').
The Government expects to achieve, and shall use its best efforts
to ensure the achievement of, these Project Objectives during the
Compact Term.
Section 1.2 Projects. The Annexes attached hereto describe the
specific projects and the policy reforms and other activities related
thereto (each, a ``Project'') that the Government will carry out, or
cause to be carried out, in furtherance of this Compact to achieve the
Project Objectives.
Section 1.3 Entry into Force; Compact Term. This Compact shall
enter into force on the date of the last letter in an exchange of
letters between the Principal Representatives of each Party confirming
that each Party has completed its domestic requirements for entry into
force of this Compact and that all conditions set forth in section 4.1
have been satisfied by the Government and MCC (such date, the ``Entry
into Force''). This Compact shall remain in force for five (5) years
from the date of the entry into force of this Compact, unless earlier
terminated in accordance with section 5.4 (the ``Compact Term'').
Article II. Funding and Resources
Section 2.1 MCC Funding.
(a) MCC's Contribution. MCC hereby grants to the Government,
subject to the terms and conditions of this Compact, an amount not to
exceed Sixty-Five Million Six Hundred Ninety Thousand United States
Dollars (USD $65,690,000) ( ``MCC Funding'') during the Compact Term to
enable the Government to implement the Program and achieve the Project
Objectives.
(i) Subject to sections 2.1(a)(ii), 2.2.(b) and 5.4, the allocation
of MCC Funding within the Program and among and within the Projects
shall be as generally described in Annex II or as otherwise agreed upon
by the Parties from time to time.
(ii) If at any time MCC determines that a condition precedent to an
MCC Disbursement has not been satisfied, MCC may, upon written notice
to the Government, reduce the total amount of MCC Funding by an amount
equal to the amount estimated in the applicable Detailed Financial Plan
for the Program or Project activity for which such condition precedent
has not been met. Upon the expiration or termination of this Compact,
(1) any amounts of MCC Funding not disbursed by MCC to the Government
shall be automatically released from any obligation in connection with
this Compact and (2) any amounts of MCC Funding disbursed by MCC to the
Government as provided in section 2.1(b)(i), but not re-disbursed as
provided in section 2.1(b)(ii) or otherwise incurred as permitted
pursuant to section 5.4(e) prior to the expiration or termination of
this Compact, shall be returned to MCC in accordance with section
2.5(a)(ii).
(b) Disbursements.
(i) Disbursements of MCC Funding. MCC shall from time to time make
disbursements of MCC Funding (each such disbursement, an ``MCC
Disbursement'') to a Permitted Account or through such other mechanism
agreed by the Parties under and in accordance with the procedures and
requirements set forth in Annex I, the Disbursement Agreement or as
otherwise provided in any other relevant Supplemental Agreement.
(ii) Re-Disbursements of MCC Funding. The release of MCC Funding
from a Permitted Account (each such release, a ``Re-Disbursement''),
shall be made in accordance with the procedures and requirements set
forth in Annex I, the Disbursement Agreement or as otherwise provided
in any other relevant Supplemental Agreement.
(c) Interest. Unless the Parties agree otherwise in writing, any
interest or other earnings on MCC Funding that accrue (collectively,
``Accrued Interest'') shall be held in a Permitted Account and accrue
in accordance with the requirements for the accrual and treatment of
Accrued Interest as specified in Annex I or any relevant Supplemental
Agreement. On a quarterly basis and upon the termination or expiration
of this Compact, the Government shall return, or ensure the return of,
all Accrued Interest to any United States Government account designated
by MCC.
(d) Conversion; Exchange Rate. The Government shall ensure that all
MCC Funding that is held in the Permitted Account(s) shall be
denominated in the currency of the United States of America (``United
States Dollars'') prior to Re-Disbursement; provided, that a certain
portion of MCC Funding may be transferred to a Local Account and may be
held in such Local Account in the currency of Vanuatu prior to Re-
Disbursement in accordance with the requirements of Annex I and any
relevant Supplemental Agreement. To the extent that any amount of MCC
Funding held in United States Dollars must be converted into the
currency of the Republic of Vanuatu for any purpose, including for any
Re-Disbursement or any transfer of MCC Funding into a Local Account,
the Government shall ensure that such amount is converted consistent
with Annex I, including the rate and manner set forth in Annex I, and
the requirements of the Disbursement Agreement or any other
Supplemental Agreement between the Parties.
(e) Guidance. From time to time, MCC may provide guidance to the
Government through Implementation Letters on the frequency, form and
content of requests for MCC Disbursements and Re-Disbursements or any
other matter relating to MCC Funding. The Government shall apply such
guidance in implementing this Compact.
Section 2.2 Government Resources.
(a) The Government shall provide or cause to be provided such
Government funds and other resources, and shall take or cause to be
taken such actions, including obtaining all necessary approvals and
consents, as are specified in this Compact or in any Supplemental
Agreement to which the Government is a party or as are otherwise
necessary and appropriate to effectively carry out the Government
Responsibilities or other responsibilities or obligations of the
Government under or in furtherance of this Compact during the Compact
Term and through the completion of any post-Compact Term activities,
audits or other responsibilities.
(b) If at any time during the Compact Term, the Government
materially reallocates or reduces the allocation in its national budget
or any other ni-Vanuatu governmental authority at a departmental,
municipal, regional or other jurisdictional level materially
reallocates or reduces the allocation of its respective budget, of the
normal and expected resources that the Government or such other
governmental authority, as applicable, would have otherwise received or
budgeted, from external or
[[Page 14300]]
domestic sources, for the activities contemplated herein, the
Government shall notify MCC in writing within fifteen (15) days of such
reallocation or reduction, such notification to contain information
regarding the amount of the reallocation or reduction, the affected
activities, and an explanation for the reallocation or reduction. In
the event that MCC independently determines upon review of the executed
national annual budget that such a material reallocation or reduction
of resources has occurred, MCC shall notify the Government and,
following such notification, the Government shall provide a written
explanation for such reallocation or reduction and MCC may (i) reduce,
in its sole discretion, the total amount of MCC Funding or any MCC
Disbursement by an amount equal to the amount estimated in the
applicable Detailed Financial Plan for the activity for which funds
were reduced or reallocated or (ii) otherwise suspend or terminate MCC
Funding in accordance with section 5.4(b).
(c) The Government shall use its best efforts to ensure that all
MCC Funding is fully reflected and accounted for in the annual budget
of Vanuatu on a multi-year basis.
(d) The Government shall establish an independent unit within the
Ministry of Finance and Economic Management, or such other entity as
may be acceptable to MCC, which shall be responsible for the oversight
and management of the Program as specified in Annex I (``MCA-
Vanuatu''). The Government shall ensure the independent and proper
administration of MCA-Vanuatu in accordance with the terms of the
Compact, the Governing Documents of MCA-Vanuatu and any relevant
Supplemental Agreements.
Section 2.3 Limitations on the Use or Treatment of MCC Funding.
(a) Abortions and Involuntary Sterilizations. The Government shall
ensure that MCC Funding shall not be used to undertake, fund or
otherwise support any activity that is subject to prohibitions on use
of funds contained in (i) paragraphs (1) through (3) of section 104(f)
of the Foreign Assistance Act of 1961 (22 U.S.C. 2151b(f)(1)-(3), a
United States statute, which prohibitions shall apply to the same
extent and in the same manner as such prohibitions apply to funds made
available to carry out Part I of such Act; or (ii) any provision of law
comparable to the eleventh and fourteenth provisos under the heading
``Child Survival and Health Programs Fund'' of division E of Public Law
108-7 (117 Stat. 162), a United States statute.
(b) United States Job Loss or Displacement of Production. The
Government shall ensure that MCC Funding shall not be used to
undertake, fund or otherwise support any activity that is likely to
cause a substantial loss of United States jobs or a substantial
displacement of United States production, including:
(i) Providing financial incentives to relocate a substantial number
of United States jobs or cause a substantial displacement of production
outside the United States;
(ii) Supporting investment promotion missions or other travel to
the United States with the intention of inducing United States firms to
relocate a substantial number of United States jobs or a substantial
amount of production outside the United States;
(iii) Conducting feasibility studies, research services, studies,
travel to or from the United States, or providing insurance or
technical and management assistance, with the intention of inducing
United States firms to relocate a substantial number of United States
jobs or cause a substantial displacement of production outside the
United States;
(iv) Advertising in the United States to encourage United States
firms to relocate a substantial number of United States jobs or cause a
substantial displacement of production outside the United States;
(v) Training workers for firms that intend to relocate a
substantial number of United States jobs or cause a substantial
displacement of production outside the United States;
(vi) Supporting a United States office of an organization that
offers incentives for United States firms to relocate a substantial
number of United States jobs or cause a substantial displacement of
production outside the United States; or
(vii) Providing general budget support for an organization that
engages in any activity prohibited above.
(c) Military Assistance and Training. The Government shall ensure
that MCC Funding shall not be used to undertake, fund or otherwise
support the purchase or use of goods or services for military purposes,
including military training, or to provide any assistance to the
military, police, militia, national guard or other quasi-military
organization or unit.
(d) Prohibition of Assistance Relating to Environmental, Health or
Safety Hazards. The Government shall ensure that MCC Funding shall not
be used to undertake, fund or otherwise support any activity that is
likely to cause a significant environmental, health, or safety hazard.
Unless MCC and the Government agree otherwise in writing, the
Government shall ensure that activities undertaken, funded or otherwise
supported in whole or in part (directly or indirectly) by MCC Funding
comply with environmental guidelines delivered by MCC to the Government
or posted by MCC on its Web-site or otherwise publicly made available,
as such guidelines may be amended from time to time (the
``Environmental Guidelines''), including any definition of ``likely to
cause a significant environmental, health, or safety hazard'' as may be
set forth in such Environmental Guidelines.
(e) Taxation.
(i) Taxes. As required by applicable United States law and
consistent with the applicable requirement of Vanuatu law that
international cooperation assistance shall be exempt from taxes, the
Government shall ensure that the Program, all Program Assets, MCC
Funding and Accrued Interest shall be free from any taxes imposed under
laws currently or hereafter in effect in Vanuatu during the Compact
Term. This exemption shall apply to any use of any Program Asset, MCC
Funding and Accrued Interest, including any Exempt Uses, and to any
work performed under or activities undertaken in furtherance of this
Compact by any person or entity (including contractors and grantees)
funded by MCC Funding, and shall apply to all taxes, tariffs, duties,
and other levies (each a ``Tax'' and collectively, ``Taxes''),
including:
(1) To the extent attributable to MCC Funding, income taxes and
other taxes on profit or businesses imposed on organizations or
entities, other than nationals of Vanuatu, receiving MCC Funding,
including taxes on the acquisition, ownership, rental, disposition or
other use of real or personal property, taxes on investment or deposit
requirements and currency controls in Vanuatu, or any other tax, duty,
charge or fee of whatever nature, except fees for specific services
rendered; for purposes of this section 2.3(e), the term ``national''
refers to organizations established under the laws of Vanuatu, other
than MCA-Vanuatu or any other entity established solely for purposes of
managing or overseeing the implementation of the Program or any wholly-
owned subsidiaries, divisions, or Affiliates of entities not registered
or established under the laws of Vanuatu;
(2) Customs duties, tariffs, import and export taxes, or other
levies on the importation, use and re-exportation of goods, services,
or the personal belongings and effects, including personally-owned
automobiles, for Program use or the personal use of individuals who are
neither citizens nor
[[Page 14301]]
permanent residents of Vanuatu and who are present in Vanuatu for
purposes of carrying out the Program or their family members, including
all charges based on the value of such imported goods;
(3) Taxes on the income or personal property of all individuals who
are neither citizens nor permanent residents of Vanuatu, including
income and social security taxes of all types and all taxes on the
personal property owned by such individuals, to the extent such income
or property are attributable to MCC Funding; and
(4) Taxes or duties levied on the purchase of goods or services
funded by MCC Funding, including sales taxes, tourism taxes, value-
added taxes (VAT), or other similar charges.
(ii) This section 2.3(e) shall apply, but is not limited to (1) any
transaction, service, activity, contract, grant or other implementing
agreement funded in whole or in part by MCC Funding; (2) any supplies,
equipment, materials, property or other goods (referred to herein
collectively as ``goods'') or funds introduced into, acquired in, used
or disposed of in, or imported into or exported from, Vanuatu by MCC,
or by any person or entity (including contractors and grantees) as part
of, or in conjunction with, MCC Funding or the Program; (3) any
contractor, grantee, or other organization carrying out activities
funded in whole or in part by MCC Funding; and (4) any employee of such
organizations (the uses set forth in clauses (1) through (4) are
collectively referred to herein as ``Exempt Uses'').
(iii) If a Tax has been levied and paid contrary to the
requirements of this section 2.3(e), whether inadvertently, due to the
impracticality of implementation of this provision with respect to
certain types or amounts of taxes, or otherwise, the Government shall
refund promptly to MCC to an account designated by MCC the amount of
such Tax in the currency of Vanuatu, within thirty (30) days (or such
other period as may be agreed in writing by the Parties) after the
Government is notified in writing according to procedures agreed by the
Parties, whether by MCC or otherwise, of such levy and tax payment;
provided, however, the Government shall apply national funds to satisfy
its obligations under this section 2.3(e)(iii) and no MCC Funding,
Accrued Interest, or any assets, goods, or property (real, tangible, or
intangible) purchased or financed in whole or in part (directly or
indirectly) by MCC Funding (``Program Assets'') may be applied by the
Government in satisfaction of its obligations under this paragraph.
(iv) The Parties shall memorialize in a mutually acceptable
Supplemental Agreement or other suitable document the mechanisms for
implementing this section 2.3(e), including (1) a formula for
determining refunds for Taxes paid, the amount of which is not
susceptible to precise determination, (2) a mechanism for ensuring the
tax-free importation, use, and re-exportation of goods, services, or
the personal belongings of individuals (including all Providers)
described in paragraph (i)(2) of this section 2.3(e), and (3) any other
appropriate Government action to facilitate the administration of this
section 2.3(e).
(f) Alteration. The Government shall ensure that neither MCC
Funding nor Accrued Interest or Program Assets shall be subject to any
impoundment, rescission, sequestration or any provision of law now or
hereafter in effect in Vanuatu that would have the effect of requiring
or allowing any impoundment, rescission or sequestration of any MCC
Funding, Accrued Interest or Program Asset.
(g) Liens or Encumbrances. The Government shall ensure that no MCC
Funding, Accrued Interest or Program Assets shall be subject to any
lien, attachment, enforcement of judgment, pledge, or encumbrance of
any kind (each a ``Lien''), except with the prior approval of MCC in
accordance with section 3(c) of Annex I, and in the event of the
imposition of any Lien not so approved, the Government shall promptly
seek the release of such Lien and shall promptly pay any amounts owed
to obtain such release; provided, however, the Government shall satisfy
its obligations under this section 2.3(g) at its own expense and no MCC
Funding, Accrued Interest or Program Assets may be applied by the
Government in satisfaction of its obligations under this section
2.3(g).
(h) Other Limitations. The Government shall ensure that the use or
treatment of MCC Funding shall be subject to such other limitations (i)
as required by the applicable law of the United States of America now
or hereafter in effect during the Compact Term, (ii) as advisable under
or required by applicable United States Government policies now or
hereafter in effect during the Compact Term, or (iii) to which the
Parties may otherwise agree in writing.
(i) Utilization of Goods, Services and Works. The Government shall
ensure that any Program Assets, services, facilities or works funded in
whole or in part (directly or indirectly) by MCC Funding, unless
otherwise agreed by the Parties in writing, shall be used solely in
furtherance of this Compact.
(j) Notification of Applicable Laws and Policies. MCC shall notify
the Government of any applicable United States law or policy affecting
the use or treatment of MCC Funding, whether or not specifically
identified in this section 2.3, and shall provide to the Government a
copy of the text of any such applicable law and a written explanation
of any such applicable policy.
Section 2.4 Incorporation; Notice; Clarification.
(a) The Government shall include, or ensure the inclusion of, all
of the requirements set forth in section 2.3 in all Supplemental
Agreements to which MCC is not a party and shall use its best efforts
to ensure that no such Supplemental Agreement is implemented in
violation of the prohibitions set forth in section 2.3.
(b) The Government shall ensure notification of all of the
requirements set forth in section 2.3 to any Provider and all relevant
officers, directors, employees, agents, representatives, Affiliates,
contractors, sub-contractors, grantees and sub-grantees of any
Provider. The term ``Provider'' shall mean (i) MCA-Vanuatu and any
Government Affiliate or Permitted Designee involved in any activities
in furtherance of this Compact or (ii) any third party who receives at
least USD $50,000 in the aggregate of MCC Funding (other than employees
of MCA-Vanuatu) during the Compact Term or such other amount as the
Parties may agree in writing, whether directly from MCC, indirectly
through Re-Disbursements, or otherwise.
(c) In the event the Government or any Provider requires
clarification from MCC as to whether an activity contemplated to be
undertaken in furtherance of this Compact violates or may violate any
provision of section 2.3, the Government shall notify, or ensure that
such Provider notifies, MCC in writing and provide in such notification
a detailed description of the activity in question. In such event, the
Government shall not proceed, and shall use its best efforts to ensure
that no relevant Provider proceeds, with such activity, and the
Government shall ensure that no Re-Disbursements shall be made for such
activity, until MCC advises the Government or such Provider in writing
that the activity is permissible.
Section 2.5 Refunds; Violation.
(a) Notwithstanding the availability to MCC, or exercise by MCC of,
any other remedies, including under international law, this Compact, or
any Supplemental Agreement:
[[Page 14302]]
(i) If any amount of MCC Funding or Accrued Interest, or any
Program Asset, is used for any purpose prohibited under this Article II
or otherwise in violation of any of the terms and conditions of this
Compact, any guidance in any Implementation Letter, or any Supplemental
Agreement between the Parties, MCC may require the Government to repay
promptly to MCC to an account designated by MCC or to others as MCC may
direct the amount of such misused MCC Funding or Accrued Interest, or
the cash equivalent of the value of any misused Program Asset, in
United States Dollars, plus any interest that accrued or would have
accrued thereon, within thirty (30) days (or such other period as may
be agreed in writing by the Parties) after the Government is notified,
whether by MCC or otherwise, of such prohibited use; provided, however,
the Government shall apply national funds to satisfy its obligations
under this section 2.5(a)(i) and no MCC Funding, Accrued Interest, nor
Program Assets may be applied by the Government in satisfaction of its
obligations under this section 2.5(a)(i); and
(ii) If all or any portion of this Compact is terminated or
suspended and upon the expiration of this Compact, the Government
shall, subject to the requirements of sections 5.4(e) and 5.4(f),
refund, or ensure the refund, to MCC to such account(s) designated by
MCC the amount of any MCC Funding, plus any Accrued Interest, promptly,
but in no event later than thirty (30) days after the Government
receives MCC's request for such refund; provided, that if this Compact
is terminated or suspended in part, MCC may request a refund for only
the amount of MCC Funding, plus any Accrued Interest, then allocated to
the terminated or suspended portion; provided, further, that any refund
of MCC Funding or Accrued Interest shall be to such account(s) as
designated by MCC.
(b) Notwithstanding any other provision in this Compact or any
other agreement to the contrary, MCC's right under this section 2.5 for
a refund shall continue during the Compact Term and for a period of (i)
five (5) years thereafter or (ii) one (1) year after MCC receives
actual knowledge of such violation, whichever is later.
(c) If MCC determines that any activity or failure to act violates,
or may violate, any section in this Article II, MCC may refuse any
further MCC Disbursements for or conditioned upon such activity, and
may take any action to prevent any Re-Disbursement related to such
activity.
Article III. Implementation
Section 3.1 Implementation Framework. This Compact shall be
implemented by the Parties in accordance with this Article III and as
further specified in the Annexes and in relevant Supplemental
Agreements.
Section 3.2 Government Responsibilities.
(a) The Government shall have principal responsibility for
oversight and management of the implementation of the Program (i) in
accordance with the terms and conditions specified in this Compact and
relevant Supplemental Agreements, (ii) in accordance with all
applicable laws then in effect in the Republic of Vanuatu, and (iii) in
a timely and cost-effective manner and in conformity with sound
technical, financial and management practices (collectively, the
``Government Responsibilities''). Unless otherwise expressly provided,
any reference to the Government Responsibilities or any other
responsibilities or obligations of the Government herein shall be
deemed to apply to any Government Affiliate and any of their respective
directors, officers, employees, contractors, sub-contractors, grantees,
sub-grantees, agents or representatives.
(b) The Government shall ensure that no person or entity shall
participate in the selection, award, administration or oversight of a
contract, grant or other benefit or transaction funded in whole or in
part (directly or indirectly) by MCC Funding, in which (i) the entity,
the person, members of the person's immediate family or household or
his or her business partners, or organizations controlled by or
substantially involving such person or entity, has or have a financial
or other interest or (ii) the person or entity is negotiating or has
any arrangement concerning prospective employment, unless such person
or entity has first disclosed in writing to the Government the conflict
of interest and, following such disclosure, the Parties agreed in
writing to proceed notwithstanding such conflict. The Government shall
ensure that no person or entity involved in the selection, award,
administration, oversight or implementation of any contract, grant or
other benefit or transaction funded in whole or in part (directly or
indirectly) by MCC Funding shall solicit or accept from or offer to a
third party or seek or be promised (directly or indirectly) for itself
or for another person or entity any gift, gratuity, favor or benefit,
other than items of de minimis value and otherwise consistent with such
guidance as MCC may provide from time to time.
(c) The Government shall not designate any person or entity,
including any Government Affiliate, to implement, in whole or in part,
this Compact or any Supplemental Agreement between the Parties
(including any Government Responsibilities or any other
responsibilities or obligations of the Government under this Compact or
any Supplemental Agreement between the Parties) or to exercise any
rights of the Government under this Compact or any Supplemental
Agreement between the Parties, except as expressly provided herein or
with the prior written consent of MCC; provided, however, the
Government may designate MCA-Vanuatu or, with the prior written consent
of MCC, such other mutually acceptable persons or entities, to
implement some or all of the Government Responsibilities or any other
responsibilities or obligations of the Government or to exercise any
rights of the Government under this Compact or any Supplemental
Agreement between the Parties (referred to herein collectively as
``Designated Rights and Responsibilities''), in accordance with the
terms and conditions set forth in this Compact or such Supplemental
Agreement (each, a ``Permitted Designee''). Notwithstanding any
provision herein or any other agreement to the contrary, no such
designation shall relieve the Government of such Designated Rights and
Responsibilities, for which the Government shall retain ultimate
responsibility. In the event that the Government designates any person
or entity, including any Government Affiliate, to implement any portion
of the Government Responsibilities or other responsibilities or
obligations of the Government, or to exercise any rights of the
Government under this Compact or any Supplemental Agreement between the
Parties, in accordance with this section 3.2(c), then the Government
shall (i) cause such person or entity to perform such Designated Rights
and Responsibilities in the same manner and to the full extent to which
the Government is obligated to perform such Designated Rights and
Responsibilities, (ii) ensure that such person or entity does not
assign, delegate, or contract (or otherwise transfer) any of such
Designated Rights and Responsibilities to any other person or entity
and (iii) cause such person or entity to certify to MCC in writing that
it will so perform such Designated Rights and Responsibilities and will
not assign, delegate, or contract (or otherwise transfer) any of such
Designated Rights
[[Page 14303]]
and Responsibilities to any person or entity without the prior written
consent of MCC.
(d) The Government shall, upon a request from MCC, execute, or
ensure the execution of, an assignment to MCC of any cause of action
which may accrue to the benefit of the Government, a Government
Affiliate or any Permitted Designee including MCA-Vanuatu in connection
with or arising out of any activities funded in whole or in part
(directly or indirectly) by MCC Funding.
(e) The Government shall ensure that (i) no decision of MCA-Vanuatu
is modified, supplemented, unduly influenced or rescinded by any
governmental authority, except by a non-appealable judicial decision or
any judicial decision which MCA-Vanuatu, with the agreement of MCC,
decides not to appeal, and (ii) the authority of MCA-Vanuatu shall not
be expanded, restricted, or otherwise modified, except in accordance
with this Compact, the Governance Agreement, or any other Supplemental
Agreement between the Parties.
(f) The Government shall ensure that all persons and individuals
that enter into agreements to provide goods, services or works under
the Program or in furtherance of this Compact shall do so in accordance
with the Procurement Guidelines and shall obtain all necessary
immigration, business and other permits, licenses, consents and
approvals to enable them and their personnel to fully perform under
such agreements.
Section 3.3 Government Deliveries. The Government shall proceed,
and cause others to proceed, in a timely manner to deliver to MCC all
Government deliveries required to be delivered by the Government under
this Compact or any Supplemental Agreement between the Parties, in form
and substance as set forth in this Compact or in any such Supplemental
Agreement.
Section 3.4 Government Assurances. The Government hereby provides
the following assurances to MCC that as of the date this Compact is
signed:
(a) The information contained in the Proposal and any agreement,
report, statement, communication, document or otherwise delivered or
otherwise communicated to MCC by or on behalf of the Government on or
after the date of the submission of the Proposal (i) are true, correct
and complete in all material respects and (ii) do not omit any fact
known to the Government that if disclosed would (1) alter in any
material respect the information delivered, (2) likely have a material
adverse effect on the Government's ability to effectively implement, or
ensure the effective implementation of, the Program or any Project or
to otherwise carry out its responsibilities or obligations under or in
furtherance of this Compact, or (3) have likely adversely affected
MCC's determination to enter into this Compact or any Supplemental
Agreement between the Parties;
(b) Unless otherwise disclosed in writing to MCC, the MCC Funding
made available hereunder is in addition to the normal and expected
resources that the Government usually receives or budgets for the
activities contemplated herein from external or domestic sources;
(c) This Compact does not conflict and will not conflict with any
international agreement or obligation to which the Government is a
party or by which it is bound; and
(d) No payments have been (i) received by any official of the
Government or any other government body in connection with the
procurement of goods, services or works to be undertaken or funded in
whole or in part (directly or indirectly) by MCC Funding, except fees,
taxes, or similar payments legally established in Vanuatu or (ii) made
to any third party, in connection with or in furtherance of this
Compact, in violation of the United States Foreign Corrupt Practices
Act of 1977, as amended (15 U.S.C. 78a et seq.).
Section 3.5 Implementation Letters; Supplemental Agreements.
(a) MCC may, from time to time, issue one or more letters to
furnish additional information or guidance to assist the Government in
the implementation of this Compact (each, an ``Implementation
Letter''). The Government shall apply such guidance in implementing
this Compact.
(b) The details of any funding, implementing and other arrangements
in furtherance of this Compact may be memorialized in one or more
agreements between (i) the Government (or any Government Affiliate or
Permitted Designee) and MCC, (ii) MCC and/or the Government (or any
Government Affiliate or Permitted Designee) and any third party,
including any of the Providers or Permitted Designee or (iii) any third
parties where neither MCC nor the Government is a party, before, on or
after the Entry into Force (each, a ``Supplemental Agreement''). The
Government shall deliver, or cause to be delivered, to MCC within five
(5) days of its execution a copy of any Supplemental Agreement to which
MCC is not a party.
Section 3.6 Procurement; Awards of Assistance.
(a) The Government shall ensure that the procurement of all goods,
services and works by the Government or any Provider in furtherance of
this Compact shall be consistent with the procurement guidelines (the
``Procurement Guidelines'') reflected in a Supplemental Agreement
between MCC and MCA-Vanuatu (the ``Procurement Agreement''), which
Procurement Guidelines shall include the following requirements:
(i) Internationally accepted procurement rules with open, fair and
competitive procedures are used in a transparent manner to solicit,
award and administer contracts, grants, and other agreements and to
procure goods, services and works;
(ii) Solicitations for goods, services, and works shall be based
upon a clear and accurate description of the goods, services or works
to be acquired;
(iii) Contracts shall be awarded only to qualified and capable
contractors that have the capability and willingness to perform the
contracts in accordance with the terms and conditions of the applicable
contracts and on a cost effective and timely basis; and
(iv) No more than a commercially reasonable price, as determined,
for example, by a comparison of price quotations and market prices,
shall be paid to procure goods, services, and works.
(b) The Government shall maintain, and shall use its best efforts
to ensure that all Providers maintain, records regarding the receipt
and use of goods, services and works acquired in furtherance of this
Compact, the nature and extent of solicitations of prospective
suppliers of goods, services and works acquired in furtherance of this
Compact, and the basis of award of contracts, grants and other
agreements in furtherance of this Compact.
(c) The Government shall use its best efforts to ensure that
information, including solicitations, regarding procurement, grant and
other agreement actions funded (or to be funded) in whole or in part
(directly or indirectly) by MCC Funding shall be made publicly
available in the manner outlined in the Procurement Guidelines or in
any other manner agreed upon by the Parties in writing.
(d) The Government shall ensure that no goods, services or works
funded in whole or in part (directly or indirectly) by MCC Funding are
procured pursuant to orders or contracts firmly placed or entered into
prior to the Entry into Force, except as the Parties may otherwise
agree in writing.
(e) The Government shall ensure that MCA-Vanuatu and any other
Permitted
[[Page 14304]]
Designee follows, and uses its best efforts to ensure that all
Providers follow, the Procurement Guidelines in procuring (including
soliciting) goods, services and works and in awarding and administering
contracts, grants and other agreements in furtherance of this Compact,
and shall furnish MCC evidence of the adoption of the Procurement
Guidelines by MCA-Vanuatu no later than the time specified in the
Disbursement Agreement.
(f) The Government shall include, or ensure the inclusion of, the
requirements of this section 3.6 into all Supplemental Agreements
between the Government or any Government Affiliate or Permitted
Designee or any of their respective directors, officers, employees,
Affiliates, contractors, sub-contractors, grantees, sub-grantees,
representatives or agents, on the one hand, and a Provider, on the
other hand.
Section 3.7 Policy Performance; Policy Reforms. In addition to the
specific policy and legal reform commitments identified in Annex I and
the Schedules thereto, the Government shall seek to maintain and
improve its level of performance under the policy criteria identified
in section 607 of the Millennium Challenge Act of 2003, as amended (the
``Act''), and the MCA selection criteria and methodology published by
MCC pursuant to section 607 of the Act from time to time (``MCA
Eligibility Criteria'').
Section 3.8 Records and Information; Access; Audits; Reviews.
(a) Reports and Information. The Government shall furnish to MCC,
and shall use its best efforts to ensure that all Providers and any
other third party receiving MCC Funding, as appropriate, furnish to the
Government (and the Government shall provide to MCC), any records and
other information required to be maintained under this section 3.8 and
such other information, documents and reports as may be necessary or
appropriate for the Government to effectively carry out its obligations
under this Compact, including under section 3.12.
(b) Government Books and Records. The Government shall maintain,
and shall use its best efforts to ensure that all Providers maintain,
accounting books, records, documents and other evidence relating to
this Compact adequate to show, to the satisfaction of MCC, without
limitation, the use of all MCC Funding, including all costs incurred by
the Government and the Providers in furtherance of this Compact, the
receipt, acceptance and use of goods, services and works acquired in
furtherance of this Compact by the Government and the Providers,
agreed-upon cost sharing requirements, the nature and extent of
solicitations of prospective suppliers of goods, services and works
acquired by the Government and the Providers in furtherance of this
Compact, the basis of award of Government and other contracts and
orders in furtherance of this Compact, the overall progress of the
implementation of the Program, and any documents required by this
Compact or any Supplemental Agreement between the Parties or reasonably
requested by MCC upon reasonable notice (``Compact Records''). The
Government shall maintain, and shall use its best efforts to ensure
that all Covered Providers maintain, Compact Records in accordance with
generally accepted accounting principles prevailing in the United
States, or at the Government's option and with the prior written
approval by MCC, other accounting principles, such as those (i)
prescribed by the International Accounting Standards Committee (an
affiliate of the International Federation of Accountants) or (ii) then
prevailing in Vanuatu. Compact Records shall be maintained for at least
five (5) years after the end of the Compact Term or for such longer
period, if any, required to resolve any litigation, claims or audit
findings or any statutory requirements.
(c) Access. At the request of MCC, the Government, at all
reasonable times, shall permit, or cause to be permitted, authorized
representatives of MCC, the Inspector General, the United States
Government Accountability Office, any auditor responsible for an audit
contemplated herein or otherwise conducted in furtherance of this
Compact, and any agents or representatives engaged by MCC or a
Permitted Designee to conduct any assessment, review or evaluation of
the Program, at all reasonable times the opportunity to audit, review,
evaluate or inspect activities funded in whole or in part (directly or
indirectly) by MCC Funding or undertaken in connection with the
Program, the utilization of goods and services purchased or funded in
whole or in part (directly or indirectly) by MCC Funding, and Compact
Records, including of the Government or any Provider, relating to
activities funded or undertaken in furtherance of, or otherwise
relating to, this Compact, and shall use its best efforts to ensure
access by MCC, the Inspector General, the United States Government
Accountability Office or relevant auditor, reviewer or evaluator or
their respective representatives or agents to all relevant directors,
officers, employees, Affiliates, contractors, representatives and
agents of the Government or any Provider.
(d) Audits.
(i) Government Audits. The Government shall, on at least an annual
basis and as the Parties may otherwise agree in writing, conduct, or
cause to be conducted, financial audits of all MCC Disbursements and
Re-Disbursements during the year since the Entry into Force or since
the prior anniversary of the Entry into Force in accordance with the
following terms, except as the Parties may otherwise agree in writing.
As requested by MCC in writing, the Government shall use, or cause to
be used, or select, or cause to be selected, an auditor named on the
approved list of auditors in accordance with the Guidelines for
Financial Audits Contracted by Foreign Recipients (the ``Audit
Guidelines'') issued by the Inspector General of the United States
Ag
