4.

Annex IV shall be amended as follows: (a) Article 3 shall be amended as follows: (i) in paragraph 1, point (a) shall be replaced by the following: ‘(a) needs shall be assessed on the basis of criteria pertaining to per capita income, population size, social indicators and level of indebtedness, export earning losses and dependence on export earnings, in particular in the sectors of agriculture and mining. Special treatment shall be accorded to the least developed ACP States, and the vulnerability of island and landlocked States shall duly be taken into account. In addition, account shall be taken of the particular difficulties of countries dealing with the aftermath of conflict or natural disaster; and’; (ii) the following paragraph shall be added: ‘5. Without prejudice to Article 5(7) concerning reviews, the Community may, in order to take account of special needs or exceptional performance, increase a country's allocation.’; (b) Article 4 shall be amended as follows: (i) paragraph 1 shall be replaced by the following: ‘1. Upon receipt of the information referred to above, each ACP State shall draw up and submit to the Community a draft indicative programme on the basis of and consistent with its development objectives and priorities as expressed in the CSS. The draft indicative programme shall contain: (a) the focal sector, sectors or areas on which support should be concentrated; (b) the most appropriate measures and operations for attaining the objectives and targets in the focal sector, sectors or areas; (c) the resources reserved for programmes and projects outside the focal sector(s) and/or the broad outlines of such activities, as well as an indication of the resources to be deployed for each of these elements; (d) the types of non-State actors eligible for funding, in accordance with the criteria laid down by the Council of Ministers, the resources allocated for non-State actors and the type of activities to be supported, which must be not-for-profit; (e) proposals for regional programmes and projects; and (f) a reserve for insurance against possible claims and to cover cost increases and contingencies.’; (ii) paragraph 3 shall be replaced by the following: ‘3. The draft indicative programme shall be the subject of an exchange of views between the ACP State concerned and the Community. The indicative programme shall be adopted by common agreement between the Commission on behalf of the Community and the ACP State concerned. It shall, when adopted, be binding on both the Community and that State. This indicative programme shall be annexed to the CSS and shall in addition contain: (a) specific and clearly identified operations, especially those that can be committed before the next review; (b) a timetable for implementation and review of the indicative programme, including commitments and disbursements of resources; and (c) the parameters and criteria for the reviews.’; (iii) the following paragraph shall be added: ‘5. When an ACP State faces a crisis situation as the result of a war or other conflict, or exceptional circumstances with a comparable effect, preventing the National Authorising Officer from carrying out his duty, the Commission may itself manage the resources allocated to the State in question in accordance with Article 3 and use it for special support. Special support may concern peace-building policies, conflict management and resolution, post-conflict support, including institution-building, economic and social-development activities, taking particular account of the needs of the most vulnerable sections of the population. The Commission and the ACP State concerned shall revert to normal implementation and normal management procedures as soon as the authorities responsible for managing cooperation are able to do so once more.’; (c) Article 5 shall be amended as follows: (i) throughout this article, the term ‘Head of Delegation’ shall be replaced by the term ‘Commission’; (ii) in paragraph 4, point (b) shall be replaced by the following: ‘(b) programmes and projects outside the focal sector(s);’; (iii) paragraph 7 shall be replaced by the following: ‘7. Following the completion of the mid-term and end-of-term reviews, the Commission may, on behalf of the Community, revise the resource allocation in the light of current needs and performance of the ACP State concerned.’; (d) In Article 6, paragraph 1 shall be replaced by the following: ‘1. Regional cooperation shall cover operations benefiting and involving: (a) two or more or all ACP States as well as any non-ACP developing countries participating in these operations, and/or (b) a regional body of which at least two ACP States are members, including those with members which are non-ACP countries.’; (e) Article 9 shall be replaced by the following: ‘Article 9 Resource allocation 1. At the beginning of the period covered by the Financial Protocol, each region shall receive from the Community an indication of the volume of resources from which it may benefit during a five-year period. The indicative resource allocation shall be based on an estimate of needs and the progress and prospects in the process of regional cooperation and integration. In order to achieve an adequate scale and to increase efficiency, regional and national funds may be mixed for financing regional operations with a distinct national component. 2. Without prejudice to Article 11 concerning reviews, the Community may, in order to take account of new needs or exceptional performance, increase a region's allocation.’; (f) In Article 10(1), point (c) shall be replaced by the following: ‘(c) the programmes and projects enabling those objectives to be attained, insofar as they have been clearly identified, as well as an indication of the resources to be deployed for each of these elements and a timetable for their implementation.’; (g) Article 12 shall be replaced by the following: ‘Article 12 Intra-ACP cooperation 1. At the beginning of the period covered by the Financial Protocol, the Community shall indicate to the ACP Council of Ministers the part of the funds earmarked for regional operations that shall be set aside for operations that benefit many or all ACP States. Such operations may transcend the concept of geographic location. 2. The Community may, in order to take account of new needs for increasing the impact of intra-ACP activities, increase the allocation for intra-ACP cooperation.’.; (h) Article 13 shall be replaced by the following: ‘Article 13 Requests for financing 1. Requests for financing of regional programmes shall be submitted by: (a) a duly mandated regional body or organisation; or (b) a duly mandated sub-regional body or organisation or an ACP State in the region concerned at the programming stage, provided that the operation has been identified in the RIP. 2. Requests for financing of intra-ACP programmes shall be submitted by: (a) at least three duly mandated regional bodies or organisations belonging to different geographic regions, or at least two ACP States from each of the three regions; or (b) the ACP Council of Ministers, or the ACP Committee of Ambassadors; or (c) international organisations carrying out operations that contribute to the objectives of regional cooperation and integration, such as the African Union, subject to prior approval by the ACP Committee of Ambassadors.’; (i) Article 14 shall be replaced by the following: ‘Article 14 Procedures for implementation 1. (deleted) 2. (deleted) 3. Account being taken of the objectives and inherent characteristics of regional cooperation, including intra-ACP cooperation, operations undertaken in this sphere shall be governed by the procedures established for development finance cooperation where applicable. 4. In particular and subject to paragraphs 5 and 6, any regional programme or project financed from the Fund shall give rise to: (a) either, in accordance with Article 17, a financing agreement drawn up between the Commission and one of the bodies mentioned in Article 13; in such cases, the relevant body shall designate a Regional Authorising Officer whose duties correspond mutatis mutandis with those of the National Authorising Officer; (b) or a grant contract as defined in Article 19a drawn up between the Commission and one of the bodies mentioned in Article 13, depending on the nature of the action and where the relevant body, other than an ACP State, is responsible for carrying out the programme or project. 5. Programmes and projects financed from the Fund and for which requests for financing have been presented by international organisations in accordance with Article 13(2)(c) shall give rise to the drawing up of a grant contract. 6. Programmes and projects financed from the Fund for which requests for financing have been presented by the ACP Council of Ministers or Committee of Ambassadors shall be implemented either by the ACP Secretariat, in which case a financing agreement shall be drawn up between the Commission and the Secretariat in accordance with Article 17, or by the Commission, depending on the nature of the action.’; (j) In Chapter 3, the title shall be replaced by the following: ‘APPRAISAL AND FINANCING’; (k) Article 15 shall be replaced by the following: ‘Article 15 Identification, preparation and appraisal of programmes and projects 1. Programmes and projects that have been presented by the ACP State concerned shall be subject to joint appraisal. The ACP-EC Development Finance Cooperation Committee shall develop the general guidelines and criteria for appraisal of programmes and projects. These programmes and projects are generally multiannual and may incorporate a whole range of actions of a limited size in a particular area. 2. Programme and project dossiers prepared and submitted for financing must contain all information necessary for the appraisal of the programmes and projects or, where programmes and projects have not been completely defined, provide the broad outlines necessary for their appraisal. 3. Programme and project appraisal shall take due account of national human resource constraints and ensure a strategy favourable to the promotion of such resources. It shall also take into account the specific characteristics and constraints of each ACP State. 4. Programmes and projects to be implemented by non-State actors which are eligible in accordance with this Agreement may be appraised by the Commission alone and give rise to the establishment, between the Commission and non-State actors, of grant contracts as defined in Article 19a. This appraisal shall comply with Article 4(1)(d) regarding the types of actors, their eligibility and the type of activity to be supported. The Commission, through the Head of Delegation, shall inform the National Authorising Officer of such allocated grants.’; (l) Article 16 shall be replaced by the following: ‘Article 16 Financing proposal and decision 1. The conclusions of the appraisal shall be summarised in a financing proposal, the final version of which shall be drawn up by the Commission in close collaboration with the ACP State concerned. 2. (deleted) 3. (deleted) 4. The Commission, acting on behalf of the Community, shall communicate its financing decision to the ACP State concerned within 90 days from the date on which the final version of the financial proposal is drawn up. 5. Where the financing proposal is not adopted by the Commission on behalf of the Community, the ACP State concerned shall be informed immediately of the reasons for that decision. In such a case, the representatives of the ACP State concerned may, within 60 days thereafter, request either: (a) that the matter be referred to the ACP-EC Development Finance Cooperation Committee set up under this Agreement; or (b) that they be given a hearing by the Community's representatives. 6. Following such a hearing, a definitive decision to adopt or reject the financing proposal shall be taken by the Commission on behalf of the Community. Before any decision is taken, the ACP State concerned may forward to the Commission any facts which may appear necessary to supplement the information available to it.’; (m) Article 17 shall be replaced by the following: ‘Article 17 Financing Agreement 1. Save as otherwise provided for in this Agreement, for any programme or project financed from the Fund, a financing agreement shall be drawn up between the Commission and the ACP State concerned. 2. The financing agreement shall be drawn up between the Commission and the ACP State concerned within 60 days of the decision taken by the Commission on behalf of the Community. The financing agreement shall: (a) specify, in particular, the details of the Community's financial contribution, the financing arrangements and terms and the general and specific provisions relating to the programme or project concerned; and (b) make adequate provision for appropriations to cover cost increases and contingencies. 3. Any unexpended balance left upon closure of the accounts of programmes and projects shall accrue to the ACP State or States concerned.’; (n) Article 18 shall be replaced by the following: ‘Article 18 Overrun 1. Once it appears that there is a risk of cost over-runs over and above the financing available under the financing agreement, the National Authorising Officer shall notify the Commission and request its prior approval on the measures which the National Authorising Officer intends to take in order to cover such cost over-runs, either by reducing the scale of the programme or project or by calling on national or other non-Community resources. 2. If it is not possible to reduce the scale of the programme or project or to cover the over-runs with other resources, the Commission, acting on behalf of the Community, may, on the basis of a reasoned request from the National Authorising Officer, take an additional financing decision on resources from the indicative programme.’; (o) Article 19 shall be replaced by the following: ‘Article 19 Retroactive financing 1. In order to ensure early project start-up, avoid gaps between sequential projects and prevent delays, the ACP States may, on completion of project appraisal and before the financing decision is taken, pre-finance activities linked to the start-up of programmes, preliminary and seasonal work, orders for equipment with long delivery lead times as well as some on-going operations. Such expenditure shall satisfy the procedures provided for in this Agreement. 2. Any expenditure referred to in paragraph 1 shall be mentioned in the financing proposal and shall be without prejudice to the financing decision taken by the Commission on behalf of the Community. 3. Expenditure made by the ACP State under this Article shall be retroactively financed under the programme or project, once the financing agreement is signed.’; (p) In Chapter 4, the title shall be replaced by the following: ‘IMPLEMENTATION’; (q) The following Articles shall be inserted: ‘Article 19a Implementation measures 1. Where financial execution is the Commission's responsibility, implementation of programmes and projects financed from the Fund shall consist chiefly of the following: (a) awarding of procurement contracts; (b) awarding of grants; (c) performance by direct labour; (d) direct payments as budgetary support, support for sectoral programmes, debt relief and support to cover short-term fluctuations in export earnings. 2. In the context of this Annex, procurement contracts are contracts for pecuniary interest concluded in writing in order to obtain, against payment of a price, the supply of movable assets, the execution of works or the provision of services. 3. In the context of this Annex, grants are direct financial contributions awarded by way of a donation in order to finance: (a) either an action designed to help achieve an objective of this Agreement or of a programme or project adopted in accordance with this Agreement, or (b) the functioning of a body which pursues such an objective. Grants shall be covered by a written contract. Article 19b Tender procedure with suspension clause In order to ensure early project start-up, the ACP States may, in all duly substantiated cases and in agreement with the Commission, issue invitations to tender for all types of contracts with a suspension clause, once project appraisal is completed but before the financing decision is taken. Such a provision must be mentioned in the financing proposal.’; (r) Article 20 shall be replaced by the following: ‘Article 20 Eligibility Save where a derogation is granted in accordance with Article 22, and without prejudice to Article 26: 1. participation in procedures for the awarding of procurement contracts or grants financed from the Fund shall be open to all natural and legal persons from ACP States and Member States of the Community; 2. supplies and materials purchased under a contract financed from the Fund must originate in a State that is eligible under point 1. In this context, the definition of the concept of “originating products” shall be assessed by reference to the relevant international agreements, and supplies originating in the Community shall include supplies originating in the Overseas Countries and Territories; 3. participation in procedures for the awarding of procurement contracts or grants financed from the Fund shall be open to international organisations; 4. whenever the Fund finances an operation implemented through an international organisation, participation in procedures for the awarding of procurement contracts or grants shall be open to all natural and legal persons who are eligible under point 1, and to all natural and legal persons who are eligible according to the rules of the organisation, care being taken to ensure equal treatment of all donors. The same rules apply for supplies and materials; 5. whenever the Fund finances an operation implemented as part of a regional initiative, participation in procedures for the awarding of procurement contracts or grants shall be open to all natural and legal persons who are eligible under point 1, and to all natural and legal persons from a country participating in the relevant initiative. The same rules apply for supplies and materials; 6. whenever the Fund finances an operation co-financed with a third State, participation in procedures for the awarding of procurement contracts or grants shall be open to all natural and legal persons eligible under point 1, and to all persons eligible under the rules of the above mentioned third State. The same rules apply for supplies and materials.’; (s) Article 22 shall be replaced by the following: ‘Article 22 Derogations 1. In exceptional duly substantiated circumstances, natural or legal persons from third countries not eligible under Article 20 may be authorised to participate in procedures for the awarding of procurement contracts or grants financed by the Community at the justified request of the ACP States concerned. The ACP States concerned shall, on each occasion, provide the Commission with the information needed to decide on such derogation, with particular attention being given to: (a) the geographical location of the ACP State concerned; (b) the competitiveness of contractors, suppliers and consultants from the Member States and the ACP States; (c) the need to avoid excessive increases in the cost of performance of the contract; (d) transport difficulties or delays due to delivery times or other similar problems; (e) technology that is the most appropriate and best suited to local conditions; (f) cases of extreme urgency; (g) the availability of products and services in the relevant markets. 2. In the case of projects financed from the Investment Facility, the procurement rules of the Bank shall apply.’; (t) Article 24 shall be replaced by the following: ‘Article 24 Implementation by direct labour 1. In the case of direct labour operations, programmes and projects shall be implemented through public or semi-public agencies or departments of the ACP State or States concerned or by the legal person responsible for executing the operation. 2. The Community shall contribute to the costs of the department involved by providing the equipment and/or materials that it lacks and/or resources to allow it to acquire additional staff required in the form of experts from within the ACP States concerned or other ACP States. The Community's participation shall cover only costs incurred by supplementary measures and temporary expenditure relating to execution that are strictly confined to the requirements of the programmes and projects in question. 3. Programme estimates implementing direct-labour operations must comply with the Community rules, procedures and standard documents laid down by the Commission, as applicable at the time of approval of the programme estimates.’; (u) Article 26 shall be replaced by the following: ‘Article 26 Preferences 1. Measures shall be taken to encourage the widest participation of the natural and legal persons of ACP States in the performance of contracts financed by the Fund in order to permit the optimization of the physical and human resources of those States. To this end: (a) for works contracts of a value of less than EUR 5 000 000, tenderers from the ACP States, provided that at least one quarter of the capital stock and management staff originates from one or more ACP States, shall be accorded a 10 % price preference where tenders of an equivalent economic, technical and administrative quality are compared; (b) for supply contracts, irrespective of the value of the supplies, tenderers from the ACP States who offer supplies of at least 50 % in contract value of ACP origin, shall be accorded a 15 % price preference where tenders of equivalent economic, technical and administrative quality are compared; (c) in respect of service contracts, where tenders of equivalent economic and technical quality are compared, preference shall be given to: (i) experts, institutions or consultancy companies or firms from ACP States with the required competence; (ii) offers submitted by ACP firms, either individually or in a consortium with European partners; and (iii) offers presented by European tenderers with ACP sub-contractors or experts; (d) where subcontracting is envisaged, preference shall be given by the successful tenderer to natural persons, companies and firms of ACP States capable of performing the contract required on similar terms; and (e) the ACP State may, in the invitation to tender, offer prospective tenderers assistance from other ACP States' companies or firms or national experts or consultants selected by mutual agreement. This cooperation may take the form either of a joint venture, or of a subcontract or of on-the-job training of trainees. 2. Where two tenders are acknowledged to be equivalent on the basis of the criteria stated above, preference shall be given: (a) to the tenderer of an ACP State; or (b) if no such tender is forthcoming, to the tenderer who: (i) allows for the best possible use of the physical and human resources of the ACP States; (ii) offers the greatest subcontracting possibilities for ACP companies, firms or natural persons; or (iii) is a consortium of natural persons, companies and firms from ACP States and the Community.’; (v) In Chapter 6, the title shall be replaced by the following: ‘FUND-RESOURCE MANAGEMENT AND EXECUTING AGENTS’; (w) Article 34 shall be replaced by the following: ‘Article 34 The Commission 1. The Commission shall undertake the financial execution of operations carried out with Fund resources, with the exception of the Investment Facility and interest-rate subsidies, using the following main methods of management: (a) centralised management; (b) decentralised management. 2. As a general rule, the financial execution of the Fund resources by the Commission shall be decentralised. In this instance, the execution duties shall be carried out by the ACP States in accordance with Article 35. 3. In order to carry out the financial execution of the Fund resources, the Commission shall delegate its executive powers within its own departments. The Commission shall inform the ACP States and the ACP-EC Development Finance Cooperation Committee of this delegation of tasks.’; (x) Article 35 shall be replaced by the following: ‘Article 35 National Authorising Officer 1. The Government of each ACP State shall appoint a National Authorising Officer to represent it in all operations financed from the Fund resources managed by the Commission and the Bank. The National Authorising Officer shall appoint one or more deputy National Authorising Officers to replace him when he is unable to carry out his duties and shall inform the Commission of this appointment. Wherever the conditions regarding institutional capacity and sound financial management are met, the National Authorising Officer may delegate his functions for implementation of the programmes and projects concerned to the body responsible within the national administration. The National Authorising Officer shall inform the Commission of any such delegation. When the Commission becomes aware of problems in carrying out procedures relating to management of Fund resources, it shall, in conjunction with the National Authorising Officer, make all contacts necessary to remedy the situation and take any appropriate steps. The National Authorising Officer shall assume financial responsibility only for the executive tasks entrusted to him. Where Fund resources are managed in a decentralised way and subject to any additional powers that might be granted by the Commission, the National Authorising Officer shall: (a) be responsible for the coordination, programming, regular monitoring and annual, mid-term and end-of-term reviews of implementation of cooperation, and for coordination with donors; (b) in close cooperation with the Commission, be responsible for the preparation, submission and appraisal of programmes and projects; (c) prepare tender dossiers and, where appropriate, the documents for calls for proposals; (d) submit tender dossiers and, where appropriate, documents for calls for proposals, to the Commission for approval before launching invitations to tender and, where appropriate, calls for proposals; (e) in close cooperation with the Commission, launch invitations to tender and, where appropriate, calls for proposals; (f) receive tenders and, if applicable, proposals, and transmit copies of tenders to the Commission; preside over the opening of tenders and decide on the results of their examination within the period of validity of the tenders, taking account of the time required for approval of contracts; (g) invite the Commission to the opening of tenders and, if applicable, proposals and notify the Commission of the results of the examination of tenders and proposals for approval of the proposals for the award of contracts and grants; (h) submit contracts and programme estimates and any addenda thereto to the Commission for approval; (i) sign the contracts and addenda thereto approved by the Commission; (j) clear and authorise expenditure within the limits of the funds assigned to him; and (k) during the execution operations, make any adaptation arrangements necessary to ensure the proper execution of approved programmes or projects from the economic and technical viewpoint. 2. The National Authorising Officer shall, during the execution of operations and subject to the requirement to inform the Commission, decide on: (a) technical adjustments and alterations to programmes and projects in matters of detail so long as they do not affect the technical solution adopted and remain within the limits of the reserve for adjustments provided for in the financing agreement; (b) changes of site for multiple-unit programmes or projects where justified on technical, economic or social grounds; (c) imposition or remission of penalties for delay; (d) acts discharging guarantors; (e) purchase of goods, irrespective of their origin, on the local market; (f) use of construction equipment and machinery not originating in the Member States or ACP States provided there is no production of comparable equipment and machinery in the Member States or ACP States; (g) subcontracting; (h) final acceptance, provided that the Commission is present at provisional acceptance, endorses the corresponding minutes and, where appropriate, is present at the final acceptance, in particular where the extent of the reservations recorded at the provisional acceptance necessitates major additional work; and (i) hiring of consultants and other technical assistance experts.’; (y) Article 36 shall be replaced by the following: ‘Article 36 Head of Delegation 1. The Commission shall be represented in each ACP State or in each regional grouping which expressly so requests, by a delegation under the authority of a Head of Delegation, with the approval of the ACP State or States concerned. Appropriate measures shall be taken in any case in which a Head of Delegation is appointed to a group of ACP States. The Head of Delegation shall represent the Commission in all spheres of its competence and in all its activities. 2. The Head of Delegation shall be the main contact for ACP States and bodies or organisations eligible for financial support under the Agreement. He shall cooperate and work in close cooperation with the National Authorising Officer. 3. The Head of Delegation shall have the necessary instructions and delegated powers to facilitate and expedite all operations under the Agreement. 4. On a regular basis, the Head of Delegation shall inform the national authorities of Community activities which may directly concern cooperation between the Community and the ACP States.’; (z) Article 37 shall be replaced by the following: ‘Article 37 Payments 1. For the purpose of effecting payments in the national currencies of the ACP States, accounts denominated in the currencies of the Members States or in euro may be opened in the ACP States by and in the name of the Commission with a national public or semi-public financial institution chosen by agreement between the ACP State and the Commission. This institution shall exercise the functions of National Paying Agent. 2. The National Paying Agent shall receive no remuneration for its services and no interest shall be payable by it on deposited funds. The local accounts shall be replenished by the Commission in the currency of one of the Member States or in euro, based on estimates of future cash requirements, which shall be made sufficiently in advance to avoid the need for pre-financing by ACP States and to prevent delayed disbursements. 3. (deleted) 4. Payments shall be made by the Commission in accordance with the rules laid down by the Community and the Commission, where appropriate after the expenditure has been cleared and authorised by the National Authorising Officer. 5. (deleted) 6. The procedures for clearance, authorisation and payment of expenditure must be completed within a period of 90 days from the date on which the payment becomes due. The National Authorising Officer shall process and deliver the payment authorisation to the Head of Delegation not later than 45 days before the due date. 7. Claims for delayed payments shall be borne by the ACP State or States concerned, and by the Commission from its own resources, for that part of the delay for which each Party is responsible in accordance with the above procedures.’.