Project Readiness Financing Project Administration Manual...required by the State-Owned Enterprises...

Project Readiness Financing

Project Administration Manual

Project Number: 53351-001 December 2019

Republic of Marshall Islands: Preparing Urban Service Improvement Projects

CONTENTS

I. IMPLEMENTATION PLAN 1

A. Outputs and Activities 1 B. PRF Implementation Period 1 C. Overall Implementation Plan 2

II. PROJECT MANAGEMENT ARRANGEMENTS 4

A. Project Implementation Organizations: Roles and Responsibilities 4 B. Key Persons Involved in Implementation 5

III. COSTS AND FINANCING 6

A. Key Assumptions 6 B. Allocation and Withdrawal of Grant Proceeds 6 C. Detailed Cost Estimates by Expenditure Category and Financier 6 D. Detailed Cost Estimates by Year 7 E. Contract and Disbursement S-Curve 8

IV. FINANCIAL MANAGEMENT 9

A. Financial Management Assessment 9 B. Disbursement 11 C. Accounting 12 D. Auditing and Public Disclosure 12

V. PROCUREMENT AND CONSULTING SERVICES 13

A. Procurement of Consulting Services 13 B. Procurement of Goods and Civil Works 14 C. Procurement Plan 14 D. Consultant's Terms of Reference 18

VI. SAFEGUARDS 18

VII. PERFORMANCE MONITORING 18

A. Monitoring 18 B. Reporting 18

VIII. ANTICORRUPTION POLICY 19

IX. ACCOUNTABILITY MECHANISM 19

X. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL 19

APPENDIX 1. CONSULTANT'S TERMS OF REFERENCE 20

A. Output 1 20 B. Output 2 26 C. Output 3 35 D. Output 4 36

Project Administration Manual for Project Readiness Financing: Purpose and Process

The project administration manual (PAM) for project readiness financing (PRF) is an abridged version of the regular PAM of the Asian Development Bank (ADB) and describes the essential administrative and management requirements to implement PRF following the policies and procedures of the government and ADB. The PAM should include references to all available templates and instructions either by linking to relevant URLs or directly incorporating them in the PAM. The Ministry of Finance (MOF), Ministry of Works, Infrastructure and Utilities (MWIU), Kwajalein Atoll Local Government (KALG), and Majuro Water and Sewer Company (MWSC) are wholly responsible for the implementation of ADB-financed PRF projects, as agreed between the borrower and ADB, and following the policies and procedures of the government and ADB. ADB staff is responsible for supporting implementation, including compliance by MOF, MWIU, KALG, and MWSC of their obligations and responsibilities for PRF project implementation following ADB’s policies and procedures. In the event of any discrepancy or contradiction between the PAM and the grant agreement, the provisions of the PRF grant agreement will prevail. After ADB’s approval of the PRF proposal, changes in implementation arrangements are subject to agreement and approval pursuant to relevant government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval, they will be subsequently incorporated in this PAM.

ABBREVIATIONS

ADB – Asian Development Bank ADF – Asian Development Fund APFS – audited project financial statements ICS – individual consultant selection KALG – Kwajalein Atoll Local Government MOF – Ministry of Finance MWIU – Ministry of Works, Infrastructure and Utilities MWSC – Majuro Water and Sewer Company NGO – nongovernment organization NRW – nonrevenue water PAI – project administration instructions PAM – project administration manual

PFM – public financial management PMU – project management unit PPA – project preparation assistance PRF – project readiness financing RMI – Republic of the Marshall Islands QBS – quality-based selection QCBS – quality- and cost-based selection RFQ – request for quotations SMW – solid waste management TOR – terms of reference

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I. IMPLEMENTATION PLAN A. Outputs and Activities 1. Output 1: Enabling environment for the ensuing investment projects created. To support the PRF implementing agency, the Ministry of Works, Infrastructures and Utilities (MWIU), output 1 will (i) recruit consultants (individual and firms) to establish and strengthen a project management unit (PMU) within MWIU; and (ii) design and implement public awareness and community outreach campaigns focusing on water, sanitation and solid waste issues, foster community understanding and ownership of MWSSP and ESWMP. 2. Output 2: Investment scope identified, project readiness prepared, and advance procurement activities for ensuing projects completed. Output 2 will (i) review relevant strategic and planning documents of the implementing agencies of the ensuing projects on delivering sustainable and affordable urban services; (ii) identify scope of the projects based on such plans; (iii) conduct feasibility studies for the ensuing projects; (iv) prepare the due diligence needed; (v) complete detailed engineering design and prepare bidding documents; and (vi) support advance procurement actions for the ensuing projects. 3. Output 3: Tariff frameworks and fee collection systems reviewed and MWSC water supply network operations strengthened. For ESWMP, output 3 will (i) review the financial management and performance of KALG in SWM services and explore the possibility for KALG to charge a waste fee to users.1 For MWSSP, output 3 will (ii) review and recommend amendments to MWSC’s existing water supply and sewage tariff framework to achieve a full cost recovery through user charges and government community service obligation payments (subsidies) as required by the State-Owned Enterprises Act, 2015;2 (iii) strengthen MWSC’s water supply and sewage asset management planning including the preparation of a detailed NRW assessment and action plan; and (iv) procure water leakage detection equipment to support MWSC’s NRW capacity building program.

4. Output 4: Integrated SWM investment plan for Majuro developed. Given the urgent need for SWM in Majuro, output 4 will develop a strategic SWM investment plan for Majuro, which will present an improved SWM solution, with (i) detailed technical solutions and alternatives; (ii) capital and operational cost estimates; and (iii) essential institutional and capacity building measures. This will help to develop any potential project pipeline for ADB financing. 5. Major activities. The PRF will finance consulting firms and individual consultants to deliver outputs 1 to 4. The PRF will also finance the purchase leak detection equipment to assist MWSC to strengthen its capacity to reduce NRW. Assets delivered under the PRF will belong to MWSC. B. PRF Implementation Period 6. The PRF will be implemented over 36 months commencing in January 2020 and ending in January 2023. The PRF will be closed on 31 July 2023.

1 Most of the household and public wastes are collected and transported to the final disposal site by KALG free of

charge. Some of the commercial wastes are transported to the site by themselves, but no tipping fee is charged. 2 Republic of Marshall Islands. 2015. State-Owned Enterprises Act, 2015. Majuro.

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C. Overall Implementation Plan

Table 1: PRF Implementation Schedule

PRF Year 1

2020 PRF Year 2

2021 PRF Year 3

2022

Activities 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12

A. Implementation

Output 1

Consultant selection

Advertisements

Selection

Contract awards

Delivery

Institutional strengthening

asset management and operations management

public awareness and community outreach

Output 2


Advertisements

Selection

Contract awards

Delivery

Output 3

Procure equipment

Output 4


Advertisements

Selection

Contract awards

Delivery

3

PRF Year 1

2020 PRF Year 2

2021 PRF Year 3

2022

B. Management Activities

Submission of quarterly progress report

Submission of annual report

Submission of APFS

Projected date of ensuing loan

APFS = audited project financial statement, PRF = project readiness financing. Source: Asian Development Bank.

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II. PROJECT MANAGEMENT ARRANGEMENTS A. Project Implementation Organizations: Roles and Responsibilities

Table 2: Organizations: Roles and Responsibilities PRF Project Implementation Organizations Management Roles and Responsibilities

A. Executing agencies

1. Ministry of Finance (MOF) (i) Overall delivery of the PRF and reporting to the government and donors (ii) Ensure compliance with financing agreement covenants. (iii) Coordinate with MWIU in the preparation of withdrawal applications and

submission to ADB. (iv) Maintain separate project accounts, have all project accounts audited

annually and sent to ADB. (v) Ensure the compilation and presentation of all reporting requirements

under the project. (vi) Ensure interagency coordination.

B. Implementing agency

1. Ministry of Works, Infrastructure and Utility (MWIU)

(i) Responsible for the overall implementation of the project including the day-to-day project activities and administration of the project.

(ii) Consult and coordinate with KALG and MWSC on project activities. (iii) Ensure compliance with the provisions of the Grant Agreement and

government policies and guidelines. (iv) Prepare overall project implementation plan and consolidated annual

work plan. (v) Prepare consultant request for proposals to comply with ADB

requirements, evaluate proposals, and award, administer contracts. (vi) Negotiate and sign contracts with consultants (vii) Administer all consulting services contracts (viii) Issue contract change orders as appropriate. (ix) Prepare grant withdrawal applications. (x) Maintain project records. (xi) Submit reports to the government and ADB as required during the

implementation of the PRF including progress reports (at least quarterly).

(xii) Prepare the PRF completion report to the government and ADB. (xiii) Ensure compliance with financial and safeguards requirements. (xiv) Update the ensuing project’s resettlement plan following completion of

detailed design of project components. (xv) Update the ensuing project’s environmental monitoring plan following

completion of detailed design of project components. (xvi) Carry out environmental assessments. (xvii) Engage the community public awareness activities.

C. Asian Development Bank Monitor and review overall implementation in consultation with the MOF, MWIU, KALG, and MWSC including: PRF implementation schedule; actions required with reference to the summary poverty reduction & social strategy, gender action plan and environment management plan; timeliness of budgetary allocations and counterpart funding; project expenditures progress with procurement and disbursement, compliance with grant covenants; and likelihood of attaining PRF outputs and outcome.

KALG = Kwajalein Atoll Local Government; MWIU = Ministry of Works, Infrastructure and Utilities; MWSC = Majuro Water and Sewer Company; PRF = project readiness financing. Source: Asian Development Bank

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B. Key Persons Involved in Implementation Executing Agency Ministry of Finance Officer’s Name Maybelline Bing (Ms.)

Position Secretary of Finance E-mail address [email protected] Office address P.O. Box D Majuro, MH 96960 Republic of

the Marshall Islands Asian Development Bank Urban, Water Supply and Sanitation Division Pacific Department

Officer’s Name Jingmin Huang (Ms.) Position Director Telephone No. +63 2 8632 6181 E-mail address [email protected]

Team Leader Officer’s Name Yuki Ikeda (Ms.)

Position Public Management Economist Telephone No. +63 2 8632 6515 E-mail address [email protected]

mailto:[email protected]



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III. COSTS AND FINANCING

A. Key Assumptions 7. The following key assumptions underpin the cost estimates and financing plan:

(i) The official currency of the Republic of Marshall Islands is the United States dollar ($). All financial transactions relating to the project readiness facility (PRF) will be in United States dollars.

(ii) Price contingencies based on expected cumulative inflation over the implementation period are provided as follows:

Table 3: Escalation Rates for Price Contingency Calculation

Item 2020 2021 2022 Average

Foreign rate of price inflation 1.5% 1.6% 1.6% 1.6% Domestic rate of price inflation 1.0% 1.2% 1.8% 1.3% Source: Asian Development Bank. B. Allocation and Withdrawal of Grant Proceeds 8. The government has requested a grant not exceeding $5.00 million from Asian Development Bank’s (ADB) Special Funds resources (ADF grant) to help finance the PRF. The summary financing plan is in Table 4. ADB will finance the expenditures in relation to consulting services, surveys, and equipment. The government will contribute $0.502 million toward the costs of the PRF through the exemption of taxes and duties and provision of office space and other logistical support.

Table 4. Allocation and Withdrawal of Grant Proceeds

Number Category Amount Allocated

$'000 *

Percentage and Basis for

Withdrawal from the Grant Account

1 Consulting Services and Goods 5,000 100% of total

expenditures claimed*

Total 5,000 * Exclusive of local taxes and duties within the territory of the Recipient. Source: Asian Development Bank

C. Detailed Cost Estimates by Expenditure Category and Financier

Table 5. Detailed Cost Estimates by Expenditure Category and Financier

Item

Cost ADB Government of RMI

$'000 $'000 % $'000 %

A. Investment Costs a

1 Materials and equipment 70 70 100.0% - 0.0%

2 Consultancy Services 4,616 4,616 100.0% - 0.0%

Output1 2,148 2,148 100.0% - 0.0% Output2 1,860 1,860 100.0% - 0.0% Output3 174 174 100.0% - 0.0%

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Item

Cost ADB Government of RMI

$'000 $'000 % $'000 % Output 4 435 435 100.0% - 0.0%

3 Taxes and Duties 467 - 0.0% 467 100.0%

Subtotal (A): Total Base Cost 5,153 4,686 90.9% 467 9.1%

B. Contingencies b

1. Physical 263 237 90.0% 26 10.0%

2. Price 86 77 90.0% 9 10.0%

Subtotal (B) 349 314 90.0% 35 10.0%

Total Project Cost (A+B) 5,502 5,000

502

% of Total Project Costs 100.0%

90.9%

9.1%

ADB = Asian Development Bank, RMI = Republic of Marshall Islands. a In mid-2019 prices. b Physical contingencies computed at 5.1%. Price contingencies computed at average of 1.6% on foreign exchange costs and 1.3% on local currency costs; includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. Source: Asian Development Bank. D. Detailed Cost Estimates by Year

Table 6. Detailed Cost Estimates by Year ($'000)

Category Total 2020 2021 2022

A. Materials and equipment 70 19 36 15

B. Consulting Services 4,616 2,162 2,001 453

Output 1 2,148 584 1,111 453

Output 2 1,860 1,044 816 -

Output 3 174 99 74 -

Output 4 435 435 - -

Subtotal (A+B) 4,686 2,181 2,037 468

C. Contingencies 314 145 138 32

Total Project Cost (A+B+C) 5,000 2,326 2,175 500

% of Total Cost 100% 46.5% 43.5% 10.0% Source: Asian Development Bank.

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E. Contract and Disbursement S-Curve

Figure 1. Projected Contract Awards and Disbursements ($'000)

Source: Asian Development Bank

Table 7. Projected Contract Awards and Disbursements

Year Quarter Disbursements

($’000)

Contract Awards ($’000)

Cumulative Disbursements

($’000)

Cumulative Contract Awards ($’000)

2020 Q1 0 0 0 0

2020 Q2 149 2,063 149 2,063

2020 Q3 680 2,513 824 4,576

2020 Q4 1,175 110 2,004 4,686

2021 Q1 989 0 2,993 4,686

2021 Q2 638 0 3,631 4,686

2021 Q3 315 0 3,945 4,686

2021 Q4 288 0 4,233 4,686

2022 Q1 257 0 4,490 4,686

2022 Q2 162 0 4,651 4,686

2022 Q3 35 0 4,686 4,686

2022 Q4 314 314 5,000 5,000

Total 5,000 5,000 Source: Asian Development Bank.

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Q12020

Q22020

Q32020

Q42020

Q12021

Q22021

Q32021

Q42021

Q12022

Q22022

Q32022

Q42022

Cumulative Disbursements Cumulative Contract Awards

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IV. FINANCIAL MANAGEMENT A. Financial Management Assessment 9. A financial management assessment (FMA) of the project was carried out in October–November 2019, in accordance with ADB’s Guidelines for the Financial Management and Analysis of Projects and Financial Due Diligence: A Methodology Note.3 The FMA considered the capacity of the Ministry of Finance (MOF) as the Executing Agency and MWIU as the Implementing Agency.

1. Country level risks 10. The RMI’s public financial management (PFM) is based on the basic legislative framework under the RMI Code. The Code covers basic executive, legislative and judicial procedures and has a separate chapter on financial management, also referred to as the Financial Management Act of RMI. 11. In 2012, MOF conducted a public expenditure and financial accountability (PEFA) assessment of its public financial management practices and came up with a Public Financial Management Performance Report and Action Plan in preparation for another PEFA assessment planned in 2015. No new PEFA assessment was carried out afterwards. Some of the adverse findings of the self-assessment are still practiced today. The practice of government offices to prepare the trial balance and the auditors prepare the financial statements that they audit is still being done. Some key findings of the assessment include weakness in budget implementation and in expenditure controls, low tax compliance, insufficient dissemination of information to the public and limited accountability of government offices to act on audit findings. 12. These weaknesses and practices may have significant impact in the financial management of the ensuing projects and it is recommended that specific control measures are in place to provide assurance that funds are used for the purpose intended, and that the investment is sustainable over its useful life. 13. The national government’s financial statements are prepared based on US Government Accounting Standards since they must report to the US due to substantial grant funding through the Compact of Free Association with the US. The RMI’s financial statements are audited by Deloitte. 14. The 4Gov financial management information system (FMIS) is used by the RMI. It is a windows-based modular FMIS that has been used for the past ten years or so, and the RMI is considering the migration to a more advanced and user-friendly FMIS. The FMIS is in effect a modified double entry accounting system with receipts being posted on an actual basis when received, and with payments based on accrual accounting. The FMIS consists of several modules for accounts payable, procurement, payroll, inventory, cash receipts and budget. Reports can be produced of at any time of the budget and cumulative spending to date. The cumulative spending cannot exceed the budget. Certain modules which should be used, such as bank reconciliation and fixed assets, are not used due to the lack of knowledge on their use and the functions are being done manually, off-system, which is inefficient and error-prone. A reform coordination unit (RCU) established under ADB’s PFM project continues to provide training to MOF staff regarding

3 ADB. 2005. Financial Management and Analysis of Projects. Manila; ADB. 2009. Financial Due Diligence, A

Methodology Note. Manila; and ADB. 2015. Financial Management Technical Guidance Note. Manila.

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budgeting and grants management. This training is designed to be user-friendly and adaptable to the current manual and 4GoV system, and to coordinate with the anticipated FMIS updates (expected in 2020).4 15. In the MOF, the Standard Operating Procedures (SOP) were prepared by an external consultant in 2015 and approved by the Minister of Finance. These are specific policies, procedures and controls to be adhered to in processing transactions in accordance with best practice. A centralized public sector payroll is maintained by MOF. In addition, payments of the various government departments/ministries are also centralized at MOF. The RCU has worked to update the SOPs and has so far released the Procedures Manual on Grants and Sub-grants Management and the Embassy Imprest Accounts Manual. The manuals for Payroll Management and Fixed Assets Management are currently being finalized.

2. Entity level assessment

a. Ministry of Works, Infrastructure and Utilities (MWIU) 16. MWIU currently manages several donor-funded projects and MWIU has received substantial support, both technical and financial, from donors and is familiar with donor requirements and processes. However, MWIU’s project resources are stretched, as MIWU staff do not stay long in the agency unless they are occupying key positions. Some other MWIU institutional weaknesses include lack of internal audit function, and delays in the submission of independent audit reports. Independent audit is conducted by external auditors and signed off by the Office of the Auditor General which also conducts audit for whole of government accounts.

3. Conclusion 17. The financial management risk of MWIU is assessed as high. Limited staff resources and lack of an internal audit capacity are considered the key risks for the implementation of the PRF. To mitigate these risks, a dedicated project management unit (PMU), housed under the MWIU will be established for the day-to-day implementation and management of the PRF. Individual consultants, funded by the PRF, will be recruited to staff the PMU. The PMU will be composed of the Secretary of MWIU as the PMU Head, a PRF project manager, and a financial management specialist. MWIU may allocate additional personnel to the PMU from its staff complement on a needs and availability basis. The financial management specialist will monitor the use of PRF resources. An external auditor will be recruited to audit the PRF accounts and prepare audited PRF financial statements. The costs for the external auditor are eligible for financing under the PRF. 18. Moving forward, in terms of setting up the institutional framework for project management of the ensuing projects, a more stringent funds flow procedure to ensure that the funds are effectively handled and applied to project implementation will be agreed with the government. The PMU that was set up to implement the PRF may be considered for project implementation, making use of their familiarity with the project and lessons learned from the PRF implementation. 19. Project auditing and report submission in a timely manner would be highlighted during the grant negotiation. Audit fees may be financed by the PRF grant to ensure timely conduct of the

4 ADB. 2017. Report and Recommendation of the President: Public Financial Management Project in the Republic of

Marshall Islands. Manila; ADB. 2019. Report and Recommendation of the President: Public Financial Management Project (Additional Financing) in the Republic of Marshall Islands. Manila.

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activities. Staff from the implementing agency will also receive training in ADB guidelines and procedures.

Table 8. Financial Management, Internal Control, Risk Assessment and Action Plan

Entity/Risk Description Risk

Assessment

Mitigation Measures

MWIU

Weaknesses in internal control could allow for misuse of resources.

High MWIU will engage an internal audit specialist to conduct a comprehensive review of the PMU and MWIU internal control processes by July 2020, with periodic internal audit process reviews semi-annually. In addition to the internal audit specialist, the PRF will finance a financial management specialist, who will monitor the use of PRF resources.

Staffing – high turnover of staff MWIU may reduce the effectiveness of its operation.

High MWIU will prepare a comprehensive review of MWIU personnel resources required to deliver the PRF and ensuing projects, which will be completed by October 2020. The PRF will finance the key PRF project management positions for the duration of the PRF.

Overall assessment High

B. Disbursement 20. MWIU will disburse the project readiness grant proceeds following the Asian Development Bank (ADB) Loan Disbursement Handbook (2017, as amended from time to time), and detailed arrangements agreed between the government and ADB. Online training for project staff on disbursement policies and procedures is available.5 Project staff are encouraged to avail of this training to help ensure efficient disbursement and fiduciary control. 21. Direct payment and reimbursement procedures will be used for disbursements under the PRF. MWIU will be responsible for: (i) collecting supporting documents, and (ii) preparing and sending withdrawal applications to ADB. As the PMU Head, the Secretary of MWIU will certify all eligible payments (invoices and progress claims). 22. Before submitting the first withdrawal application, the government should submit to ADB sufficient evidence of the authority of the person who will sign the withdrawal applications on behalf of the government, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application is stipulated in ADB’s Loan Disbursement Handbook. Individual payments below such amount should be paid by the MOF and MWIU and subsequently claimed from ADB through reimbursement unless otherwise accepted by ADB. The borrower should ensure sufficient category and contract balances before requesting disbursements. Use of ADB’s Client Portal for Disbursements system is encouraged for submission of withdrawal applications to ADB.6

5 Disbursement eLearning. http://wpqr4.adb.org/disbursement_elearning. 6 ADB’s Client Portal for Disbursements system facilitates online submission of withdrawal applications to ADB,

resulting in faster disbursement. The forms to be completed by the borrower are available at ADB. Guide to the Client Portal for Disbursements.

http://wpqr4.adb.org/disbursement_elearning

https://www.adb.org/documents/client-portal-disbursements-guide

https://www.adb.org/documents/client-portal-disbursements-guide

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C. Accounting 23. MOF will maintain separate PRF project accounts and records by funding source for all expenditures incurred on the PRF project, following cash accounting. PRF project accounts will follow the Government Accounting Standards of the United States. D. Auditing and Public Disclosure 24. The MOF will cause the detailed PRF financial statements to be audited following the Government Accounting Standards of the United States by an independent auditor acceptable to ADB. MOF will present the audited project financial statements together with the auditor’s opinion, in English, to ADB within 6 months from the end of the fiscal year. 25. The audit report for the project financial statements will include a management letter and auditor’s opinions, which cover (i) whether the project financial statements present an accurate and fair view or are presented fairly, in all material respects, following the applicable financial reporting standards; (ii) whether the proceeds of the grant were used only for the purposes of the project; and (iii) whether the borrower or executing agency complied with the financial covenants contained in the legal agreements (where applicable). 26. MOF will monitor compliance with financial reporting and auditing requirements during review missions and normal program supervision and will follow up regularly with all concerned, including the external auditor. 27. ADB has made the government, MOF and MWIU aware of ADB’s approach to delayed submission and the requirements for satisfactory and acceptable quality of the audited project financial statements.7 ADB reserves the right to require a change in the auditor (in a manner consistent with the constitution of the borrower) or for additional support to be provided to the auditor, if the audits required are not conducted in a manner satisfactory to ADB or if the audits are substantially delayed. ADB reserves the right to verify the project’s financial accounts to confirm that its policies and procedures were followed when the share of ADB’s financing was used. 28. ADB’s Access to Information Policy 2018 will guide the public disclosure of the audited project financial statements, including the auditor’s opinion on the project financial statements. After the review, ADB will disclose the audited project financial statements and the opinion of the auditors on the project financial statements no later than 14 days of ADB’s confirmation of their acceptability by posting them on its website. The management letter, additional auditor’s opinions, and audited entity financial statements will not be disclosed.

7 ADB’s approach and procedures regarding delayed submission of audited project financial statements:

(i) When ADB does not receive the audited project financial statements by the due date, ADB will write to the executing agency to inform it that (a) the audit documents are overdue; and (b) if they are not received within the next 6 months, requests for new contract awards and disbursement such as new replenishment of advance accounts, processing of new reimbursement, and issuance of new commitment letters will not be processed.

(ii) When ADB does not receive the audited project financial statements within 6 months after the due date, ADB will withhold processing of requests for new contract awards and disbursement such as new replenishment of advance accounts, processing of new reimbursement, and issuance of new commitment letters. ADB will inform the executing agency (a) of ADB’s actions and (b) that the loan may be suspended if the audit documents are not received within the next 6 months.

(iii) When ADB does not receive the audited project financial statements within 12 months after the due date, ADB may suspend the loan.

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V. PROCUREMENT AND CONSULTING SERVICES A. Procurement of Consulting Services 29. MOF will recruit all consultants and nongovernment organizations following the ADB Procurement Policy and Procurement Regulations for ADB Borrowers (2017, as amended from time to time). Consulting services will comprise 6 input-based individual consultant contracts, 3 output-based contracts for firms, and a local non-governmental organization (NGO) as outlined in Table 9. The terms of reference for all consulting services are detailed in Appendix 1.

Table 9. Consulting Services Requirements

Output Package

No. Assignment Purpose Recruitment

Method

1 1.1 Project Manager (MWIU)

Assist MWIC by ensuring project preparatory activities and providing coordination between EA and IAs (MWIU, KALG, and MWSC), and consultants.

ICS

1 1.2 ESWMP Task Manager (KALG)

Assist KALG by ensuring project preparatory activities and providing coordination between EA and IA (MWIU and KALG), and consultants.

ICS

1 1.3 MWSC Task Manager

Assist MWSC by ensuring project preparatory activities and providing coordination between EA, IAs (MWIU and MWSC), and consultants

ICS

1, 3 1.4 Water Supply and Sewerage Planning and Operations Engineer

Strengthen MWSC technical capacity to effectively plan and to sustainably deliver water supply and sewerage services.

ICS

1, 3 1.5 NRW Specialist Plan and manage NRW reduction activities, conduct network investigations, detect leakage within networks, and enable improvements in network operations.

ICS

1 1.6 Majuro-based NGO

Design and implementation of a public awareness and community outreach campaign focusing on water resource and sanitation issues and foster community understanding and support for the project.

QBS

2 2.1 Consulting Firm - Project Preparation for ESWMP

Prepare feasibility studies, due diligence, detailed engineering design, and procurement assistance for ESWMP.

QCBS

2 2.2 Consulting Firm - Project Preparation for MWSSP

Prepare feasibility studies, due diligence, detailed engineering design, and procurement assistance for MWSSP.

QCBS

3 3.1 Financial Management Advisor

Build financial management capacity of MWIU, KALG, and MWSC and support the preparation the project’s financial documentation.

ICS

4 4.1 Consulting Firm - Developing an integrated SWM plan for RMI

Development of a strategic SWM investment plan for RMI, which presents an improved solid waste management solution.

QCBS

ICS= individual consultant selection; KALG = Kwajalein Atoll Local Government; MWIU = Ministry of Works, Infrastructure and Utilities; MWSC = Majuro Water and Sewer Company; NGO = non-governmental

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organization; NRW = non-revenue water; QBS = quality-based consultant selection; QCBS = quality- and cost-based selection

30. Individual consultants will be recruited using the individual consultant selection method. The NGO will be recruited following the quality-based selection method. 31. Consulting firms will be engaged to deliver Package 2.1: Project Preparation for ESWMP, Package 2.2: Project Preparation for MWSSP, and Package 4.1: Developing an integrated SWM plan for RMI. The firms will be recruited using the quality- and cost-based selection (QCBS) method with a 90:10 quality-cost ratio. B. Procurement of Goods and Civil Works 32. Procurement of equipment under Output 3, as presented in Table 10, will be procured by MWIU and will follow the ADB Procurement Policy and Procurement Regulations for ADB Borrowers (2017, as amended from time to time). Shopping will be used for the procurement of equipment. All equipment will be procured with a minimum 3-year warrantee, effective from the date of delivery to MWSC, for timely replacement and repair of defective parts (within 6 weeks of receipt of a defect report from MWSC).

Table 10. Goods and Equipment Requirements

Output Package No. Assignment Component Procurement Method

3 3.2 NRW reduction Leak detection equipment Goods – RFQ

NRW = non-revenue water; RFQ = request for quotation.

C. Procurement Plan

Basic Data

Project Name: Project Readiness Financing: Preparing Urban Service Improvement Projects

Project Number: 53351-001 Approval Number:

Country: Republic of Marshall Islands Executing Agency: MOF

Project Procurement Classification: B Implementing Agency: MWIU

Procurement Risk: High

Project Financing Amount: $5.00 million

ADB Financing: $5.00 million Grant Closing Date: 31 July 2023

Date of First Procurement Plan Date of this Procurement Plan: 8 November 2019

Procurement Plan Duration: 18 months Advance contracting: no eGP: no

MOF = Ministry of Finance; MWIU = Ministry of Works, Infrastructure and Utilities

1. Methods, Review and Procurement Plan

33. Except as ADB may otherwise agree, the following methods shall apply to procurement of goods, works, nonconsulting services, and consulting services.

Procurement of Goods, Works and Nonconsulting Services Method Comments

Request for quotations (RFQ) The amount funded by the grant under a single contract will not exceed $250,000. (Output 3)

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Consulting Services Method Comments

Individual consultant selection (ICS) Applicable for individual consultants (Outputs 1 and 3)

Quality- and cost-based selection (QCBS) Applicable for selection of firms. The quality-cost ratio will be 90:10. (Outputs 2 and 4)

Quality-based selection (QBS) Applicable for selection of a non-governmental organization (Output 1)

16

2. List of Active Procurement Packages (Contracts)

34. The following table lists goods, works, nonconsulting, and consulting services contracts for which the procurement activity is either ongoing or expected to commence within the procurement plan’s duration.

Goods, Works, and Nonconsulting Services

Package Number General Description

Estimated Value ($)

Procurement Method Review

Bidding Procedure

Advertisement Date Comments

3.2 Output3 Leak detection equipment

$70,000 RFQ Post RFQ Q4 2020

Consulting Services

Package No.

General Description

Estimated Value ($)

Selection Method Review

Type of Proposal


1.1 Output 1: Project Manager for MWIU

$556,500 ICS Prior Q1 2020 • Type: Individual

• Assignment: International

• Expertise: Project management

• Advance Contracting: No

1.2 Output 1: Project Manager for KALG





1.3 Output 1: Project Manager for MWSC





1.4 Outputs 1, 3: Water Supply and Sewerage Planning and Operations Engineer



• Expertise: Water Supply and Sewerage Planning and Operations Engineering


• Possible single source selection of MWSC current technical advisor.

1.5 Outputs 1, 3: NRW Specialist or Network Specialist



• Expertise: Non-revenue water reduction


1.6 Output 1: Majuro-based NGO

$40,000 QBS Prior, BTP

Q3 2020 • Type: NGO

• Assignment: National

• Expertise: Community outreach


2.1 Output 2: Project Preparation for ESWMP

$500,000 QCBS Prior, STP

Q1 2020 • Type: Firm


• Quality-Cost Ratio: 90:10


17

Consulting Services

Package No.

General Description

Estimated Value ($)


Type of Proposal


2.2 Output 2: Project Preparation for MWSSP

$1,360,000 QCBS Prior, FTP





3.1 Output 3: Financial Management Advisor



• Expertise: Financial management


4.1 Output 4: Developing an integrated SWM plan for Majuro

$435,000 QCBS Prior, STP





BTP = biodata technical proposal; FTP = full technical proposal; KALG = Kwajalein Atoll Local Government; MWIU = Ministry of Works, Infrastructure and Utilities; MWSC = Majuro Water and Sewer Company; STP = simplified technical proposal.

3. List of Indicative Packages (Contracts) Required under the Project

35. The following table lists goods, works, nonconsulting, and consulting services contracts for which the procurement activity is expected to commence beyond the procurement plan duration and over the life of the project (i.e. those expected beyond the current procurement plan’s duration).

Goods, Works and Nonconsulting Services


Estimated Value ($)

Procurement Method Review

Bidding Procedure Comments

Nil

Consulting Services


Estimated Value ($)


Type of Proposal Comments

Nil

4. List of Awarded and Completed Contracts 36. The following table lists the awarded contracts and completed contracts for goods, works, nonconsulting, and consulting services.

Goods, Works and Nonconsulting Services Package Number

General Description

Contract Value

Date of ADB Approval of Contract Award

Date of Completion Comments

Nil

Consulting Services Package Number

General Description

Contract Value

Date of ADB Approval of Contract Award

Date of Completion Comments

Nil

18

5. Non-ADB Financing 37. The following table lists goods, works, nonconsulting, and consulting services contracts over the life of the project, financed by non-ADB sources.

Goods, Works and Nonconsulting Services

General Description

Estimated Value

(cumulative, $) Estimated Number

of Contracts Procurement

Method Comments

Nil

Consulting Services

General Description

Estimated Value

(cumulative, $) Estimated Number

of Contracts Procurement

Method Comments

Nil

D. Consultant's Terms of Reference 38. The terms of reference for all consulting services are provided in Appendix 1.

VI. SAFEGUARDS 39. Prohibited investment activities. Pursuant to ADB’s Safeguard Policy Statement (2009), ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth in Appendix 5 of the Safeguard Policy Statement.

VII. PERFORMANCE MONITORING A. Monitoring 40. Project readiness financing project performance monitoring. MOF will monitor PRF project performance semiannually and provide consolidated reports to ADB. These reports will include (i) each activity’s progress measured against the implementation schedule, (ii) key implementation issues and solutions, (iii) an updated procurement plan, and (d) an updated implementation plan for the next 12 months. To ensure PRF projects continue to be both viable and sustainable, MWIU should adequately review PRF project financial statements and the associated auditor's report. In the event that an ensuring loan is not approved, MWIU will submit a PRF project completion report to ADB within 6 months of physical completion of the PRF project.8 B. Reporting 41. MOF will provide ADB with

(i) semiannual progress reports on the PRF project in a format consistent with ADB's project performance reporting system;

8 ADB. 2018. Project Completion Report for Sovereign Operations. Project Administration Instructions. PAI 6.07A.

Manila.

https://lnadbg1.adb.org/cos0003p.nsf/f47286b4d1eb6e9b482569e500308fb9/2867397288c097b948257b0100297468!OpenDocument

19

(ii) consolidated annual reports, including (a) progress achieved by output measured against the performance targets, (b) key implementation issues and solutions, (c) an updated procurement plan, and (d) an updated implementation plan for the next 12 months;9 and

(iii) PRF project accounts, MOF’s audited financial statements, and the associated auditor’s reports.

VIII. ANTICORRUPTION POLICY

42. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy (1998, as amended to date) relating to the PRF project following ADB’s Integrity Principles and Guidelines. 10 All contracts financed by ADB will include provisions specifying ADB’s right to audit and examine the records and accounts of the executing agency and all PRF project contractors, suppliers, consultants, and other service providers. This includes the examination of project outputs, assets, and all other information that may be considered relevant for audit or inspection by ADB regardless of project completion, termination, or cancellation. Firms or individuals on ADB’s anticorruption debarment list are ineligible to participate in activities that are financed, supported, or administered by ADB; and may not be awarded any contracts under the PRF project.11 43. To support these efforts, ADB included relevant provisions in the grant agreement and grant regulations and the bidding documents for the PRF project

IX. ACCOUNTABILITY MECHANISM 44. People who are, or may in the future be, adversely affected by the PRF project may submit complaints to ADB’s Accountability Mechanism. The Accountability Mechanism provides an independent forum and process whereby people adversely affected by ADB-assisted PRF projects can voice and seek a resolution for their problems, as well as report alleged violations of ADB’s operational policies and procedures. Before submitting a complaint to the Accountability Mechanism, affected people should make an effort in good faith to solve their problems by working with the concerned ADB operations department. Only after doing that, and if they are still dissatisfied, should they approach the Accountability Mechanism.12

X. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL

9 The regional departments will present the performance of the completed PRF in the project completion report of the

ensuing loan. 10 ADB. 2015. Integrity Principles and Guidelines (2015). Manila. 11 ADB. Anticorruption and Integrity. 12 ADB. Accountability Mechanism.

https://www.adb.org/sites/default/files/institutional-document/32131/integrity-principles-guidelines.pdf

https://www.adb.org/site/integrity/main

https://www.adb.org/site/accountability-mechanism/main

20 Appendix 1

CONSULTANT'S TERMS OF REFERENCE A. Output 1 1. Consulting services under Output 1 will comprise induvial consultants including: (i) a project manager for Ministry of Works, Infrastructure and Utilities (MWIU) (international, 22 person-months, intermittent); (ii) a project manager for Kwajalein Atoll Local Government (KALG) (international, 22 person-months, intermittent); (iii) a project manager for Majuro Water and Sewer Company (MWSC) (international, 22 person-months, intermittent); (iv) a water supply and sewerage planning and operations engineer (international, 24 person-months, intermittent); (v) a non-revenue water (NRW) specialist or network specialist (international, 6 person-months, intermittent); and (vi) a Majuro-based non-governmental organization for deliver MWSC’s community outreach program. The outline terms of reference for the consultants are provided below. 2. Package 1.1 – PRF Project Manager (international, 22 person-months, intermittent). The PRF project manager will manage the project management unit, oversee the delivery and implementation of the PRF, and build MWIU’s project management capacity. The PRF project manager will have a degree in civil, environmental, or mechanical engineering from a recognized tertiary institution and at least 15 years’ experience. The PRF project manager will report to the Secretary of MWIU / PMU Head. Specific tasks of the project manager will include:

(i) Under the guidance of the Secretary of MWIU / PMU Head, establish the project management unit (PMU) through the development and implementation of project management processes, tools, and systems;

(ii) Develop prioritized workplan to deliver the PRF;

(iii) Manage PMU personnel;

(iv) Manage PRF procurement for the duration of the PRF. Ensure full compliance with ADB and MWIU (where applicable) procurement policies and regulations;

(v) Manage (a) Project Manager for KALG (Package 1.2), (b) Project Manager for MWSC (Package 1.3), and (c) Financial Management Specialist (Package 3.1) to ensure the PRF outputs are delivered within program and to the agreed standards;

(vi) Lead MWIU coordination with KALG, MWSC, and national and local government agencies to facilitate implementation of the PRF and delivery of PRF outputs;

(vii) Ensure appropriate safeguards and governance controls are in place, managed and reported as required;

(viii) Maintain strong relationships with key PRF stakeholders;

(ix) Attend and report to the MWIU as required by the MWIU Secretary;

(x) Provide coaching and mentoring to MWIU staff managing design and construction projects using best practice project management;

(xi) Provide knowledge transfer MWIU staff.

Appendix 1 21

3. Package 1.2 – ESWMP Task Manager / Solid Waste Management Specialist (international, 22 person-months, intermittent). The ESWMP task manager / solid waste management specialist will oversee the delivery and implementation of the Ebeye SWM component of the PRF. The ESWMP task manager / solid waste management specialist will have a degree in civil, environmental, or mechanical engineering from a recognized tertiary institution and at least 15 years’ experience. The ESWMP task manager / solid waste management specialist will report to the PRF Project Manager. Specific tasks of the project manager / solid waste management specialist will include:

(i) Project Management

a) Develop prioritized workplan to deliver the Ebeye SWM component of the PRF

and the ensuing Ebeye Solid Waste Management Project (ESWMP);

b) Manage ESWMP PRF procurement activities for the duration of the PRF. Ensure full compliance with ADB and KALG (where applicable) procurement policies and regulations;

c) Report to the PRF Project Manager (Package 1.1), maintain close communication with Financial Management Specialist (Package 3.1), and manage consulting firm engaged to deliver the PRF Package 2.1 – Project Preparation Assistance for KALG to ensure the PRF outputs are delivered within program and to the agreed standards;

d) Assist KALG coordination with national and local government agencies to facilitate implementation of the PRF and delivery of PRF outputs;

e) Ensure appropriate safeguards and governance controls are in place,

managed and reported as required; f) Maintain strong relationships with key PRF stakeholders; g) Attend and report to the KALG as required by the KALG City Manager; h) Provide coaching and mentoring to KALG staff managing design and

construction projects using best practice project management; and i) Provide knowledge transfer KALG staff.

(ii) Solid Waste Management Specialist

a) Provide day-to-day assistance and technical advice to the KALG’s solid waste

management manager and personnel in relation to SWM operations. Ensure that the agreed SWM service standards are met;

b) Monitor the performance of the PRF Package 2.1 – Project Preparation Assistance for KALG consultant. In consultation with KALG personnel, review the PRF Package 2.1 deliverables and ensure the deliverables fully meet with KALG expectations and are aligned with KALG strategies for development of its water supply and sewerage services;

22 Appendix 1

c) Prepare change orders and non-conformance notices, for the PRF Package

2.1 – Project Preparation Assistance for KALG consultant contracts;

d) Review the design and construct contractor’s drawings and calculations to check arrangements for optimized operation and maintenance and verify compliance with contract specifications;

e) respond to requests for information form the PRF Package 2.1 – Project Preparation Assistance for KALG consultant in all matters related to interpreting contract documents, ground survey controls, quality control testing, and other matters relating to the contracts;

f) Provide technical support to KAGLOV’s SWM operations teams; and

g) Support KALG City Manager in preparation of reports on business performance.

4. Package 1.3 – MWSC Task Manager for MWSC / Water Supply and Sanitation Utility Specialist (international, 22 person-months, intermittent). The MWSC task manager / water supply and sanitation utility specialist will oversee the delivery the implementation of the PRF, and build MWSC’s project management capacity. The MWSC task manager / water supply and sanitation utility specialist will have a degree in civil, environmental, or mechanical engineering from a recognized tertiary institution and at least 15 years’ experience. The MWSC task manager / water supply and sanitation utility specialist will report to the MWSC Project Manager. Specific tasks of the MWSC Task Manager / water supply and sanitation utility specialist will include:

(i) Project Management

a) Develop prioritized workplan to deliver the Majuro water supply and sanitation component of the PRF and the ensuing Majuro Water Supply and Sanitation Project (MWSSP);

b) Manage MWSC PRF procurement activities for the duration of the PRF. Ensure full compliance with ADB and MWSC (where applicable) procurement policies and regulations;

c) Report to the PRF Project Manager (Package 1.1), maintain close communication with Financial Management Specialist (Package 3.1) and Water Supply and Sewerage Planning and Operations Engineer (Package 1.4), and manage consulting firm engaged to deliver the PRF Package 2.2 – Project Preparation Assistance for MWSC to ensure the PRF outputs are delivered within program and to the agreed standards;

d) Assist MWSC coordination with national and local government agencies to facilitate implementation of the PRF and delivery of PRF outputs;

e) Ensure appropriate safeguards and governance controls are in place, managed and reported as required;

f) Maintain strong relationships with key PRF stakeholders;

Appendix 1 23

g) Attend and report to the MWSC as required by the MWSC General Manager. h) Provide coaching and mentoring to MWSC staff managing design and

construction projects using best practice project management; and

i) Provide knowledge transfer to MWSC staff.

(ii) Water Supply and Sanitation Utility Specialist a) Provide day-to-day assistance and technical advice to the MWSC’s water

supply and sewerage Manager and MWSC water supply and sewerage personnel in relation to MWSC water supply and sewerage systems, including surface water and groundwater resources, water and wastewater treatment plants, water supply and wastewater network components, and customer connections. Ensure that the agreed water supply and sewerage service standards are met (in terms of water quality, quantity, and access);

b) Provide strategic advice and direction for the development of MWSC’s water supply and sewerage services, including for the MWSC water supply and sewerage masterplans and advice to MWSC relating to the selection of priority projects to be delivered under MWSSP, focusing building financial and technical sustainability and resilience to natural disasters and climate change impacts;

c) Monitor the performance of the PRF Package 2.2 – Project Preparation Assistance for MWSC consultants including ensuring that the deliverables fully meet with MWSC expectations and are aligned with MWSC strategies for development of its water supply and sewerage services;

d) Review the design and construct contractor’s drawings and calculations to check arrangements for optimized operation and maintenance and verify compliance with contract specifications;

e) Process claims, prepare change orders and non-conformance notices, for the PRF Package 2.2 – Project Preparation Assistance for MWSC consultant contracts;

f) respond to requests for information form the PRF Package 2.2 – Project Preparation Assistance for MWSC consultant in all matters related to interpreting contract documents, ground survey controls, quality control testing, and other matters relating to the contracts;

g) Lead improvements to and regular updating of MWSC’s water supply and sewerage asset management system;

h) Provide technical support to MWSC’s water supply and sewerage operations teams;

i) Support General Manager and Assistant Manager, Operations, in preparation of reports on business performance.

24 Appendix 1

5. Package 1.4 – Water supply and sewerage planning and operations engineer (international, 24 person-months, intermittent). The objective of the assignment is to strengthen MWSC technical capacity to effectively plan and to sustainably deliver water supply and sewerage services. The water supply and sewerage planning and operations engineer will report to the MWSC Task Manager. 6. Specific tasks and responsibilities of the Water Supply and Sewerage Planning and Operations Engineer will include:

(i) Provide day-to-day assistance and technical advice to the MWSC Operations Manager and MWSC’s operations personnel in relation to MWSC’s water supply and sewerage systems, including groundwater, water and wastewater treatment plants, water supply and wastewater network components, and customer connections. Ensure that the agreed water supply and sewerage service standards are met (in terms of water quality, quantity, and access).

(ii) Assist MWSC to update and implement its’ capital improvement program (CIP) which may include:

(a) assisting the General Manager and Operations Manager in obtaining funding for the CIP

(b) preparing documentation for technical and other support consultancies for implementation of the CIP

(c) representing MWSC as program manager for implementation of the CIP, including overseeing support consultants and ensuring the various works are carried out in accordance with the required standards, budgets and timelines

(iii) Lead development and evaluation of operational data for business performance assessment and future operations planning.

(iv) Lead preparation of documentation and management of consultant and construction contracts for major projects.

(v) Lead improvements to and regular updating of asset management system.

(vi) Provide technical support to operations teams for minor works projects.

(vii) Support Operations Manager in preparation of reports on business performance.

7. The Water Supply and Sewerage Planning and Operations Engineer will have a degree in Civil, Mechanical or Environmental Engineering plus a minimum of 5 years water utility experience. The Water Supply and Sewerage Planning and Operations Engineer will report to MWSC’s Operations Manager. 8. The Water Supply and Sewerage Planning and Operations Engineer must have demonstrated experience and knowledge in the following areas:

(a) water supply and sewerage system operations and management; (b) contract management of water supply and sewerage projects, (c) planning and design of water supply and sewerage schemes, (d) quality assurance and quality control systems, (e) environmental requirements for civil infrastructure development, (f) electronic project scheduling; and (g) health and safety in the workplace. (h) Analytical and problem-solving skills and capability to work independently without

continuous peer review

Appendix 1 25

Experience obtained in a Pacific developing nation will be considered favorably. 9. The specific outputs and reporting requirements of the Infrastructure Specialist will include:

(i) monthly progress reports to be provided to MWSC and ADB. (ii) other outputs as required from time-to-time as required by the MWSC Operations

Manager. 10. Package 1.5 – NRW Specialist (international, 6 person-months, intermittent). The non-revenue water specialist will assist MWSC to develop MWSC’s non-revenue water (NRW) reduction strategy and a detailed 5-year NRW reduction plan. The non-revenue water specialist will have a relevant qualification and at least 10 years’ experience in non-revenue water reduction planning and implementation. The non-revenue water specialist will report to the MWSC Task Manager. Specific tasks of the non-revenue water specialist will include:

(i) Data collection on existing MWSC water supply assets and customers (from MWSC’s water supply customer database);

(ii) Evaluate the current production, transmission and distribution service performance;

(iii) Prepare current water balance as per International Water Association (IWA) methodology;

(iv) Establish current annual levels of NRW with breakup of commercial and physical losses and evaluate the economic loss to MWSC;

(v) Develop a strategy for the control and reduction of NRW in a phased manner (short term, midterm and long term) to enable provision of continuous pressurized water supply services to all MWSC water supply customers. The strategy will present short-, medium-, and long-term NRW targets and will compare the costs of achieving the NRW targets against the potential revenue lost and / or operational cost savings that would result from the target NRW reduction;

(vi) Prepare a detailed 5-year NRW reduction plan (yearly activity plan) based on reduction of losses proposed. Assess the losses in each demand management area in Majuro supply zone. Identify the causes of water losses and suggest specific solutions for each area. Prepare detailed physical and commercial loss reduction forecasts for the detailed plan. In preparing the NRW strategy and NRW reduction plan;

(vii) Identify and assess options for achieving the NRW reduction targets including strengthening MWSC NRW reduction teams and / or outsourced NRW reduction through performance-based contracts; and

(viii) Provide on-the-job training for MWSC NRW reduction teams in NRW identification and reduction techniques.

11. Package 1.6 – Community Outreach Program. A Majuro based non-governmental organization (NGO) will be recruited using quality-based selection to implement the MWSC public awareness and community outreach campaign over a period of 18 months commencing the fourth quarter of 2020. Specific tasks of the NGO will include:

(i) Implement MWSC’s public awareness and community outreach campaign following the communication strategy and the public awareness and community outreach campaign design prepared by a consulting firm contracted under Package 2.2. The program will raise public awareness of the need for safe water, of the costs

26 Appendix 1

associated with the operation of water supply systems, the importance of water conservation, and foster community support for the ensuing Majuro Water Supply and Sanitation Project (MWSSP).

(ii) Conduct Willingness to Pay Survey. Canvass all communities on Majuro, providing information on MWSSP, performing inspections of current water and wastewater practices, and receiving inputs from the consumers as to their perceived needs, and their ability to pay for service. In consultation with the financial management specialist (Package 3.1) and MWSC, design and implement a simple survey to cover at least 10% of households in Majuro. The data collected from this survey will be summarized, and the information provided to the stakeholders for consultation. The information will also be used by MWSC and the financial management specialist in assessing appropriate and affordable MWSC water supply and sewerage tariffs.

(iii) Following MWSC communication strategy and the public awareness and community outreach campaign design, prepare and disseminate water supply awareness materials to Majuro residents. The awareness materials may include illustrated guides to the various sources of water, details of the equipment used to treat and distribute water, details of the costs to MWSC in delivering water supply and sewerage services and detail the need for water conservation. Water Conservation and Watershed Protection materials that have been produced for other areas, but pertinent to this area, may also be used. Materials should be produced in the local vernacular, where practical.

(iv) Conduct a series of community workshops and seminars to present the information to the public, to get further feedback, and to distribute the Water Conservation and Watershed Protection materials.

(v) Prepare and submit to MWSC monthly reports outlining activities over the previous month and listing participants, proceedings, and outcomes of workshops, seminars, and meetings to be submitted to the Project Manager for MWSC (Package 1.3) for dissemination.

B. Output 2 12. Consulting services under Output 2 will comprise (i) a firm to deliver the Project Preparation Phase 1 contract (output-based contract), (ii) a firm to deliver the Project Preparation Phase 2 contract (output-based contract); and (iii) an individual consultant to design water, sanitation, and hygiene awareness specialist (international, 4 person-months, intermittent). The outline terms of reference for the consultants are provided below. 13. Package 2.1 - Project Preparation Assistance (PPA) for KALG (Output-based contract). PPA consultants will be recruited to assist the Kwajalein Atoll Local Government (KALG) to prepare the project. The PPA consultants will report to the KALG’s project manager. An international consulting firm will be engaged over a period of 18 months to provide the PPA consulting team. The consulting firm will be selected using quality- and cost-based selection procedures with a quality-cost ratio of 90:10 in accordance with ADB’s Procurement Policy and Procurement Regulations for ADB Borrowers (2017, as updated from time to time). The contract for the PPA consulting services will be an output-based contract with milestone payments paid upon acceptance of the deliverables. 14. Scope of the PPA consultancy Services. The PPA consultants will: (i) prepare feasibility studies for key project activities; (ii) conduct due diligence for the proposed investment project and (iii) provide other services to the PMU project manager as necessary to prepare the project.

Appendix 1 27

The PPA consulting services will be implemented in 3 phases: (i) Phase 1 – Inception; (ii) Phase 2 – Feasibility Studies; (iii) Phase 3 – Due diligence; and (iv) Phase 4 preparation of bidding documents and procurement support. Activities and deliverables of the 3 consulting service phases are described in Section D (below). Phase 3 and Phase 4 may be undertaken concurrently. 15. In addition, the consultancy may include: (i) topographic and cadastral surveys required for the feasibility studies; (ii) materials testing and investigations, required for the feasibility studies; and (iii) other surveys required for the preparation of the feasibility studies. 16. PPA Consultancy Outputs and Activities. Outputs and activities of the PPA consultants will include (but not be limited to):13

Phase 1 - Inception. In consultation with key stakeholders and with the guidance of the Project Steering Committee (PSC) and the PMU, prepare the PPA inception report setting out the findings of the inception phase activities including, but not limited to:

(i) identification of lessons from previous solid waste management (SWM) projects in

the Pacific region (ADB and other donor agencies); (ii) identification of current initiatives for reform of the SWM sector in Marshall Islands; (iii) diagnostic review of KALG’s SWM operations including internal policies and

practices (e.g. financial management and accounting, operational procedures, maintenance practices) as well as external factors (e.g. regulation and relevant government policies);

(iv) review of relevant SWM documents including the Kwajalein Atoll Solid Waste Management Plan 2019–2028. Conduct initial discussions on SMW issues in Ebeye with key stakeholders;

(v) a literature review to identify potential impacts to SWM in Ebeye resulting from potential climate change and disaster impacts;

(vi) preparation of a communications strategy in accordance with ADB’s User Guide for Preparing Communications Strategies for Projects; and

(vii) preparation of the PPA inception report presenting the findings of inception phase activities and including a detailed work plan and proposed changes to the terms of reference.

Phase 2 – Feasibility Studies: Phase 2 will prepare feasibility studies for waste disposal options appropriate for Ebeye (e.g., waste-to-energy, incinerator, conventional landfill) and key investments identified in the Kwajalein Atoll Solid Waste Management Plan 2019–2028. The feasibility studies will address identification of feasible technical options and technical concepts development, preparation of capital and life cycle cost estimates; identification of the potential environmental impacts, financial, technical and social risk assessments, options for delivery of the investments, and preparation of feasibility study reports. Feasibility studies will be conducted for the following 5 key components: (a) recycling activities and the introduction of the container deposit legislation (CDL) in Ebeye; (b) recommendation on waste disposal options appropriate for Ebeye (e.g., waste-to-energy, incinerator, conventional landfill); (c) improvement of the current dumpsite; (d) maintenance and improvement of collection; and (e) a cost recovery plan and introduction of SWM fee collection system.

13 Note that the numbering of the PPA outputs listed in Section D does not necessarily correlate to the Project

outputs listed in Section A.

28 Appendix 1

Phase 3 – Due Diligence. Undertake the following due diligence in consultation with key stakeholders:

(i) Social analysis: (i) prepare a stakeholder analysis in accordance with ADB's Poverty and Social Analysis Handbook (2012); (ii) undertake social surveys and analyses and assess the project’s impacts on affected people including willingness and ability to pay for improved SWM services; (iii) prepare the project’s stakeholder communication strategy; (iv) prepare the project’s poverty and social assessment and summary poverty reduction and social strategy.

(ii) Gender Analysis. (i) conduct a gender analysis of the project in accordance with the guidelines provided in ADB's Handbook on Poverty and Social Analysis (2012); (ii) Prepare a Gender Action Plan (GAP) to maximize the participation of women in the design and implementation of the PRF and ensuing project. Gender considerations will include: (a) financing options, such as preferential treatment for very poor and vulnerable women (as defined by the survey analysis), (b) community participation based on gender-inclusive and culturally sensitive participatory strategies and modalities, (c) training options for women as recycling and health advocates, in operation and maintenance, gender training for project staff and executing agency officials, and (e) gender equity based indicators and targets for monitoring project implementation.

(iii) Environment Assessment. (i) assess the project’s environmental impact in accordance with ADB’s Safeguard Policy Statement (SPS) 2009 and the Marshall Islands environmental laws and policies; (ii) assess the institutional capacity of: (a) KALG to monitor implementation of the environmental management plan (EMP), and (b) Minister in Assistance to the President and Environment and other concerned agencies in clearing and monitoring environmental assessments and issuing licenses and/or permits; and (iii) prepare the project environmental assessment and review framework (EARF) and initial environmental examinations (IEE) for the core subprojects, including environmental management plan for core subproject.

(iv) Financial Assessment. Undertake the financial due diligence, including a financial analysis in accordance with ADB requirements14 and based on the project scope, undertake the financial due diligence, including a financial analysis of the Project consistent with the economic analysis, covering; (i) a financial management assessment of the executing and implementing agencies; preparation of project cost estimates and the project financing plan based on verifiable data and that are sufficient to support project implementation; (ii) conduct financial evaluations (financial cost-benefit analyses) including sensitivity analyses of project components that have a cost-recovery objective; (iii) conduct a financial risk assessment and recommend relevant financial performance indicators to be incorporated in financial covenants; and (iv) recommend financial reporting, auditing and public disclosure arrangements for the project.

14 ADB. 2014. Financial Management, Cost Estimates, Financial Analysis, and Financial Performance Indicators.

Operations Manual. OMG2/BP. Manila. Relevant guidance is available at https://www.adb.org/about/financial-management-resources.

Appendix 1 29

(v) Economic Assessment. Undertake the economic due diligence using the

methodology and covering the 10 key areas of economic analysis presented in ADB Guidelines for the Economic Analysis of Projects (2017). 15 The analysis will address: (i) country context analysis; (ii) sector analysis; (iii) rationale for public intervention; (iv) demand analysis; (v) alternative analysis; (vi) cost-benefit analysis; (vii) sustainability analysis; (viii) sensitivity and risk analysis; (ix) distribution analysis and (x) the project’s design and monitoring framework.

(vi) Procurement Capacity and Risk Assessment. Conduct a procurement risk assessment of MWIU and KALG following ADB’s Guidance Note on Procurement Risk Framework (2018) https://www.adb.org/documents/procurement-risk-framework. Structure contract packages and prepare the project procurement plan following ADB’s Guidance Note on Strategic Procurement Planning (2018) https://www.adb.org/sites/default/files/procurement-planning.pdf.

Phase 4: Preparation of bidding documents and procurement support. Phase 4 outputs will include: (i) detailed engineering design and preparation of bidding documents for selected investments following feasibility studies prepared under Phase 2; and (ii) assist KALG to procure the investments including bid evaluation and preparation of bid evaluation reports and awarding contracts. Phase 4 will require, at a minimum, the following tasks:

(i) Preparation of bidding documents. For the selected investments:

a) Drawing on the climate change literature review (under Phase 1), ensure that design parameters to maximize the climate change resilience while maintaining the economic feasibility are incorporated in the design of infrastructure to be developed under the project.

b) Identify information required and organize for surveys and capture of all data necessary for the detailed design and preparation of bid documents, including (but not limited to) topographic and cadastral data, and geotechnical conditions and geotechnical design parameters, environmental baseline surveys as required, and additional socio-economic surveys if required for social and gender assessments, and inventory of losses surveys for resettlement plans.

c) Prepare and complete technical designs including recommendations for modifications to the preliminary designs resulting from the due diligence, including bills of quantities, provision of detailed cost estimates and scopes of work for subprojects.

d) Assist MWIU and KALG to prepare specifications for the purchase of equipment and materials.

e) Prepare draft bidding documents for subprojects following ADB’s procurement procedures and using standard bidding documents and guidelines.

f) Based on the updated and approved safeguards documents and plans, ensure that selected investment specific EMP, gender, and social

15 Available from https://www.adb.org/documents/guidelines-economic-analysis-projects.

https://www.adb.org/documents/procurement-risk-framework

https://www.adb.org/sites/default/files/procurement-planning.pdf

30 Appendix 1

mitigation measures are incorporated into bid documents and comply with the laws of the Marshall Islands and ADB’s SPS.

g) Submit the draft bid documents to MWIU, KALG, and ADB for review and update the bid documents to address comments and suggestions.

(ii) Procurement Support. Assist MWIU and KALG to procure the selected

investments. Specific tasks will include: a) Assist MWIU and KALG to invite bids for the selected investments including

preparation of procurement notices, arranging advertising in the Marshall Islands and international media, and issuing bidding documents to interested parties.

b) Assist MWIU and KALG to address requests for clarifications and requests for information relating to the selected investments and to prepare addendums and notices to bidders.

c) Assist MWIU and KALG in organizing and conducting pre-bid meetings and site inspections and preparation and distribution of pre-bid meeting minutes.

d) Assist MWIU and KALG in arranging and conducting bid opening meetings for the selected investments and preparation of minutes of bid opening meetings.

e) Assist MWIU and KALG in evaluating bids for the various selected investments including detailed evaluation of bids, participation in bid evaluation committee meetings, and preparation of bid evaluation reports.

f) Assist MWIU and KALG in awarding contracts for the selected investments including preparation of letters of acceptance and preparation of contract documents for execution by MWIU and KALG and the successful bidders.

17. Procedure for Review and Acceptance of Deliverables. Each of the deliverables, will be reviewed by MWIU, KALG, and ADB. The PIA consultants will address MWIU, KALG, and ADB comments in finalizing the documents. Upon formal acceptance of the outputs by the government and ADB, the progress payments will be made according to the payment schedule specified to be agreed during contract negotiations. 18. Proposing entities will determine the number and the nature of experts required to deliver the PPA consultancy deliverables. Proposing entities must include in their technical proposal, in the personnel work plan, and in the financial proposal all experts required in accordance with the proposing entity’s approach and methodology. The proposing entity must also determine and indicate the number of person-months inputs required for each of the experts and the minimum time each of the experts will deliver their inputs to the project in Marshall Islands. The inclusion of a Team Leader / Solid Waste Management Specialist must be included in the team of experts. All financial due diligence must be undertaken by a specialist with Certified Public Accountant or Chartered Accountant accreditation. 19. The Team Leader/Solid Waste Management Specialist will have a degree in engineering or project management and have: (i) at least 15 years demonstrated experience in planning, designing and implementing urban infrastructure projects including at least 10 years in planning, designing and implementing solid waste management projects; and (ii) at 10 years demonstrated experience in managing multi-disciplinary teams. Knowledge of ADB procurement and reporting procedures and small developing nation experience is essential. The Team Leader/Solid Waste Management Specialist will report to project management unit (PMU) project managers in MWIU and KALG and will be: (i) responsible for ensuring satisfactory performance of all PPA

Appendix 1 31

consultants; and (ii) assist the PMU Project Managers with day-to-day activities required to prepare the project. 20. Package 2.2 - Project Preparation Assistance (PPA) for MWSC (Output-based contract). PPA consultants will be recruited to assist the Majuro Water and Sewer Company (MWSC) to prepare the project. The PPA consultants will report to the MWSC’s project manager. An international consulting firm will be engaged over a period of 18 months to provide the PPA consulting team. The consulting firm will be selected using quality- and cost-based selection procedures with a quality-cost ratio of 90:10 in accordance with ADB’s Procurement Policy and Procurement Regulations for ADB Borrowers (2017, as updated from time to time). The contract for the PPA consulting services will be an output-based contract with milestone payments paid upon acceptance of the deliverables. 21. Scope of the PPA consultancy Services. The PPA consultants will: (i) prepare feasibility studies for key project activities; (ii) design the hygiene awareness, promotion, and education program; (iii) conduct due diligence for the proposed investment project and (iv) provide other services to the PMU project manager as necessary to prepare the project. The PPA consulting services will be implemented in 3 phases: (i) Phase 1 – Inception; (ii) Phase 2A – Feasibility Studies and Phase 2B – Hygiene awareness, promotion, and awareness; (iii) Phase 3 – Due diligence; and (iv) Phase 4 preparation of bidding documents and procurement support. Activities and deliverables of the 3 consulting service phases are described in Section D (below). Phase 2A and Phase 2B activities are expected to be undertaken concurrently. Phase 3 and Phase 4 may be undertaken concurrently. 22. In addition, the consultancy may include: (i) household social surveys; (ii) topographic and cadastral surveys required for the feasibility studies; (ii) materials testing and investigations, including geotechnical investigations and field and laboratory testing of soils, required for the feasibility studies; and (iii) other surveys (coastal current, bathymetric, and flow gauging) required for the preparation of the feasibility studies. 23. PPA Consultancy Outputs and Activities. Outputs and activities of the PPA consultants will include (but not be limited to):16

Phase 1 - Inception. In consultation with key stakeholders and with the guidance of the Project Steering Committee (PSC) and the PMU, prepare the PPA inception report setting out the findings of the inception phase activities including, but not limited to:

(viii) identification of lessons from previous Pacific water supply and sanitation projects

(ADB and other donor agencies); (ix) identification of current initiatives for reform of the water sector in Marshall Islands; (x) diagnostic review of MWSC operations including internal policies and practices (e.g.:

financial management and accounting, operational procedures, maintenance practices, customer billing systems) as well as external factors (e.g.: SOE governance, regulation and relevant government policies);

(xi) review of relevant water supply and sanitation documents including the MWSC 20 Year Water and Sanitation Strategic Plan, and a 5 Year Water and Sanitation

16 Note that the numbering of the PPA outputs listed in Section D does not necessarily correlate to the Project outputs

listed in Section A.

32 Appendix 1

Development Plan. Conduct initial discussions on water sector issues in Majuro with key stakeholders;

(xii) identification of trends in the incidence of water-borne disease in the urban areas of Majuro and correlation with other factors such as drought;

(xiii) a literature review to identify potential impacts to water supply and sanitation in Majuro resulting from potential climate change and disaster impacts;

(xiv) preparation of a communications strategy in accordance with ADB’s User Guide for Preparing Communications Strategies for Projects; and

(xv) preparation of the PPA inception report presenting the findings of inception phase activities and including a detailed work plan and proposed changes to the terms of reference.

Phase 2A – Feasibility Studies: Phase 2A will prepare feasibility studies for key investments identified in MWSC 20 Year Water and Sanitation Strategic Plan and 5 Year Development Plan: The feasibility studies will address identification of feasible technical options and technical concepts development, preparation of capital and life cycle cost estimates; identification of the land acquisition and potential environmental and resettlement impacts, financial, technical and social risk assessments, options for delivery of the investments, and preparation of feasibility study reports. Feasibility studies will be conducted for the following 5 key investments: (a) sealing of unsealed areas of the airport runway; (b) refurbishment of the water treatment plant C (WTP C); (c) replacement of the Delap sewer outfall and the provision of a macerator facility; (d) Design and implementation of the MWSC change management reform and training program; (e) Implementation of a non-revenue water (NRW) improvement plan and pre-paid or smart meters. Phase 2B - Hygiene awareness, promotion, and education program. In consultation with key stakeholders and with the guidance of the PSC and the PMU design and implement the hygiene awareness and education program. Tasks required to design and implement the hygiene awareness and education will include, but not limited to: (a) Review of previous hygiene awareness programs; (b) Identification of key stakeholders and preparation of engagement plan; (c) a household survey to assess knowledge, attitudes, and perceptions of hygiene and water conservation issues; (d) design of Hygiene Awareness and Education Program (HAEP) complementing other hygiene awareness and education programs being delivered in Solomon Islands. The HAEP will be delivered primarily through schools, youth programs and women’s groups over a period of at least 5 years.

Phase 3 – Due Diligence. Undertake the following due diligence in consultation with key stakeholders:

(vii) Resettlement and social analysis: (i) review of government laws, policies and guidelines/procedure on land acquisition and resettlement, and identification of gaps between ADB’s Safeguard Policy Statement (SPS) 2009 and the Government’s laws; (ii) prepare a stakeholder analysis in accordance with ADB's Poverty and Social Analysis Handbook (2012); (iii) undertake social surveys and analyses and assess the project’s impacts on affected people including willingness and ability to pay for improved water supply and sanitation services; (iv) assess the project’s land acquisition/resettlement requirements and impacts on indigenous peoples. Develop a resettlement framework (RF), resettlement plans (RP) for each of the project’s core sub-projects, and an

Appendix 1 33

indigenous peoples plan, if required, in accordance with ADB’s SPS inclusive of cost estimates to supervise and monitor the RP implementation; (v) prepare the project’s stakeholder communication strategy; (vi) assist the IA to disclose the RP and RF, to APs and other stakeholders in accordance with ADB’s SPS and Access to Information Policy 2018; and (vii) prepare the project’s poverty and social assessment and summary poverty reduction and social strategy.

(viii) Gender Analysis. (i) conduct a gender analysis of the project in accordance with the guidelines provided in ADB's Handbook on Poverty and Social Analysis (2012); (ii) Prepare a Gender Action Plan (GAP) to maximize the participation of women in the design and implementation of the PRF and ensuing project. Gender considerations will include: (a) hardware options, such as women and men’s preferences in the number, location and type of pumps and latrines, types of taps, water pumps and water storage systems, (b) financing options, such as preferential treatment for very poor and vulnerable women (as defined by the survey analysis), , (c) community participation based on gender-inclusive and culturally sensitive participatory strategies and modalities, (d) training options for women as hygiene and health advocates, in mechanics and operation and maintenance, gender training for project staff and executing agency officials, and (e) gender equity based indicators and targets for monitoring project implementation.

(ix) Environment Assessment. (i) assess the project’s environmental impact in accordance with ADB’s Safeguard Policy Statement (SPS) 2009 and the Marshall Islands environmental laws and policies; (ii) assess the institutional capacity of: (a) MWSC to monitor implementation of the EMP, and (b) Minister in Assistance to the President and Environment and other concerned agencies in clearing and monitoring environmental assessments and issuing licenses and/or permits; and (iii) prepare the project environmental assessment and review framework (EARF) and initial environmental examinations (IEE) for the core subprojects, including environmental management plan for core subproject.

(x) Financial Assessment. Undertake the financial due diligence, including a financial analysis in accordance with ADB requirements17 and based on the project scope, undertake the financial due diligence, including a financial analysis of the Project consistent with the economic analysis, covering; (i) a financial management assessment of the executing and implementing agencies; preparation of project cost estimates and the project financing plan based on verifiable data and that are sufficient to support project implementation; (ii) conduct financial evaluations (financial cost-benefit analyses) including sensitivity analyses of project components that have a cost-recovery objective; (iii) conduct a financial risk assessment and recommend relevant financial performance indicators to be incorporated in financial covenants; and (iv) recommend financial reporting, auditing and public disclosure arrangements for the project.

(xi) Economic Assessment. Undertake the economic due diligence using the methodology and covering the 10 key areas of economic analysis presented in ADB Guidelines for the Economic Analysis of Projects (2017). 18 The

17 ADB. 2014. Financial Management, Cost Estimates, Financial Analysis, and Financial Performance Indicators.

Operations Manual. OMG2/BP. Manila. Relevant guidance is available at https://www.adb.org/about/financial-management-resources. 18 . Available from https://www.adb.org/documents/guidelines-economic-analysis-projects.

34 Appendix 1

analysis will address: (i) country context analysis; (ii) sector analysis; (iii) rationale for public intervention; (iv) demand analysis; (v) alternative analysis; (vi) cost-benefit analysis; (vii) sustainability analysis; (viii) sensitivity and risk analysis; (ix) distribution analysis and (x) the project’s design and monitoring framework.

(xii) Procurement Capacity and Risk Assessment. Conduct a procurement risk assessment of MWSC following ADB’s Guidance Note on Procurement Risk Framework (2018) https://www.adb.org/documents/procurement-risk-framework. Structure contract packages and prepare the project procurement plan following ADB’s Guidance Note on Strategic Procurement Planning (2018)

(xiii) https://www.adb.org/sites/default/files/procurement-planning.pdf.

Phase 4: Preparation of bidding documents and procurement support. Phase 4 outputs will include: (i) detailed engineering design and preparation of bidding documents for selected investments following feasibility studies prepared under Phase 2a; and (ii) assist MWSC to procure the investments including bid evaluation and preparation of bid evaluation reports and awarding contracts. Phase 4 will require, at a minimum, the following tasks:

(iii) Preparation of bidding documents. For the selected investments:

h) Drawing on the climate change literature review (under Phase 1), ensure that design parameters to maximize the climate change resilience while maintaining the economic feasibility are incorporated in the design of infrastructure to be developed under the project.

i) Identify information required and organize for surveys and capture of all data necessary for the detailed design and preparation of bid documents, including (but not limited to) topographic and cadastral data, and geotechnical conditions and geotechnical design parameters, environmental baseline surveys as required, and additional socio-economic surveys if required for social and gender assessments, and inventory of losses surveys for resettlement plans.

j) Prepare and complete technical designs including recommendations for modifications to the preliminary designs resulting from the due diligence, including bills of quantities, provision of detailed cost estimates and scopes of work for subprojects.

k) Assist the MWSC to prepare specifications for the purchase of equipment and materials.

l) Prepare draft bidding documents for subprojects following ADB’s procurement procedures and using standard bidding documents and guidelines.

m) Based on the updated and approved safeguards documents and plans, ensure that selected investment specific EMP, gender, and social mitigation measures are incorporated into bid documents and comply with the laws of the Marshall Islands and ADB’s SPS.

n) Submit the draft bid documents to the MWSC and ADB for review and update the bid documents to address comments and suggestions.

(iv) Procurement Support. Assist MWSC to procure the selected investments.

Specific tasks will include:

https://www.adb.org/documents/procurement-risk-framework

https://www.adb.org/sites/default/files/procurement-planning.pdf

Appendix 1 35

g) Assist MWSC to invite bids for the selected investments including preparation of procurement notices, arranging advertising in the Marshall Islands and international media, and issuing bidding documents to interested parties.

h) Assist MWSC to address requests for clarifications and requests for information relating to the selected investments and to prepare addendums and notices to bidders.

i) Assist MWSC in organizing and conducting pre-bid meetings and site inspections and preparation and distribution of pre-bid meeting minutes.

j) Assist MWSC in arranging and conducting bid opening meetings for the selected investments and preparation of minutes of bid opening meetings.

k) Assist MWSC in evaluating bids for the various selected investments including detailed evaluation of bids, participation in bid evaluation committee meetings, and preparation of bid evaluation reports.

l) Assist MWSC in awarding contracts for the selected investments including preparation of letters of acceptance and preparation of contract documents for execution by MWSC and the successful bidders.

24. Procedure for Review and Acceptance of Deliverables. Each of the deliverables, will be reviewed by the MWSC and ADB. The PIA consultants will address MWSC and ADB comments in finalizing the documents. Upon formal acceptance of the outputs by the government and ADB, the progress payments will be made according to the payment schedule specified to be agreed during contract negotiations. 25. Proposing entities will determine the number and the nature of experts required to deliver the PPA consultancy deliverables. Proposing entities must include in their technical proposal, in the personnel work plan, and in the financial proposal all experts required in accordance with the proposing entity’s approach and methodology. The proposing entity must also determine and indicate the number of person-months inputs required for each of the experts and the minimum time each of the experts will deliver their inputs to the project in Marshall Islands. The inclusion of a Team Leader / Water Supply Specialist must be included in the team of experts. All financial due diligence must be undertaken by a specialist with Certified Public Accountant or Chartered Accountant accreditation. 26. The Team Leader/Water Supply Specialist will have a degree in engineering or project management and have: (i) at least 15 years demonstrated experience in planning, designing and implementing urban infrastructure projects including at least 10 years in planning, designing and implementing water supply and sewerage projects; and (ii) at 10 years demonstrated experience in managing multi-disciplinary teams. Knowledge of ADB procurement and reporting procedures and small developing nation experience is essential. The Team Leader/Water Supply Specialist will report to MWSC’s project management unit (PMU) project manager and will be: (i) responsible for ensuring satisfactory performance of all PPA consultants; and (ii) assist the PMU Project Manager with day-to-day activities required to prepare the project. C. Output 3 27. Consulting services under Output 3 will comprise individual consultants including: (i) project manager / water supply and sanitation utility specialist (international, 15 person-months, intermittent), (ii) water supply demand management specialist (international, 6 person-months, intermittent); and (iii) a non-revenue water specialist (international, 6 person-months, intermittent). The outline terms of reference for the consultants are provided below.

36 Appendix 1

28. Package 3.1 – Financial Management Specialist (international, 6 person-months, intermittent). The financial management specialist will strengthen financial management capacity of the three IAs (MWIU, KALG, and MWSC) and assist the PMU within MWIU to establish and maintain the PRF accounts and to prepare the PRF financial documentation. The financial management specialist will have a degree in accounting, finance, or a related field, and will have a recognized professional accountancy qualification and at least 15 years’ experience in financial management including experience in building the financial management capacity of power or water utilities. Specific tasks and responsibilities of the financial management specialist will include:

(i) Review current revenue collection, receipting, and banking procedures; implement strengthened internal financial control procedures as required and train staff of MWIU, KALG, and MWSC thoroughly in their use;

(ii) Review financial management and financial record keeping procedures of MWIU, KALG, and MWSC. Prepare guidelines for financial record management and monitor the implementation of the guidelines.

(iii) Review the current financial accounting and reporting tools (including adequacy of software and computer hardware) used at MWIU, KALG, and MWSC and design and implement improved procedures, including establishing and monitoring financial indicators, as required;

(iv) Assist MWSC to establish and maintain separate project accounts and records for all expenditures incurred under the PRF.

(v) Assist MWSC to prepare and submit PRF grant withdrawal applications and associated documentation to ADB.

(vi) Monitor the PRF grant financial activities project. Review the project accounts quarterly and identify project financial risks and recommend corrective actions to ensure the project accounts follow international accounting principles and practices.

(vii) Prepare guidelines for quarterly and annual financial reporting and train staff of MWIU, KALG, and MWSC in the use. Assist finance personnel of the IAs in the production of routine, quarterly, and annual financial reports and accounts, including the PRF accounts, required for internal and external use;

(viii) Assist MWIU, KALG, and MWSC to prepare an action plan to progressively enhance their financial and operating systems to improve its collection of accounts receivable over the course of PRF targeting 95% by 31 December 2022;

(ix) Conduct annual reviews of water supply and sewerage tariffs of MWSC in relation to sustaining full cost recovery (operations and maintenance costs, depreciation, and debt servicing). Recommend amendments to the MWSC tariff framework for the Combined Utility Board’s consideration, to ensure MWSC’s financial sustainability;

(x) Recommend a new fee charging system and fee schedule to KALG for their solid waste management services to ensure KALG’s financial sustainability.

D. Output 4 29. Consulting services under Output 4 will comprise a firm to deliver the solid waste management investment plan for Majuro (output-based contract). The outline terms of reference for the consultants are provided below. 30. Package 4.1 – Developing an integrated solid waste management (SWM) plan for Majuro (Output-based contract). The objective of this assignment is to conduct a comprehensive

Appendix 1 37

feasibility study and due diligence review for the determination of the most appropriate integrated solid waste management system for Majuro, taking into consideration the previous studies.19 The firm selected will work in consultation with key stakeholders and with the guidance of the Majuro Atoll Waste Company (MAWC), which is a state-owned enterprise responsible for solid waste collection and disposal in Majuro Atoll, established in 2007 and supervised by the Ministry of Works, Infrastructure and Utilities (MWIU). 31. The contract deliverables will include:

• review of the existing solid waste management practices, cost structures, and revenue collection;

• condition assessments of all MAWC waste management assets;

• review existing disposal technologies used in small island developing states and make recommendation for (a) technology to be used and (ii) the rehabilitation of the existing dumpsite at Rairok;

• design and document an incinerator plant, which is suitable for the amount of solid waste generated in Majuro

• design and document a leachate treatment solution to capture and treat ground water in and in the vicinity of the dumpsite for current and future needs;

• design and document a dumpsite upgrading plan to allow for the continuous mining of the current waste pile and the provision of new sanitary cells on the mined areas;

• prepare a financial model to demonstrate the commercial viability of an incineration plant and their impact on the operations of MAWC;

• review of operating and capital costs at MSWC and recommendations for revenue requirements and collection measures to ensure MAWC’s financial sustainability;

• identify the training and capacity development needs of MAWC staff and recommend training and development programs to meet the operational needs of the incineration plant;

• work with existing consultants engaged in both within ADB and by partner organizations.

32. Further details of the contract deliverables are provided below.

(i) Inception. In consultation with key stakeholders and with the guidance of MAWC, prepare an inception report setting out the findings of the inception phase tasks as outlined below and including a detailed work plan and any proposed changes to the terms of reference for review by key stakeholders. The inception phase tasks shall include, but not limited to:

a) Existing Documentation and Reports. Review relevant SWM reports in

RMI, including those produced by the Japan International Cooperation Agency and a consulting firm engaged with ADB in 2019 and the waste analysis and characterization study (WACS) for Majuro (2015).20 Conduct initial discussions on SWM issues in Majuro with key stakeholders including MWIU, the Majuro Atoll Local Government, community services organization and non-governmental organizations, educational and faith institutions, and local businesses.

19 Such previous studies include existing reports produced by a consultant engaged with ADB in 2019 and MAWC’s

draft solid waste management plan for Majuro 2019–2028 (Action Plan: 2019–2023), developed with assistance from the Japan International Cooperation Agency.

20 Majuro Atoll Waste Company. Majuro Atoll Solid Waste Management Plan 2019–2028 (Action Plan:2019–2023).

38 Appendix 1

b) Policy and Regulatory Frameworks. Review the policy and legislative framework for SWM in Majuro.

c) Climate Change. Undertake a literature review and identify potential impacts to SWM in Majuro resulting from potential climate change and disaster impacts and the RMI and Majuro Atoll governments climate change adaptation policies. Determine the implications for the formulation of the proposed project and identify the appropriate design parameters to account for climate change. Further data capture and predictive modeling of potential climate change impacts through this contract are not proposed.

d) SWM Sector Assessment: Prepare a report describing the arrangements for SMW (e.g. collection, recycling, and disposal) in Majuro, with a focus on MAWC operations. The report will identify the factors, such as assets and asset condition, legislation, user charges and affordability, financial conditions, institutional arrangements and capacity observations. The report will also identify development partner assistance for development of SWM services in Majuro since 2010.

e) Inception Report and Inception Workshop. Prepare an inception report presenting the findings of inception phase activities and including a detailed work plan and proposed changes to the terms of reference, if required, for review by stakeholders. Present the findings of the inception phase tasks at a stakeholder workshop. Within 2 weeks of receipt of comments from key stakeholders but not later than 3 weeks after the inception phase workshop, finalize the inception report addressing stakeholder comments and suggestions. The inception report will also detail changes to the scope of the Package 4.1 contract proposed by the Package 4.1 consultant.

Deliverables: 1.1 Draft inception report 1.2 Inception workshop 1.3 Final inception report and PowerPoint presentation

(ii) Interim Report: Prepare the interim report which presents an improved SWM

solution for Majuro that is based on a) Identification and assessment of waste disposal option (e.g., waste-to-

energy, incinerator, conventional landfill); b) Management of existing disposal site; c) improving the coverage and efficiency of the collection system for municipal

solid waste for the entire Majuro Atoll; d) rehabilitating the existing dump site at Rairok following the landfill mining; e) the possibility of developing a new landfill cell for the Atoll on the reef flat

outside the current Rairok dumpsite; f) recommended options.

Also, the interim report presents g) the technical solutions in detail, the estimated capital and operational costs,

required institutional and capacity building measures as well as an initial assessment of the safeguard measures and the proposed procurement plan.

h) Interim Workshop. Present the findings of the interim report at a stakeholder

workshop. Within 2 weeks of receipt of comments from key stakeholders but

Appendix 1 39

not later than 3 weeks after the interim workshop, finalize the interim report addressing stakeholder comments and suggestions. The interim report will also detail changes to the scope of the Package 4.1 contract proposed by the Package 4.1 consultant.

Deliverables: 2.1 Draft interim report 2.2 Interim workshop 2.3 Final interim report and PowerPoint presentation

(iii) Feasibility Studies. After the interim workshop, MAWC, in consultation with key

stakeholders including MWIU, will identify a list of key investments to be delivered under future investment projects by the RMI government and/or development partners (“selected investments”). Prepare feasibility studies for each the selected investments. The feasibility studies will include the following tasks:

a) In close consultation with MAWC, recommend suitable standards to be

adopted for the design of the selected investment. b) Prepare site layout concepts and assess the land acquisition requirements. c) Prepare preliminary capital cost and life cycle cost estimates for the various

options. d) Prepare a risk assessment covering the construction and operations and

maintenance. e) Identify and assess options for delivery and operations and maintenance (e.g.

design-build-operate, design-build-own-operate, extended defects liability periods, etc.).

f) Prepare a draft feasibility report covering all the selected investments. The report will detail the findings of the feasibility studies and include drawings, diagrams, costs estimates and recommendations. Within 3 weeks of receipt of comments on the draft feasibility report, finalize and submit the feasibility report to MAWC.

Deliverables: 3.1 Draft feasibility report 3.2 Final feasibility report

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