TREATIES AND OTHER INTERNATIONAL ACTS SERIES 14-701.1

________________________________________________________________________

ECONOMIC ASSISTANCE

Millennium Challenge Compact 

Between the 

UNITED STATES OF AMERICA

and GEORGIA

Signed at Tbilisi July 26, 2013

with

Annexes 
 NOTE BY THE DEPARTMENT OF STATE

 Pursuant to Public Law 89—497, approved July 8, 1966

(80 Stat. 271; 1 U.S.C. 113)—

“. . .the Treaties and Other International Acts Series issued

under the authority of the Secretary of State shall be competent

evidence . . . of the treaties, international agreements other than

treaties, and proclamations by the President of such treaties and

international agreements other than treaties, as the case may be, 

therein contained, in all the courts of law and equity and of maritime

jurisdiction, and in all the tribunals and public offices of the

United States, and of the several States, without any further proof

or authentication thereof.”
 GEORGIA

 Economic Assistance

 Millennium Challenge Compact

 signed at Tbilisi July 26, 2013;

 Entered into force July 1, 2014.

 With annexes.
MILLENNIUM CHALLENGE COMPACT 

BETWEEN 

THE UNITED STATES OF AMERICA 

ACTING THROUGH . 

THE MILLENNIUM CHALLENGE CORPORATION 

AND 

GEORGIA 
MILLENNIUM CHALLENGE COMPACT 

TABLE OF CONTENTS 

Page 

Article 1. Goal and Objectives .................................................................................................... 1 

Section 1.1 

Section 1.2 

Section 1.3 

Compact Goal ..................................................................................................... 1 

Program Objective .............................................................................................. 1 

Project Objectives ............................................................................................... 1 

Article 2. Funding and Resources ............................................................................................... 2 

Section 2.1 Program Funding ................................................................................................ 2 

Section 2.2 Compact Implementation Funding ..................................................................... 2 

Section 2.3 MCC Funding ..................................................................................................... 3 

Section 2.4 Disbursement ...................................................................................................... 3 

Section 2.5 Interest. ................................................................................................................ 3 

Section 2.6 Government Resources; Budget ......................................................................... 3 

Section 2.7 Limitations on the Use ofMCC Funding ........................................................... 4 

.Section 2.8 Taxes ................................................................................................................... 4 

Article 3. .Implementation ........................................................................................................... 5 

Section 3.1 Program Implementation Agreement .................................................................. 5 

Section 3.2 Government Responsibilities .............................................................................. 6 

Section 3.3 Policy Performance ............................................................................................. 6 

Section 3.4 Accuracy of Information ................................................................. , ................... 7 

Section 3.5 Implementation Letters ....................................................................................... 7 

Section 3.6 Procurement and Grants ...................................................................................... 7 

Section 3.7 Records; Accounting; Covered Providers; Access ............................................. 7 

Section 3.8 Audits; Reviews .................................................................................................. 8 

Article 4. Communications ......................................................................................................... 9 

Section 4.1 

Section 4.2 

Section 4.3 

Communications ................................................................................................. 9 

Representatives ........... : ..................................................................................... 10 

Signatures .......................................................................................................... 10 

Article 5. Termination; Suspension; Expiration ....................................................................... 11 

Section 5.1 

Section 5.2 

Section 5.3 

Section5.4 

Termination; .Suspension .................................................................................. 11 

Consequences of Termination, Suspension or Expiration ................................ 12 

Refunds; Violation ............................................................................................. 12 

Survival ............................................................................................................. 12 

Article 6. Compact Annexes; Amendments; Governing Law .................................................. 12 

Section 6.1 

Section 6.2 

Section.6.3 

Annexes ............................................................................................................. 12 

Amendments ............. ~ ....................................................................................... 12 

Inconsistencies .................................................................................................. 13 
Section 6.4 

Section 6.5 

Section 6.6 

Section ·6. 7 

Section 6.8 

Governing Law ................................................................................................. 13 

Additional Instruments ...................................................................................... 13 

References to MCC Website ............................................................................. 13 

References to Laws, Regulations, Policies and Guidelines .............................. 13 

MCC Status ....................................................................................................... 13 

Article 7. Entry Into Force·················'······················································································ 14 

Section 7.1 

Section7.2 

Section 7.3 

Section 7.4 

Section 7.5 

Annex I: 

Annex II: 

Annex III: 

Annex IV: 

Annex V: 

Annex VI: 

Domestic Requirements ............................................................ : ....................... 14 

Conditions Precedent to Entry into Force ................ .' ................... : .................... 14 

DateofEntry into Force ................................................................................... 14 

Compact Term .................................................................................................. 15 

Provisional Application .................................................................................... 15 

Program Description 

Multi-Year Financial Plan Summary 

Description of Monitoring and Evaluation Plan 

Conditions Precedent to Disbursement of Cpmpact Implementation Funding 

Definitions 

Tax Provisions 

Toe- ii 
MILLENNIUM CHALLENGE COMPACT 

PREAMBLE 

This MILLENNIUM CHALLENGE COMPACT (this "Compact') is between the United 

· States of America, acting through the Millennium Challenge Corporation, a United States 

government corporation ("MCC'), and Georgia ("Georgia"), acting through its government (the 

"Government') (individually a "Party" and collectively, the "Parties"). Capitalized terms used 

in this Compact will have the meanings provided in Annex V. 

Recalling that the Parties successfully concluded an initial M-illennium Challenge 

Compact that advanced the progress of Georgia in achieving lasting economic growth and 

poverty reduction, demonstrated the strong partnership between the Parties, and was 

implemented in accordance with MCC's core policies and standards; 

Recognizing thatthe Parties are committed to the shared goals of promoting economic 

growth and the elimination of extreme poverty in Georgia and that MCC assistance under this 

· Compact supports Georgia's demonstrated commitment to strengthening good governance, 

economic freedom and investments in people; 

Recalling that the Government consulted with the private sector and .civil society of 

Georgia to determine the priorities for the use ofMCC assistance and developed and submitted 

to MCC a proposal for such assistance to achieve lasting economic growth and poverty 

reduction; and 

Recognizing that MCC wishes to help Georgia implement the program described herein 

to achieve the goal and objectives described herein (as such program description and objectives 

may be amended from time to time in accordance with the terms hereof, the "Program"); 

The Parties hereby agree as follows: 

ARTICLE 1. 

GOAL AND OBJECTIVES 

Section 1.1 Compact Goal. The goal of this Compact is to reduce poverty through economic 

growth in Georgia (the "Compact Goaf'). MCC's assistance will be provided in a manner that 

strengthens good governance, economic freedom, and investments in the people of Georgia. 

Section 1.2 Program Objective. The, objective ofthe Program (the "Program Objective") is to 

support strategic investments in general education, technical and vocational education and 

training and higher education that will strengthen the quality of education in Georgia, with an 

emphasis on science, technology, engineering, and math ("STEM') education. The Program 

consists of the projects described in Annex I (each a "Project" and collectively, the "Projects"). 

Section 1.3 Project Objectives. The objective of each of the Projects (each a "Project 

Objective" and collectively, the "Project Objectives") is to: 
(a) improve general education quality in Georgia through: infrastructure 

enhancements to the physical learning environment in schools, training for educators and school 

managers, and support to classroom, national and international education assessments; 

(b) strengthen the linkage between market-demanded skills and the supply of 

Georgians with technical skills relevant to the local economy; and 

(c) support delivery ofhigh-quality STEM degree pr~grams inGeorgia, 

ARTICLE2. 

FUNDING AND RESOURCES . 

Section 2.1 Program Funding. Upon entry into force of this Compact in accordance with 

Section 7.3, MCC will grant to the· Government, under the terms of this Compact, an amount not 

to exceed One Hundred Thirty Six Million Six Hundred Fifty Thousand United States Dollars 

(US$136,650,000) ("Program Funding") for use by the Government to implement the Program. 

The allocation of Program Funding is generally described in Arine~ II. 

Section 2.2 Compact Implementation Funding. 

(a) Upon signature of this Compact, MCC will grant to the Government, under the 

terms of this Compact and in addition to the Program Funding described in Section 2.1, an 

amount not to exceed Three Million Three Hundred Fifty Thousand Uriited States Dollars 

(US$3,350,000) ("Compact Implementation Funding") under Section 609(g) of the Millennium 

Challenge Act of 2003, as amended (the "MCA Acf'), for use by the Government to facilitate 

implementation of the Compact, including for the following purposes: 

(i) · financial management and procurement activities (including costs related 

to agents procured by MCC to provide standby fiscal and procurement agent services, if 

required); 

. (ii) administrative activities (including start-up costs such as staff salaries) and 

administrative support expenses such as rent, office equipment, computers and other information 

technology or capital equipment; 

(iii) monitoring and evaluation activities; 

(iv) feasibility, design and other project preparatory studies; and 

(v) other activities to facilitate Compact implementation as approved by 

MCC. 

The allocation of Compact Implementation Funding is· generally described in Annex II. 

(b) In accordance with Section 7.5, this Section 2.2 and other provisions of this 

Compact applicable to Compact Implementation Funding will be effective; for purposes of 

2 
Compact Implementation Funding only, as of the date this Compact is signed by MCC and the 

Government. 

(c) Each Disbursement of Compact Implementation Funding is subject to satisfaction 

of the conditions precedent to such disbursement as set forth in Annex IV. 

(d) If, after the first anniversary ofthis Compact entering into force, MCC determines 

that the full amount of Compact Implementation Funding available under Section 2.2(a) exceeds 

the amount.that reasonably can be utilized for the purposes set forth in Section 2.2(a), MCC, by 

written notice to the Government, may withdraw the excess amount, thereby reducing the 

amount of the Compact Implementation Funding available under Section 2.2(a) (such excess, the 

"Excess CIF Amount'). In such event, the amount of Compact Implementation Funding granted 

to the Government under Section 2.2(a) will be reduced by the Excess CIF Amount, and MCC 

will have no further obligations with respect to such Excess CIF Amount. 

(e) MCC, at its option by written notice to the' Government, may elect to grant to the 

Government an amount equal to all or a portion of such Excess CIF Amount as an increase in the 

Program Funding, and such additional Program Funding will be subject to the terms and 

conditions of this Compact applicable to Program Funding. 

Section 2.3 MCC Funding. Program Funding and Compact Implementation Funding are 

collectively referred to in this Compact as "MCC Funding," and includes any refunds or 

reimbursements of Program Funding or Compact Implementation Funding paid by the 

Government in accordance with this Compact. 

Section 2.4 Disbursement. In accordance with this Compact and the Program Implementation 

Agreement, MCC will disburse MCC Funding for expenditures incurred in furtherance of the 

Program (each instance, a "Disbursement'). Subject to the satisfaction of all applicable 

conditions precedent, the proceeds of Disbursements will be made available to the Government, 

at MCC's sole election, by (a) deposit to one or more bank accounts established by the 

Government and acceptable to MCC (each, a "Permitted Account') or (b) direct payment to the 

relevant provider of goods, works or services for the implementation of the Program. MCC 

Funding may be expended only for Program expenditures. 

Section 2.5 Interest. The Government will pay or transfer to MCC, in accordance with the 

Program Implementation Agreement, any interest or other earnings that accrue on MCC Funding 

prior to such funding being used for a Program purpose. 

Section 2.6 Government Resources; Budget. 

(a) In accordance with MCC's Guidelines for Country Contributions, the 

Government will make a contribution towards meeting the Program Objective and Project 

Objectives of this Compact. Annex !!-describes such contribution in more detail. In addition, the 

Governn1ent will take all actions that are necessary to carry out the Government's 

responsibilities under this Compact. 

3 
. . (b) . T~e Government will use its best efforts to ensure that all MCC Funding it 

receives or IS proJected to receive in each of its fiscal years is fully accounted for in its annual 

budget for the duration of the Program. 

(c) The Government wiU not reduce the normal and expected resources that it would 

otherwise receive or budget from sources other than MCC for the activities contemplated under 

this Compact and the Program. 

. (d) .. Unless the Government discloses otherwise to MCC in writing, MCC Funding 

will be in addition to the resources that the Government would otherwise receive or budget for 

the activities contemplated under this Compact and the Program. 

Section 2.7 Limitations on the Use ofMCC Funding. The Government will ensure that MCC 

Funding is not used for any purpose that would violate United States law or policy, as specified 

in this Compact or as further notified to the Government in writing or by posting from time to 

time on the MCC website at www.mcc.gov (the "MCC Website"), includingbut not limited to 

the following purposes: 

(a) ·for assistance to, or training of, the military, police, militia, national guard or 

other quasi-military organization or unit; 

· (b) for any activity that is likely to cause a substantial loss of United States jobs or a 

substantial displacement ofUnited States production; 

(c) to undertake, fund or otherwise support any activity that is likely to cause a 

significant environmental, health, or safety hazard, as further described in MCC's Environmental 

Guidelines and any guidance documents issued in connection with the guidelines posted from 

time to time on the MCC Website or otherwise made available to the Government (collectively, 

the "MCC Environmental Guidelines"); or 

(d) to pay for the performance of abortions as a method of family planning or to 

motivate or coerce any person to practice abortions, to pay for the performance of involuntary 

sterilizations as a method of family planning or to coerce or provide any financial incentive to 

any person to undergo sterilizations or to pay for any biomedical research which relates, in whole 

or in part, to methods of, or the performance of, abortions or involuntary sterilization as a means 

of family planning. 

Section 2.8 Taxes. 

(a) Unless the Parties specifically agree otherwise in writing, the Government will 

ensure that all MCC Funding and GRDF Funding are free from the payment or imposition of any 

existing or future taxes, duties, levies, contributions or other similar charges (but not fees or 

charges for services that are generally applicable in Georgia, reasonable in amount and imposed 

on a non-discriminatory basis) ("Taxes") of or in Georgia (including any such Taxes imposed by 

a national, regional, local or other governmental or taxing authority of or in Georgia). 

Specifically, and without limiting the generality of the foregoing, MCC Funding and GRDF 

Funding will be free from the payment of (i) any tariffs, customs duties, import taxes, export 

taxes, and other similar charges on any goods, works or services introduced into Georgia in 

4 
connection with the Program or the activities of GRDF; (ii) sales tax, value added tax, excise tax, 

property transfer tax, and other similar charges on any transactions involving goods, works or 

services in connection with the Program or the activities of GRDF; (iii) taxes and other similar 

charges on ownership-, possession or use of any property in connection with the Program or the 

activities of GRDF; and (iv) taxes and other similar charges on income, profits or gross receipts 

attributable to work performed. in connection with the Program or the activities of GRDF and 

related social security taxes and other similar charges on all natural or legal persons performing 

work in connection with the Program or the activities ofGRDF, except (x) natural persons who 

are residents of Georgia for taxation purposes (excluding non-Georgian citizens) and (y) legal 

persons formed under the laws of Georgia or any subsidiaries or branches thereof (but excluding 

MCA-Georgia and anyother entity formed for the purpose of implementing the Government's 

obligations hereunder). 

(b) The mechanisms that the Government will use to implement the tax exemption 

required by Section 2.8(a) are set forth in Annex VI. Such mechanisms may include exemptions 

from the payment of Taxes that have been granted in accordance with applicable law, refund or 

reimbursement of Taxes by the Government to MCC, MCA'-Georgia or to the taxpayer, or 

payment by the Government to MCA-Georgia or MCC, for the benefit of the Program, of an 

agreed amount representing any collectible Taxes on the items described in Section 2.8(a). To 

the extent that there are Taxes not addressed in Annex VI, whether currently in force or 

established in the fut~re, that MCC determines, in its sole discretion, are not being ex:empted by 

the Government in accordance with this Section 2.8(b), the Goveriunent hereby agrees that it will 

implement appropriate procedures (approved in writing by MCC) to ensure that such additional 

Taxes are exempted in accordance with this Section 2.8. For the :;tvoidance of doubt, the 

identification (or lack of identification) of Taxes in Annex VI, or the description (or lack of 

description) of procedures to implement the required exemption from Buch Taxes in Annex VI, 

will in no way limit the scope of the tax exemption required by Section 2.8. 

(c) If a Tax has been paid contrary to the requirements of Section 2.8(a) or Annex VI, 

the Government will refund promptly to MCC (or to another party as designated by MCC) the 

amount of such Tax in United States dollars or the currency of Georgia within thirty (30) days 

(or such other period as may be agreed in writing by the Parties) after the Government is notified 

in writing (whether by MCC or MCA-Georgia) that such Tax has been paid. 

(d) No MCC Funding or GRDF Funding, proceeds thereof or Program Assets may be 

applied by the Government in satisfaction of its obligations under Section 2.8( c). 

(e) MCA-Georgia will withhold all applicable Taxes on behalf of the staff of MCAGeorgia (excluding non-Georgian citizens). 

ARTICLE3. 

IMPLEMENTATION 

Section 3.1 Program Implementation Agreement. The Parties will enter into an agreement 

providing further detail on the implementation arrangements, fiscal accountability and 

disbursement and use of MCC Funding, among other matters (the "Program Implementation 

5 
Agreement" or "PIA"); and the Government will implement the Program in accordance with this 

Compact, the PIA, any other Supplemental Agreement and any Implementation Letter. 

Section 3.2 Government Responsibilities. 

(a) · The Government has principal responsibility for overseeing and managing the 

implementation of the Program. 

(b) The Government hereby designates Millennium Challenge Acc~)Unt Georgia, a 

legal entity of public law under Georgian law, as the accountable entity to implement the 

Program and to exercise and perform the Government's right and obligation to oversee, manage 

and implement the Program, including without limitation, managing the implementation of 

Projects and their Activities, allocating resources and managing procurements. Such entity will 

be referred to herein as. "MCA-Georgia," and has the authority to bind the Government with 

regard to all Program activities. The Government hereby also de.signates MCA-Georgia to 

exercise and perform the Government's rights and responsibilities to oversee, manage and 

implement the activities defined in the Grant and Implementation Agreement, dated as of July 

13, 2012. The designation by this Section 3 .2(b) will not relieve the Government of any 

obligations or responsibilities hereunder or under any related agreement, for which the 

Government remains fully responsible. MCC hereby acknowledges and consents to the 

designation in this Section 3.2(b). 

(c) The Government will ensure that any Program Assets or services funded in whole 

or in part(directly or indirectly) by MCC Funding or GRDF Funding are used solely in 

furtherance of this Compact and the Program unless MCC agrees otherwise in writing. 

(d) The Government will take all necessary or appropriate steps to achieve the 

Program Objective and the Project Objectives during the Compact Term (including, without 

limiting Section 2.6(a), funding all costs that exceed MCC Funding and are required to carry out 

the terms hereof and achieve such objectives, unless MCC agrees otherwise in writing). 

(e) The Government will ensure that the Program is implemented and that the 

Government carries out its obligations hereunder with due care, efficiency and diligence in 

conformity with sound technical, financial, and management practices, and in conformity with 

this Compact, the Program Implementation Agreement, each other Supplemental Agreement and 

the Program Guidelines. 

(f) The Government grants to MCC a perpetual, irrevocable, royalty-free, worldwide, 

fully paid, assignable right and license to practice or have practiced on its behalf (including the 

right to produce, reproduce, publish, repurpose, use, store, modify, or make available) any 

portion or portions oflntellectual Property as MCC sees fit in any medium, now known or 

hereafter developed, for any purpose whatsoever. 

Section 3.3 Policy Performance. In addition to undertaking the specific policy, legal and 

· regulatory reform commitments identified in Annex I (if any), the Government will seek to 

maintain and to improve its level of performance under the policy criteria identified in Section 

607 of the MCA Act, and the selection criteria and methodology used by MCC. 

6 
Section 3.4 Accuracyoflnformation. The Government assures MCC that, as ofthe date this 

Compact is signed by the Government; the information provided to MCC by or on behalf of the 

Government in the course of reaching agreement with MCC on this Compact is true, correct and 

complete in all material respects. 

Section 3.5 Implementation Letters. From time to time, MCC may provide guidance to the 

Government in writing on any matters relating to this Compact, MCC Funding or 

implementation of the Program (each, an "Implementation Letter"). The Government will use 

such guidance in implementing the Program. The Parties may also issue jointly agreed-upon 

Implementation Letters to confirm and record their mutual understanding on aspects related to 

the implementation of this Compact, the PIA or other related agreements. 

Section 3.6 Procurement and Grants. 

(a) The Government Will ensure that the procurement of all goods, works and 

services by the Government or any Provider to implement the Program will be in accordance 

with the MCC Program Procurement Guidelines posted from time to time on the MCC Website 

(the "MCC Program Procurement Guidelines"). The MCC Program Procurement Guidelines 

include the following requirements, among others: 

(i) open, fair, and competitive procedures must be usedin a transparent 

manner to solicit, award and administer contracts and to procure goods, works and services; 

(ii) solicitations for goods, works, and services must be based upon a clear and 

accurate description of the goods, works and services to be acquired; 

(iii) contracts must be awarded only to qualified contractors. that have the 

capability and willingness to perform the contracts in accordance with their terms on a cost 

effective and timely basis; and 

(iv) no more than a commercially reasonable price, as determined, for 

example, by a comparison of price quotations and market prices, will be paid to procure goods, 

works and services. 

(b) Unless MCC otherwise consents in writing, the Government will ensure that any 

grant issued in furtherance of the Program (each, a "Granf') is awarded, implemented and 

managed pursuant to open, fair and competitive procedures administered in a transparent manner 

acceptable to MCC. In furtherance of this requirement, and prior to .the issuance of any Grant, 

the Government and MCC will agree upon written procedures to govern the identification of 

potential Grant recipients, including, without limitation, appropriate eligibility and selection 

criteria and award procedures. Such agreed procedures will be posted on the MCA-Georgia 

website. 

Section 3.7 Records; Accounting; Covered Providers; Access. 

(a) Government Books and Records. The Government will maintain, and will use its 

best efforts to ensure that all Covered Providers maintain accounting books, records, documents 

and other evidence relating to the Program adequate to show, to MCC's satisfaction, the use of 

7 
all ~-CC Funding and the implementation and results of the Program ("Compact Records"). In 

ad_di_twn, the Governnient_will furnish or cause to be furnished to MCC, upon its request, 

ongmals or copies of such Compact Records. 

(b) Accounting. The Government will maintain and will use its best efforts to ensure 

that all Covered Providers maintain Compact Records in accordance with generally accepted 

accounting principles prevailing in the United States, or at the Government's option and with 

MCC's prior written approval, other accounting principles, such as those (i) prescribed by the 

International Accounting Standards Board, or (ii) then prevailing in Georgia. Compact Records 

must be maintained for at least five (5) years after the end of the Compact Term or for such 

longer period, if any, required to resolve any litigation, claims or audit findings or any applicable 

legal requirements. 

(c) Providers and Covered Providers. Unless the Parties agree otherwise in writing, a 

"Provider" is (i) any entity of the Government that receives or uses MCC Funding or any other 

Program Asset in carrying out activities in furtherance of this Compact or (ii) any third party that 

receives at least US$50,000 in the aggregate of MCC Funding (other than as salary or 

compensation as an employee of an entity ofthe Government) during the Compact Term. A 

"Covered Provider" is (i) a non-United States Provider that receives (other than pursuant to a 

direct contract or agreement with MCC) US$300,000 or more of MCC Funding in any 

Government fiscal year or any other non-United States person or entity that receives, directly or 

indirectly, US$300,000 or more ofMCC Funding from any Provider 'in such fiscal year, or (ii) 

any United States Provider thatreceives (other than pursuant to a direct contract or agreement 

with MCC) US$500,000 or more ofMCC Funding in any Government fiscal year or any other 

United States person or entity that receives, directly or indirectly, US$500,000 or more ofMCC 

Funding from any Provider in such fiscal year. 

(d) Access. Upon MCC's request, the Government, at all reasonable times, will 

permit, or cause to be permitted, authorized representatives of MCC, an authorized Inspector 

General ofMCC ("Inspector Generaf'), the United States Government Accountability Office, 

any auditor responsible for an audit contemplated herein or otherwise conducted in furtherance 

of this Compact, and any agents or representatives engaged byMCC or the Government to 

conduct any assessment, review or evaluation of the Program, the opportunity to audit, review, 

evaluate or inspect facilities, assets and activities funded in whole or in part by MCC Funding. 

Section 3.8 Audits; Reviews. 

(a) Government Audits. Except as the Parties may agree otherwise in writing, the 

Government will, on an annual basis (or on a more frequent basis if requested by MCC in 

· writing), conduct, or cause to be conducted, financial audits of all disbursements of MCC 

Funding covering the period from signing of this Compact until the following December 31 and 

covering each twelve-month period thereafter ending December 31, through the end of the 

Compact Term. In addition, upon MCC's request, the Government will ensure that such audits 

are conducted by an independent auditor approved by MCC and named on the lisl of local 

auditors approved by the Inspector General or a United States-based certifiedpublic accounting 

firm selected in accordance with the Guidelines for Financial Audits Contracted by the 

Millennium Challenge Corporation's Accountable Entities (the "Audit Guidelines") issued and 

8 
revised from timetotime by the Inspector General, which are posted on the MCC Website. 

Audits will be performed in accordance with the Audit Guidelines and be subject to quality 

assurance oversight by the Inspector General. Each audit must be completed and the audit report 

delivered to MCC no later than 90 days after the applicable audit period, or such other period as 

the Parties may otherwise agree in writing. 

(b) Audits of Other Entities. The Government will ensure that MCC financed 

agreements between the Government or any Provider, on the one hand, and (i) a United States 

nonprofit organization, on the other hand, state that the United States nonprofit organization is 

subject to the applicable audit requirements contained in OMB Circular A-133, Audit$ ofStates, 

Local Governments, and Non-Profit Organizations, issued by the United States Office of 

Management and Budget; (ii) a United States for-profit Covered Provider, on the other hand, 

state that the United States for-profit organization is subject to audit by the applicable United 

States Government agency~ unless the Government and MCC agree otherwise in writing; and 

(iii) a non-US Covered Provider, on the other hand, state that the non-US Covered Provider is 

subject to audit in accordance with the Audit Guidelines. 

(c) Corrective Actions. The Government will use its best efforts to ensure that each 

Covered Provider (i) takes, where necessary, appropriate and timely corrective actions in 

response to audits; (ii) considers whether the results of the Covered Provider's audit necessitates 

adjustment of the Government's records; and (iii) permits independent auditors to have access to 

its records and financial statements as necessary. 

(d) Audit by MCC. MCC will have the right to arrange for audits of the 

Government's use ofMCC Funding. 

(e) Cost of Audits, Reviews or Evaluations. MCC Funding may be used to fund the 

costs of any audits, reviews or evaluations required under this Compact. 

ARTICLE4. 

COMMUNICATIONS 

Section 4.1 Communications. Any document or comnmnication required or submitted by 

either Party to the other under this Compact will be in writing and, except as otherwise agreed 

with MCC, in English. All such documents or communication must be submitted to the address 

of each Party set forth below or to such other address as may be designated by any Party in a 

written notice to the other Party. 

ToMCC: 

Millennium Challenge Corporation 

Attention: Vice President, Compact Operations 

(with a copy to the Vice President and General Counsel) 

875 Fifteenth Street NW 

Washington, DC 20005 

United States of America 

Telephone:(202) 521-3600 

9 
Facsimile: (202) 521-3700 

Email: VPOperations@mcc.gov (Vice President, Compact Operations) 

VPGeneralCounsel@mcc.gov (Vice President and General Counsel) 

To the Government: 

Ministry of Finance 

Attention: Minister of Finance 

(with a copy to the Department of Public Debt and External Financing) 

16, Vakhtang Gorgasali Street 

Tbilisi 0 114 

Georgia 

Telephone:+995 32 2261 444; +995 32 2261 461 

Facsimile: +995 32 2261 088; +995 32 2261 461 

To MCA-Georgia: 

MCA-Georgia 

Attention: Chief Executive Officer 

(with a copy to the General Counsel) 

4, Sanapiro Street 

Tbilisi 0105 

Georgia 

Telephone:+995 32 2281 185; +995 32 2281 174 

Section 4.2 Representatives. For all purposes of this Compact, the Government will be 

represented by the individual holding the position of, or acting as, Minister of Finance of 

Georgia, and MCC will be represented by the individual holding the position of, or acting as, 

Vice President, Compact Operations (each of the foregoing, a "Principal Representative"). Each 

Party, by written notice to the other Party, may designate one or more additional representatives 

(each, an "Additional Representative") for all purposes of this Compact except as specified in 

Section 6.2. The Government hereby designates the Chief Executive Officer of MCA-Georgia as 

an Additional Representative. MCC hereby designates the Deputy Vice President, Department of 

Compact Operations, EAPLA, as an Additional Representative. A Party may change its Principal 

Representative to a new representative that holds a position of equal or higher authority upon 

written notice to the other Party. 

Section 4.3 Signatures. Signatures to this Compact and to any amendment to this Compact 

will be original signatures appearing on the same page or in an exchange of letters or diplomatic 

notes. With respect to all documents arising out of this Compact (other than the Program 

Implementation Agreement and any other legally binding international agreement) and 

amendments thereto, signatures may be delivered by facsimile or electronic mail and in 

counterparts and will be binding on the Party delivering such signature to the same extent as an 

original signature would be. 

10 
ARTICLE 5. 

TERMINATION; SUSPENSION; EXPIRATION 

Section 5.1 Termination; Suspension. 

(a) Either Party may terminate this Compact without cause in its entirety by giving 

·the other Party thirty (30) days' prior written notice. MCC may also terminate this Compact or 

· MCC Funding without cause in part by giving the Government thirty (30) days' prior written 

notice. 

(b) MCC may, immediately, upon written notice to the Government, suspend or 

terminate this Compact or MCC Funding, in whole or in part, and any obligation related thereto, 

ifMCC determines that any circumstance identified by MCC, as a basis for suspension or 

. termination (as notified in writing to the Government) has occurred, which circumstances 

include but are not limited to the following: 

(i) the Government fails to comply with its obligations· under this Compact or 

any other agreement or arrangement entered into by the Government in connection with this 

Compact or the Program; 

(ii) an event or series of events has occurred that makes it probable that the 

Program Objective or any of the Project Objectives will not be achieved during the Compact 

Term or that the Government will not be able to perform its obligations under this Compact; 

(iii) a use of MCC Funding or continued implementation of this Compact or 

the Program violates applicable law or United States Government policy, whether now or 

hereafter in effect; 

(iv) the Government or any other person or entity receiving MCC Funding or 

using Program Assets is engaged in activities that are contrary to the .national security interests of 

the United States; 

(v) an act has been committed or an omission or an event has occurred that 

would render Georgia ineligible to receive United States economic assistance under Part I of the 

Foreign Assistance Act of 1961, as amended (22 U.S.C. 2151 et seq.), by reason of the 

application of any provision of such act or any other provision of law; 

(vi) the Government has engaged in a pattern of actions inconsistent with the 

criteria used to determine the eligibility of Georgia for assistance under the MCA Act; and 

(vii) the Government or another person or entity receiving MCC Funding or 

using Program Assets is found to have been convicted of a narcotics offense or to have been 

engaged in drug trafficking. · 

11 
Section 5.2 Consequences of Termination, Suspension or Expiration. 

(a) . Upon the suspension or termination, in whole or in part, of this Compact or any 

MCC Fundmg, or upon the expiration of this Compact, the provisions of Section 4.2 of the 

Pro?ra~ Implementation Agreement will govern the post-suspension, post-termination or postexpiratiOn treatment ofMCC Funding, any related Disbursements and Program Assets. Any 

portionofthis Compact, MCC Funding, the Program Implementation Agreement or any other 

Supplemental Agreement that is not suspended or terminated will remain in full force and effect. 

(b) MCC may reinstate any suspended or terminated MCC Funding under this 

Compact if MCC determines that the Government or other relevant person or entity has 

committed to correct each condition for which MCC Funding was suspended or terminated. 

Section 5.3 Refunds; Violation. 

(a) If any MCC Funding, any interest or earnings thereon, or any Program Asset is 

used for any purpose in violation of the terms of this Compact, then MCC may require the 

Government to repay to MCC in United States Dollars the value of the misuseci MCC Funding, 

interest, earnings, or asset, plus interest within thirty (30) days after the Governinent's receipt of 

MCC's request for repayment. Interest will accrue from the date of the violation and will be 

calculated at the 10-year U.S. Treasury Note rate prevailing as of the close of business in 

Washington, DC as ofthe date ofMCC's request for payment. The Government.will not use 

MCC Funding, proceeds thereof or Program Assets to make such payment. 

(b) Notwithstanding any other provision in this Compact or any other agreement to 

the contrary, MCC's right under Section 5.3(a) to obtain a refund will continue during the 

Compact Term and for a period of(i) five (5) years thereafter, or (ii) one (1) year after MCC 

receives actual knowledge of such violation, whichever is later. 

Section 5.4 Survival. The Government's responsibilities under this Section and Sections 2.7, 

3.2(f), 3.7, 3.8, 5.2, 5.3, and 6.4 will survive the expiration, suspension or termination of this 

Compact. 

ARTICLE6. 

COMPACT ANNEXES; AMENDMENTS; GOVERNING LAW 

Section 6.1. Annexes. Each annex to this Compact constitutes ari integral part hereof, and 

references to "Annex" mean an annex to this Compact unless otherwise expressly stated. 

Section 6.2. Amendments. 

(a) The Parties may amend this Compact by written agreement. Such agreement will 

specify how it enters into force. The Additional Representatives will not represent the Parties for 

such purposes. 

(b) .. Notwithstanding Section 6.2(a), the Parties may modify Annexes I-V, by written 

agreement signed by the Parties which will enter into force upon signature, to (i) suspend, 

12 
terminate or modify ~ny Project or Activity, or to create a new project; (ii) change the allocations 

of funds as set forth m Annex II as of the date hereof (including to allocate funds to a new 

pro~ect); (iii) m?~ify the implementation framework described in Annex I; or (iv) add, delete or 

Wat~e an~ condit~on pre.cedent described in Annex IV; provided that, in each case, any such 

mo~Ifi~atwn (1) IS consistent in all material respects with the Program Objective and Project 

ObJectives; (2) does not cause the amount of Program Funding to exceed the aggregate amount 

specified in Section 2.1 (as may be modified by operation of Section 2.2(e)); (3) does not cause 

the amount of Compact Implementation Funding to exceed the aggregate amount specified in 

Section 2.2(a); (4) does not reduce the Government's responsibilities or contribution of resources 

required under Section 2.6; and (5) does not extend the Compact Term. 

Section 6.3. Inconsistencies. In the event of any conflict or inconsistency between: 

(a) any Annex and any of Articles 1 through 7, such Articles 1 through 7, as 

applicable, will prevail; or 

(b) this Compact and any other agreement between the Parties regarding the Program, 

this Compact will prevail. 

Section 6.4. Governing Law. This Compact is an international agreement and as such will be 

governed by the principles of international law. 

Section 6.5. Additional Instruments. Any reference to activities, obligations or rights 

undertaken or existing under or in furtherance of this Compact or similar language will include 

activities, obligations and rights undertaken by, or existing under or in furtherance of any 

agreement, document or instrument related to this Compact and the Program. 

Section 6.6. References to MCC Website. Any reference in this Compact, the PIA or any other 

agreement entered into in connection with this Compact, to a document or information available 

on, or notified by posting on the MCC Website will be deemed a reference to such document or 

information as updated or substituted on the MCC Website from time to· time. 

Section 6. 7. References to Laws, Regulations, Policies and Guidelines. Each reference in this 

Compact, the PIA or any other agreement entered into in connection with this Compact, to a law, 

regulation, policy, guideline or similar document will be construed as a reference to such law, 

regulation, policy, guideline or similar document as it may, from time to time, be amended, 

revised, replaced, or extended and will include any law, regulation, policy, guideline or similar 

document issued under or otherwise applicable or related to such law, regulation, policy, 

guideline or similar document. 

Section 6.8. MCC Status. MCC is a United States government corporation acting on behalf of 

the United States Government in the implementation of this Compact. MCC and the United 

States Government assume no liability for any claims or loss arising out of activities or 

omissions under this Compact. The Government waives any and all claims against MCC or the 

United States Government or any current or former officer or employee of MCC or the United 

States Government for all loss, damage, injury, or death arising out of activities or omissions 

under this Compact, and agrees that it will not bring any claim or legal proceeding of any kind 

against any of the above entities or persons for any such loss, damage, injury, or death. The 

13 
Government agrees that MCC and the United States Government or any current or former officer 

or employee of MCC or the United States Government will be immune from the jurisdiction of 

all courts of Georgia for any claim or loss arising out of activities or omissions under this 

Compact. 

ARTICLE 7. 

ENTRY INTO FORCE 

Section 7.1 Domestic Requirements. Before this Compact enters into force, the Government 

will proceed in a timely manner to complete any domestic procedures necessary for entry into 

force of this Agreement. 

Section 7.2 Conditions Precedent to Entry into Force. Before this Compact enters into force: 

. (a) the Program Implementation Agreement must have been signed by the parties 

thereto; 

(b) The Government must have delivered to MCC: 

(i) a letter signed and dated by the Principal Representative of the 

Government, or such other duly authorized representative of the Government acceptable to 

MCC, confirming that the Government has completed its domestic requirements necessary for 

this Compact to enter into force and that the other conditions precedent to entry into force in this 

Section 7.2 have been met; 

(ii) a signed legal opinion from the Ministry of Justice of Georgia (or such 

other legal representative of the Government acceptable to MCC), in form and substance 

satisfactory to MCC; and 

(iii) complete, certified copies of all decrees, legislation, regulations or other 

governmental documents relating to the Government's domestic requirements necessary for this 

Compact to enter into force and the satisfaction of Section 7.1, which MCC may post on its 

website or otherwise make publicly available. 

(c) The Government must have developed an implementation plan to build capacity 

in Georgian public universities to offer international standard STEM degrees and/or 

Accreditation Board for Engineering and Technology ("ABET') accreditation for the STEM 

Higher Education Project in form and substance acceptable to MCC; and 

(d) MCC shall not have determined that after signature of this Compact, the 

Government has engaged in a pattern of actions inconsistent with the eligibility criteria for MCC 

Funding. 

Section 7.3 Date of Entry into Force. This Compact will enter into force on the date of the 

letter from MCC to the Government in an exchange of letters confirming that MCC has 

14 
completed its domestic requirements for entry into force ofthis Compact and that the conditions 

precedent to entry into force in Section 7.2 have been met. 

Section 7.4 Compact Term. This Compact will remain in force for five (5) years after its entry 

into force, unless terminated earlier under Section 5.1 (the "Compact Term"). 

Section 7.5 Provisional Application. Upon signature of this Compact, and until this Compact 

·has entered into force in accordance with Section 7.3, the Parties will provisionally apply the 

terms of this Compact; provided that, no MCC Funding, other than Compact Implementation 

Funding, will be made available or disbursed before this Compact enters into force. 

SIGNATURE PAGE FOLLOWS ON THE NEXT PAGE 

15 
IN WITNESS WHEREOF, the undersigned, having been duly authorized, have si:-l 

this Compact. 

Done at Tbilisi, Georgia, this 26th day of July, 2013, in the English language only. 

FOR THE UNITED STATES OF AMERICA, 

ACTING THROUGH THE MILLENNIUM 

CHALLENGE CORPORATION 

t\ 1\ I 

\ A 1 l ) ~ ( ~ 11,- ~I ..) \ 

Nam~: Daniel W. Ybhannes 

Title: ChiefExecutive Officer 

FOR GEORGIA, ACTING THROUGH ITS 

GOVERNMENT 

SIGNATURE PAGE TO MILLENNIUM CHALLENGE COMPACT 

BETWEEN THE UNITED STATES OF AMERICA 

ACTING THROUGH THE MILLENNIUM CHALLENGE CORPORATION 

AND GEORGIA 

--
ANNEX I 

PROGRAM DESCRIPTION 

This Annex I describes the Program that MCC Funding will support in Georgia during the 

Compact Term. 

A. PROGRAM OVERVIEW 

1. Background and Consultative Process. 

(a) Background. 

This is the second MCC compact with Georgia, following a US$395 million compact, which 

entered into force in April 2006 and was completed in April 2011, and focused on certain 

infrastructure ,improvements (roads, water networks and energy rehabilitation) and rural private 

enterprise development through a grant program and an investment fund (the "First Compact"). 

The First Compact supplemented efforts by the Government to promote stability, good 

government and private enterprise development in the years following the 2004 Rose 

Revolution. The infrastructure development goals of the First Compact remain key facets of a 

broader Georgian strategy to reduce poverty in the country. Likewise, many ofthe investments 

made by the investment fund, the Georgia Regional Development Fund, survive and thereby 

continue to provide critical capital to small and medium enterprises. Among the lessons learned 

from the First Compact were the effectiveness of MCA-Georgia as an MCA Entity and a model 

for core operations such as procurement, finance, and government and public relations that offers 

significant advantages in terms of transparency and independence. The productive nature of 

MCC's partnership with the Government during the First Compact set the stage for the . 

development of the second Compact. Georgia was selected eligible for this second Compact in 

December 2012 after an iterative three-year process, throughout which MCC encouraged the 

Government to continue working to refine its proposals. 

Despite the advances achieved by the First Compact, the Government conducted an analysis of 

constraints to economic growth in spring 2011 and identified the low quality ofhuman capital as 

a significant constraint to economic growth. The lack of human capital is particularly acute in the 

STEM fields. The Compact aims to reduce this human capital constraint to economic growth. 

(b) Consultative Process. 

Throughout the development of the second Compact, the Government engaged in an inclusive 

consultative process, conducting consultations across Georgia and in the United States. Together 

with MCC in the course of compact development, the Government has utilized several formal 

mechanisms to solicit direct input to inform project selection and design from relevant 

stakeholders at different steps in the process. 

The Government's analysis of constraints to economic growth was published in spring 2011 in 

draft form and open for public comment. At that stage formal consultations were held with non-
governmental organizations and think tanks to solicit feedback. The Economic Policy Research 

Center, a Georgia-based non-governmental organization, provided written comments that helped 

shaped the project selection process, leading to further investigation and exploration of projects 

across the education sector that could address the binding constraint of human capital. Other key 

consultations that took place during the early stages of compact development include three sets 

of consultative meetings with over 50 different international higher education institutions in 

Georgia and the U.S. to help define the STEM Higher Education Project. 

The Georgian private sector was also consulted extensively, with Government and/or MCC 

· officials meeting with more than 70 private sector representatives throughout compact 

development, primarily to discuss the areas where gaps in the supply of qualified potential 

employees/Georgian university graduates and the demands of the labor market were perceived. 

·Private sector demand for skilled, educated technicians was gauged more formally through a 

wage survey of Georgian Am Cham members conducted by a Georgia-based research institution, 

which contributed directly to the economic analysis. 

Public consultations have and are expected to continue well into the design and implementation 

phase. As part of the Industry-led Skills and Workforce Development Project, an open invitation 

to interested parties in several Georgian cities resulted in several outreach sessions in December 

2012, that werewidely attended by a diverse group of private industry representatives, nongovernmental organizations, and education institutions. Following a "Call for Ideas," the 

Government received over 130 proposals for outlining priorities and proposed investments to 

improve professional training. These have been assessed by a panel to further define the MCC 

investment proposal. 

2. Description of Program and Beneficiaries. 

(a) Description. 

The Program consists of three Projects: (i) the Improving General Education Quality Project; (ii) 

the Industry-led Skills and Workforce Development Project; and (iii) the STEM Higher 

Education Project. These projects respond to constraints to economic growth by aiming to 

improve the poor quality of human capital in Georgia. 

Each Project is generally described in Part B of this Annex I. Part B also identifies one or more 

of the Activities that will be undertaken in furtherance of each Project as well as the various subactivities within each Activity. 

(b) Beneficiaries. 

Each Project of the. Compact is intended to further poverty reduction through economic growth. 

Specific beneficiaries are identified in greater detail in the Project descriptions in Part B of this 

Annex I. A brief summary of the beneficiaries of each Project is as follows: 

(i) The beneficiaries of the Improving General Education Quality Project in 

the first year of implementation are estimated to be approximately 186,400students. Students 

entering these schools each year will add to the total number of beneficiaries with approximately 

870,000 student beneficiaries projected over a 20 year project lifetime. Including family 

ANNEX I -2 
members over twenty years and adjusting for possible double counting, total beneficiaries are 

estimated at 1.6 million. 

(ii) The number of beneficiaries of the Industry-led Skills and Workforce 

Development Project is estimated to be 26,000. Beneficiaries will likely be from poorer 

households, the population that has traditionally taken advantage of technical vocational training. 

This Project is also expected to strengthen sector policy, to facilitate the creation of new 

programs, and to promote the uptake of best practice throughout the sector. 

(iii) The number of student beneficiaries from the STEM Higher Education 

Project over twenty years is estimated at 8,500. Including family members, total beneficiaries are 

estimated at 31,000. 

3. Environmental and Social Safeguards. 

All of the Projects will be implemented in compliance with the MCC Environmental Guidelines, 

the International Finance Corporation Performance Standards on Environmental and Social 

Sustainability, and the MCC Gender Policy, and in a manner acceptable to MCC. The 

Government also will ensure that the Projects comply with all national environmental laws and 

regulations, licenses and permits, except to the extent such compliance would be inconsistent 

with this Compact. Specifically, the Government will: (a) develop, adopt, and implement an 

Environment and Social Management System for MCA-Georgia.and other Government 

agencies, as necessary, for all Compact activities, which will be in form and substance 

satisfactory to MCC; (b) cooperate with or complete, as the case may be, any ongoing 

environmental and social impact assessments, or if necessary undertake and complete any 

additional environmental and social assessments, environmental and social management plans, 

environmental and social audits, resettlement policy frameworks, and resettlement action plans, 

each in form and substance satisfactory to MCC; (c) ensure that Project-specific environmental 

and social management plans are developed and all relevant measures contained in such plans 

are integrated into project design, and the applicable procurement documents and associated 

finalized contracts, in each case, in form and substance satisfactory to MCC; and (d) implement 

to MCC's satisfaction appropriate environmental and social mitigation measures identified in 

such assessments or plans or developed to address environmental and social issues identified 

during compact implementation. Unless MCC agrees otherwise in writing, the Government will 

fund all necessary costs of environmental and social mitigation measures (including, without 

limitation~ costs of resettlement) not specifically provided for, or that exceed the MCC Funding 

specifically allocated for such costs in, the Detailed Financial Plan for any Project. 

To maximize the positive social impacts ofthe Projects, address cross-cutting social and gender 

issues such as human trafficking, child and forced labor, and HIV I AIDS, and ensure compliance 

with the MCC Gender Policy the Government will: (x) develop a comprehensive social and 

gender integration plan which, at a minimum, incorporates the findings of a comprehensive 

social and gender analysis, identifies approaches for regular, meaningful and inclusive 

consultations with women and other vulnerable/underrepresented groups, consolidates the 

findings and recommendations of Project-specific social and gender analyses and sets forth 

strategies for incorporating findings of the social and gender analysesirito final Project designs 

as appropriate ("Social and Gender Integration Plan"); and (y) ensure, through monitoring and 

ANNEX I- 3 
coordination during implementation, that final Activity designs, construction tender documents, 

other bidding documents and implementation plans are consistent with and incorporate the 

outcomes of the social and gender analyses and Social and Gender Integration Plan. 

B. DESCRIPTION OF PROJECTS 

Set forth below is a description of each of the Projects that the Government will implement, or 

· cause to be implemented, using MCC Funding to advance the applicable Project Objective. In 

addition, specific activities that will be undertaken within each Project (each, an "Activity"), 

including sub-activities, are also described. 

1. Improving General Education Quality Project. 

(a) Summary of Project and Activities. 

The Improving General Education Quality Project consists of three Activities that target areas 

where the Georgian education sector needs the most support: physical environment, secondary 

school teacher subject knowledge and pedagogical skills, school management capacity, and 

education assessments. 

To increase the impact and sustainability of the Improving General Education Quality Project, 

MCA-Georgia will work to develop partnerships with the private sector to promote private 

investment in and around the Project. Areas for partnership include but are not limited to teacher 

and school leader professional development, curriculum and learning platforms, and other 

innovations in STEM, ICT, and English-language education. 

(i) Improved Learning Environment Infrastructure Activity. 

The Improved Learning Environment Infrastructure Activity will rehabilitate approximately 130 

existing Georgian public school facilities. Many Georgian public schools were built in the Soviet 

era and have been largely neglected due to the absence of any significant maintenance program. 

This has resulted in the school facilities being in a very poor physical condition including 

internal utilities such as heating, electrical, water supply and sanitation systems. The 

Government formed the Educational and Scientific Infrastructure Development Agency 

("ESIDA") within the Ministry of Education and Science of Georgia ("MoES'') to address issues 

related to school maintenance, rehabilitation and building of new school facilities. 

The Improved Learning Environment Infrastructure Activity will involve the full internal and 

external rehabilitation of selected school facilities, utility upgrades, and provision of laboratories. 

Such an approach addresses the key elements correlating with improved educational 

performance, including human comfort, indoor air quality, and adequate lighting. 

Using a transparent school selection process, the Government and MCC identified well-utilized 

schools in poor physical condition that served a high share of Socially Vulnerable students; these 

schools will be targeted for rehabilitation under this Activity over the course of the Compact 

Term. This selection of schools was based on a formula that prioritizes schools according to their 

physical condition {dilapidated physical infrastructure), social vulnerability (higher proportion of 

Socially Vulnerable students), number of students enrolled and utilization rate. 

ANNEX I- 4 
MCA-Georgia and ESIDA will develop and enter into an Implementing Entity Agreement (in 

form and substance satisfactory to MCC) that will establish the duties and obligations associated 

with implementation. For the first phase of work, MCA-Georgia will manage the financial 

resources for this Activity. 

The establishment of an Operations and Maintenance ("O&M') program in the Georgian school 

system is critical for ensuring the sustainability ofMCC's investment and more broadly to the 

viability of Georgian schools. The Government has committed to developing and funding a 

strategy to address school O&M and a plan for its implementation (collectively, a "School O&M 

Plan") withMCCsupport. Key elements ofthis School O&M Plan include hiring permanent 

dedicated and technically qualified staff to develop and implement the School O&M Plan. 

Establishing an MCC incentive fund. MCC will support this effort via an incentive fund of up to 

US$2,500,000 (Two Million, Five Hundred Thousand United States Dollars) to support school 

O&M activities .. This funding will be contingent upon Government implementation of the School 

O&M Plan in a manner satisfactory to MCC. On an annual basis, MCC will evaluate ESIDA's 

performance against the School O&M Plan and will build on satisfactory performance by 

contributing MCC funding to O&M activities in the following year. 

(ii) Training Educators for Excellence Activity. 

The objectives ofthe Training Educators for Excellence Activity are to: (1) improve math, 

science, information and communication technology ("ICT'), and English teaching and learning 

in Grades 7-12; and (2) improve school management. This Activity will achieve the first 

objective by training approximately 23,400 math, science, ICT, and English teachers and 

improving upon the existing system of continuous professional development. To improve schoolbased professional development, the Activity will train up to one school-based professional 

development coordinator perpublic school, or approximately 2,000 such coordinators. Training 

these coordinators will provide new teacher orientation and continued school-based professional 

development to· support the adoption of new knowledge and good teaching practices. To meet the 

second objective, this Activity will support the development of a continuous professional 

development framework for school principals and will provide training for up to 2,000 public 

school principals in Georgia. 

The Implementing Entity for the Training Educators for Excellence Activity will be the Teacher 

Professional Development Center ("TPDC'), the MoES entity currently responsible for 

managing teacher professional development. Compact funding will support capacity building for 

TPDC, the development and provision of training materials and equipment, and the 

implementation oftraining courses. This Activity will also support the provision of appropriate 

teaching/learning technology and equipment for both schools and TPDC. 

(iii) Education Assessment Support Activity. 

A rigorous testing and assessment system is needed to track student progress as well as to hold 

teachers, administrators, and national authorities accountable to Georgian stakeholders for 

achieving outcomes. National testing systems will be supplemented by participating in 

international benchmarking assessments such as the OECD's "Program for International Student 

ANNEX I- 5 
Assessment" and Institute of Education Science's "Trends in International Math and Science 

Study" not only to verify national results but also to track the country's performance relative to 

the international community. Furthermore, international assessments can help Georgia monitor 

system-level achievement trends in a global context over time and to further improve teaching 

and learning through research and analysis of assessment data. 

The National Assessment and Examination Center ("NAEC') will be the Implementing Entity 

and a direct beneficiary of this Activity. This investment will support NAEC to carry out (1) 

national; (2) international; and (3). classroom assessments of student learning, with a focus on 

using the results for improving the quality of general education. The investment will support the 

effective implementation of approximately six national assessments, including secondary school 

mathematics and selected sciences. This Activity will fund preparation for and participation in 

five international assessments aimed at measuring student and teacher performance in secondary 

school math, science, and ICT. Finally, NAEC will create a classroom assessment system for 

secondary school math and science teachers that will enable those teachers to assess their 

students' learning and use the results to improve teaching and learning in their classrooms. This 

system will build upon current USAID work in classroom assessment tools for primary school 

teachers described in paragraph (f) below. 

The Government will submit for MCC review and approval a plan to address the recurrent, 

operational costs associated with MCC investments in the Training Educators for Excellence 

Activity and the Education Assessment Support. 

(b) Beneficiaries. 

In general, beneficiaries of the Improving General Education Quality Project will be Georgian 

public school students in grades 7-12, who will benefit from both student assessments and 

teacher professional development. A smaller subset of students in grades 1-12 will also benefit 

from improvements to the physical infrastructure of their schools. Estimates for the number of 

beneficiaries will be established in more depth after detailed design. Identification of 

beneficiaries for each Activity is set forth below. 

(i) Improved Learning Environment Infrastructure Activity. 

Assuming that approximately 130 schools are rehabilitated, with an average enrollment of350 

students per school, the initial beneficiaries of this Activity will be approximately 45,500 

students. New students entering these schools each year will add to the total number of 

beneficiaries over a twenty year project lifetime. Most rehabilitated schools will have twelve 

grades; hence the average intake of new students each year is approximately 29 students per 

school; and will be approximately 3,800 students across 130 schools. Over a twenty year project 

·lifetime this will add approximately 72,000 additional students for a total of 117,500 student 

beneficiaries. The Improved Learning Environment Infrastructure Activity has targeted povertyreducing outcomes by balancing questions of economic efficiency, social equity, and stakeholder 

engagement. Half the beneficiaries will be girls and over25 percentwill be students from 

Socially Vulnerable families, and ethnic minorities. 

ANNEXI-6 
(ii) Training Educators for Excellence Activity. 

The beneficiaries of this Activity will be students whose teachers take part in professional 

development. It is envisioned that public secondary school math, science, ICT and English 

teachers will receive training, benefitting students in grades 7-12 over the twenty-year expected 

lifetime of the Activity. In2012, total enrollment in grades 7-9 was 134,900 and in grades 10-12, 

113,600 students. Assuming an implementation success rate of75 percent, 101,200 lowersecondary and 85,200 upper-secondary students (a total of 186,400 secondary students) will 

initially benefit from this program. With an annual intake into secondary grade 7 of 

approximately 48,000 students, and a 75 percent implementation rate, roughly 36,000 new 

student beneficiaries will enter secondary school each year. Over a twenty-year project lifetime, 

this will add ah additional 684,000 student beneficiaries, for a total of 870,400 student 

beneficiaries. Including family members and adjusting for possible double counting, total 

beneficiaries are estimated at 1.6 million individuals over twenty years. 

(iii) Education Assessment Support Activity .. 

Beneficiaries will be the NAEC staff receiving capacity building and training. All teachers and 

students in Georgia may benefit from improved classroom assessments and improved policy due 

to the systemic feedback generated from national and international assessments. Key 

stakeholders within the Government will benefit from having information that allows them to 

make better-informed policy decisions. 

(c) Environmental and Social Mitigation Measures. 

According to MCC Environmental Guidelines, the Improving General Education Quality Project 

is considered a "Category B" project. An Environmental and Social Assessment will be 

undertaken and an Environmental and Social Management Framework developed to address: the 

overall environmental and social issues associated with the school rehabilitation program; 

identify, screen and assess key risks; and propose appropriate measures to manage such risks and 

impacts. A Hazardous Waste Management Plan and an Occupational Health and Safety Plan will 

be required as part of the MCC-funded consultancy for feasibility and design. Effective measures 

for improving efficiency in the consumption of energy, water, and other resources and material 

inputs will be identified and incorporated into the design for rehabilitation. 

No resettlement is anticipated in this Project since there is no requirement for new land or 

building additions at the existing schools. 

(d) Corporate Social Responsibility. 

MCA-Georgia will develop a corporate, community, and social responsibility program that 

enables schools, community organizations and businesses to form partnerships to create 

enhanced environments for learning. This program will operate on principles of volunteerism, 

sponsorship and mentorship with the goal of increased support for education and improved 

classroom and school environments within the partner schools and the communities where they 

are located. 

ANNEXI-7 
(e) Donor Coordination. 

The World Bank, USAID, German Society for International Cooperation ("GIZ''), United 

Nations Development Programme, and the European Union have recently funded activities 

including school construction and supporting the Governrtlent in refining general education 

financing. MCC and Government consultations with other donors involved in the education 

sector are expected to continue through the Compact term, ensuring that investments in the 

sector continue to be strategic and focused on the ultimate goal of increasing future incomes for 

Georgians. Beyond general.coordination, the Education Assessment Support Activity. is expected 

to build on the World Bank's national assessment support to the NAEC as well as the USAID 

primary school classroom assessment project. 

(t) USAID. 

USAID recently performed a school rehabilitation project in Georgia and has provided valuable 

data and lessons learned from this work. In addition, USAID's Georgia Primary Education 

Project ("G-PriEd'') is supporting a variety of activities in the education sector including 

classroom diagnostic assessments in grades 1-6. G.;.PriEd provided a tool for Georgian teachers 

to assess students' knowledge and skills in critical competency areas of reading and 

· mathematics. It will be used by teachers in the classroom to ensure that children are on track to 

·meet standards: While the Georgian national standards in reading and mathematics include a 

framework for formative assessment, there is no systematic assessment approach for diagnosing 

students' performance in core reading and math competencies. G-PriEd's diagnostic assessment 

approach will be used to target skills in critical competency areas of reading and mathematics in 

the :Georgian national curriculum and thus have a direct relation with curricula and instruction in 

Georgian schools. Teachers will be trained to carry out classroom diagnostics and will be able to 

use the tool for feedback to adjust ongoing teaching and le~ng in order to improve students' 

achievement of intended instructional outcomes. MCC plans to incorporate this approach and the 

lesso·ns learned as part of its support for classroom assessments in grades 7-12. Building on 

USAID's work described above, MCC will strengthen NAEC to design and facilitate effective 

strategies for classroom-based assessments and develop materials, including sample tasks and 

tests that can be 'Used by teachers to improve their own assessment practices. 

(g) Sustainability. 

Use of the Implementing Entities (ESibA, TPDC, and NAEC), an approach replicating that 

employed with success in the First Compact, will help to develop long-term organizational 

capacity in Georgia. Building organic capabilities is an important objective in order to increase 

the probability of the Project's sustainability. 

The School O&M Plan to be developed by ESIDA will promote long-term maintenance for 

rehabilitated schools in order to maximize the useful life of investments. 

(i) Improved Learning Environment Infrastructure Activity. 

The development and implementation of a comprehensive School O&M Plan, maintenance 

standards, institutional arrangement and budgetary process is a critical element of this Activity. 

The proposed School O&M Plan will be performed in close coordination with ESIDA to ensure 

ANNEX 1-8 
human resources, program activities, implementation mechanisms and budgetary processes are 

well integrated and sustainable. ESIDA will hire sufficient technical staff dedicated to the 

Compact activities as well as provide the necessary office facilities to conduct the design 

activities. 

(ii) Training Educators for Excellence Activity .. 

This Activity will improve TPDC's capacity to engage in a broad range of teacher and principal 

continuing professional development. In the future, TPDC will be able to use experience gained 

during the Compact term to expand this model to all teachers. Increased Government funding 

dedicated to professional development will promote the long-term sustainability of professional 

development. 

(iii) Education Assessment Support Activity. 

Over the course of the Compact~ the staff of the NAEC will have executed a number of national 

and international assessments, gaining experience in planning and implementing ongoing 

assessments. This will help ensure that national and international assessments contribute to 

continued improvement of the general education system, particularly in support of ongoing 

curriculum revision and reform. A system for classroom assessments will have been created and 

NAEC will have built initial experience in running this system. Increased Government funding 

dedicated to assessments will promote the long-term sustainability ofNAEC activities. 

(h) Policy, Legal and Regulatory Reforms. 

MCC and the Government have focused on two areas in planning for policy reform relevant to 

the Compact: operations and maintenance of infrastructure investments and international 

assessments. 

(i) Improved Learning Environment Infrastructure Activity. 

With respect to future operations and maintenance of school infrastructure rehabilitated under 

this Project, the Government (specifically, ESIDA, and the Georgian Ministry of Finance) has 

agreed to develop and fund the School O&M Plan for the entire public school system, during and 

after the Compact term. This funding will be complemented by Compact-funded technical 

assistance to create and implement for the School O&M Plan and a matching O&M incentive 

fund through the Compact term. MCC and the Government will work together to transform 

O&M management practices to increase the sustainability of infrastructure investments. 

(ii) Education Assessment Support Activity. 

High quality national and international assessments provide valuable information for monitoring 

learning achievement, such as the gaps between boys and girls or between urban and rural 

students. Support to NAEC will enable it to analyze educational outcomes, including gender and 

social differences in achievement, and to provide the MoES useful information for policymaking. 

ANNEX I- 9 
2. Industry-led Skills and Workforce Development Project. 

(a) Summary of Project and Activities. 

The Industry-led Skills and Workforce Development Project aims to improve the linkage 

between market-demanded skills and the supply of Georgians with technical skills relevant to the 

local economy. Investments to support Technical Vocational Education and Training ("TVET') 

are necessary to address industry demand for skilled technicians and to reach potential 

beneficiaries who may not have the opportunity to obtain further education and training. The two 

activities proposed under this Project are therefore designed to (1) solicit innovative proposals 

from Georgian TVET providers for the establishment of new or the expansion of existing 

training programs to meet industry needs; and (2) to strengthen the Georgian TVET sector's 

national policy and provider practice with respect to industry engagement. 

(i) Competitive Program Improvement Grants Activity. 

The objective of this Activity will be to provide a:n initial investment in programs that develop 

and expand innovative and effective approaches to employment-oriented skills development in 

Georgia through a competitive grants program. Given the complexities and dynamics of the 

Georgian labor market, a competitive grants program aims to incentivize TVET providers to 

engage local industry and will provide the necessary funding and technical assistance to 

overcome financial and capacity barriers to market entry, particularly in the more costly and 

complex STEM fields and agriculture. 

The Competitive Program Improvement Grants Activity will award grants to develop new or 

expand existing TVET programs. This may include support to the following types of activities: 

curriculum development, new program piloting, instructor training, internship and job placement 

programs, teaching and learning materials, equipment modernization, and limited facilities 

rehabilitation. In addition to this development capital, technical assistance will be provided to 

promote quality proposals, build capacity, and ensure compliance with MCC policies. To receive 

grants, TVET providers and their industry partners will be required to show commitment through 

cash or in-kind contributions. MCA-Georgia will work to ensure industry engagement through 

outreach and support for linking industry and providers. · 

. (ii) Strengthening Sector Policy and Provider Practice Activity. 

In addition to direct support to TVET programs, there is a need to strengthen sector policy and 

provider practice with respect to industry engagement. At the national level, this Activity will 

provide technical assistance to the Government to strengthen sector policy to support industry 

engagement. At the provider level, existing good practices in industry engagement such as tracer 

studies and industry advisory boards will be identified and promoted across the sector to foster 

linkages and responsiveness to labor market needs. 

Sector Strengthening: Building on the Government's recent reforms, a number of areas have 

been identified at the sector policy level where specific technical assistance to improve industry 

engagement and education quality may provide substantial systemic returns. The Government 

will ensure that targeted sector interventions build on past and on-going technical assistance 

provided by other donors. 

ANNEXI-10 
Provider Practice: The Strengthening Sector Policy and Provider Practice Activity will identify 

and promote existing but isolated internationally accepted good practice within the sector. This 

will be achieved by supporting industry recognition awards, and strengthening, documenting, 

and .disseminating these practices to other providers. Conferences in Georgia will be hosted to 

showcase and promote good practice. Technical assistance will be offered to providers interested 

in adopting good practice at their institutions. 

Practices supported by the Strengthening Sector Policy and Provider Practice Activity will be 

linked to sector strengtheningtechnical assistance. These linkages will provide a local context 

for industry engagement and local examples ofhow to enhance engagement in the Georgian 

TVET sector. Thus, national technical assistance will not be provided in isolation but together 

with developing provider practice. 

(b) Beneficiaries. 

Estimates for the number of beneficiaries will be established in more depth after detailed design, 

though currently the number.is approximately 26,000. Generally, beneficiaries will likely be 

from economically disadvantaged households, because that is the population that has 

traditionally taken advantage oftechnical vocational training. 

Both TVET program improvements and wider usage of TVET best practice will benefit staff, 

teachers, and students of supported programs. The most direct impact will be to students who are 

able to obtain well-paid employment following their training. Industry will benefit from having a 

supply of trained labor to meet market demand. The target beneficiaries for the sector 

strengthening technical assistance will be the staff of the national policy entities and indirectly all 

provider staff, teachers, and students involved in the sector. 

(c) Environmental and Social Mitigation Measures. 

According to MCC Environmental Guidelines, the Industry-led Skills and Workforce 

Development Project is considered a "Category D" project. MCA-Georgia and the grants 

manager will be required to develop and implement the Competitive Program Improvement 

Grants Activity in accordance with operational procedures that address environmental and social 

performance issues, including the screening and assessment of key environmental and social 

impacts, the development of appropriate mitigation measures for proposed investments, the 

monitoring of the adequacy of implementation of mitigation measures, and periodic reporting of 

environmental and social performance to MCA-Georgia. While the Project does not anticipate 

major TVET infrastructure rehabilitation, proposed investments will be assessed in broad terms 

to ensure that technical and environmental supporting infrastructure, such as sufficient structural 

capacity and adequate electrical, gas, water supply and sanitation facilities, is in place for the 

investments. Resettlement is not anticipated as part of this Project . 

. Given the importance of increasing employment in high demand technical areas, integration of 

gender and social t!quity objectives in technical and vocational education is a critical part of 

ensuring successful overall project outcomes. Substantial gender differences in STEM program 

participation, and in employment and remuneration, also point to the importance ofTVET career 

counseling. Gender and social issues will be addressed through technical assistance and 

ANNEXI-11 
resources for implementing(i) national policies, and (ii) high priority TVET qualification 

providing programs. Social and gender integration will be a critical component of grant 

evaluation and of technical assistance to grant recipients. Guidelines for the competitive grants 

program will require that proposed program providers specify their strategies and approaches for 

ensuring that women and members of disadvantaged groups are equitably represented in these 

priority programs, drawing from the results of an MCC study on barriers to participation for 

women and vulnerable groups. 

(d) Donor Coordination. 

There are a number of local and international donors active in the TVET sector. In the planning 

processes forthis Compact MCC and MCA-Georgia have met regularly with donors, including 

UNDP,.the World Bank, GIZ, the European Union, and other donors to ensure coordination of 

planning and leverage of existing donor activity in the design of activities. One example is the 

proposal for work in the Strengthening Sector Policy and Provider Practice Activity to build an 

industry engagement component to enhance the TVET strategy document completed by another 

donor. Engagement with other donors will be on-going. 

(e) Sustainability. 

By creating stronger linkages between labor supply and demand at the national and providerlevels, investing in a· knowledge system to identify and promote best practice, and rewarding 

industry-led program design, the Industry-led Skills and Workforce Development Project will 

promote sustainability of the programs financed through the Compact; as well as future programs 

in Georgia. Additionally, programs receiving grants must have a sustainability plan to ensure that 

Compact investments will result in programs that continue beyond the period of grant financing. 

3. STEM Higher Education Project. 

(a) Summary of Project. 

Georgia has industrial, infrastructure, information technology, and transport related economic 

growth that requires well-educated graduates from STEM degree programs. While access to 

higher education is widespread, institutions in Georgia with STEM programs are not historically 

well-equipped to provide the skilled graduates needed by industry. In particular, there are two 

factors impeding the establishment of quality STEM programs in Georgia: (1) outdated 

knowledge and approach of fac~lty educated largely under the Soviet system; and (2) the 

substantial cost in facilities and equipment necessary to establish a modern STEM program. 

In order to achieve the delivery of high-quality STEM degree programs to boost productivity and 

growth and increase employment opportunities, the STEM Higher Education Project plans to 

attract international university partner(s) to support the Government's effort to modernize STEM 

education. The objectives of this Project will be to build capacity in Georgian public universities 

and to offer international standard STEM degrees and/or Accreditation Roard for Engineering 

and Technology ("ABET') accreditation. International university partner(s) will also bring the 

needed experience to promote equitable participation for women and minorities in STEM 

programs. 

ANNEXl-12 
(i) International Partner Selection. 

MCA-Georgia launched an open and competitive RFP to identify international universities 

interested in partnering with Georgian universities to offer STEM degrees. The RFP solicited 

proposals from international universities, alone or in consortia, that could offer international 

university STEM bachelor degree(s) in partnership with Georgian public universities. A 

technical-evaluation panel selected three proposals from U.S. universities that will undertake 

detailed program development analyses and tasks that will be completed using Compact 

Implementation Funding, including development of a full technical implementation plan. 

(ii) ABET Accreditation. 

MCC may also support STEM programs at Georgian public universities in obtaining 

accreditation from ABET in conjunction with or as an alternative to international university 

STEM bachelor degree(s) to achieve quality STEM education outcomes. ABET is the U.S. 

association that accredits' university programs in applied science, computing, engineering, and 

engineeringtechnology. ABET accreditation for Georgian institutions may require facility and 

equipment upgrades, curriculum development, professional development for professors, and 

institutional support. 

(iii) Georgia Regional Development Fund. , 

The Georgia Regional Development Fund is an independently managed investment fund created 

under the First Compact to provide capital to Georgian small and medium enterprises in the 

agribusiness and tourism sectors. Concurrently with the First Compact's expiration, GRDF 

began a five year wind-down period that will conclude on April 7, 2016, and as part of the 

conclusion ofthe First Compact the ownership interest in GRDF was transferred to the Service 

Agency ofthe Ministry of Finance of Georgia. Prior to its complete wind-down, GRDF may 

make distributions to the holder of the ownership interest, and at the conclusion of the winddown will liquidate all of its assets and make a final distribution of the liquidation proceeds to 

the holder of the ownership interest. The Parties have agreed that proceeds from GRDF will be 

used to support the activities of the STEM Higher Education Project. 

To facilitate GRDF's support of the STEM Higher Education Project, the Parties anticipate that 

. its ownership interest will be transferred to MCA-Georgia and that MCA-Georgia will assume 

responsibility for managing the proceeds of GRDF distributions, provided that the Service 

Agency of the Ministry of Finance will remain responsible for any liabilities associated with the 

ownership interest that arose prior to the date of transfer; The management ofGRDF is 

responsible for collection of proceeds. The ownership interest transfer, along with modifications 

to existing GRDF operational documents will be made pursuant to one Or more agreements that 

must be in form and substance satisfactory to the Parties. In addition, MCC and the Government 

must agree to the specific uses of the GRDF proceeds in theProject before any expenditure of 

such proceeds. The Parties anticipate signing a Supplemental Agreement that will specify the 

terms ofMCC and the Government's agreement on the use ofGRDF proceeds, and that MCAGeorgia will develop operational guidelines for its management of the funds (including 

requirements for internal controls, auditing and reporting), all of which rnust be satisfactory in 

form and substance to MCC (collectively, the "New GRDF Operational Documents"). In the 

ANNEX l-13 
event that MCA-Georgia receives a distribution from GRDF before the New GRDF Operational 

Documents have been finalized, MCA-Georgia will hold such proceeds in a segregated bank 

account at a financial institution acceptable to MCC. If any of the GRDF proceeds remain at the 

·end of the Compact Term, they will beallocated to such uses as MCCand the Government may 

agree as part of the compact closure process. 

(b) Beneficiaries. 

Be11eficiaries are the students who will obtain a high-quality undergraduate degree in STEM 

disciplines. This will provide them with improved employment opportunities, higher salaries, 

and improved long-term prospects for professional growth in a STEM sector. The Project will 

focus on recruiting women as well as Socially Vulnerable students. Taking the average cohort 

size provided by the three selected respondents, an estimated 8,500 students would pass through 

the higher education program over twenty years. Including family members of the students, total 

beneficiaries are estimated at approximately 31,000 individuals. Estimates for the number of 

beneficiaries will be established in more depth after the program design phase. 

(c) Environmental and Social Mitigation Measures. 

(i) Environmental and Social Performance. 

According to MCC Environmental Guidelines, this Activity is considered to be a "Category B" 

project, as minor environmental impacts may occur. Appropriate environmental and social 

assessment and mitigation measures and proper due diligence will. be implemented in accordance 

with MCC Environmental Guidelines in order to ensure that these programs are well designed 

and will not result in adverse environmental health and safety impacts. Proposed investments 

should be assessed in broad terms to ensure that technical and environmental supporting 

infrastructure is in place for the investments, such as sufficient structural capacity and adequate 

electrical, gas, water supply and sanitation facilities. Based on the assessments, participating 

universities and Government agencies, as necessary, will develop and implement an 

environmental and social operations manual to ensure use of best practices regarding waste 

management, emergency preparedness, and occupational health and safety. 

(ii) Access. 

A major challenge in higher education is women's self-selection into non-STEM concentrations 

(e.g., women were 27 percent of enrollees in engineering in 2009) and the low share of language 

minority and Socially Vulnerable students pursuing higher education. Disadvantaged students, 

who often cannot afford higher education and/or lack the level of general education needed to 

access it, may not benefit from this Project. This risk will be partially mitigated through the 

proposed Improving General Education Quality Project, designed to enable access to higher 

education for traditionally disadvantaged students. 

MCA-Georgiaalsowill helpthe international university partner to develop private sector support 

for scholarships and endowments to help disadvantaged students. The Government has also 

.expressed a commitment to providing scholarships to students. One criterion for selecting the 

three qualified international universities was their demonstrated experience in recruiting and 

retaining female and Socially Vulnerable students into STEM programs. In addition, the Project 

ANNEX 1-14 
will address gender and social imbalances in supported STEM programs by ( 1) implementing 

activities based on the findings and recommendations of studies that identify barriers to female 

and Socially Vulnerable students' participation in STEM programs; (2) ensuring that higher 

education programs supported by the Compact include specific activities for outreach, 

mentoring, and career counseling programs directed toward women, minorities, and 

disadvantaged student populations; and (3) needs-based scholarships. Ethnic minority students 

accepted into the program will have a year to study Georgian before starting classes, in line with 

the current Government policy. 

(d) Sustainability. 

The universities and their Georgian partners will be required to present clear and feasible 

business plans for how the programs will be maintained after the Compact funding period. 

Program proposals must demonstrate the long-term viability of programs at sustainable operating 

cost levels. The capacity building of Georgian public universities will improve their ability to 

provide high-quality STEM education in the future or to achieve and maintain ABET 

accreditation. To promote sustainability, the Government has committed to provide funding for 

universities over twenty years, tied to student enrollment, in line with Government policy. 

Moreover, as noted above, the Government has agreed that proceeds from GRDF will be 

allocated to support the long term sustainability of the STEM Higher Education Project. 

To further increase the impact and sustainability of the STEM Higher Education Project, MCAGeorgia will work to develop private sector engagement and partnerships between the selected 

consortium and businesses. Examples of these partnerships may include arrangements in which 

companies advise the university partner on needed professional skills, contribute equipment and 

knowledge that the university needs to develop these skills, sponsor students and faculty with 

scholarships and endowments, and hire interns and graduating students. 

Additionally, university partners have a strong interest in training professionals and helping them 

find jobs. The universities may carry out tracer studies to better understand job uptake and adjust 

programs accordingly. MCA-Georgia will also help university partner(s) to develop ties with 

businesses to assess market demand and place students in jobs. 

(e) Policy, Legal and Regulatory Reforms. 

(i) University Accreditation Policy. 

Tertiary institutions obtain authorization and accreditation to deliver programs of study and issue 

diplomas and certificates recognized by Government and industry. Authorization decisions are 

made by the National Centre for Education Quality Enhancement ("NCEQE') CounCil on 

Authorization of Education Institutions. Accreditation is an external evaluation process 

conducted by the NCEQE Educational Program Accreditation Council, which determines the 

compliance_ of an educational program with established standards. Only accredited programs are 

eligible to receive Government funding. MCC will work with NCEQE to strengthen capacity to 

carry out authorization and accreditation of higher education institutions. 

ANNEX 1-15 
C. IMPLEMENTATION FRAMEWORK 

1. Accountable Entity 

(a) Structure and Establishment. 

The Government established an accountable entity, MCA~Georgia, as a legal entity of public law 

under the laws of Georgia. MCA-Georgia will act as the Government's permitted designee under 

the Compact. MCA-Georgia is not under the control of any state controlling body and it will 

have operational and legal independence, including, inter alia, the ability to (i) enter into 

contracts in its own name; (ii) sue and be sued; (iii) establish a bank account in its own name; 

(iv) expend MCC Funding; and (v) engage contractors, consultants and/or grantees, including, 

without limitation, a procurement and fiscal agent. 

MCA-Georgia's internal operations are governed by a charter, which was required as part of the 

governmental decree establishing MCA-Georgia and by bylaws, which provide further detail on 

the internal operations of MCA-Georgia. 

MCA-Georgia is administered, managed, and supported by the following bodies: (x) a 

supervisory board (the "Supervisory Board''); (y) a management team (the "Management 

Team"); and (z) one or more Stakeholders Committees (as defined below). 

(b) Supervisory Board. 

The Supervisory Board will have ultimate responsibility for the oversight, direction, and 

decisions ofMCA-Georgia, as well as the overall implementation of the Compact. It is 

comprised of seven voting members, plus two non-voting members. The Supervisory Board 

includes the following representatives I offices: 

(i) Prime Minister (Chairman of the Supervisory Board); 

(ii) Minister of Finance of Georgia; 

(iii) Minister of Education and Science of Georgia; 

(iv) Minister of Justice of Georgia; 

(v) Minister of Foreign Affairs of Georgia; 

(vi) Private sector representative; and 

(vii) Civil (non-government) society representative. 

In addition, an: MCC representative and MCA-Georgia's Chief Executive Officer (CEO) serve as 

non-voting members of the Supervisory Board. The private sector and civil society 

representatives will be chosen by a transparent selection process approved by MCC. 

ANNEXI-16 
(c) Management Team. 

The Management Team reports to the Supervisory Board and has principal responsibility for the 

day-to-day operations management of the Compact, including contracting, program 

management, financial management, reporting, and monitoring and evaluation. The Management 

Team is led by a CEO and as .of the date of Compact signature is composed of the following 

directors and officers: 

(i) Chief Executive Officer; 

(ii) Chief Financial Officer; 

(iii) Improving General Education Quality Project Director; 

(iv) Tertiary Education Project Director; 

( v) Chief Infrastructure Engineer; 

(vi) Procurement Director; 

, (vii) Environmental and Social Performance Director; 

(viii) General Counsel; 

(ix) Monitoring and Evaluation Director; 

(x) Gender and Social Assessment Director; and 

(xi) Business, Government and Public Relations Director. 

(d) Stakeholders' Committee(s). 

MCA-Georgia will be assisted by one or more stakeholders' committees, the composition of 

which is currently under discussion with the Government (the "Stakeholders' Committee"). The 

Stakeholders' Committee(s) will be responsible for continuing the consultative process 

throughout implementation ofthe Compact. While the Stakeholders' Committee(s) will not have 

any decision-making authority, the Stakeholders' Committee(s) will be responsible for 

reviewing, at the request of the Board or the management unit, certain reports, agre,ements, and 

documents related to the implementation of the Compact in order to provide advice and input to 

MCA-Georgia regarding the implementation ofthe Program. The Stakeholders' Committee(s) 

may be composed. of, inter alia, program beneficiaries, regional and local government 

representatives, entities with an interest or involvement in the implementation of the Compact, 

key NGOs, and any applicable civil society and private sector representatives. 

2. Implementing Entities. 

Subject to the terms and conditions of this Compact, the Program Implementation Agreement 

and any other related agreement entered into in connection with this Compact, as noted above the 

Government intends to engage several entities of the Government to implement and carry out 

ANNEXl-17 
specified Activities (or a component thereof) under this Compact (each, an "Implementing 

Entity"): The appointment of any Implementing Entity will be subject to review and approval by 

MCC.The Government will ensur~ that the roles and responsibilities of each Implementing 

Entity and other appropriate terms are set forth in an agreement, in form and substance 

. satisfactory to MCC (each an "Implementing Entity Agreement'}. 

3. Fiscal Agent. 

Unless MCC agrees otherwise in writing, the Government will engage a fiscal agent (a "Fiscal 

Agent') which will be responsible for assisting the Government with its fiscal management and 

assuring appropriate fiscal accountability of MCC Funding, and whose duties will include those 

set forth in the Program Implementation Agreement and such agreement as the Government 

enters into with the Fiscal Agent, which agreement will be in form and substance satisfactory to 

MCC. 

4. Procurement Agent. 

Based upon an assessment of local capacity and previous experience from the First Compact, an 

internal MCA-Georgia procurement unit will manage Compact'procurements. A procurement 

director who has the requisite skills and experience to manage the procurement processes 

·planned for this Compact (the "Procurement Director") has been hired by MCA-Georgia. In 

addition, a budget for procurement support consulting services is included for the first two years 

of the Compact to assist with the .greater workload during this period. The Procurement Director 

will ass·ure that MCA-Georgia adheres to the procurement standards set forth in the MCC 

Program Procurement Guidelines and ensure procurements are consistent with the procurement 

plan adopted by the. Government pursuant to the Program Implementation Agreement, unless 

MCC agrees otherwise in writing. MCC may require that the Government engage an independent 

Procurement Agent during the Compact Term. 

ANNEX I- 18 
ANNEX II 

MULTI-YEAR FINANCIAL PLAN SUMMARY 

This Annex ll summarizes the Multi-Year Financial Plan for the Program. 

1. General. 

A multi-year financial plan summary ("Multi-Year Financial Plan Summary") is attached 

hereto as Exhibit A to this Annex II. By such time as specified in the Program Implementation 

Agreement, the Government will adopt, subject to MCC approval, a multi-year financial plan 

that includes, in addition to the multi-year summary of estimated MCC Funding and the 

Government's contribution of funds and resources, the annual and quarterly funding 

requirements for the Program (including administrative costs) and for each Project, projected 

both on a commitment and cash requirement basis. 

2. Government Contribution. 

During the Compact Term, the Government will make contributions, relative to its national 

budget and taking into account prevailing economic conditions, as are necessary to carry out the 

Government's responsibilities under Section 2.6(a) of this Compact. These contributions may 

include in-kind and financial contributions (including obligations of Georgia on any debt 

·incurred toward meeting these contribution obligations). To meet this obligation the Government 

has developed a budget over the Compact Term to allocate resources to each of the Projects 

including financial support for (a) implementing entity costs related to.the management of the 

School O&M Plan; (b) the development ofhigher education·STEM degrees; (c) capital 

equipment for MCC rehabilitated schools; (d) teacher training and assessments; (e) rehabilitation 

of public TVET facilities; (f) computers for educator professional development, as well as inkind contributions of real property to be used for Program purposes; and (g) forgone taxes 

related to GRDF proceeds. The Government anticipates making contributions of approximately 

US$21,000,000 (or 15 percent of the amount ofMCC Funding provided under this Compact) 

over the Compact Term. Such contribution will be in addition to the Government's spending 

allocated toward such activities in its budget for the year immediately preceding the 

establishment ofthis Compact. The Government's contribution will be subject to any legal 

requirements in Georgia for the budgeting and appropriation of such contribution, including 

approval of the Government's annual budget by its legislature. The Parties may set forth in the 

Program Implementation Agreement or other appropriate Supplemental Agreements certain 

requirements regarding this Government contribution, which requirements may be conditions 

precedent to the Disbursement ofMCC Funding. During implementation of the Program, the 

Government's contributions may be changed or new contributions added with MCC approval; 

provided that, the modified or new contributions continue to advance the Project Objectives. 

ANNEX III 

DESCRIPTION OF MONITORING AND EVALUATION PLAN 

This Annex III generally describes the components of the Compact monitoring and evaluation 

plan ("M&E Plan"). The actual structure and content of the M&E Plan will be agreed to by 

. MCC and the Government in accordance with MCC's Policy for Monitoring and Evaluation of 

Compacts and Threshold Programs (the "MCC M&E Policy") and may be modified as described 

in the MCC M&E Policy with MCC approval without requiring an amendment to this Annex III. 

The M&E Plan will be posted publicly on the MCC website and updated as necessary. 

1. Overview. 

MCC and the Government will formulate and agree to, and the Government will implement or 

cause to be implemented, an M&E Plan that specifies: (a) how progress toward the Compact 

Goal and Project Objectives will be monitored ("Monitoring Component'); (b) a process and 

time line for the monitoring of planned, ongoing, or completed Activities to determine their 

efficiency and effectiveness; and {c) a methodology for assessment and rigorous evaluation of 

the outcomes and impact of the Program ("Evaluation Component'). The Monitoring 

Component and Evaluation Component are complementary activities that together provide a 

'Comprehensive plan for tracking progress and impacts. Information regarding the Program's 

performance, including the M&E Plan, and any amendments or modifications thereto, as well as 

progress and other reports, will be made publicly available on the website ofMCC, MCAGeorgia and elsewhere. 

2. Program Logic. 

The M&E Plan will be built on a logic model that illustrates how the Projects and Activities 

contribute to the Compact Goal and the Project Objectives. A description of the logic underlying 

the proposed Compact Projects is included below, and a visualization of the logic model is 

included in Figure III.l and III.2. This logic model is subject to change and will be updated and 

revised in the M&E Plan. 

(a) The objective of the Improving General Education Quality Project is to improve 

student learning outcomes, which is expected to lead to further education, higher employability 

higher productivity, and higher earnings for project beneficiaries. The Improved Learning 

Environment Infrastructure Activity is expected to produce improved student learning outcomes 

through learning environments that facilitate increased time on task and increased attendance. 

The Training Educators for Excellence Activity is expected to yield improved classroom 

teaching and better management of the educational system through the support of teachers' and 

principals' continued professional development. The Education Assessment Support Activity is 

expected to yield improved classroom teaching and better management of the educational system 

. through better supply of classroom, national, and international assessment information. 

(b) The objective of the Industry-led Skills and Workforce Development Project is to 

•. increase the availability of STEM technicians to meet industry demand, which is expected to 

lead to higher productivity, employability and earnings for project beneficiaries. The 
Strengthening Sector Policy and Provider Practice Activity is expected to identify existing good 

practice through industry recognition awards, and strengthen, document, and disseminate these 

practices to other providers. In addition, this Activity is expected to identify and implement 

target policy reforms in the sector which promote a TVET sector with improved industry 

engagement. The Competitive Program Improvement Grants Activity is expected to increase the 

provision of high-quality TVET programming, especially in higher levels ofTVET 

qualifications. · 

(c) The objective of the STEM Higher Education Project is to increase the 

availability of quality engineers and professionals from other STEM disciplines in the Georgian 

labor market, which is expected to increase the productivity, employability and earnings of 

project beneficiaries. In addition, the project expects to reduce the number of Georgian students 

studying abroad (i.e. by the proportion of project beneficiaries who would have otherwise 

pursued a degree abroad) and to reduce the number of foreign workers hired by Georgian firms 

(i.e. the number of STEM jobs which are filled locally, but would have otherwiserequired the 

procurement of a foreign specialist). In order to achieve the above objectives, the STEM Higher 

Education Project expects to create improved incentives and support structures for world-class 

researchers/professors, which will be achieved either through support for ABET accreditation, 

providing degrees from U.S. institutions within Georgia, or a combination thereof. 

ANNEXIII-2 


(a) Indicators . 

. The M&E Plan will measure the results of the Program using quantifiable, objective and reliable 

data ("Indicators"). Each indicator will have benchmarks that specify the expected value and the 

expected time by which that result will be achieved ("Target'). The M&E Plan will be based on 

a logical framework approach that classifies indicators as goal, outcome, output, and process. 

The Compact Goal indicators ("Goal Indicators") will indirectly measure the economic growth 

.and poverty reduction goal for each Project. Second, Outcome Indicators ("Outcome 

Indicators") will measure the intermediate results of the Project Activities. Output Indicators 

("Output Indicators.") will directly measure Project Activities, and finally Process Indicators 

("Process Indicators") will measure progress toward the completion of Project Activities. For 

Outcome Indicators and Goal Indicators, the M&E Plan will define a strategy for obtaining and 

verifying the value of the baselines values, as necessary. All indicators will be disaggregated by 

gender, ethnic group and other beneficiary types to the extent practical. Subject to prior written 

approval from MCC, MCA-Georgia may add indicators or refine the definitions, baselines and 

Targets of existing indicators. 

(i) Compact Indicators. 

(1) Goal. The Program will contribute to economic growth and 

poverty reduction nationwide, but the results are attributable to many factors in the economy. 

The M&E Plan will contain the following Indicators related to the Compact Goal: 

(A) Higher (lifetime) earnings for Project beneficiaries; 

(B) Improved employability of Project beneficiaries; and 

(C) Increased household investments in education (i.e. 

increases in years of education attained). 

(2) Outcome, Output, and Process Indicators. The M&E Plan will 

contain the Indicators listed in the following tables. Indicators that can be reported on at least an 

annual basis will be included in quarterly monitoring indicator reports, while indicators that 

require survey data or a longer time period to track will be tracked for evaluation purposes. Goal 

and Outcome Indicators will be used for evaluation purposes, whether during or after the 

Compact period, but will not be tracked for regular monitoring efforts. The M&E Plan will 

reflect revisions to indicators in Annex III as well as additional indicators identified as useful for 

project monitoring. MCC's Common Indicators for Education will also be included in the M&E 

Plan, as relevant. 

ANNEX III- 5 






serve to identify where those levels of quality are not possible, given the realities of data 

collection. 

(d) Management Information System. The M&E Plan will describe the information 

system that will be used to collect data, store, process and deliver information to relevant 

stakeholders in such a way that the Program information collected and verified pursuant to the 

M&E Plan is at all times accessible and useful to those who wish to use it. The system 

.development will take into consideration the requirements and data needs of the components of 

the Program and will be aligned with existing MCC systems, other service providers, and 

ministries. 

(e) Role ofMCA-Georgia. The monitoring and evaluation of this Compact spans 

three discrete Projects and will involve a variety of governmental, nongovernmental, and private 

sector institutions. In accordance with the designation contemplated by Section 3 2(b) of this 

Compact, MCA-Georgia is responsible for implementation of the M&E Plan. MCA-Georgia will 

oversee all Compact:-related monitoring and evaluation activities conducted for each of the 

Projects, ensuring that data from all implementing entities is consistent, accurately reported and 

aggregated into regular Compact performance reports as described in the M&E Plan. 

(f) Role of other Implementing Partners. During the finalization of the M&E Plan 

prior to the entry into force of the Compact, the potential monitoring and evaluation role of other 

agencies and Implementing Entities, including but not limited to GeoStat, EMIS, ESIDA, TPDC, 

and NAEC will be assessed. The Government and MCC will make every effort to leverage 

agency missions, expertise, and data-collection services to support the Compact. This may result 

in specific responsibilities being assumed by one or more of these agencies, as appropriate. 

4. Evaluation Component. 

The Evaluation Component of the M&E Plan will contain three types of evaluations: (i) impact 

evaluations; (ii) performance evaluations; and (iii) special studies. The Evaluation Component of 

the M&E Plan will describe the purpose of the evaluation, methodology, timeline, required MCC 

approvals, and the process for collection and analysis of data for· each evaluation. The results of 

all evaluations will be made publicly available in accordance with MCC's Policy for Monitoring 

and Evaluation of Compacts and Threshold Programs. 

(a) Independent Evaluations. The M&E Plan will include a description of the 

methods to be used for impact evaluations and plans for integrating the evaluation method into 

Project design. Based on in-country consultation with stakeholders, the strategies outlined below 

werejointly determined as having the strongest potential for rigorous impact evaluation. The 

M&E Plan will further outline in detail these methodologies. Comprehensive impact evaluation 

strategies are to be included in the M&E Plan. The following is a summary of the potential 

impact evaluation methodologies: 

(i) Improving General Education Quality Project. 

(1) Improved Learning Environment Infrastructure Activity. This 

Activity is expected to receive independent impact evaluation in which outcomes of this Activity 

will be rigorously assessed and attributed to MCC investments in school rehabilitation. MCC and 

ANNEX III - 12 
MCA-Georgia have developed plaris to employ a Regression Discontinuity Design (''RDD") 

evaluation to assess the impact of this Activity. This RDD design utilizes a scoring system to 

rank the program's target population by priority for rehabilitation and through which a cutoff 

may be determined. The schools scoring above this cutoff will be selected as the treatment group 

for this Activity. The concept driving the RDD method is that those schools near the cutoff, 

whether above (treatment) or below (control) will be statistically comparable, allowing for an 

estimation of program impact. 

In order to ensure the validity of the Activity's evaluation methodology, the Government will 

ensure that: 

(A) no school facility designated as "Comparison/Control" 

within the impact evaluation framework will receive 

Government- or donor-funded rehabilitation beyond those 

expenditures necessary for continuing operations, insomuch 

as donor-funded rehabilitations are within the control of the 

Government; 

(B) schools selected as beneficiaries ofMCC rehabilitation will 

neither be systematically targeted nor systematically 

precluded from other Government activities, funding, or 

support; and · · 

(C) schools designated as "Comparison/Control" will neither be 

systematically targeted nor systematically precluded from 

other Government activities, funding, or support. 

(2) Training Educators for Excellence Activity. The component of this 

Activity which focuses on the implementation of teacher training is amenable to impact 

evaluation, yet further development of the implementation structure and time lines will be 

necessary in order to determine the specific methodology. MoES and TPDC will collaborate with 

MCC and MCA-Georgia to determine the ideal design ofthis activity which enables the rigorous 

evaluation of the projected outcomes, namely, improved teacher knowledge and improved 

student learning outcomes. 

(3) Education Assessment Support Activity. As this Activity will be 

focused on improving the information basis for policy decisions, rigorous evaluation will not be 

viable for this Activity. Nevertheless, the outputs of this Activity (i.e. the various results of 

assessmenttools) will be a key input into the evaluations of the two preceding evaluations, and 

the interaction between this Activity and the M&E Plan's evaluation framework will be key to 

the successful evaluation ofthe Improving General Education Quality Project as a whole. 

(ii) Industry-Led Skills and Workforce Development Project. 

(1) Plans are being developed to designate evaluation resources for 

grant proposals which. develop a rigorous plan for the evaluation of the grant recipients' 

beneficiaries. In addition, all grant proposals will be required to include an evaluation plan, 

whether for rigorous impact evaluation or not (i.e. yerformance evaluation). 

ANNEX III - 13 
(ii) STEM Higher Education Project. 

( 1) As· the recreation of counterfactual scenarios would be difficult, 

rigorous impact evaluation is not expected to be feasible for this Project as a whole. Plans are 

being developed for tracer studies to detect impacts on beneficiaries (tertiary graduates) in 

comparison to non-beneficiaries with similar characteristics. Furthermore, any potential 

scholarship-granting component may yield the opportunity to rigorously compare the outcomes 

between beneficiaries and non-beneficiaries. Finally, plans are in place for an evaluation which 

focuses on the processes through which the Project was able to produce anticipated outputs. 

(b) Final Evaluation. The M&E Plan will make provision for final Project level 

evaluations ("Final Evaluations"). With the prior written approval of MCC, the Government 

will engage independent evaluators to conduct the Final Evaluations at or near the end of each 

Project. The Final Evaluations will review progress during Compact implementation and provide 

a qualitative context for interpreting monitoring data and evaluation findings. They must at a 

minimum (i) evaluate the efficiency and effectiveness of the Activities; (ii) determine if and 

analyze the reasons why the Compact Goal and Project Objective(s), outcome(s) and output(s) 

were or were not achieved; (iii) identifY positive and negative unintended results of the Program; 

(iv) provide lessons learned that rriay be applied to similar projects; and (v) assess the likelihood 

that results will be sustained over time. 

(c) Special Studies. The M&E Plan will include a description ofthe methods to be 

used for special studies, as necessary, funded through this Compact or by MCC. Plans for 

conducting the special studies will be determined jointly between the Government and MCC 

before the approval of the M&E Plan. The M&E Plan will identifY and make provision for any 

other special studies, ad hoc evaluations, and research that may be needed as part of the 

monitoring and evaluating of this Compact. Examples of potential special studies are further 

studies of absenteeism in Georgia, the demand for and utilization of science labs, and/or further 

analysis of the constraints to industry engagement in TVET. As necessary, MCC or the 

Government may request special studies or ad hoc evaluations ofProjects, Activities, or the 

·Program as a whole prior to the expiration of the Compact Term. When MCA-Georgia engages 

an evaluator, the engagement will be subject to the prior "Written approval ofMCC. For all 

evaluations of Compact Projects, whether commissioned by MCC, MCA-Georgia or the 

Government, contract terms shall ensure non-biased results and the publication of results. 

(d) Request for Ad Hoc Evaluation or Special Study. Ifthe Government requires 

an ad hoc independent evaluation or special study at the request of the Government for any 

reason, including for .the purpose of contesting an MCC determination with respect to a Project 

or Activity or·to seek funding from other donors, no MCC Funding resources may be applied to 

such evaluation or special study without MCC's prior written approval. 

5. Other Components of the M&E Plan. 

In addition to the monitoring and evaluation components, the M&E Plan will include the 

following components for the Program, Projects and Activities, including, where appropriate, 

roles and responsibilities of the relevant parties and providers: 

ANNEX III - 14 
(a) Costs. A detailed cost estimate for all components of the M&EPlan; and 

(b) Assumptions and Risks. Any assumption or risk external to the Program that 

underlies the accomplishment of the Project Objectives and Activity outcomes and outputs. 

However, such assumptions and risks will not excuse any Party's performance unless otherwise 

expressly agreed to in writing by the other Party. 

6. Approval and Implementation of the M&E Plan. 

The approval and implementation of the M&E Plan, as ar~ended from time to ti~~' will be in 

accordance with the Program Implementation Agreement, any other relevant Supplemental 

Agreement and the MCC Policy for Monitoring and Evaluation of Compacts and Threshold 

Programs. 

7. Post-Compact M&E Plan. 

In conjunction with the Program Closure Plan, MCC and MCA will develop a Post-Compact 

M&E Plan designed to observe the persistence of benefits created under the Compact. This plan 

. should describe future monitoring and evaluation activities, identify the individuals and 

organizations that would undertake these activities, and provide a budget framework for future 

monitoring and evaluation which would draw upon both MCC and country resources, as agreed 

by each party. The Post-Compact M&E Plan should build directly off the Compact M&E Plan. 

ANNEX III - 15 
ANNEX IV 

CONDITIONS PRECEDENT 

TO DISBURSEMENT OF COMPACT IMPLEMENTATION FUNDING 

This Annex IV sets forth the conditions precedent applicable to Disbursements of Compact 

Implementation Funding (each a "CIF Disbursement'). Capitalized terms used in this Annex IV 

and not defined in this Compact will have the respective meanings assigned thereto in the 

Program Implementation Agreement. Upon execution of the Program Implementation 

Agreement, each CIF Disbursement will be subject to the terms of the Program Implementation 

Agreement. 

1. Conditions Precedent to Initial CIF Disbursement. 

Each of the following must have occurred or been satisfied prior to the initial CIF Disbursement. 

The Government (or MCA-Georgia) has delivered to MCC: 

.(a) an interim fiscal accountability plan acceptable to MCC; and· 

' 

(b) a CIF procurement plan acceptable to MCC. 

2. ·Conditions Precedent to all CIF Disbursements (Including Initial CIF 

Disbursement). 

Each of the following must have occurred or been satisfied prior to each CIF Disbursement: 

(a) The Government (or MCA-Georgia) has delivered to MCC the following 

documents, in form and substance satisfactory to MCC: 

(i) · a completed Disbursement Request, together with the applicable Periodic 

Reports, for the applicable Disbursement Period, all in accordance with the Reporting 

Guidelines; 

(ii) a certificate of the Government (or MCA-Georgia), dated as ofthe date of 

the CIF Disbursement Request, in such form as provided by MCC; 

(iii) if a Fiscal Agent has been engaged, a Fiscal Agent Disbursement 

Certificate; and 

(iv) . if a Procurement Agent has been engaged, a Procurement Agent 

Disbursement Certificate. 

(b) . If any proceeds of the CIF Disbursement are to be deposited in a bank account, 

MCC has received satisfactory evidence that (i) the Bank Agreement has been executed and (ii) 

the Permitted Accounts have been established; 
(c) Appointment of an entity or individual to provide fiscal agent services, as 

approved b~ MCC, until such time as the Government provides to MCC a true and complete 

copy of a Fiscal Agent Agreement, duly executed and in full force and effect, and the fiscal agent 

engaged thereby is mobilized; . 

· , (d)· Appointment of an Procurement Director ofMCA-Georgia, as approved by MCC, 

until such time as the Government provides to MCC a true and complete copy of a Procurement 

Operations Manual, duly executed and in full force and effect; 

(e) MCC is satisfied, in its sole discretion, that (i) the activities being funded with 

such CIF Disbursement are necessary, advisable or otherwise consistent with the goal of 

facilitating the implementation of the Compact and will not violate any applicable law or 

regulation; (ii) no material default or breach of any covenant, obligation or responsibility by the 

Government, MCA-Georgia or any Government entity has occurred and is continuing under this 

Compact or any Supplemental Agreement; (iii) there has been no violation of, and the use of 

requested funds for the purposes requested will not violate~ the limitations on use or treatment of 

MCC Funding set forth in Section 2. 7 of this Compact or in any applicable law or regulation; (iv) 

any Taxes paid with MCC Funding through the date 90 days prior to the start of the applicable 

Disbursement Period have been reimbursed by the Government in full in accordance with 

Section 2.8(c) of this Compact; and (v) the Government has satisfied all of its payment 

obligations, including any insurance, indemnification, tax payments or other obligations, and 

contributed all resources required from it, under this Compact and any Supplemental Agreement; 

(f) For any CIF Disbursement occurring after this Compact has entered into force in 

accordance with Article 7: MCC is satisfied, in its sole discretion, that (i) MCC has received 

copies of any reports due from any technical consultants (including environmental auditors 

engaged by MCA-Georgia) for any Activity since the previous Disbursement Request, and all 

such reports are in form and substance satisfactory to MCC; (ii) the Implementation Plan 

Documents and Fiscal Accountability Plan are current and updated and are in form and substance 

satisfactory to MCC, and there has been progress satisfactory to MCC on the components of the 

Implementation Plan for any relevant Projects or Activities related to such CIF Disbursement; 

(iii) there has been progress satisfactory to MCC on the M&E Plan and Social and Gender 

Integration Plan for the Program or relevant Project or Activity and substantial compliance with 

·the requirements of the M&E Plan and Social and Gender Integration Plan (including the targets 

·set forth therein and any applicable reporting requirements set forth therein for the relevant 

Disbursement Period); (iv) there has been no material negative finding in any financial audit 

· report delivered in accordance with this Compact and the Audit Plan, for the prior two quarters 

{or such other period as the Audit Plan may require); (v) MCC does not have grounds for 

concluding that any matter certified to it in the related MCA Disbursement Certificate, the Fiscal 

Agent Disbursement Certificate or the Procurement Agent Disbursement Certificate is not as 

certified;· and (vi) if any of the officers or key staff of MCA-Georgia have been removed or 

resigned and the position remains vacant, MCA-Georgia is actively engaged in recruiting a 

replacement; and 

(g) MCC has not determined, in its sole discretion, that an act, omission, condition, or 

event has occurred that would be the basis for MCC to suspend or terminate, in whole or in part, 

the Compact or MCC Funding in accordance with Section 5.1 of this Compact. 

ANNEX IV -2 

--
ANNEXV 

DEFINITIONS 

ABET has the meaning provided in Section 7.2(c) and paragraph 3(a) of Part B of Annex 1 

Activity has the meaning provided in Part B of Annex I 

Additional Representative has the meaning provided in Section 4.2. 

Audit Guidelines has the meaning provided in Section 3.8(a). 

· Baseline has the meaning provided in paragraph 3 of Annex III 

CIF Disbursement has the meaning provided in Annex IV. 

Compact has the meaning provided in the Preamble. 

Compact Goal has the meaning provided in Section 1.1. 

Compact Implementation Funding has the meaning provided in.Section 2.2(a). 

Compact Records has the meaning provided in Section 3. 7 (a). 

Compact Term has the meaning provided in Section 7. 4. 

Covered Provider has the meaning provided in Section 3. 7 (c). 

Disbursement has the meaning provided in Section 2. 4. 

ESIDA has the meaning provided in paragraph 1 (a) of Part B of Annex 1 

Evaluation Component has the meaning provided in paragraph 1 of Annex 111 

Excess CIF Amount has the meaning provided in Section 2.2(d). 

Final Evaluations has the meaning provided in paragraph 4(b) of Annex Ill 

Fiscal Agent has the meaning provided in paragraph 3 of Part C of Annex 1 

First Compact has:the meaning provided in paragraph 1 (a) of Part A of Annex 1 

Georgia has the meaning provided in the Preamble. 

GIZ has the meaning provided in paragraph 1 (e) of Part B of Annex 1 

Goal Indicators has the meaning provided in paragraph 3(a) of Annex 111 

Governance Guidelines means MCC 's Guidelines for Accountable Entities and Implementation 

Structures, as such may be posted on MCC 's Website from time to time. 
Government has the meaning provided in the Preamble. 

G-PriEd has the meaning provided in paragraph 1 (f) of Part B of Annex 1 

Grant has the meaning provided in Section 3.6(b). 

GRDF rheans Georgia Regional Development Fund, LLC, a limited liability company organized under 

the laws of the State of Delaware. 

· GRD.F Funding means any assets, interest, dividends, sale proceeds or any other income or property 

received and owned by GRDF and/or obtained or derived from GRDF by MCA-Georgia, the Service 

Agency of the Ministry of Finance of Georgia, or any other Government agency, person or entity, whether 

directly or indirectly. 

ICT has the meaning provided in paragraph 1 (a)(ii) of Part B of Annex 1 

Implementation Letter has the meaning provided in Section 3.5. 

Implementing Entity has the meaning provided in paragraph 2 of Part C of Annex 1 

Implementing Entity Agreement has the meaning provided in paragraph 2 of Part C of Annex 1 

Improving General Education Quality Project means the Project described in paragraph 1 of Part B of 

Annex/ and whose Project Objectives are outlined in Section 1.3(a). 

Indicators has the meaning provided in paragraph 3(a) of Annex Ill 

Industry-led Skills and Workforce Development Project means the Project described in paragraph 2 of 

. Part B of Annex I and whose Project Objectives are outlined in Section 1.3(b). 

Inspector General has the meaning provided in Section 3. 7(d). 

Intellectual Property means all registered and unregistered trademarks, service marks, .logos, names, 

trade names and all other trademark rights; all registered and unregistered copyrights; all patents, 

inventions, shop rights, know how, trade secrets, designs, drawings, art work, plans, prints, manuals, 

computer files, computer software, hard copy files, catalogues, specifications, and other proprietary 

technology and similar information; .and all registrations for, and applications for registration of, any of 

the foregoing, that are financed, in whole or in part, using MCC Funding. · 

M&E Plan has the meaning provided in Annex Ill 

Management Team has the meaning provided in paragraph 1 (a) of Part C of Annex 1 

MCA Act has the meaning provided in Section 2.2(a). 

MCA-Georgia has the meaning provided in Section 3.2(b). 

MCC has the meaning provided in the Preamble. 

MCC Environmental Guidelines has the meaning provided in Section 2. 7 (c). 

MCC Funding has the meaning provided in Section 2.3. 

ANNEXV -2 
MCC Gender Policy means the MCC Gender Policy (including any guidance documents issued in 

connection with the guidelines) posted from time to time on the MCC Website or otherwise made 

available to the Government. 

MCC M&E Policy has the meaning provided in Annex Ill 

MCC Program Procurement Guidelines has the meaning provided in Section 3.6(a). 

MCC Website has the meaning provided in Section 2. 7. 

Ministry has the meaning provided in Schedule A of Annex Vl 

MoBS has the meaning provided in paragraph 1 (a)(i) of Part B of Annex l 

Monitoring Component has the meaning provided in paragraph 1 of Annex Ill 

Multi-Year Financial Plan Summary has the meaningprovidedinparagraph 1 of Annex Il 

NAEC has the meaning provided in paragraph 1 (a)(iii) of Part B of Annex l 

NCEQE has the meaning provided in paragraph 3 (e)(i) of Part B of Annex l 

New GRDF Operational Documents has the meaning provided in paragraph 3(a)(iii) of Part B of Annex L 

O&M has the meaning provided in paragraph 1 (a)(i) of Part B of Annex l 

Outcome Indicators has the meaning provided in paragraph 4(a) of Annex IlL 

Output Indicators has the meaning provided in paragraph 4(a) of Annex Ill 

Party and Parties have the meaning provided in the Preamble. 

Permitted Account has the meaning provided in Section 2.4. 

Principal Representative has the meaning provided in Section 4.2. 

Process Indicators has the meaning provided in paragraph 3(a) of Annex Ill 

Procurement Director has the meaning provided in paragraph 4 of Part C of Annex L 

Program has the meaning provided in the Recitals. 

Program Assets means any assets, goods or property (real, tangible or intangible) purchased or financed 

in whole or in part (directly or indirectly) by MCC Funding. 

Program Funding has the meaning provided in Section 2.1. 

Program Guidelines means collectively the Audit Guidelines, the MCC Environmental Guidelines, the 

MCC Gender Policy, the Governance Guidelines, Guidelines for Country Contributions, the MCC 

Program Procurement Guidelines, the Reporting Guidelines, the MCC M&E Policy, the MCC Cost 

Principles for Government Affiliates Involved in Compact Implementation, the MCC Program Closure 

Guidelines (including any· successor to any of the foregoing) and any other guidelines, policies or 

ANNEXV -3 
guidance papers relating to the administration of MCC-funded compact programs and as from time to 

time published on the MCC Website. 

Program Implementation Agreement and PIA have the meaning provided in Section 3.1. 

Program Objective has the meaning provided in Section 1.2. 

Project(s) has the meaning provided in Section 1.2. 

·Project Objective(s) has the meaning provided in Section 1.3. 

Provider has the meaning provided in Section 3. 7 (c). 

RDD has the meaning provided in paragraph 4(a)(i)(1) of Annex Ill 

Reimbursable VAT and Excise Tax Expense has the meaning provided in Schedule A of Annex VI 

Reporting Guidelines means the "MCC Guidance on Quarterly MCA Disbursement Request and 

Reporting Package "posted by MCC on the MCC Website or otherwise publicly made available. 

School O&M Plan has the meaning provided in paragraph 1 (a)(i) of Part B of Annex 1 

Social and Gender Integration Plan has the meaning provided in paragraph 3 of Part A of Annex 1 

Socially Vulnerable means students (i) from high mountainous regions, (ii)from the occupied territories, 

(iii) from Azeri/Armenian language schools, (iv) whose parent died in battles for the territorial integrity 

of Georgia, (v) whose ancestors (being citizens of Samtskhe-Javakheti) were deported from Georgia 

during the Soviet period, (vi) who are orphans, (vii) from families that have 4 or more children, (viii) with 

acute physical disabilities, (ix) whose families are. registered in unified data base for socially vulnerable 

individuals with a reintegration score below a certain threshold, (x) from villages bordering occupied 

territories, and (xi) under State custody. 

Stakeholders' Committee has the meaning provided in paragraph 1 (d) of Part C of Annex 1 

STEM has the meaning provided in Section 1.2. 

STEM Higher Education Project means the Project described in paragraph 3 of Part B of Annex I and 

whose Project Objectives are outlined in Section 1.3(c). 

Supervisory Board has the meaning provided in paragraph 1 (a) of Part C of Annex 1 

Supplemental Agreement means any agreement between (i) the Government (or any Government 

affiliate, including MCA-Georgia) and MCC (including, but not limited to, the PIA), or (ii) MCC and/or 

the Government (or any Government affiliate, including MCA-Georgia), on the one hand, and any third 

party, on the other hand, including any of the Providers, in each case, setting forth the details of any 

funding, ,implementing or. other arrangements in furtherance of, and in compliance with, this Compact. 

Target has the meaning provided in paragraph 3(a) of Annex Ill 

Taxes has the meaning provided in Section 2.8(a). 

TPDC has the meaning provided in paragraph 1 (a)(ii) of Part B of Annex 1 

ANNEXV -4 
TVET has the meaning provided in paragraph 2(a) of Part B of Annex l 

United States Dollars or US$ means the lawful currency of the United States of America. 

USAID means the United States Agency for International Development. 

VAT and Excise Tax Account has the meaning provided in Schedule A of Annex Vl 

ANNEXV -5 
ANNEX VI 

TAX PROVISIONS 

SCHEDULE A 

CO-FINANCING OF VALUE ADDED TAX (VAT) AND EXCISE TAXES 

Legal Basis for Co-Financing. 

1. The Compact 

2. The Tax Code of Georgia 

Beneficiaries of Co-Financing. 

1. MCA-Georgia 

2. Implementing Entities, Providers, and contractors under the Compact 

Procedures. 

The MinistryofFinance (the "MiniStry") will establish a separate account (the "VAT and Excise 

Tax Account') at the State Treasury and provide MCA-Georgia or its designated agent regular 

withdrawal access to the account. MCA-Georgia will identify its authorized representatives or 

agents to the Ministry in writing. 

No later than August 15 of each calendar year, MCA-Georgia will provide the Ministry with an 

estimate of the amount of Reimbursable VAT and Excise Tax Expenses (defined below) for the 

next calendar year. The Ministry will ensure that provisions for such expenses are made in the 

State budget. Transactions valued at less than US$500 will not be subject to co-financing or 

reimbursement of VAT or excise taxes. 

The Ministry will deposit the total amount of the forecasted annual Reimbursable VAT and 

Excise Tax Expenses in the VAT and Excise Tax Account within seven calendar days of 

Parliamentary approval of the State budget. The state-budgeted expenses notwithstanding, the 

Ministry will deposit further funds in the VAT and Excise Tax Account (if necessary) from time 

to time to ensure that funds are at all times available to make the payments required below. 

MCA -Georgia or its designated representative will withdraw sums out of the VAT and Excise 

Tax Account as needed to pay Reimbursable VAT and Excise Tax Expenses. Payments will be 

made through the State Treasury. MCA-Georgia will present the State Treasury a tax order 

authenticated with valid signatures of two permitted signatories and the MCA-Georgia seal for 

each withdrawal, as provided in the regulations on non-cash settlements approved by National 

Bank order N220 of September 2, 1999. The Ministry will ensure that funds in the amount of the 

Reimbursable VAT and Excise Tax'Expenses are transferred from the State Treasury to MCAGeorgia or as directed by MCA-Georgia. MCA-Georgia or its designated representative will be 

entitled to receive from the State Treasury complete activity reports regarding the VAT and 
· Excise Tax Account on a monthly basis or at such other periodic basis as the MCA-Georgia and 

the Ministry may agree. 

At least fifteen (15) calendar days prior to the commencement of each calendar quarter, MCA-

. Georgia or its de~ignated agent will submit to the Ministry a copy of the quarterly Financial Plan 

which will forecast for the following calendar quarter and identify, in Georgia Lari, any VAT or 

· excise taxes imposed on goods, labor and services procured by MCA-Georgia, Implementing 

Entities, Providers, and contractors under the Compact ("Rf!imbursable VAT and Excise Tax 

Expense"). No later than fifteen (15) calendar days after the end of each calendar quarter, MCAGeorgia or its designated representative will submit a report to the Ministry accounting for all 

payments out of the VAT and Excise Tax Account during the preceding quarter. 

Each of the Ministry, MCA-Georgia, and MCC may audit the VAT and Excise Tax Account 

from time to time. The Parties will cooperate in any such audit. 

In accordance with Section 2.8 of the Compact, the Govefilllient will reimburse Taxes paid in 

each case in which there are insufficient funds for the payment of VAT or excise tax for any 

reason, including in the event that the actual amount of the Reimbursable VAT and Excise Tax 

Expense exceeds the amount estimated by MCA-Georgia and budgeted for in the state budget. 

The Government hereby acknowledges that it will ensure that each Government affiliate and 

each Qther governmental body makes a good faith effort to implement and recognize the 

exemptions from Taxes contemplated. under Section 2.8 of the Compact. Following the entry into 

force of the Compact, the Government will reimburse all Reimbursable VAT arid Excise Tax 

Expenses that relate to Compact Implementation Funding disbursed prior to the entry into force 

of the Compact. 

ANNEXVI-2 
Legal Basis for Co-Financing. 

1. The Compact 

SCHEDULEB 

TAX EXEMPTION 

2. The Tax Code of Georgia 

Beneficiaries of Co-Financing. 

1. MCA-Georgia 

'. 2. Implementing Entities, Providers, and contractors under the Compact 

Exempt Taxes. 

1. Corporate Income Tax 

2. Personal Income Tax 

3. Profit Tax 

4. Property Tax 

5. Withholding Tax 

6. Other Taxes 

Procedures. 

In accordance with Section 2.8 of the Compact the Ministry will ensure that all MCC Funding 

and GRDF Funding are exempt from any Taxes during the Compact Term. Such exemption 

applies to any use ofMCC Funding or GRDF Funding, and for the avoidance of doubt, to any 

activities and work performed, and supplies used or purchased, in the implementation of the 

Compact, by any person or organization (including contractors and grantees) funded by MCC 

Funding and GRDF Funding as set forth in accordance with Section 2.8 of the Compact. 

MCA-Georgia will be free from any Taxes as set forth in Section 2.8 of the Compact. The 

Ministry will issue a tax exemption letter to MCA-Georgia evidencing such exemption from 

Taxes (other than VAT and excise tax), as promptly as possible and in no event later than thirty 

(30) days following the ratification of the Compact. 

In order to implement this tax exemption the Ministry will from time to time execute and deliver, 

or cause to be executed and delivered, such other instructions, instruments or documents, and to 

take or cause to be taken such other action, as may be necessary or appropriate. 

ANNEXVI-3 
From time to time MCA-Georgia will provide to the Ministry a list of Implementing Entities, 

Providers, and contractors, receiving MCC Funding or GRDF Funding with which MCAGeorgia is doing business or with which it is planning to do business. The list will state, for each 

Implementing Entity, Provider, or contractor, the length oftime ofthe engagement of such 

ImplementingEntity, Provider, or contractor. The Ministry.will be responsible for publishing the 

list on a public website and updating the list from time to time. 

In accordance with Section 2. 8 of the Compact, the Government will reimburse Taxes paid 

attributable to work performed in connection with the Program or the activities of GRDF in each 

case in which an entity named on the list published by the Ministry does not receive the benefit 

of the tax exemption by the tax and customs authorities. The Government hereby acknowledges 

that it will ensure that each Government affiliate and each other governmental body makes a 

good faith effort to implement and recognize the exemptions from Taxes contemplated under 

Section 2.8 ofthe Compact. Following the entry into force of the Compact, the Government will 

reimburse all Taxes that relate to Compact Implementation Funding disbursed prior to the entry 

into force of the Compact. 

ANNEXVI-4 
Legal Basis for Co-Financing. 

1. The Compact 

SCHEDULEC 

IMPORT TAXES 

2. The Tax Code of Georgia 

Beneficiaries of Co-Financing. 

1. MCA-Georgia 

2. Implementing Entities, Providers, and contractors under the Compact 

Exempt Taxes. 

1. Import Taxes 

Procedures. 

· When applicable, MCA-Georgia shall issue a letter to Implementing Entities, Providers, and 

contractors receiving MCCFunding or GRDF Funding with which MCA-Georgia is doing 

business or with which it is planning to do business, stating that specific goods are imported or 

· · shall be imported by the named entity in connection with the works performed in the framework 

of the Program or the activities ofGRDF. 

In accordance with Section 2.8 of the Compact, the Government will reimburse import taxes paid 

attributable to work performed in connection with the Program or the activities of GRDF in each 

case in which the letter described above is not accepted or recognized by the tax and customs 

authorities. Following the entry into force of the Compact, the Government will reimburse all 

· import taxes that relate to Compact Implementation Funding disbursed prior to the entry into 

force of the Compact. 

ANNEXVI-5