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May 27, 1994

1. GENERAL

This MEMORANDUM expresses the understandings of the Government of the Republic of the Philippines and the Government of Australia concerning the respective responsibilities of the two Governments in relation to the provision of wheat flour for monetization and use of the Philippines Street Children Nutrition and Education Project.

2. EXECUTING AUTHORITIES

2.1 The Executing Authorities for the respective Governments for this Memorandum will be:

For the Government of the Republic of the Philippines (GOP):

The Food for Work Project Management Office (FWPMO) of the Department of the Interior and Local Government (DILG).

4.2 The PSC will meet once every quarter and will:

(a) ensure interagency coordination in project implementation and for policy issues;

(b) review overall progress of project implementation;

(c) determine the composition, and selection criteria of members of Project Review/Evaluation Missions; and

(d) determine responsibilities regarding the funding of Mission members.

4.3 Additional meetings of the PSC may be convened as necessary by DILG-AIDAB/WFP.

4.4 The GOP will establish a system for the monitoring, reporting and evaluation of project inputs and outputs and shall provide AIDAB with quarterly reports covering:

(a) problems or inadequacies, if any, encountered in the release of rice by the National Food Authority for distribution to project beneficiaries;

(b) project progress, achievements and problems;

(c) funds generated; and

(d) non-food items provided through the WFP, and the provision of essential external non-food related project inputs.

4.5 Unless specific provision is made and agreed to the contrary, the GOP will keep and account for food commodities and non-food resources provided by AIDAB separately from other project supplies.

4.6 Lead agencies and the Task Force will report every month to DILG, with a copy to WFP. DILG, in turn will prepare a consolidated quarterly progress report and submit to WFP who will review and analyze the report prior to forwarding copies to AIDAB and WFP Headquarters.

4.7 In addition to the reports specified in Paragraphs 4.4, 4.5 and 4.6 above, the GOP will, upon request, provide other documents and information as may be relevant to project implementation. Such documents and information will include annual work plans, annual project budget and annual expenditure plans for the funds generated from the food provided under this Memorandum.

5. RESPONSIBILITIES OF THE GOVERNMENT OF AUSTRALIA

5.1 The GOA will:

(a) subject to the normal Australian annual parliamentary appropriation of funds and in accordance with Annexes A and B of this Memorandum, supply food aid to the GOP through WFP on a cost, insurance and freight (CIF) basis;

(b) take all reasonable measures to ensure that the food is of sound and merchantable quality at the time of loading;

(c) arrange for shipment of the food aid to the WFP at the port of discharge in the Philippines; and

(d) as far as possible, keep the GOP informed of the progress of arrangements for the supply of wheat flour.

6. RESPONSIBILITIES OF THE GOVERNMENT OF THE PHILIPPINES

6.1 The GOP will:

(a) provide, as far in advance as possible, advice on the desired time of shipment and the required Philippine port of discharge;

(b) be responsible for the prompt clearance through customs and for all import and customs duties and other public charges of the food provided under this Memorandum;

(c) arrange for the payment of expenses incurred for the internal transport, storage and handling of the Australian food aid consignments;

(d) ensure that there are no exports from the Philippines of wheat flour or any byproducts resulting therefrom commencing on the date of delivery at the port of discharge of the consignment of the wheat flour and ending six months after the delivery of the wheat flour under this Memorandum; and

(e) ensure that all of the wheat flour supplied under this Memorandum is used for human consumption.

7. UTILIZATION OF COMMODITIES AND GENERATED FUNDS

7.1. In accordance with Annex A and C of this Memorandum, the Australian food aid wheat flour consignments will be monetized through open public bidding and the proceeds from said monetization process will be deposited in an interest-bearing trust account to be known as the Australian Food Aid Fund Account (AFAFA) which will be managed jointly by WFP and GOA. These arrangements are detailed in a separate MOU between the GOA and WFP. The deposited funds, including generated interests, will be used to purchase local rice from the National Food Authority or from other sources deemed appropriate by both Executing Authorities.

8. READINESS FOR COMMENCEMENT

8.1 The project will commence on completion of the measures preparatory to the commencement of food assistance in the project as detailed in Annexes A and B of this Memorandum.

9. FACILITATION

9.1 The GOT will provide personnel and facilities necessary to enable personnel of the GOA to efficiently and economically carry out their project related activities and without - limiting the generality of the paragraph, such contribution will include:

(a) access to GOP facilities, documentation and personnel;

(b) provision of appropriate offices and work facilities if required; and

(c) all necessary approvals and authorities for carrying out project related activities.

10. CLAIMS RELATING TO PROJECT ACTIVITIES

10.1 The GOP will release the GOA and its representatives and personnel from all actions, suits, proceedings, claims and demands whatsoever which the GOP may now have or may in the future have against them or any of them in relation to loss or damage resulting from or consequent upon the Street Children Nutrition and Education Project.

10.2 The GOP will absolve the GOA, its representatives and personnel from any liability against:

(a) all actions, suits, proceedings, claims and demands whatsoever, which any other party may now have or may in future have against them or any of them in relation to loss or damages resulting from, or consequent upon, project activities; and

(b) any claim for contributions which any party may have in the future against any of them in respect of any such actions, suits, proceedings, claims and demands.

10.3 The waiver from any liability referred to in subparagraphs 10.1 and 10.2 will not apply ' where it has been mutually decided by the two Governments that a claim arises from gross negligence or willful misconduct of the GOA, its personnel or its representatives.

11. PROJECT REVIEW AND EVALUATION

11.1 The GOA may undertake, with the cooperation of the GOP, review missions in order to assist in monitoring the progress of the project and, as necessary, advise on ways to improve the efficiency and effectiveness of project implementation.

11.2 The GOA may undertake, with the cooperation of the GOP, reviews of the Project with regard to:

(a) the efficacy of the operations undertaken, including the timely provision of all inputs and the achievement of targeted outputs with emphasis on critical issues and operational problems in the implementation process;

(b) the role and function of food aid, including the verification of the actual role of food aid and its intended positive effects as well as the justification for food assistance; and

(c) the achievement of specified immediate objectives of the Project, including analysis of performance indicators and socio-economic effects on the ultimate beneficiaries.

11.3 The GOA may undertake, with the cooperation of the GOP, an ex-post evaluation of the project to analyze its effects and impact.

12. FAILURE TO MEET REQUIREMENTS

12.1 In the event that either Government does not meet the requirements of this Memorandum, the other Government may either:

(a) suspend the discharge of its own responsibilities under this Memorandum by giving written notice to that effect to the defaulting Government; or

(b) terminate the Memorandum within sixty days of written notice being provided to the defaulting Government.

12.2 On termination of this Memorandum, any generated funds remaining unspent or any food commodity obtained by the generated funds and intended for, but not distributed to, project beneficiaries, may be reallocated for other purposes within the AIDAB program in the Philippines and their utilization will be mutually determined by the GOP and the GOA.

13. AMENDMENT

13.1 Amendments to this Memorandum may be made at any time by a written mutual agreement between the two Governments.

14. ANNEX

ANNEXES to this Memorandum are made and shall form integral parts hereof.

Signed in duplicate at the City of Pasay this twenty-seventh day of May 1994.

(Sgd.)	(Sgd.)
For the Government of the Republic of thePhilippines	For the Government of Australia

Witnesses:

ANNEX A
MONETIZATION AND COUNTERPART FUNDS ARRANGEMENTS

1. Prior to each shipment by the GOA of the Australian food aid wheat flour contribution:

• the GOA will provide WFP/DILG with the specifications and a sample of the food aid wheat flour to be provided; and

• WFP will publicly call for bids for the purchase of an estimated Australian food aid wheat flour tonnage based on the specifications and sample provided. The actual wheat flour tonnage purchased by the successful bidder will be determined by the per tonne sale price of the wheat flour (See Paragraph 4, below).

2. For bidding purposes, the CIF per tonne value of the pending food aid wheat flour consignment will establish the per tonne bidding floor price.

3. The WFP will participate in an adhoc Bidding Committee which will include DILG, NEDA, and another UN agency and which will be responsible for reviewing the bidding process and determining the successful bid.

4. Immediately following the sale of the wheat flour, WFP will provide AIDAB Manila with details of the successful bid and the wheat flour per tonne sale price.

5. The international market price per tonne of rice of similar type and quality to that to be provided to the project (i.e. Thai second class rice, 35% broken), will be multiplied by the project's rice tonnage requirement and divided by the per tonne sale price of the wheat flour to determine both the quantity of Australia's wheat flour contribution and the quantity of wheat flour actually purchased by the successful bidder.

6. Any shortfall in the amount of funds required to purchase the project's rice requirements after monetization of the Australian food aid, will be made up by the GOP.

7. Any losses in excess of 5% of the Australian wheat flour consignment which may be incurred during loading and shipping, will be refunded by the GOA to the GOP.

8. A separate interest bearing account to be called the Australian Food Aid Fund Account' (AFAFA) will be established by GOA and WFP (as detailed in a separate MOU).

9. The counterpart funds generated from the sale of the Australian food aid wheat flour will be deposited by the WFP in the AFAFA within thirty days of its sale.

10. The WFP will provide formal advice to AIDAB Manila and DILG immediately the AFAFs have been deposited in the AFAF Account.

11. The GOA and WFP will co-sign the authority for all withdrawals of funds from the AFAF Account.

12. Any interest earned by the AFAFA will belong to the project and its use will be agreed to by the PSC.

13. On completion of the final food distributions to project beneficiaries, any generated funds remaining unspent or any food commodity obtained by the generated funds and intended for, but not distributed to project beneficiaries, may be reallocated for other purposes within the AIDAB program in the Philippines and their utilization will be mutually determined by the GOP and the GOA.

ANNEX B
THE AUSTRALIAN FOOD AID CONTRIBUTION

1. Australia's food aid contribution will be provided on a cost, insurance and freight (CIF) basis in the form of good quality wheat flour, suitable for human consumption.

2. The volume of Australia's food aid wheat flour grant will be equivalent in price to the international market price of the 6526 tonnes of rice required by the five year term of the project and will be calculated in the manner stipulated in Annex A, Paragraph 5 of this Memorandum.

3. Australia's food aid grant will be provided in two shipments; in years one and three.

• The initial shipment will be of sufficient quantity to provide for the purchase, as calculated in Annex A, Paragraph 5 of this Memorandum, of 3,770 tonnes rice.