OFFICIAL , a DOCUMENTS i 7 ADMINISTRATION AGREEMENT FOR EU CONTRIBUTIONS PROVIDED-TTHE EUROPE 2020 PROGRAMMATIC TRUST FUND Administration Agreement between the European Commission on behalf of the European Union and the International Bank for Reconstruction and Development concerning the Part II Europe 2020 Programmatic Single-Donor Trust Fund Trust Fund (No. TF072733) (EC Contract No 30-CE-08 72647/00-64) This Administration Agreement is concluded under Direct Management in the context of the Framework Agreement between the World Bank Group and the European Commission dated April 15, 2016 which sets the general conditions for this Agreement (the "Framework Agreement"). The Framework Agreement shall be applicable and form an integral part of the Administration Agreement for the Trust Fund. I. The International Bank for Reconstruction and Development (the "Bank") acknowledges that the European Commission (the "Donor", and together with the Bank, the "Parties" and each a "Party") agrees to provide the sum of nine hundred thousand Euro (E900,000) (the "Contribution") for the Part I Europe 2020 Programmatic Single-Donor Trust Fund, (No. TF072733) (the "Trust Fund") in accordance with the terms of this Administration Agreement. The estimated total budget of the Trust Fund is nine hundred thousand Euro (E900,000). The indicative budget set out in Annex 5 shall be used for monitoring purpose only and shall not be binding. 2. The Contribution shall be used to finance the activities set forth in the "Part II Europe 2020 Programmatic Single-Donor Trust Fund Description" attached hereto as Annex 1, and shall be administered by the Bank on behalf of the Donor in accordance with the terms of this Administration Agreement, including the "Standard Provisions" attached hereto as Annex 2 and "Governance" attached hereto as Annex 3. Expected results of the Trust Fund and corresponding indicators (including baselines, result goals and sources of data) are set out in Annex 4. The Implementation period shall start on the date following that on which the last of the two parties signs. 3. The Donor shall deposit the Contribution in accordance with the following schedule and in the currency specified in Section I above ("Contribution Currency") into such bank account designated by the Bank (each amount deposited hereinafter referred to as an "Installment") upon submission of a payment request by the Bank: (A) Promptly following countersignature - E 450,000 (B) 6 350,000 subject to the disbursement of 70% of the preceding instalment. (C) E 100,000 subject to the disbursement of 70% of the preceding instalment. The period for payment of further instalments shall be 60 days. The period for payment of the balance shall be 90 days. 4. When making any deposit, the Donor shall instruct its bank to include in its deposit details information (remittance advice) field of its SWIFT deposit message, information indicating: the amount deposited, that the deposit is made by the Donor for TF072733 (the Part H Europe 2020 Programmatic Single-Donor Trust Fund), the Commission internal reference number and the date of the Administration Agreement, the name of the project for which the funds are intended, the name of the Commission department responsible for the Trust Fund and the date of the deposit (the "Deposit Instructions"). In addition, the Donor shall provide a copy of the Deposit Instructions to the Bank's Accounting Trust Funds Division by e-mail sent to tfremitadvice@worldbank.org or by fax sent to +1 (202) 614-1315. 5. Except with respect to the Deposit Instructions, any notice, request or other communication to be given or made under this Administration Agreement shall be in writing and delivered by mail, fax or e- mail to the respective Party's address specified below or at such other address as such Party notifies in writing to the other Party from time to time: For the Bank (the "Bank Contact"): Arup Banerji Regional Director European Union The World Bank 17 av Marnix, 1000 Brussels - Belgium Tel: +32 2 504 0994 E-mail: Abanerji@worldbank.org For the Donor (the "Donor Contact"): Ms Wallis GOELEN - VANDEBROCK Head of Unit for Poland, Slovakia, Czechia European Commission, Directorate-General for Employment, Social Affairs and Inclusion Rue de Spa 3 B-1049 Bruxelles Tel: +32 229-51827 E-mail: Wallis. Goelen@ec. europa. eu 6. In the event any amounts are to be returned to the Donor under this Administration Agreement, the Bank shall transfer such amounts to the Donor, unless otherwise agreed with the Bank. 7. All annexes hereto and the Framework Agreement between the World Bank Group and the European Commission constitute an integral part of this Administration Agreement, whose terms taken together shall constitute the entire agreement and understanding between the Donor and the Bank. In the event of any inconsistency, the Framework Agreement prevails over the Administration Agreement and the Administration Agreement prevails over its Annexes. Unless otherwise specified in an annex hereto, this Administration Agreement may be amended only by written amendment between the Bank and the Donor. 8. The measures taken to identify the EU as a source of financing shall be in accordance with Attachment 4 of the Framework Agreement. 9. Each of the Parties represents, by confirming its agreement below, that it is authorized to enter into this Administration Agreement and act in accordance with these terms and conditions. The Parties are requested to sign and date this Administration Agreement, and upon possession by the Bank of this fully 2 signed Administration Agreement, this Administration Agreement shall become effective as of the date of the last signature. INTERNA NAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By: Name: r ner i \ 0 Title: Regi al Director European Union Date: 126q )(U EUROPE U ON represented by the EUROPEA NCOMMI ISSION By: Name: Wallis Goelen Vandenbro& Title: Head of Unit for Poland, Slovakia, Czechia Date: 616____1_Z_I _ 3 ANNEX I Part II Europe 2020 Pro2rammatic Single-Donor Trust Fund Description This Annex shall be applicable to and form an integral part of the Administration Agreement for the Trust Fund between the Bank and the Donor. 1. Objectives The objectives of the Trust Fund are: The European Commission and the Bank share a common objective of building competitive and sustainable economies and reducing poverty and social exclusion - goals of the Europe 2020 Agenda which is built on three pillars of smart, sustainable and inclusive growth. The European Commission and the Bank concur that direct interaction is beneficial to both institutions and through them to the beneficiary countries. This applies particularly to the provision of analytical, advisory and knowledge services and technical assistance. The European Commission has expressed an interest in ensuring that the Bank continues to provide technical assistance in the framework of the Trust Fund in furtherance of the common objective set forth above. 2. Activities 2.1. The sub-objectives and description of activities are: The European Commission, particularly the Directorate General for Employment, Social Affairs and Inclusion, supports the analysis of labour market and social inclusion policies and the development of policy recommendations within the process of European Semester, leading to Country Report(s) and Country Specific Recommendation(s) outlining the structural reforms needed to be implemented by the Member states. Process of European Semester contributes to delivery of Europe 2020 strategy, which aims at confronting structural weaknesses through progress in three mutually reinforcing priorities: - smart growth, based on knowledge and innovation; - sustainable growth, promoting a more resource efficient, greener and competitive economy; - inclusive growth, fostering a high employment economy delivering economic, social and territorial cohesion. Investing more in research, innovation and entrepreneurship is at the heart of Europe 2020. The European Commission supports the development by the Bank of an integrated, ready-to-use and innovative methodology on return on investment (ROI)' in smart specialization (RIS3), i.e. investments in For purposes of this project, the term "Return on Investment (ROI)" shall be understood as the benefits to the 4 research and innovation supported by European Structural Investment Fund (ESIF), to help in the monitoring, evaluation and management of the use of ESIF in Poland. While the scope of the activities are 16 regional operational programmes (ROPs) and national Operational Programmes in Poland, the methodology to be developed should, to the extent possible, be general and transversal enough to also be applied to other types of support through ESIF across the European Union. The development of a methodology aims to accomplish the following specific objectives: I. Measure the return on investment in research and innovation of ESIF innovation support in Poland under the 2007-13 and 2014-2020 programming periods, taking into account possible impacts at the firm/company (micro), regional (mezzo) and national (macro) levels to the extent possible, and derive relevant high-level conclusions for future program design. 2. The methodology on return on investment in smart specialization should take into account direct and, to the extent possible, indirect support to businesses through services provided by institutions such as science, technological and business parks, incubators, etc., from the ESIF and return on this input in terms of: a. direct effect for beneficiary: in jobs, turnover and value added. b. indirect effects for regional economy (subject to data availability): in jobs, turnover and value added in business services, manufacturing, construction and the rest of national economy. c. fiscal return to government of social security and taxes. 3. Data allowing, the methodology will also include an analysis of the correlation between the effectiveness of EU support and circumstantial variables such as educational attainment, investment climate and other aspects of the innovation ecosystem. The return on investment methodology will be complemented by developing and piloting tools to assess and improve the efficiency and effectiveness of public investments in research and innovation under smart specialization (RIS3) strategies. This could cover program design and implementation issues, e.g. beneficiary selection. Results should, to the extent possible, also have a clear practical relevance that would resonate with both policy makers and the general public. The activities (which may be described as "components" of activities) to be financed by the Trust Fund, in support of the sub-objectives cited in Section 2.1 above, are the following Bank-executed activities: Component One: Development of a methodology to calculate return to public investments in research and innovation Taking into account existing methods and practices already addressed by literature for measuring returns to public investments in research and innovation, the Bank will develop an integrated methodology to calculate return to public investments in research and innovation. EC guidelines on monitoring and evaluation and evaluations of research investments published by national/regional governments should also be taken into account, in particular, with regards to spill-over effects for the territory. This country, region and firms in terms of the socio economic variables listed in bullet no. 2 below. 5 component will develop the categorisation of the various impacts (direct, indirect, correlations) of the interventions. Component Two: Ex-post evaluation of ESIF financial support for innovation in Poland The Bank will carry out an ex-post evaluation of EU innovation support in Poland under the previous round of structural funds from 2007-13 to provide empirical evidence on implemented measures and their return on public investments for research and innovation. This will be a quantitative assessment for which a panel dataset will be built that links the information from the SIMIK database on recipients of EU funded innovation support to firm level information from the Polish Enterprise Census and / or the Amadeus firm level database or equivalent, subject to data availability2. The merging will be done primarily via REGON: the firms' tax payer identification numbers, and company name and address will be used as a secondary source. In addition to support that is given directly to firms, in order to include in the analysis, the results of indirect support from EU funds given to businesses through services provided by institutions such as science, technological, business parks, incubators, clusters organisations, technological offices, advisory services, etc., the Bank will use the SIMIK database to obtain information on beneficiary firms. Using firm level data and a differences-in-differences approach enhanced by propensity score matching techniques, the report prepared by the Bank will evaluate the impact of EU funding under the 2007-13 structural funds for innovation support at the firm level in terms of direct effects for beneficiary: in jobs, turnover and value added. Additional methods will be utilized to estimate: ii) indirect effects for regional economies: in jobs, turnover and value added in business services, manufacturing, construction and the rest of national/regional economy; iii) fiscal return to government of social security and taxes. To the extent possible, the study will also analyse the success of interventions at both the regional and program level. This is expected to deliver indicators of efficiency of support and differences across regions and programs to the extent possible subject to statistical limitations. In addition, the study will evaluate the interaction of circumstantial factors such as the regional investment climate and availability of skills with the efficiency of ESIF support. The result of this component will be a technical report explaining the methodology and its key results in detail. This will serve as an input for a policy discussion facilitated by the Bank in Poland to identify economic, efficient and effective measures to be applied, promoted or avoided under Component Three. Component Three: Developing and piloting tools to assess and improve public investments in research and innovation The Bank will develop and pilot tools that aim to improve the efficiency and effectiveness of research and innovation support programs. The tools will assess public expenditures on research and innovation along a variety of dimensions, and can be considered a tool for managing EU and government expenditures going forward. The tools will be piloted for a subset of research and innovation support instruments, e.g. in one region. The subset of instruments to be analysed will depend on counterpart interest and data and resource availability. The methodology will aim to address questions such as: * How much is spent by the government on research and innovation, by whom, with what objectives, and what is the coherence of the policy mix? * What is the quality of the design, implementation, and M&E of selected instruments? 2 The availability of the Enterprise Census data is subject to a satisfactory arrangement with the Polish Statistics Office (GUS). Alternatively, the Amadeus data, while more limited in coverage would have to be purchased. 6 * Do the instruments generate the expected output with a reasonable level of inputs? How are they linked to intermediate outcomes and impacts (such as those measured under Component 2)? The above questions will be investigated through program document reviews, interviews with program managers, and focus groups and interviews with beneficiaries. The Bank will provide a report with findings, recommendations on how to align the policy mix, program design, implementation, and M&E with good international practice. The Bank will also carry out capacity building activities to provide national and regional counterparts with the skills to apply the expenditure assessment methodology, subject to time and resource availability. Methodology: The following elements should be taken into account: * Limited data availability and implementation capacity in beneficiary regions need to be taken into account * Results need to be credible, to the extent possible, in terms of establishing attribution between support received and performance of beneficiaries. * Existing methodologies applied for calculating return on investment for public support in research and innovation * The mechanism should be quickly operational and aim to deliver tangible results in the prospect of the coming assessment of the performance framework (which will start as of 30 June 2019). 7 Indicative outputs and timeline table The timeline of the project will cover 18 months and include the following steps Time needed for Delivery Schedule Output* (from date of effectiveness of this Agreement) 1) Development of a methodology to calculate return to public 2.5 months 3 months investments in research and innovation (Component One) 2) Ex-post evaluation of ESIF financial support for innovation in 6 months* 9 months Poland (Component Two) 3) Developing and piloting tools for assessing public expenditures in 14 months 17 months research and innovation (Component Three) 4) Project Closing Seminar(s)/ I month 17 months Conference(s) 5) Final Report Document I month 18 months Subject to data availability. 8 3. Eligible Expenditures 3.1 For Bank-executed activities, the Trust Fund funds may be used to finance: (a) Staff and consultant services; (b) Cost of travel; (c) Cost of training and workshop; and (d) Other services including translation. 4. Taxes 4.1 The foregoing activities and categories of expenditures may include the financing of taxes in accordance with the Bank's applicable policies and procedures. 5. Program Criteria 5.1 Activities are to be financed in accordance with the following program criteria: The Trust Fund is established to enable the European Commission and the Bank to continue to collaborate and exchange experience and expertise on a number of themes under all three pillars of the Europe 2020 Agenda of smart, sustainable and inclusive growth. The express purpose of this Trust Fund is to allow the European Commission to avail itself of the Bank's technical assistance and analytical and policy capacity for the purpose of pursuing the goals of Europe 2020. The three pillars of Europe 2020 are broadly in line with the objectives and strategies adopted in the Europe and Central Asia Region of the World Bank Group. All activities that are in pursuance of these three pillars are eligible to be financed and implemented under this Trust Fund. 9 ANNEX 2 STANDARD PROVISIONS This Annex shall be applicable to and form an integral part of the Administration Agreement for the Trust Fund between the Bank and the Donor. 1. Administration of the Contributions 1.1 The Bank shall be responsible only for performing those functions specifically set forth in this Administration Agreement and shall not be subject to any other duties or responsibilities to the Donor, including, without limitation, any duties or obligations that might otherwise apply to a fiduciary or trustee under general principles of trust or fiduciary law. Nothing in this Administration Agreement shall be considered a waiver of any privileges or immunities of the Bank under its Articles of Agreement or any applicable law, all of which are expressly reserved. 1.2 The Donor's Contribution shall be administered in accordance with the Bank's applicable policies and procedures, as the same may be amended from time to time, including its procurement, financial management, disbursement and safeguard policies, its framework to prevent and combat fraud and corruption and its screening procedures to prevent the use of Bank resources to finance terrorist activity, in line with the Bank's obligations to give effect to the relevant decisions of the Security Council taken under Chapter VII of the of Charter of the United Nations. The Donor acknowledges that this provision does not create any obligations of the Bank under the anti-terrorist financing and asset control laws, regulations, rules and executive orders of an individual member country that may apply to the Donor. 2. Manazement of the Contributions 2.1 The funds deposited in the Trust Fund shall be accounted for as a single trust fund and shall be kept separate and apart from the funds of the Bank. The funds deposited in the Trust Fund may be commingled with other trust fund assets maintained by the Bank. The Bank, in its capacity as trustee, has legal title to the funds deposited in the Trust Fund. 2.2 The currency in which the funds in the Trust Fund shall be held is Euro (the "Holding Currency"). 2.3 The Donor agrees to deposit its Contributions in the Contribution Currency stated in the Administration Agreements. In the case of deposits received in a Contribution Currency other than the Holding Currency, promptly upon the receipt of such amounts and the accompanying Deposit Instructions, the Bank shall convert such amounts into the Holding Currency at the exchange rate obtained by the Bank on the date of the conversion. Where deposits prove to be insufficient to complete activities as a result of exchange rate fluctuations, neither the Bank nor the Donor shall bear any responsibility for providing any additional financing. 2.4 The funds deposited in the Trust Fund may be freely exchanged by the Bank into other currencies as may facilitate their disbursement at the exchange rate obtained by the Bank on the date of the conversion. 2.5 The Bank shall invest and reinvest the funds deposited in the Trust Fund pending their disbursement in accordance with the Bank's applicable policies and procedures for the investment of trust 10 funds administered by the Bank. The Bank shall transfer all income from such investment to the Donor's applicable donor balance account with the Bank. 3. Trust Fund Fees and Costs 3.1 The Bank shall deduct and retain for its own account, as a deduction from each Instalment, an amount equal to five percent (5%) per Instalment as an administrative fee for the Trust Fund. 3.2 The Donor acknowledges and agrees that the percentage deductions for fees in this Trust Fund Fees and Costs section are estimated on the basis of anticipated Contributions. If actual Contributions significantly differ from what was originally anticipated at the time of signature of the first Administration Agreement, or if other circumstances affecting Trust Fund fees or costs change, the Bank reserves the right to request a change to the terms of this Trust Fund Fees and Costs section, which would be effectuated by amendments made to the Administration Agreements of the Donor and which would thereafter be applicable to all new Contributions that are provided either as amendments to supplement existing Administration Agreements or from new Administration Agreements. 4. Accounting and Financial Reporting 4.1 The Bank shall maintain separate records and ledger accounts in respect of the funds deposited in the Trust Fund and disbursements made therefrom. 4.2 The Bank shall furnish to the Donor current financial information relating to receipts, disbursements and fund balance in the Holding Currency with respect to the Contributions via the World Bank's Trust Funds Donor Center secure website. Within six (6) months after all commitments and liabilities under the Trust Fund have been satisfied and the Trust Fund has been closed, the final financial information relating to receipts, disbursements and fund balance in the Holding Currency with respect to the Contributions shall be made available to the Donor via the World Bank's Trust Funds Donor Center secure website. 4.3 The Bank shall provide to the Donor via the World Bank's Trust Fund Donor Center secure website, within six (6) months following the end of each Bank fiscal year, an annual single audit report, comprising (i) a management assertion together with an attestation from the Bank's external auditors concerning the adequacy of internal control over cash-based financial reporting for all cash-based trust funds as a whole; and (ii) a combined financial statement for all cash-based trust funds together with the Bank's external auditor's opinion thereon. The cost of the single audit shall be borne by the Bank. 4.4 If the Donor wishes to request, on an exceptional basis, a financial statement audit by the Bank's external auditors of the Trust Fund, the Donor and the Bank shall first consult as to whether such an external audit is necessary. The Bank and the Donor shall agree on the appropriate scope and terms of reference of such audit. Following agreement on the scope and terms of reference, the Bank shall arrange for such external audit. The costs of any such audit, including the internal costs of the Bank with respect to such audit, shall be borne by the requesting Donor. 5. Progress Reporting 11 5.1 The Bank shall provide the Donor with semi-annual reports on the progress of activities financed by the Contributions. Within six (6) months of the End Disbursement Date (as defined below), the Bank shall furnish to the Donor a final report on the activities financed by the Trust Fund. 5.2 The Donor may review or evaluate activities financed by the Trust Fund at any time up to six (6) months following the End Disbursement Date. The Donor and the Bank shall agree on the scope and conduct of such review or evaluation, and the Bank shall provide all relevant information within the limits of the Bank's applicable policies and procedures. All associated costs, including any costs incurred by the Bank, shall be borne by the Donor. It is understood that any such review or evaluation will not constitute a financial, compliance or other audit of the Trust Fund. 6. Disbursement; Cancellation; Refund 6.1 It is expected that the funds deposited in the Trust Fund will be fully disbursed by the Bank by - November 30, 2018 (the "End Disbursement Date"). The Bank shall only disburse funds deposited in the Trust Fund for the purposes of this Administration Agreement (other than returns to Donor) after such date to the extent such date is changed in accordance with amendments made to the Administration Agreement(s) of the Donor. Following the End Disbursement Date, the Bank shall return any remaining balance of the Trust Fund to the Donor in the Holding Currency in the manner specified in its respective Administration Agreement on a pro rata basis with regard to the total funds deposited in the Trust Fund by such Donor relative to the total funds deposited in the Trust Fund by the Donor, all calculated as Holding Currency amounts. 6.2 The Donor may cancel all or part of such Donor's pro rata share/contribution, and the Bank may cancel all or any Donor's pro rata share/contribution, upon three (3) months' prior written notice, of any Contributions (paid and not yet paid) that are not committed pursuant to any agreements entered into between the Bank and any consultants and/or other third parties for the purposes of this Administration Agreement, including any Grant Agreements, prior to the receipt of such notice. In the event of a cancellation, the Bank shall return to the Donor its pro rata share in the Holding Currency as specified in the Administration Agreement unless otherwise agreed between the Bank and the Donor. 7. Disclosure; Dispute Resolution 7.1 The Bank shall disclose the Administration Agreements and related information on this Trust Fund in accordance with the Bank's Policy on Access to Information. By entering into Administration Agreements, the Donor consents to such disclosure of their respective Administration Agreements and such related information. 7.2 The Donor and the Bank shall use their best efforts to amicably settle any dispute, controversy, or claim arising out of or relating to the Administration Agreements. 12 ANNEX 3 GOVERNANCE OF THE ACTIVITIES This Annex shall be applicable to and form an integral part of the Administration Agreement for the Trust Fund between the Bank and the Donor. The World Bank and the Directorate General for Employment, Social Affairs and Inclusion will consult each other regularly on the implementation of the Activities in accordance with the description of the Activities in Annex I of this Administration Agreement, including the indicative (and therefore non- binding) output timetable in said Annex. An Advisory Group will oversee and guide the technical aspects of the Activities described in Annex I of this Administration Agreement. The Advisory Group will include senior staff from Directorate General for Employment, Social Affairs and Inclusion, Directorate General for Regional and Urban Policy, Polish Ministry of Economic Development, and the World Bank. Payment ReQuests Requests for payments related to the activities set forth in Section 2.1 of Annex I to this Administration Agreement will be sent by the World Bank to the Commission with the reference CE-0872647/00-64 and shall be addressed to: Greffe Financier DG EMPL Directorate General.for Employment, Social Affairs and Inclusion European Commission B-1049 Brussels (Belgium) 13 ANNEX 4 INDICATIVE RESULTS INDICATORS Expected Results Indicators Baselines Result Sources of data Assumptions (logic of intervention) goals Impact EU support under 2014-20 Job creation, sales To be TBD Ex-post Improvements in project cycle delivers growth and income determined evaluation of program design higher impact per Euro. generation to direct by results the 2007-13 successfully translate beneficiaries per of ex-post cycle vs. ex- into more effective and Euro spent evaluation post evaluation efficient programs. of the of 2014-20 Better program 2007-13 cycle at its outcomes and impacts cycle under completion (not are achieved within data component part of this reporting timeframe. 2 of the intervention) project Outcome(s) National/subnational List of implemented 0 TBD Outputs below Willingness and authorities discuss the reforms capacity of counterparts outputs in order to take a to implement decision to implement recommendations recommendations to improve instrument mix, design, and delivery Output(s) Methodology to calculate Methodology report 0 1 N/A return to public delivered investments in research and innovation Ex-post evaluation of ESIF Evaluation report 0 1 N/A WBG team can arrange financial support for delivered timely access to GUS innovation in Poland firm-level data Tools to assess Pilot report delivered 0 1 N/A Government counterpart expenditures on research willingness to and innovation developed collaborate on and piloted assessment 14 reomnain ANNEX 5 INDICATIVE BUDGET Expenditure Category Amount in Euro Staff and consultant services 530.000 Cost of travel 175.000 Cost of training and workshop 75.000 Other services including translation 75.000 Sub-total 855.000 Administration fee (5%) 45.000 Total 900.000 The amount estimated for personnel is calculated taking into account different levels of expertise estimated to be required for carrying out the activities described in Annex 1. The World Bank Group entity may transfer amounts between categories of the indicative budget. This does not require an amendment of the Administration Agreement if the Action is carried out as described in the Annex 1. 15