OECS Strengthening Institutional Capacity for Project Implementation The proposed grant seeks to support the Governments of the sub-region to effectively implement the key recommendations of the FY07 OECS Policy Note on Project Fiduciary Management. More specifically, the grant will support the Governments' efforts to develop and sustain the institutional capacity in financial management, procurement and project management to enable the countries to effectively implement capital projects in support of their development agenda.  Objectives & Expected Outcomes.  The grant will enhance the capacity of key ministries and departments within the public sector, involved in capital project implementation, in the critical areas of project management and fiduciary areas. The quality and pace of projects are expected to improve, thereby leading to greater development impact. In addition, transaction costs are expected to decrease substantially for both the authorities and donors. Proposed activities: The IDF grant would provide financing for technical assistance to assist the Governments of the OECS sub-region in implementing specific action plans to build institutional capacity in the key areas discussed above.  Specifically, the components to be finance by the proposed grant include: o   Component One:  Project Management Capacity Building The weaknesses in the fiduciary area are symptomatic of much broader project management issues relating to formulation of the countries' development strategy, the quality of project planning to implement the strategy, the design of project components, and the quality of project implementation. This component will therefore focus on building project management capacity within the public sector for project planning, design and implementation. A review of existing country systems for project management will be followed by the development and implementation of a country-specific Action Plan for this area.   This might include upgrading of existing systems, training of personnel, and the realignment of management processes. The activities under this component will contribute to the strengthening of the Public Sector Investment Program process. o   Component Two: Financial Management Capacity Building All of the countries in the OECS have experienced challenges in the timely preparation, delivery and review of good quality financial information - a critical component of the monitoring and evaluation of the projects' performance. To strengthen the institutional capacity of the supreme audit institutions (SAIs), individual country action plans, based on the analysis of the existing needs, will be prepared. They will focus on such areas as audit methodology development and implementation; personnel training and professional development. Following the implementation of proposed actions, further support will be provided to the SAIs, while applying on practice newly developed tools and skills. Participating SAIs will be paired with the peer institutions and/or reputable private audit firms and provided with ad-hoc consultant support and assistance. Extending the scope of the SAIs' involvement in audits and reviews of the government and donor-financed projects will enhance government accountability, decrease transaction costs and facilitate the movement towards country systems. o   Component Three:  Procurement Capacity Building Limited procurement capacity has had a detrimental effect on the preparedness and subsequent implementation of projects across the OECS.  Failure to properly plan procurement activities, including inappropriate qualification and evaluation criteria, limited capacity for contract administration, and late payments to suppliers and contractors are some of the pervasive characteristics of this function. The existing legal frameworks for procurement in most of the OECS countries are also outdated, but are currently being considered for review. Regulatory and institution strengthening would comprise: (i) a review of the procurement Acts to reflect best-practice as well as anti-corruption measures; (ii) training of government staff in procurement; (iii) the establishment of a monitoring system to track contract awards and to deal with complaints and other procurement-related issues; and (iv) the establishment of a one-stop virtual sub-regional procurement database. o   Component Four: Project Management, Monitoring and Evaluation Given the regional nature of the proposed Grant it should be executed by one of the regional institution with the appropriate comparative advantage and inter-island learning should be fully exploited.  Under this component, a mid-term forum--to monitor progress and share best practices and lessons learned--would be convened among the various stakeholders involved in the implementation of the Grant. In addition, using existing arrangements, a monitoring committee would be established under the auspices of the Eastern Caribbean Central Bank.  It would comprise the six Financial Secretaries/Permanent Secretaries of Finance from each OECS country and would draw upon outside expertise in the areas of project management, financial management and procurement.