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EUROPEAN COMMISSION

TWINNING FICHE

Support to the Department of Foreign Economic Cooperation and Investment Policy of the Ministry of Trade and Economic Development of the Republic of Armenia Support to the Ministry of Economy of the Republic of Armenia

Table of Contents

1 BASIC INFORMATION...... 2 1.1 Programme...... 2 1.2 Twinning Number...... 2 1.3 Title...... 2 1.4 Sector...... 2 1.5 Beneficiary Country...... 2 2 OBJECTIVES...... 2 2.1 Overall objective...... 2 2.2 Project purpose...... 2 2.3 Contribution to National Development Plan / Cooperation agreement / Association Agreement / Action Plan...... 2 3 DESCRIPTION...... 4 3.1 Background and justification...... 4 3.1.1 Project Background...... 4 3.1.2 Project justification...... 8 3.2 Linked activities...... 9 3.3 Results...... 10 3.4 Activities...... 12 3.4.0 General Activities...... 12 3.4.1 Component I: Development of a Policy and Institutional Framework for wider Regulatory Management (RM) Interventions...... 15 3.4.2 Component II: Development of Structures for the Implementation of the Standard Cost Model (SCM)...... 19 3.4.3 Component III: Institutional Capacity Building...... 22 3.4.4 Component IV: Completion of pilot SCM survey(s)...... 28 3.4.5 Component V: External Communication and Stakeholder Sensitisation...... 31 3.5 Means/Inputs from the Member State Partner Administration...... 32 3.5.1 Profile and tasks of the Project Leader (PL)...... 32 3.5.2 Profile and tasks of the Resident Twinning Advisor (RTA)...... 33 3.5.3 Profile and tasks of the Short-term experts...... 35 4. Institutional Framework...... 37 4.1 Armenian Project Leader...... 37 4.2 RTA Counterpart...... 37 4.3 Project Steering Committee (PSC)...... 38 5. Budget...... 38 6. Implementing Arrangements...... 38 6.1 Implementing Agency...... 38 6.2 Main counterpart in the Beneficiary Country...... 39 6.3 Contracts...... 39 7. IMPLEMENTATION SCHEDULE (INDICATIVE)...... 39 7.1 Launching of the call for proposals...... 39 7.2 Start of project activities...... 40 7.3 Project completion...... 40 ii Support to the Ministry of Economy of the Republic of Armenia

7.4 Action’s implementation period...... 40 8. SUSTAINABILITY ISSUES...... 40 9. CROSSCUTTING ISSUES...... 40 10. CONDITIONALITY AND SEQUENCING...... 40 10.1 Risks and Assumptions...... 40 10.2 Sequencing...... 41 ANNEXES TO PROJECT FICHE...... 42 Annex I: Logical Framework Matrix for the Twinning Project...... 42 Annex II: Implementation – Gantt chart...... 42 Annex III: Acronyms and Abbreviations...... 42 Annex IV: Draft Law on Regulatory Impact Assessment (Unofficial Translation.)...... 42 Annex I: LOGICAL FRAMEWORK – Support to the Department of Foreign Economic Cooperation and Investment Policy of the Ministry of Economy of the Republic of Armenia for the Development of a Twinning Fiche...... 43 Annex III: Acronyms and Abbreviations...... 52

iii STANDARD TWINNING PROJECT FICHE

1 BASIC INFORMATION

1.1 Programme: National ENP Action Programme 2007

1.2 Twinning Number: AM08/ENP-PCA/TR01

1.3 Title: “Support to the Department of Foreign Economic Cooperation and Investment Policy of the Ministry of Economy of the Republic of Armenia”

1.4 Sector: Economic

1.5 Beneficiary Country: The Republic of Armenia

2 OBJECTIVES

2.1 Overall objective

The overall objective of the proposed Twinning project is the strengthening of the regulatory and business environment in Armenia.

2.2 Project purpose

The Specific Objective of the proposed Twinning Project is the successful introduction in Armenia of a regulatory management programme to be developed, using the Standard Cost Model (SCM) methodology as one tool to develop simplified and transparent administrative practices lessening administrative burdens in order to increase attractiveness of Armenia for investors. This will be achieved through the implementation of Five (5) components:

 Development of a Policy and Institutional Framework for improved Regulatory Management Interventions (Component One);  Development of Structures for the Implementation of SCM (Component Two);  Institutional Capacity Building (Component Three);  Completion of one or more pilot SCM surveys (Component Four);  External Communication and Stakeholder Sensitization (Component Five).

2.3 Contribution to National Development Plan, PCA and ENP Action Plan As a response to the new geopolitical situation following its enlargement in May 2004, the European Union (EU) has adopted a new framework for relations with its neighbours, the European Neighbourhood Policy (ENP). The ENP aims to go beyond the existing Partnership and Co-operation Agreements (PCA) to offer neighbouring countries the prospect of an increasingly closer relationship with the EU with the overall goal of fostering the political and

Page 2 economic reform processes, promoting closer economic integration as well as legal and technical approximation and sustainable development. The central element of the ENP is a bilateral Action Plan which clearly sets out policy targets and benchmarks. The ENP Action Plan (ENP-AP) for Armenia was signed in November 2006.

With respect to the ENP-AP, the proposed Twinning will be directly relevant to Priority area 4: Further improvement of investment climate and strengthening of private sector-led growth. The following actions are relevant:

- Develop and implement a comprehensive programme to improve the business climate, in particular by improving the conditions to starting a business, hiring and firing workers, registering property, getting credit, protecting investors, enforcing contracts and closing a business;

- Continue the modernisation and simplification of the tax administration in order to simplify the tax system, to improve coherence and reliability of the system and to reduce corruption risks and shadow economy.

- Set up a mechanism to ensure regular consultation/information of the trade community on import and export regulations and procedures;

Based on the ENP Action Plan, the National Indicative Programme (NIP) 2007-2010 for Armenia highlights Priority Area 2: Support for Regulatory Reform and Administrative Capacity Building, will be directly relevant, especially the importance of further supporting the process of regulatory reform and administrative capacity building in Armenia. It suggests in particular to further develop and implement a comprehensive programme to improve the business climate, notably through the improvement of the conditions to start a business, hire and fire workers, register property, get credit, protect investors, enforce contracts and close a business. In addition, Priority Area 1: Strengthening of Democratic Structures and Good Governance, especially Sub- priority 2: Public administration reform, including local self Government / public finance management / public internal financial control and external audit / fight against corruption, will also be impacted by this Twinning. On the completion of this Twinning and on implementation of SCM, it is anticipated that quality and efficiency of services provided by public administrations will be enhanced, that more trust in administrative bodies and decisions will emerge, and that more efficient administrative procedures will be implemented by the Government of Armenia so as to reduce risks of corruption.

Page 3 3 DESCRIPTION

3.1 Background and justification

3.1.1 Project Background

3.1.1.1 Strategic Framework

Armenia faces a set of challenges fairly similar to other countries in the post-Soviet world in the realm of crafting legislation that this beneficial to society, while not being unduly burdensome to society, while deciding what to do with pre-existing Soviet standards and regulations (still only available in the Russian language in many cases) which in many areas of norms and standards still remain in force. In general, the public is neither properly informed, nor completely understands the existing regulatory framework, and again there is no effective regulatory management programme to provide clarification or rationality.

Excessive regulation of uncertain applicability creates a fertile environment for corruption. While most Government servants are well-meaning, there also exist predatory practices whereby an inspector will accuse a business or individual of violating a standard that may or may not exist. With the average person not in a position to understand the true nature of the regulation, regrettably it may be easier to make a facilitation payment in order to make ”the problem go away”. On the other hand, the Government has not measured the true value of its services (some of which may have been initially based on older scales or imposed in time of crisis with little regard to their real value to business or individuals). The Government would like to have a better idea of what its own services truly cost it to offer and provide, and what the business community and individuals would be prepared to pay for such services.

Neither has the Government assessed the impact of pre-independence-era administrative measures which may in some cases be duplicative, or no longer necessary in the world of 2008, although still remaining (at least arguably) on the books. Businesses may, in some cases, be more concerned about reducing the burdens than about direct costs (such as fees), and might be willing to pay more for services if unnecessary burdens (which may be ultimately much more costly) and indiscriminately imposed regulation could be eliminated. Unduly heavy regulations creates hidden costs for the Government as well, for example, if a Government is requiring that a given certificate is provided to it at three different stages of a process, there are obviously duplicative costs in gathering, examining, and storing the same information several times. For the Government to raise its fees on certain services, it must have an idea of what the administrative burdens and other costs are to business of meeting what may be excessive requirements. If some of the requirements may be softened or lifted, i.e., in case of excess or duplicate requirements, it may be in the interest of Government and business both to reduce those burdens while raising certain fees.

3.1.1.2 Institutionalising a Regulatory Management Programme

Page 4 All relevant literature is quite consistent in the fact that each country should have a Regulatory Management (RM) programme. Armenia is no exception. An RM programme must be institutionalised in a sustainable form that will survive the conclusion of this Twinning Project. Armenia is currently reviewing new regulation for effects on elements indicated in Section 3.4.1 below, and desires to increase measurement of administrative burdens as well. As is the case with the SCM structures below, the institutionalisation of the RM programme must be grounded in appropriate authority, (i) in terms of law and regulation establishing such, and (ii) in terms of the level of Government that serves as its administrative foundation.

Simplification

With respect to SCM implementation, as part of that RM programme, the ultimate objective of the SCM process is simplification. Normally SCM implementation relies upon an energetic mix of:

• Deregulation – removing regulations from the statute book, leading to greater liberalisation of previously regulated regimes; • Consolidation – bringing together different regulations into a more manageable form and restating the law more clearly; • Rationalisation – using “horizontal” legislation to replace a variety of sector specific “vertical” regulations and resolving overlapping or inconsistent regulations; • Administrative burdens reductions (administrative simplification) – reducing the length of forms, increasing the intervals between information requests, sharing data, etc.1

With respect to the implementation of SCM in Armenia, the International Standard Cost Manual outlines a number of stakeholders who are normally involved in the process. In as much as SCM can be seen as a Government driven process, it in fact involves a much broader base of constituents. SCM methodology emphasises the involvement of stakeholders. As set out in the OECD International Standard Cost Manual, these include:

Practitioners in the businesses: The practitioners in the various businesses who, in the course of their daily work, have developed expert knowledge on how their business deals with the various administrative obligations. They are therefore able to contribute with crucial information regarding the extent of the administrative costs as these relate to the business environment. It is these persons who constitute the target group for the business interviews that are conducted in conjunction with the SCM survey (pilot survey).

Professional bodies/industrial organisations: In addition to involving businesses, it is important to involve their professional organisations in the process, as they also possess a broad knowledge of how their member businesses deal with administrative obligations.

Professional experts: Professional experts with in-depth knowledge as to the sector that is the subject of a Standard Cost Model measurement would be relevant. Experts can also work to see that the defined cost parameters are as true and fair as possible. 1 Adapted from International Standard Cost Manual -- Measuring and reducing administrative burdens for businesses (OECD, 2008), p. 48.

Page 5 Government departments: Relevant Government departments are a necessary resource in the Standard Cost Model measurement, as it is the departments that possess the detailed knowledge of the structure of the rules. It is therefore vital to involve relevant Government departments in the different phases of the measurement, e.g. in connection with validation of the legislation, the breakdown of it, the bringing to light of populations affected by them and the frequencies that obligations occur, as well as in connection with the identification of relevant “segmentation” variables.2

Notably, consultants are also typically involved in any substantial SCM effort, but they must be regarded as playing roles supplementary to the foregoing and not as replacements for the other stakeholders, who must remain actively engaged, particularly Government stakeholders.

3.1.1.3 SCM Structures: SCM-Coordination Unit and the SCM-Monitoring Group

As part of institutionalising a sustainable regulatory management programme to be further explicated in the Twinning’s work plan, the core structure in the implementation of Standard Cost Model is the SCM Coordination Unit (SCM-CU). Obviously, a great deal of coordination is required to keep a diverse group of stakeholders, with potentially divergent interests, working together in a rational manner on a targeted effort. A SCM Coordination Unit (SCM-CU), normally housed within the Government, is required for this purpose under SCM principles. From a regulatory perspective, the SCM-CU must be housed at the proper level and position in Government to discharge its multifaceted duties as an effective tool in implementing a regulatory management programme. Commentators have suggested that the Prime Minister’s office or the Ministry of Finance in a given country may be the right level to support a regulatory management programme. In any case, it should take no great leap of imagination to suppose how rapidly an SCM effort would go off track if there were no SCM-CU or if it were not properly established, empowered, or positioned. So the creation of a SCM-CU in a country newly introducing SCM will involve considerable regulatory thoughtfulness and care (and possibly expense). The SCM-CU also serves as the centre (within the context of a national regulatory management programme) for answering questions regarding methodology, day-to-day cooperation with the consultants and departments, other stakeholders and importantly, for SCM budgets.

SCM involves a large effort particularly to the extent it is a tool within a sustainable regulatory management programme. Accordingly, apart from the SCM-CU is also recommended that a SCM-Monitoring Group be established consisting of representatives from the relevant Government line ministries, academia, business associations and individual businesses. The monitoring group serves as a useful check on operations, and accordingly, has to follow and continuously validate the results of the measurement(s). The SCM Monitoring Group, is a permanent structure which will exist after the completion of the Twinning project, and therefore significant effort and time should be invested to ensure sufficiently high level representation of stakeholders (Government as lead (representing a number of ministries and state bodies as

2 Adapted from Standard Cost Manual -- Measuring and reducing administrative burdens for businesses (OECD, 2008), p. 14 Page 6 appropriate), Business Community, Academia, Civil Society, and other relevant bodies). As a focus of SCM implementation will be local and international investors, a representative body of investors may also be included.

3.1.1.4 The Pilot Survey(s)

One of the most important components in the implementation of the broader SCM implementation process is the implementation of one or more pilot SCM measurement(s). In the course of such surveying, the Government would normally select perhaps 2-5 regulations it would wish to simplify in text and/or in practice, perhaps accepting the leadership of the Ministry of Economy, which has emphasised ”quick wins” (fairly simple regulations to initially rationalise? obvious targets?). Once the SCM Coordination Unit and the Monitoring Unit are established with full stakeholder involvement, the SCM Coordination Unit would announce the regulations to be examined, and apply SCM rules to having staff and stakeholders “break the regulations down” into individual obligations (often called ”information obligations.” Under the SCM Coordination Unit's leadership and with oversight and validation by the SCM-Monitoring Group, a survey would be meticulously prepared with full stakeholder participation to ask businesses what their costs were in complying with each such obligation (e.g.: time waiting in line, time going to see a Government official, subsequent visits are calculated under SCM rules as costs.) These surveys are normally completed by phone. The RTA and/or Short-Term Experts allocated in the context of the Twinning should preferably participate, and indeed would be optimal.

Surveying would typically be supplemented by having the same questionnaire being answered by expert panels who would do their own approximation (this way, one need not obligatorily poll every affected business in the country (or even all those amounting to a recognised statistical sample), and in addition one gets the benefit of expert views. Accordingly, the results are not statistically robust, but informative and indicative (and the effort is thus more affordable). One extrapolates these results, obligation by obligation, to the national level, multiplying the results by the number of affected businesses. By doing this, one gets an approximation of the true costs; obligation by obligation. And by completing this analysis, the stakeholder teams working with the Government develop recommendations for simplification. The simplified regulations benefit both Government and business (as well as the broader civil society matrix) by eliminating wasteful and cumbersome administrative burdens. If business has fewer inspections (compliance meetings, etc.) and develops more efficient interaction with Government, Government also spends less staff time on unneeded activities. Importantly, based on simplification flowing from the outcome of the survey(s), the partner country (in this case Armenia) should take due credit for these improvements and begin to develop a better reputation as a business-friendly environment, thus gaining positive attention from investors.

Due to the fact that SCM implementation in general will be conducted in an integrated manner, the role of the line ministries and other representative bodies must be stressed. Although the SCM-CU is the centralised coordinating structure, individual Governmental structures and line ministries must play an important role in the wider implementation. For this reason, it is imperative that the SCM-CU engages all relevant Governmental and non-Governmental structures as early as possible. The RTA will advise the Department of Foreign Economic

Page 7 Cooperation of the Ministry of Economy on these issues and make recommendations on decentralised structures.

3.1.1.5 Overall Context of SCM in the Armenian Context

The Government of the Republic of Armenia has been genuinely committed to further improvement of the business environment for local and for foreign investors since the signature of the PCA in 1996. While efforts are already underway to measure elements indicated in Section 3.4.1 below, these must be strengthened and institutionalised as a proper regulatory management programme. The Standard Cost Model (SCM) is today the most widely applied methodology for assessing business environment through the measurement of administrative costs borne by the business community as the result of the legislation and administrative requirements imposed by state administrations. The introduction of the SCM methodology in Armenia via the Department of Foreign Economic Cooperation of the Ministry of Economy would highly support the Government of Armenia in gauging the administrative costs of its policies.

3.1.2 Project justification

With the above considerations in mind, the Government of Armenia has moved to introduce concepts of Regulatory Impact Assessment (RIA) as a proposed amendment to its Law “On Legal Acts.” These amendments have been before the National Assembly, and they may form the initial stages of an effort to rationalise the non-transparent nature of the current regulatory environment. RIA is a broad topic and involves numerous considerations such as standards, regulatory environment, and safety/standards. The proposed amendment to the Law “On Legal Acts” currently before parliament does not focus in particular on reduction of administrative burdens. Meanwhile, it is indeed reducing administrative burdens that the Government is most centrally focused upon for SCM, and for this more specific purpose, the Government has sought tools to measure administrative burdens (as an initial step on the path toward reducing them).

The Government of Armenia is committed to implementing Standard Cost Model as a mean of examining, measuring, rationalising, and reducing administrative burdens. The GoA views the reduction of administrative burdens by application of the Standard Cost Model as a high-priority initiative in rationalising the business environment and increasing the transparency in the provision of services to its citizenry. As a sign of the Ministry of Economy’s commitment to reducing administrative burdens, the Deputy Minister of Economy, Vahe Danielyan, has agreed to be the Project Manager for the proposed SCM Twinning Project. The Ministry of Economy is indeed highly motivated to this end and the Deputy Prime Minister is also a strong advocate of simplification of regulatory systems via SCM. Accordingly, the Government seeks Twinning assistance (and perhaps other EC support) in introducing SCM. They are aware that an SCM Coordination Unit (SCM-CU) of whatever design would need to be established at a sufficient level in Government and with sufficient authority to support SCM implementation and subsequent operations and they are sensitive to the creation of a regulatory management programme. One of the attractive elements of SCM, of course, is the stakeholder participation normally required to support a SCM-CU. As noted above, an SCM-CU involving not only Government staff, but also representatives of the business community, NGOs, experts, and other Page 8 relevant institutions, would be a new direction for the Government. In order to capitalise on current enthusiasm, it is highly recommended to move quickly to establish a SCM-CU in order to organise a pilot programme. In addition, it would be optimal to select an activity or pilot sector to commence a pilot implementation that would create rapid and positive results that could be then publicised in order to generate further momentum for multi-stakeholder simplification efforts such as SCM.

Once again, for the moment, enthusiasm is high (at least in parts of the Government – senior officials are hoping for (a) quick wins, and (b) the development of a longer-term strategy). Even in case the Government should later vacillate, however, the creation of a properly empowered SCM-CU and regulatory management programme at the right level of Government could give rise to notable regulatory simplification efforts (which are much needed), even apart from a potential comprehensive SCM effort. Accordingly, there would be value in moving quickly to take advantage of the current opportunity to provide Twinning assistance which is so eagerly sought.

3.2 Linked activities In late 1999, at the request of the Ministry of Trade and Economic Development of the Republic of Armenia, the WB’s and IFC joint facility Foreign Investment Advisory Service (FIAS) carried out a study of Administrative Barriers to Investment. The main objective of this study was to review and assess the existing business environment of Armenia from the perspective of potential investors. Based on the findings of the study, recommendations were made to improve the existing legal and administrative framework in a number of areas, combined with comprehensive suggestions to enhance institutional capacity as well. In 2003, the GoA requested assistance from the WB and FIAS to carry out a full self-assessment update of the Administrative Barriers to Investment Study. The study examined key administrative procedures, including start-up procedures, locating procedures, operational procedures. The Study served as a comprehensive guide to investment procedures, providing step-by-step details of all the application requirements an investor must fulfil to become fully operational. The study also provided detailed analysis of how these procedures are carried out and recommendations for improvement. The aim of the project was also to build-up internal capacities within the Department of Foreign Economic Cooperation and Investment Policy of the Ministry of Economy of Armenia for farther self-assessment studies. The currently ongoing Government programme actions involve the recommendations, which were made during the project implemented by FIAS. The Annual Administrative and Regulatory Cost Survey, conducted jointly on an annual basis between the Government of Armenia and the World Bank Group, will additionally provide guidance and background for the implementation of this SCM Twinning Project. The aim of this survey is to assess, on an annual basis, the state of the business environment, with respect to administrative costs and the regulatory environment and is therefore directly relevant to this Twinning. In addition the Article 4 analysis, conducted on an annual basis by the International Monetary Fund (IMF) will provide invaluable background on the wider economic and business environment, as well as the progress of the Government of Armenia in the implementation of their reform agenda, particularly as this relates of the Twinning Project.

Page 9 The World Bank also implemented a project from 2002 to 2005 entitled “Foreign Investment and Export Facilitation” project. One of the core outcomes of this project is the strengthening of the Armenian Development Agency. This Agency should provide, significant conceptual supports for the Twinning project, and it is therefore advised that the RTA meet with this body early in his/her tenure. One of the important structures resident in the Agency, is the Secretariat to the “High Business Council”, which represents a High Level structure involved in the creation of an enabling environment to support business and investment development, additionally this structure will be an important partner in the implementation of the Twinning. While this project has been completed, a second phase of this project is planned, and funding has been secured from international donors. This project will be strongly complementary, and will form another support for the implementation of the Twinning.

The IFC also has created a “Doing Business” product, which will be very helpful in measuring business sector indicators, and the impact of certain areas on the wider business and regulatory environment. Finally, the EU funded Armenian-European Policy and Legal Advice Project (AEPLAC) has made significant positive impact on the wider legislative and regulatory reform environment in Armenia, and therefore should be consulted in the context of Twinning Project development and implementation.

Due to the extensive business environment interventions of various donors, which are by their nature highly interdependent, it would be highly desirable that the RTA engage in donor coordination efforts, to ensure the implementation of SCM fits seamlessly into other interventions would be important.

Government advisors also suggested training in Regulatory Impact Analysis and/or SCM in the period before the RTA is deployed. We regard this as a sensible set of positions, provided that some funding mechanism whether internal or external to the actual Twinning can be identified.

3.3 Results

This project will lead to the tangible results distributed within the following five (5) main components:

Component I: Development of a Policy and Institutional Framework for Improved Regulatory Management Interventions

(1) Concept paper for Government outlining pre-conditions and necessary actions to be undertaken in the implementation of a regulatory management system;

(2) Framework Vision for Twinning project development in the wider context of a comprehensive regulatory management programme;

(3) A review of existing and normative acts and concrete recommendations in order to determine which legal norm(s) need to be amended to institutionalise a regulatory management programme, establish a SCM Coordination Unit, and otherwise provide an enabling environment for the establishment of SCM as an authoritative set of procedures under a wider regulatory management programme in Armenia. Page 10 Component II: Development of Structures for Implementation of Standard Cost Model (SCM)

(1) A proposal for a structured and integrated plan for the implementation of SCM in Armenia with the establishment of a new regulatory management programme that is line with EU best practice is presented to competent ministries and authorities focusing on Standard Cost Model (SCM);

(2) Establishment of a regulatory management programme, through creating a SCM-CU structure responsible for the implementation of SCM in Armenia and also an SCM Monitoring Group (normally both of these structures have representation from the business community, Academia, NGOs, experts in addition to Government staff);

(3) International participation of the Ministry of Economy and other relevant bodies (SCM- CU) in International and European structures and networks involved in SCM and Regulatory Management implementation.

Component III: Institutional Capacity Building

(1) A Human Resources Development (HRD) plan (including a Training Needs Analysis (TNA)) outlining the technical and human resources requirements to implement SCM in Armenia and staff a SCM Coordination Unit;

(2) Implementation of a Human Resources capacity development programme, involving multi-level training, a train-the trainer programme, study tours, and possible work placements culminating in the creation of sufficient institutional capacity to implement the SCM programme envisaged;

(3) Ministry of Economy's institutional and technical capacity, with particular emphasis on SCM, is enhanced to a significant degree to effectively implement a regulatory management programme and, in particular, SCM in Armenia.

Component IV: Completion of Pilot SCM survey(s)

(1) Identification, with strong input from Government of Armenia of 2-5 regulations that should form the basis of a pilot SCM effort;

(2) Identification and implementation of relevant training for the implementation of a statistical software package to support the implementation of pilot SCM survey(s);

(3) Implementation of a first pilot SCM survey, complete to the point of regulatory recommendations;

(4) Presentation of the findings of the first pilot SCM survey to all stakeholders in a national conference;

Page 11 (5) Institutional capacity to extend SCM to other regulations exists and process of institutional replication commences.

Component V: External Communication and Stakeholder Sensitisation

1. An external communication plan is prepared and implemented, paving the way to the institutionalisation of a sustainable communication mechanism within the GoA and wider stakeholders with respect to SCM;

2. Effective awareness raising of stakeholders on matters related to the regulatory management programme, SCM and the impact of regulation on Government services in the context of EU best practice;

3. Enhancement of the SCM-CU, Ministry of Economy and indeed the GoA’s image, as a client/stakeholder friendly and representative structure.

3.4 Activities

This section outlines a number of linked and complementary activities which should be implemented during this Twinning project. The focus of all activities and the main recipient of most of the support envisaged in this Twinning will be the structures and staff directly working on the regulatory management programme and SCM in Armenia, primarily in the Ministry of Economy. As a first step in this Twinning project, the development of a comprehensive concept paper, which will frame all future activities and set them into a wider Regulatory Management context will be very important. As these concepts are new for most civil servants in Armenia, capacity development entails capacity building, and a number of trainings, study tours, work placements and programmes are envisaged to assist in this area. The development of clear and durable structures must be stressed, as is continued political support. Both are critical from a sustainability point of view. Therefore, significant actions are outlined in this fiche to assist the GoA in the development of a comprehensive concept paper, develop wider strategies and HRD plans. A Study Tour (targeted at key relevant senior Staff of the GoA) to promote wider sensitisation and understanding will be important, and will be implemented in the course of the project.

3.4.0 General Activities

In addition to the activities outlined in the five (5) main components listed below, the project will organise three additional general activities in order to complete administrative requirements of Twinning (Twinning Work Plan), ensure a sufficient visibility of the project and promote sustainability of the projects objectives. This involves the development of a Twinning work plan, a kick-off meeting to inform stakeholders of the projects objectives and to promote wider stakeholder involvement and a discussion of the projects accomplishments towards the end of project completion (closing conference). Furthermore, to ensure effective engagement of stakeholders, as well as project management and monitoring efforts related to the project implementation, regular meetings of the Steering Committee will be organised.

Activity 3.4.0.1 Kick Off Meeting and Project Establishment Page 12 The first month of the project will be used to allow the installation of the Resident Twinning Adviser (RTA). The RTA will initially focus on:

- Establishing an office in the Ministry of Economy; - Introductions and discussions with relevant counterparts, the EC Delegation, relevant counterpart ministries and organisations, and other individuals and organisations as determined in discussions with the Beneficiary (Ministry of Economy); - Organise staff requirements (RTA Assistant and Translator/Interpreter);

A one-day kick off meeting will be organised in the first month focused on launching the project to Stakeholders, the media, and wider civil society. In order to ensure effective information exchange from the start of the project, the kick off meeting will conclude with a press conference and a press release, jointly arranged with the Beneficiary and the EC Delegation. As is the case with kick off meetings, broad and active a participation of Stakeholders would be optimal, to promote ownership and support future project activities and the work of the RTA. In order to stress the importance of the project, representatives of both the Presidential Administration and the Prime Minister’s office, key Ministers, Head of the EC Delegation, EU Presidency (Ambassador of rotating EU Presidency), other EU Member State Ambassadors, representatives of the business community, parliament and civil society should also be invited.

Resources and Benchmarks: MS Staff: RTA, Project Leader (PL) BC Staff: RTA Counterpart, BC Project Leader Administrative Requirements: Offices (provide by the beneficiary) for the RTA, RTA Assistant and interpreter/translator3, including sufficient space to host short term experts (STE), and access to a conference/meeting room. Beneficiary to provide conference venue, catering and budget to host kick-off meeting at an appropriate location. Other Resources: Interpretation, translation and documentation Location and Duration: Yerevan, One Day Timeframe: End Month One Additional Info: Press kits/releases press conference Benchmarks: Stakeholders, media and civil society informed about the project and objectives by start of Month Two (2)

Activity 3.4.0.2 Closing Conference

3 Due to the nature of this Twinning Project, and understanding the volume of translations and interpretation which will be required during the tenure of the project, a full time translator is recommended. This represents a cost effective way to support the RTA in his/her activities, and due to the specific nature of SCM implementation, would promote an understanding / competence in the translator of the terminology and nature specific to SCM. Relying on translation and interpretation on an ‘as required’ basis might be counterproductive, and require the RTA to repetitively explain the concepts and framework of SCM, potentially leading to misunderstandings and mis- translation of material. Page 13 During the final month of the Twinning project implementation period (End Month 24), a closing conference will be held. At this conference, the accomplishments and successes will be discussed, in addition to the challenges that were faced during the course of the project. Recommendations for next steps and follow-on actions will be made at this time, to derive additional support from all main stakeholders for future developments and to support sustainability.

Resources and Benchmarks: MS Staff: RTA, Project Leader (PL), STE (as required) BC Staff: RTA Counterpart, BC Project Leader Administrative Requirements: Beneficiary to provide conference venue, catering and budget to host closing conference an appropriate location. Other Resources: Interpretation, translation and documentation Location and Duration: Yerevan, Two Days Timeframe: End Month Twenty Four (24) Additional Info: Press kits/releases press conference Benchmarks: Recommendations and Lessons Learned formulated and discussed.

Institutional support for the ‘next steps’ attained and project’s findings and outputs sustainable.

3.4.1 Component I: Development of a Policy and Institutional Framework for wider Regulatory Management (RM) Interventions

The Government of Armenia is embarking on a comprehensive regulatory management programme which will impact on most components of Governmental structures and services in the coming months/years. As part of this process, the GoA (led jointly by the Ministry of Economy and the Ministry of Justice) is determined to measure the impact of each new regulation with respect to six (6) fundamental elements:

 SMEs;  Social aspects;  Economic growth;  The Environment;  Competition policy;  Corruption risks.

In terms of administrative burdens associated with these fundamental elements, the Government is therefore eager to establish a strong conceptual framework for SCM implementation in the wider regulatory management programme that is currently being developed (and which requires substantial institutional strengthening). The Government sees this Twinning project as an important part of this process. As a main output of this component, the Ministry of Economy has requested that a concept paper be drafted, to serve as a roadmap for Regulatory Management programme interventions, with a focus on long term sustainability. This concept paper would include a set of RM benchmarks and checklists and allow the RTA (supported by short term

Page 14 experts) to establish a functional and sustainable framework for both the project and wider RM developments. It is anticipated that the concept paper would be adopted by Government, and the GoA’s wider RM intervention could use this paper as guidance to promote "synchronisation". Sustainability is key. The concept paper could also be used to focus other donor efforts (sector interventions) and harmonise/focus the various donor sector interventions in the broad regulatory management area. Due to the sensitivity and significance of the concept paper, considerable effort should be made to do this work at a high level of professionalism while building ownership as to the text with key stakeholders before finalizing. The process should take approximately three-six months to complete, with a well-developed draft approved by the Government after three months in order for activities to be effectively launched.

To specifically develop the wider policy and institutional framework a series of activities are enumerated, and include:

Activity 3.4.1.1 Assist the GoA to develop a Concept Paper (focusing on pre-conditions and necessary actions to be undertaken by the GoA to structure a sound regulatory management programme), including a review of legislation and normative acts.

While determining the legislative framework (including secondary legislation) and normative acts relevant to the implementation of SCM in the context of the wider RM programme is very important, the production of a concept paper is critical to provide the conceptual framework and frame SCM interventions within the wider Regulatory Management programme of the GoA. The concept paper should focus on the preconditions and necessary actions to be undertaken by Government to structure a sound regulatory management system (incorporating SCM) and include a list of the measures that will be needed to be implemented by Government. Although the Government will be formally involved in this drafting, it would still be best to require at least two rounds of written comments from the Government before finalising, consideration of seeking outside input as well, and preferably the formation of a relevant working group to build consensus and ownership. The Twinning team may be involved subsequently in working with the Government to support them in making this into the effective Roadmap that it is intended to become.

The conference (Activity 3.4.1.2) and the study tour (Activity 3.4.1.3) outlined in this component will greatly assist GoA to develop a cohesive framework vision for the wider project development and implementation of RM and SCM.

Familiarisation of the RTA with relevant legislation and normative acts defining the current regulatory environment, particularly as this relates to the targeted pilot sector(s), will be important. While most of the relevant legislative and normative acts will be in Armenian, translations will be required. Due to the amount of translations required in the context of this Twinning project compounded by the specific nature of legal/normative adaptation and SCM, a full time Translator / Interpreter would be highly beneficial and cost effective.

Resources and Benchmarks: MS Staff: RTA, STE’s (legal and strategy), Translator/Interpreter BC Staff: RTA Counterpart, Page 15 Administrative Requirements: Translation of relevant legislation (including secondary legislation) and normative acts relevant to SCM implementation. Other Resources: Interpretation, translation and documentation Location and Duration: Ministry of Economy, On-going Activity although initial review should be complete by end Month Seven (7) – Six (6) Months Timeframe: To commence in Month Two (2) concurrent with Activity 3.4.2.1 Additional Info: Concept paper should be developed in particularly close cooperation with both the Ministry of Economy and the Ministry of Justice and with their direct involvement and contributions. Review of relevant legislation should initially focus on the selected pilot sector, which will be selected with the beneficiary early in the project. Benchmarks: Significant participation of civil servants in the process of implementing SCM in the wider regulatory environment in Armenia;

Concept paper outlining the preconditions and necessary actions to be undertaken by Government to structure a sound regulatory management system including the adaptation of legislation, normative acts and regulatory environment;

Recommendations on adaptation of key legislative (including secondary legislation) and normative acts which provide the requisite enabling environment for the implementation SCM in Armenia.

Activity 3.4.1.2 Organise an International Conference on "The Impact of Regulation on Armenian Trade and Industry" highlighting EU Member State best practice experiences.

On completion of the concept paper (or as part of the process), the RTA (supported by four STE speakers with significant experience in different RM and SCM modalities) will organise an international conference to discuss the wider implementation of RM / SCM by the Government of Armenia, introduce the regulatory management programme, launch the concept of SCM and present a broad representation of MS SCM models and experiences. The conference should be a two/three-day event and involve the participation of other MS administrations which have introduced well-developed regulatory management programmes, implemented SCM and possibly MS administrations which are currently in the process of implementing SCM. In-depth technical knowledge on the part of the main presenters will be critically important. The participants should preferably include a broad representation of participants at an appropriate level to advance support for the processes to come during the course of the project. These participants should include: Presidential Administration and the Prime Minister’s office, key Page 16 Deputy Ministers, Head of the EC Delegation, EU Member State Ambassadors, representatives of the business community, parliament and civil society. Participation of the RTA’s respective administrative structure (Project Leader and other high level experts/management) is optimal, and for this reason the conference is recommended to coincide with the Steering Committee meeting. This conference will be important to reaffirm backing for the implementation of SCM and the implementation of activities related to the creation of concrete structures (SCM Coordination Unit) and the implementation of SCM analysis (commencing with SCM pilot survey(s)). To enhance ownership and optimise understanding, a study tour to the RTA’s MS administration should be organised shortly after this conference and involve functional yet high level Government functionaries (Deputy Ministerial rank for instance) – see activity 3.4.1.3. An additional study tour of selected SCM-CU staff and key operational functionaries will be organised for later in the project – see activity 3.4.3.3.

Resources and Benchmarks: MS Staff: RTA, Project Leader (PL), STE(s) (SCM Modality) BC Staff: RTA Counterpart, BC Project Leader Administrative Requirements: Beneficiary to supply conference venue, catering, simultaneous translation, conference materials Other Resources: Interpretation, translation and documentation Location and Duration: Venue to be determined (suggested, Three (3) Days) Timeframe: Month Four (4) Additional Info: Benchmarks: Completion of an International Conference;

Significant support for the implementation of SCM as part of a regulatory management programme for the donor community, GoA, line ministries, business community and civil society;

Significant understanding by the GoA of the different RM models utilised by EU MS in the implementation of SCM (including line ministries, academia, business community, donors and civil society.

Activity 3.4.1.3 Study Tour to examine the structure and role of EU Member State regulatory agencies/structures in the implementation of SCM as a component of a RM programme

To provide firsthand experience on the mechanisms and procedures involved in the implementation of SCM within the context of a broader regulatory management programme, it is desirable that key individuals involved in the management of the SCM in Armenia travel to a MS administration to see SCM operating in practice. The target participants, should be high level Governmental officials, who will be directly involved in the implementation of this Regulatory Management programme and SCM. The focus is for champions of the process to gain a clear understanding of the importance of a RM programme and SCM and to solidify support for its implementation in Armenia.

Page 17 The RTA will therefore complete a preliminary analysis on the structure and role of EU Member State regulatory agencies/structures in at least two (2) but optimally three (3) Member States and organise a study visit for a high level delegation and management of the SCM Coordination Unit. The following issues should be addressed:

- The implementation of Regulatory Management and SCM activities within the framework streamlining administrative procedures, - European MS procedures and methods for regulatory assessment bodies, as well as, - Stakeholder (Business organisations, relevant civil society bodies) experiences and participation in SCM implementation in the MS country.

Resources and Benchmarks: MS Staff: RTA BC Staff: RTA Counterpart, BC Project Leader Administrative Requirements: Four (4) round trip air tickets (Armenia – EU MS); Four (4) round trip air tickets (EU MS – EU MS); 4 x 8 average EU Per diem; Other Resources: Interpretation, translation and documentation Location and Duration: Ministry of Economy, Eight (8) days Timeframe: Month Four (4), after the completion of the International Conference (see Activity 3.4.1.2) Additional Info: Benchmarks: Study tour to two (2) or three (3) member state bodies responsible for the implementation of Regulatory Management Programme utilising Standard Cost Model;

Sufficient high level support and awareness of the benefits of RM and SCM in the Armenian context.

3.4.2 Component II: Development of Structures for the Implementation of the Standard Cost Model (SCM)

The main task of this component is to briefly review/verify the Armenian regulatory environment, establish the requirements for the implementation of SCM in Armenia as part of a regulatory management programme to be developed for the country and to propose a plan of action that will see the necessary structures established and the requisite implementation plan developed. Based on the completion of the concept paper and the review of the regulatory environment (including the relevant legislative, normative acts and regulations) completed in Component One (1), the RTA (with the assistance of targeted STEs) will be in a strong position to propose SCM structures, the adaptation of any legislative and normative acts, and be able to present, based on past EU MS experience, the time frame and sequence in which SCM might be initially implemented.

To assist in these wider objectives, as series of activities are enumerated, and include:

Page 18 Activity 3.4.2.1 Verification of the current regulatory environment in Armenia, relevant organisational structure and management practices of the Ministry of Economy

Verify aspects of the current regulatory environment and current mechanisms by which regulation is drafted, published, and implemented. To support the RTA in these activities, he/she will be supported by STEs, although a majority of the work should be completed by the RTA, as becoming familiar with the regulatory structure will provide a useful overview of the wider process, challenges and opportunities involved in implementing SCM.

Resources and Benchmarks: MS Staff: RTA, STE’s (legal and institutional), BC Staff: RTA Counterpart, Administrative Requirements: Translation of relevant legislation (including secondary legislation) and normative acts relevant to RIA and SCM implementation. Other Resources: Interpretation, translation and documentation Location and Duration: Ministry of Economy, On-going Activity although initial review should be complete by end Month Three (3) – Two (2) Months Timeframe: To commence in Month Two (2) concurrent with activity 3.4.1.1 Additional Info: Review should initially focus on the selected pilot sector, which will be selected with the beneficiary early in the project. Benchmarks: Significant participation of civil servants in the process of planning and implementing SCM in the wider regulatory environment in Armenia;

Develop working conclusions as to the regulatory environment in Armenia.

Activity 3.4.2.2 Propose an implementation plan for the development of necessary structures (SCM Coordination Unit and Monitoring Unit), and adaptation of the regulatory framework for SCM in line with EU best practices.

The creation of an implementation plan (including timetable) for establishing the necessary structures (including a regulatory management programme and SCM-CU), the adaptation of the regulatory framework and the implementation of the plan in a timely and effective manner will be critical for the successes of the project. While this plan will be derived from the Twinning Work Plan (Activity 3.4.0.0) and the Concept Paper (Activity 3.4.1.1), the plan should provide a more detailed framework for the development of the requisite structures, administrative requirements and the required activities based on the initial findings of activities 3.4.1.1 and 3.4.2.1. The RTA with the assistance of STE(s) and in close cooperation with the Ministry of Economy will define a plan for the implementation of SCM. Efforts should initially be focused on the selected pilot sector.

Page 19 The implementation plan should relate EU MS best practice, elaborate the different models/structures utilised in Europe to implement SCM, and propose a hybrid (unique) structure which would be implementable in Armenia, given its unique strengths, challenges, aspirations and requirements. As the development of implementation plan will be a time consuming process, the RTA will be supported by STE(s). The Human Resources Development plan (Activity 3.4.3.1) may be done concurrently with the implementation plan.

Resources and Benchmarks: MS Staff: RTA, (Institutional STE(s)) BC Staff: RTA Counterpart Administrative Requirements: Other Resources: Interpretation, translation and documentation Location and Duration: Ministry of Economy, Draft Plan (Two (2) Months); Pilot (Two (2) Months); Wider Implementation (on-going from Month Eight (8) but significant progress by end of project) Timeframe: Draft Plan (Month Four (4) and Five (5)), Implementation of Pilot (Month Six (6) and Seven (7)), wider implementation: Month Eight (8) through Twenty One (21) Additional Info: None Benchmarks: Completion of a plan for the implementation of SCM in Armenia;

Implementation of the plan for the necessary reforms to the regulatory structures and legislative framework for SCM including the adaptation of legislation, normative acts procedures which comprise the regulatory environment.

Activity 3.4.2.3 Assist the Ministry of Economy to establish a SCM Coordination Unit and a SCM Monitoring Group responsible for SCM Implementation in the context of a wider regulatory management programme

As a core structure in the implementation of SCM in the context of a regulatory management programme, a separate unit or structure responsible for regulatory assessment is established to assist in the implementation of SCM. As such, a SCM Coordination Unit (SCM-CU) will be established. The structure will be based on a best practice methodology and logically based (at least in part) on the central structure established in the RTA’s MS. In as much as the SCM-CU represents the central coordinating function, additional attention should be placed on strengthening the decentralised structures which will be necessary in the wider implementation of SCM. In addition, a SCM Monitoring group will be established at this time (see Section 3.1.1.2 for additional details). The totality of the actions must be part of a regulatory management programme, and part of the work of this activity will be to support the Government in formation of such a programme with participation and commitment at a sufficiently high level.

Resources and Benchmarks: MS Staff: RTA, Project Leader (PL) BC Staff: RTA Counterpart, BC Project Leader Administrative Requirements: Page 20 Other Resources: Interpretation, translation and documentation Location and Duration: Ministry of Economy, On-going from Month Six (6) Time Frame: End Month Six (6) Additional Info: Benchmarks: Adoption of key structures and legislative (including secondary legislation) and normative acts which provide the requisite enabling environment for the implementation SCM in Armenia.

Creation of SCM-CU in some reasonably durable form

3.4.3 Component III: Institutional Capacity Building

The focus of this component is the development of an in-depth understanding of regulatory structures and procedures, relating to Standard Cost Model (SCM) and to assist the SCM Coordination Unit, Ministry of Economy and GoA to develop awareness and capability to support the implementation of SCM in Armenia. Capacity development efforts will be directed at two different levels: advanced and specialised. The two relevant groups are defined as:

a) Advanced: Selected Heads of Units and Departments in targeted sectors, whose managerial and oversight functions requires deeper knowledge enabling them to continue sensitisation of staff, build ownership and agreement at managerial level for implementation, and assisting in wider SCM implementation.

b) Specialised/Practitioner: Staff of the Ministry of Economy (SCM Coordination Unit) who will directly work on the implementation of SCM on a wider scale, staff involved in the pilot survey and analysis.

The first group (advanced) will be trained through seminars and workshops, whereas the second group (Specialised) will be involved in interactive master class which will be provided on an on- going basis over the term of the Twinning project in which best practice procedures will be delivered utilising EU MS case studies. In addition, individual STEs and staff members from the selected MS Government structure would be able to act as guest lecturers for the master class, when in country.

The objectives of the component will be accomplished through a number of specific activities. These include:

Activity 3.4.3.1 Assisting Ministry of Economy in formulating and implementing a Human Resources Development plan with respect to SCM (related to the establishment of a SCM Coordination Unit and the sensitisation of other key civil servants and stakeholders).

As SCM will be a new and innovative undertaking and understanding that implementation will require significant modifications to administrative and regulatory procedure, a comprehensive Page 21 Human Resources Development (HRD) will be important. This HRD should focus on Human Resource requirements with respect to both recruitment and training and should reflect training needs through the preparation of a Training Needs Analysis (TNA). This is important due to the fact that with the implementation of SCM new skill sets and new capabilities will be required, which will necessitate significant HRD for existing staff as well, especially in the areas of conceptual understanding of SCM theory and procedures. Development and implementation of an organised programme of capacity development is very important, as are the availability of functional operational guidelines and reference documents, and clear working procedures. Also self-study and on-the job training can be used to good effect. For these reasons a comprehensive and integrated HRD plan is needed.

Resources and Benchmarks: MS Staff: RTA, STE(s) (Human Resource Development and Training) BC Staff: RTA Counterpart, BC Project Leader Administrative Requirements: Other Resources: Interpretation, translation and documentation Location and Duration: Ministry of Economy, Five (5) Months Timeframe: Month Four (4) to End Month Eight (8) Additional Info: As the development of the Human Resources Development (HRD) Plan is integral to the development of the structures that must be developed, it is proposed that the HRD plan be conducted concurrently with the analysis and plans developed to establish these necessary structures (Activities 3.4.1.1, 3.4.2.1 and 3.4.2.3). Benchmarks: Development and implementation of a comprehensive and integrated HRD Plan.

Activity 3.4.3.2 Development and implementation of capacity development programmes in SCM

As capacity development will be a core aspect of this Twinning project it is envisaged that a comprehensive programme of training and sensitisation be developed and implemented. As various target groups of this capacity development will require varying levels of understanding and capacity, it is recommended to create two (2) capacity development programmes:

a) Advanced: Selected Heads of Units and Departments in targeted sectors, whose managerial and oversight functions requires deeper knowledge enabling them to continue sensitisation of staff, as well as stakeholders in the business community, professional institutions, relevant NGOs to build ownership and agreement at senior levels for assisting in wider SCM implementation. (Monthly)

b) Specialised/Practitioner: Staff of the Ministry of Economy (SCM Coordination Unit) who will directly work on the implementation of SCM on a broader scale, staff involved in the pilot survey and analysis, including stakeholders in the business community, professional institutions, relevant NGOs. The format should take a master class format and lead to a certificate of competence in SCM, but involve train-the-trainer and participative approach Page 22 mechanisms to support sustainability and promote national ownership of the process. To promote sustainability, the programme should focus on a train the trainer methodology, and create sufficient capacity in selected individuals that future capacity development programmes may be progressively conducted. (Weekly Basis). The RTA should make every reasonable attempt to involve Armenian participants as lecturers as frequently as possible, bearing in mind the low level of familiarity with SCM in Armenia.

Resources and Benchmarks: MS Staff: RTA, Project Leader (PL), STE(s) (HRD and Training) BC Staff: RTA Counterpart, BC Project Leader Administrative Requirements: Training Venues: Beneficiary to provide Internal Location (Ministry of Economy) for advanced and specialised/practitioner participants – Ten (10) participants each. Catering and printing costs as required will be incurred by the Beneficiary. Other Resources: Interpretation, translation and documentation Location and Duration: Ministry of Economy, On-going from Month Nine (9) Timeframe: Month Nine (9) Additional Info: Benchmarks: Capacity Building/Training programmes implemented and delivered to key stakeholders;

Sufficient participation of Staff of the Ministry of Economy, GoA and wider stakeholders.

Activity 3.4.3.3 Study Tour to examine the structure and role of EU Member State regulatory agencies/structures in the implementation of SCM

To provide firsthand experience on the mechanisms and procedures involved in the implementation of SCM, it is desirable that key staff involved in the operational aspects of wider Regulatory management programme and SCM in Armenia travel to at least two (optimally three (3) MS administration to experience SCM operating in practice. The main participants will be practitioners and staff of the SCM-CU and other key stakeholders who are involved in implementation at both the Ministry of Economy and other relevant bodies. This Study Tour should be designed to develop operational capacity and should fit into the wider capacity development programme as outlined in this section.

The RTA will therefore complete a preliminary analysis on the structure and role of EU Member State regulatory agencies/structures in at least two and optimally three Member States and organise a study visit for personnel and experts. The programme should be as operational as is possible, and should impact confidence and understanding of participants. The following issues should be addressed:

- the implementation of SCM activities from a practitioners perspective, - European MS administration work procedures and methods of regulatory assessment.

Resources and Benchmarks: Page 23 MS Staff: RTA, Project Leader (PL) BC Staff: RTA Counterpart, BC Project Leader Administrative Requirements: Eight (8) round trip air tickets (Armenia – EU MS); Eight (8) round trip air tickets (EU MS – EU MS); 8 x 10 days Per diem; Other Resources: Interpretation, translation and documentation Location and Duration: Ministry of Economy, Ten (10) days Timeframe: Month Twelve (12) Additional Info: Benchmarks: Completion of a study tour

Significant understanding developed on the practical implementation of SCM in MS(s) and experiences significantly transferred to the Armenian context.

Activity 3.4.3.4 Assisting Ministry of Economy in improving Management Information System (including integrating a functional statistical analysis software package) and the development of a web site (including on-line newsletter).

Assessing the MIS situation of the Ministry of Economy and the pilot sector, and proposing improvements to the Ministry of Economy’s and GoA regulatory management system utilised to manage its regulatory compliance will be important. In addition, proposing the introduction of relevant Management Information Systems (MIS) applications (such as a statistical analysis software package) to streamline SCM data storage/manipulation/management will be operationally useful. As a component of the on-going process of streamlining information flows, enhancing awareness of stakeholders, promoting access to relevant information, and exchanging information, the development and the launch of a web site is proposed. In addition, the development of the web site should include an on-line newsletter. Accordingly, the deployment of an MIS expert (STE) and a Web Site Development Expert (STE) from the MS partner administration are strongly proposed. It is finally prudent, that adequate statistical management software, based on recommendations in the RTA’s own administration, should be purchased and installed. Compliance with existing MIS and other systems should be ensured.

Resources and Benchmarks: MS Staff: RTA, STE(s) (MIS and Web Site Development) BC Staff: RTA Counterpart, BC Project Leader Administrative Requirements: Purchase of Statistical Analysis Software to SCM survey implementation Other Resources: Interpretation, translation and documentation Location and Duration: Ministry of Economy, 30 days (MIS) and 30 days (Web site), Five (5) Months Timeframe: Month Five (5) to end Month Nine (9) Additional Info: Due to the nature of MIS analysis and development, access to the database / MIS which be used to administer regulatory processes to both the RTA and any STE examining the MIS will be important.

Page 24 Benchmarks: An SCM-friendly functional MIS (including relevant statistical analysis software) and Web site (including on- line newsletter) exists in the SCM-CU and the Ministry of Economy to support the implementation of SCM, the information dissemination and other communication requirements.

Activity 3.4.3.5 Assisting Ministry of Economy in creating a SCM Best Practice Manual and reference documents to support the implementation of SCM in Armenia.

It is important to ensure effective documents and resource guides for the implementation of SCM exists and are available in Armenian. The RTA should therefore assist in the development of a Manual for Ministry of Economy (and other relevant stakeholders) covering organisational structure, activities, information on SCM, rules and procedures and other relevant information about SCM and its impact on investment attraction, business environment and wider civil society. This Manual should be designed as an easily understandable best practice manual or Vademecum regarding the implementation of SCM in an Armenian context and be translated into Armenian as soon as is possible. In addition, the RTA should assist Ministry of Economy in acquiring and expertly translating additional documents, such as RM and SCM interpretation guides.

Resources and Benchmarks: MS Staff: RTA, Project Leader (PL), STE(s) (Process Management) BC Staff: RTA Counterpart, BC Project Leader Administrative Requirements: Printing costs for 200 copies of Best Practice manual; CD- ROM versions with any additional relevant reference materials. (To be provided by the beneficiary). Other Resources: Interpretation, translation and documentation Location and Duration: Ministry of Economy, Three (3) Months Timeframe: Month Nine (9) through end Month Eleven (11) Additional Info: The SCM Best Practice Manual should be made available in both hard copy (printed) and electronic versions (CD- ROM and Internet). Benchmarks: A best practice manual is drafted, expertly translated into Armenian and receives a wide distribution. A copy of the manual is available in electronic format in an easily downloadable format;

Additional documentation translated into Armenian to support the understanding of SCM from a number of different MS models.

Page 25 Activity 3.4.3.6 Supporting Ministry of Economy / SCM-CU in obtaining international recognition by relevant international and European bodies involved in SCM and support the participation of SCM-CU staff in SCM Networks and working groups of European and International RM/SCM organisations.

Participation of the created SCM structures (SCM-CU and Monitoring Group) in international or European Structures involved in best practice implementation of Regulatory Management and SCM would be highly desirable from a sustainability perspective, in that it will promote linkages to maintain best practice implementation after the completion of the project. The RTA should therefore assist the GoA (represented by the Ministry of Economy and the SCM-CU) to make the first steps towards participation in any relevant European or International ‘Apex’ Structure or European/International SCM Network(s).

Resources and Benchmarks: MS Staff: RTA, Project Leader (PL) BC Staff: RTA Counterpart Administrative Requirements: Other Resources: Interpretation, translation and documentation Location and Duration: Ministry of Economy, Twelve (12) Months Timeframe: Commencing Month Twelve (12) Additional Info: Benchmarks: Armenia participates in International/European organisations involved in SCM or Regulatory Impact Assessment.

3.4.4 Component IV: Completion of pilot SCM survey(s)

One of the most important components in the implementation of the broader SCM implementation process is the implementation of a pilot survey. In the course of the survey, the GoA as part of its regulatory management programme would normally select between two (2) to five (5) regulations it would wish to simplify in text and/or in practice. With the SCM Coordinating Unit and the Monitoring Unit established with full stakeholder involvement, the SCM Coordination Unit would announce the regulations to be examined, and start applying SCM rules to having staff and stakeholders; deconstruct regulations into individual obligations (often called "information obligations"). Under the SCM Coordination Unit's leadership and with oversight and validation by the SCM Monitoring Unit, a survey would be meticulously prepared with full stakeholder participation to poll businesses as to actual costs involved in complying with each obligation. (Time waiting in line, time going to see a Government official are calculated under SCM rules as costs.) These surveys are normally completed by phone, but they can be completed in a direct interview format. The RTA and/or Short term Experts allocated in the context of the Twinning should optimally participate in this process, firstly to transfer skills, but progressively to develop a mentor role. Due to the fact that extensive surveys will be completed, involving complicated responses, sufficiently robust sampling software will be required with possible applications to link software to MIS (optimal). Discussions with MIS experts (see activity 3.4.3.4) should be undertaken to ensure system requirements.

Page 26 Activity 3.4.4.1 Assist the Ministry of Economy / SCM-CU to complete a pilot SCM survey

A stated aim of the Ministry of Economy is to complete, as soon as possible, one or more pilot SCM surveying efforts. Each survey will be implemented by the SCM-CU. Understanding this fact, the RTA will focus his/her actions after the initial reviews and the requisite establishment of structures (such as the SCM-CU, Monitoring Unit), on completing a ”Pilot Survey and Implementation” on a specific sector to be determined in discussions with the Ministry of Economy. This priority sector should be determined early in the project, during the first days of preliminary consultations (if not in the negotiations involved in the Twinning contract).

Resources and Benchmarks: MS Staff: RTA, Project Leader (PL), Survey Implementation STE(s) BC Staff: RTA Counterpart, BC Project Leader Administrative Requirements: Printing of surveys, if hard copy, purchase data/survey software (SPSS or other sampling software). In addition, significant human resources for completing the survey will most likely be required – either Ministry of Economy staff or other sources (students, contract staff, etc) Other Resources: Interpretation, translation and documentation Location and Duration: Ministry of Economy/SMC Coordination Unit, Three (3) Months Timeframe: Commencing Month Thirteen (13) through end Month Fifteen (15) Additional Info: It is important that SCM-CU staff have adequate experience with the selected Statistical or sampling software package and be trained accordingly. Benchmarks: Successful pilot SCM survey completed;

Acceptance by the Ministry of Economy, the GoA and other stakeholders of the findings and recommendations of the pilot SCM survey;

Interactive participation of the business community and wider civil society in the pilot SCM survey.

Activity 3.4.4.2 Assisting Ministry of Economy / SCM-CU in conducting a national work shop on the findings of the pilot SCM survey

On completion of the pilot SCM survey(s), a national work shop presenting the findings, successes and challenges arising from this Implementation will be completed. The conference should be a one day event and involve the participation of other national bodies and stakeholders who have been involved in the process of implementing the pilot SCM survey(s).

Resources and Benchmarks: MS Staff: RTA, BC Staff: RTA Counterpart, BC Project Leader

Page 27 Administrative Requirements: Beneficiary to supply Work Shop Venue (Ministry Location), catering, simultaneous translation, Work Shop materials4 Other Resources: Interpretation, translation and documentation Location and Duration: Ministry of Economy, One day Timeframe: Month Fifteen (15) Additional Info: Benchmarks: Completion of a National Work Shop to present findings of the initial pilot SCM survey(s);

Recommendations on specific regulatory change that emerged from the pilot effort

Open discussion on the findings, challenges and successes to determine the nature of the next steps, including wider stakeholder participation, including GoA, line ministries, business community, civil society and other stakeholders.

Activity 3.4.4.3 Assist the Ministry of Economy / SCM-CU in continuing to complete its wider SCM implementation programme

While the stated aim of the Ministry of Economy is to complete a pilot SCM survey effort (Activity 3.4.4.1), the ultimate aim is that the capacity and capability exists to continue with SCM implementation, as well as incorporating SCM into wider administrative procedures. Understanding this fact, the RTA will work closely with the staff of the SCM CU and the Ministry of Economy, as well as stakeholders in business, professional institutions and other relevant stakeholders, to commence a wider programme of SCM implementation. At this stage in the project, the RTA will adopt a mentor role and assist, as required, the SCM-CU.

Resources and Benchmarks: MS Staff: RTA, Project Leader (PL), BC Staff: RTA Counterpart, BC Project Leader Administrative Requirements: Other Resources: Interpretation, translation and documentation Location and Duration: Ministry of Economy/SCM Coordination Unit, Eight (8) Months: On-Going Timeframe: Commencing on completion of the SCM pilot, and after the Work Shop (Activity 3.3.4.2). Anticipated to commence Month Sixteen (16) Additional Info: Benchmarks: Acceptance by the Ministry of Economy and the GoA of the findings and recommendations of the Pilot SCM Implementation;

4 In the case that a suitable venue cannot be located from ministry resources, the beneficiary may consider applying to the EC Delegation to Armenia (or in the abstract, also potentially to other donors) for assistance, including justification for such support. Page 28 The SCM-CU and Ministry of Economy have sufficient knowledge and understanding to complete an SCM analysis with minimal support and advice from the RTA;

Strong participation of the business community and wider civil society in the implementation of a wider SCM programme.

3.4.5 Component V: External Communication and Stakeholder Sensitisation

This component involves an on-going process of awareness with the aim of on-going sensitisation, promoting access to relevant information, exchanging information and obtaining feedback regarding the regulatory environment and its effect of the provision of Government services as well as communicating relevant information to stakeholders. For this purpose, an integrated external communications programme is proposed which will assist the SCM-CU and the Ministry of Economy in building a closer relationship with stakeholders. Developing the SCM-CU’s capacity to facilitate exchange of information and data with stakeholders (including clients) will additionally be important.

Activity 3.4.5.1 Assist the Ministry of Economy / SCM-CU in the development of a communications plan to maximise communication with, and sensitisation of, stakeholders on the impact of the regulatory environment and SCM on investment, business and civil society

As the affects of SCM implementation can have wide reaching impact on most every sector of society, the development of a comprehensive communications plan will be important to coordinate efforts and ensure adequate information is targeted at stakeholders and maximum engagement of stakeholders in the process, ensured. This will be very important to promote maximum participation of stakeholders in the SCM pilot and subsequent surveys (Component IV: Section 3.4.4). This communication and sensitisation programme would be targeted at wider stakeholders and involve: staff members in relevant Ministries or State bodies who are interested in SCM, members of the Business Community, Academics, Civil Society, etc. Many aspects of a broader communications plan are possible but such a plan should include a seminar programme and the RTA might use visiting speakers, STEs and other SCM functionaries to deliver the programme. Other components may be developed, although the development of a web site and on-line newsletter (Activity 3.4.3.4) should also be included in the programme.

Resources and Benchmarks: MS Staff: RTA, STE(s) (Communications and Public/Media Relations) BC Staff: RTA Counterpart Administrative Requirements: Other Resources: Interpretation, translation and documentation Location and Duration: Ministry of Economy, Three (3) Months Timeframe: Month Twelve (12) through end Month Fourteen (14) Additional Info: Page 29 Benchmarks: Completion of a communications plan for the SCM-CU and the Ministry of Economy with respect to SCM implementation

Activity 3.4.5.2 Assist Ministry of Economy / SCM-CU in developing and implementing a stakeholder awareness campaign

Organising an ongoing process of awareness with the aim of collecting relevant information (assessment), exchanging information and obtaining feedback regarding the regulatory environment and its effect of the provision of Government services as well as communicating relevant information to stakeholders, is highly critical. This activity will help Ministry of Economy in building a closer relationship with stakeholders and establish a positive image of the organisation and specific unit or centre established to implement relevant processes. Dissemination of information on SCM and Regulatory Management Issues related to the EU MS best practice, including information on the impact of the adoption of SCM on the provision of services to Armenian and International stakeholders (International Investors, Armenian Business Community, Civil Society), will be critical.

Resources and Benchmarks: MS Staff: RTA, STE(s) (Communications and Public/Media Relations) BC Staff: RTA Counterpart Administrative Requirements: Other Resources: Interpretation, translation and documentation Location and Duration: Ministry of Economy, Twelve (12) Months Timeframe: Commencing Month Twelve (12) to Month Twenty Three (23) Additional Info: Benchmarks: Wider stakeholders, including the business community and Civil Society, are well informed of SCM and the benefits of implementation.

3.5 Means/Inputs from the Member State Partner Administration

3.5.1 Profile and tasks of the Project Leader (PL)

The Project Leader will be expected to devote a minimum of 3 days per month to the project in his/her home administration. He/she will be responsible for the timely input of resources from the Member State. In addition, he/she will coordinate, from the Member State side, the Project Steering Committee (PSC), which will meet in Armenia at least every three months.

Tasks

The main tasks of the Member State (MS) Project Leader are to ensure:

- The overall coordination of the Project; - The achievement of the mandatory results. Page 30 In addition, the PL will attend all Project Steering Committee meetings and participate in International conferences.

Profile

• Long-term officer or civil servant from a Member State with practical experience of the implementation of SCM in an EU Member State SCM coordination structure.

• Has education and experience in the field of project management, institutional issues and regulatory environments in an EU MS, preferably, with an in-depth knowledge of an institution in which SCM was implemented.

3.5.2 Profile and tasks of the Resident Twinning Advisor (RTA)

The Resident Twinning Adviser (RTA) will provide a 21-month input on site in Yerevan, Armenia.

Tasks - Manage the day-to-day coordination and progress of the activities in Armenia (office accommodation in Ministry of Economy premises with work in SCM Coordination Unit, once established); - Implement the work programme jointly agreed between the MS Administration and the Beneficiary Country (Host) administration in the Twinning contract; - Liaise with the Beneficiary Country (BC) Project Leader and work on an on-going basis with the RTA counterpart; - Report to the MS Project Leader; - Liaise with other relevant Armenian institutions according to SCM methodology.

Profile

- Senior officer from a Member State body with extensive direct experience in Standard Cost Model (SCM) in the wider context of Regulatory Impact Assessment; - Previous experience in project management (preferably also managing a team composed of EU and Partner Country Experts) would be an asset; - Excellent command of written and spoken English. A spoken capability in Russian or Armenian would be an asset.

In his/her daily work in Armenia, the RTA will be supported by the RTA Assistant, to be recruited and funded by the project. With respect to the applicable recruitment procedures, the RTA may seek advice from the PAO and the EC Delegation.

A full time interpreter-translator will also be recruited and funded by the project. The Interpreter- Translator will perform most of the services necessary to support project implementation. While a full time Translator-Interpreter is not directly prescribed, due to the volume of interpretation requirements, translations anticipated (which need to be checked and management) and given the Page 31 specific nature of terminology and the SCM process requiring significant sensitisation, the recruitment of a full time interpreter-translator is highly desirable. The Interpreter-Translator will support interpretation during missions of STE (translations of documents into Armenian developed by the project, translations of existing best practice manuals which are deemed important by the RTA and the beneficiary to enhance the understanding of the beneficiary on SCM). For seminars, conferences and workshops simultaneous interpreters will be procured on an as required basis, funded by the project.

3.5.3 Profile and tasks of the Short-term experts

The RTA will be assisted by short-term experts so as to cover the full range of expertise required. These will be suitably qualified and capable to provide the necessary skills according to the activities mentioned above.

INDICATIVE SHORT-TERM EXPERTS SCHEDULE: TYPE; TASKS; PROFILE; QUANTITY (Working Days)

TYPE ACTIVITY PROFILE Component I: Development of a Policy and Institutional Framework for wider Regulatory Management Interventions (85 Working Days) Legal Short Term Short Term Activity 3.4.1.1 Assist the GoA Legal and Structural Expert (s) to develop a Concept Paper (focusing knowledge on SCM on pre-conditions and necessary processes in the context of actions to be undertaken by the GoA a relevant EU MS structure. to structure a sound regulatory In depth understanding of management programme), including a legislation and Normative review of legislation and normative Acts regarding regulatory acts. (65 Working Days) structures and SCM implementation.

Short Term Expert(s) on the Activity 3.4.1.2: Organise an Wide experience on the EU European regulatory International Conference on "The regulatory systems and environment particularly as these Impact of Regulation on Armenian structures – from a relates to the implementation of Trade and Industry and the Positive modality point of view in SCM Impact of SCM” and EU Member different MS. State best practice experiences. (4 x five (5) Working Days = Twenty (20) Working Days Total). Component II: Development of Structures for Implementation of Standard Cost Model (SCM) (65 Working Days)

Page 32 Legal and Institutional Short Activity 3.4.2.1: Verification of the Legal and Institutional Term Expert(s) current regulatory environment in knowledge on SCM Armenia, relevant organisational processes in the context of structure and management practices a relevant EU MS structure. of the Ministry of Economy. (40 In depth understanding of Working Day) legislation and Normative Acts regarding regulatory structures and SCM. Institutional Short Term Expert Activity 3.4.2.2: Propose an Structural knowledge on (s) implementation plan for the SCM processes in the development of necessary structures context of a relevant EU (SCM Coordination Unit and MS structure. Monitoring Unit), and adaptation of the regulatory framework for SCM in line with EU best practices. (25 Working Days). Component III: Institutional Capacity Building(170 Working Days)

Human Resources Development Activity 3.4.3.1: Assisting Ministry Wide experience in and Training Short Term of Economy in formulating and developing a HRD plan Expert(s) implementing a Human Resources (including the development Development plan with respect to of a TNA) SCM (35 days). Human Resources Development Activity 3.4.3.2: Development and Wide experience in and Training Short Term Implementation of Capacity implementing a HRD plan Expert(s) Development programmes in SCM. (including the development (35 Working Days). of a TNA) to support RTA in capacity development programme development. MIS and Web Site Development Activity 3.4.3.4: Assisting Ministry Experience in the Short Term Expert(s) of Economy in improving development of MIS and Management Information System the development of (MIS) and the Development of a Web functional web sites for site (including on-line Newsletter). SCM implementation (30 Working Days MIS and 30 Working Days Web Site = 60 Working Days). Process Management Short Term Activity 3.4.3.5: Assisting Ministry Experience in SCM process Expert(s) of Economy / SCM-CU in creating a implementation and SCM Best Practice Manual and experience in drafting reference documents to support the easily understandable implementation of SCM in Armenia. reference guides (40 Working Days). Component IV: Completion of Pilot Survey(s) (70 Working Days)

Page 33 SCM Survey Implementation Activity 3.4.4.1: Assist the Extensive experience in Short Term Expert(s) Ministry of Economy / SCM-CU to implementing an SCM complete one or more pilot SCM Survey. The STE should surveys (70 Working Days). support the RTA in the initial SCM survey efforts and have experience in relevant statistical / survey software.

Component V: External Communication and Stakeholder Sensitisation (50 Working Days)

Communications and Activity 3.4.5.1: Assist the Experience in the Public/Media Relations Short Ministry of Economy / SCM-CU in development and Term Expert(s) the development of a communications implementation of a plan to maximise communication communications plan. with, and sensitisation of, stakeholders on the impact of the regulatory environment and SCM on investment, business and civil society (25 Working Days).

Communications and Activity 3.4.5.2: Assist Ministry Experience in the Public/Media Relations Short of Economy and SCM-CU in development and Term Expert(s) developing and implementing a implementation of a stakeholder awareness campaign (25 communications plan. Working Days).

Total STE Input: 440 Working Days

4. Institutional Framework

The Beneficiary will be the Department of Foreign Economic Cooperation and Investment policy of the Ministry of Economy of the Republic of Armenia.

4.1 Armenian Project Leader

The Armenian Project Leader (PL) will act as the counterpart of the Member State Project Leader. In close cooperation with the Member State PL, the Armenian PL ensures the overall steering and co-ordination of the project, the operational dialogue and the backing at political level. The PL's seniority will ensure his ability to mobilise the necessary staff in support of the efficient implementation of the project. He will also coordinate the Project Steering Committee (PSC) from the Armenian side.

Page 34 4.2 RTA Counterpart

The RTA Counterpart will work with the RTA on a daily basis to ensure proper coordination and implementation of all the activities of the project and achieve an efficient transfer of knowledge. He will be responsible, together with the RTA, of finalising the reports to be submitted to the PLs for the Project Steering Committee.

The implementation of the project requires full commitment and participation of the senior management within the Ministry of Economy and the Government of Armenia. They must be fully involved in the development and implementation of the policies and procedures delivered as project results. The Ministry of Economy should fully co-operate with all other institutions in the project. Senior management of Ministry of Economy will ensure that appropriate staff is made available to work with the Member State partner. They will also make sure that the Member State partner is provided with legislation and other documents necessary for the implementation of the project. The Ministry of Economy will ensure adequate support and basic equipment for the work of the full team of experts. This includes office space, phone and fax, access to Internet and translation (when necessary).

4.3 Project Steering Committee (PSC)

The Project Steering Committee (PSC) has the decision making power. It is a management meeting serving as a conduit between the GoA, the EC Delegation, the PAO and the Twinning project. The PSC exists to make the project more effective, and, hence, to accelerate the implementation of the wider Regulatory Management programme and SCM. The PSC has a managerial status. The PSC should include senior officials from administrations directly concerned by the project. Other key line ministries, relevant MS Ambassadors, as well as officials from state committees, agencies, commissions as well as representatives of the business community might attend PSC meetings as observers.

The PSC monitors and analyses the progress of implementation of the Project activities. The PSC and its members will, when instructed by the Co-Chairs (EC Delegation and Ministry of Economy) or otherwise where appropriate, assist the project with regard to tasking and prioritising the project’s work with key Government personnel. In addition to its serving as a conduit between the project and the wider stakeholders, the PSC shall provide guidance to the project in resolving issues raised by the project related to the project’s activities.

5. Budget

The maximum budget will be 1,100,000 Euros.

6. Implementing Arrangements

Page 35 6.1 Implementing Agency

The Implementing Agency responsible for tendering, contracting and accounting is the European Commission represented by its Delegation in Armenia. The person in charge of the project is:

Mr. Raul de Luzenberger Head of Delegation Delegation of the European Commission in Armenia 21 Frik Str, Yerevan, Armenia Tel: (374 10) 54 64 94 Fax: (374 10) 54 64 95 http://www.delarm.ec.europa.eu/en/index.htm

Mr. Jean Francois Moret Attaché, Project Manager Delegation of the European Commission in Armenia 21 Frik Str., Yerevan, Armenia Tel: (374 10) 54 64 94 Fax: (374 10) 54 64 95 E-mail: [email protected] http://www.delarm.ec.europa.eu/en/index.htm

6.2 Main counterpart in the Beneficiary Country

The main counterpart in Armenia is the Ministry of Economy, which is represented with respect to this Twinning project by:

Project Leader Mr. Vahe Danielyan Deputy Minister - Ministry of Trade and Economic Development Address: 5 M. Mkrtchyan Str. Yerevan, 375010, Armenia Tel/fax +374 (10) 58 94 73 E- mail: [email protected] URL: http://www.mineconomy.am

RTA Counterpart Mr. Gnel Mayilyan (Head of Investment Policy and Market Infrastructure Development Department – Ministry of Trade and Economic Development) Address: 5 M. Mkrtchyan Str. Yerevan, 375010, Armenia Tel/fax +374 (10) 58 94 73 E- mail: [email protected]

PAO Director - Head of the Project Administration Agency Mr. Ruben Sarukhanyan, Ministry of Economy of the Republic of Armenia. Page 36 Adress: 5, M. Mkrtchyan, Yerevan 0010, Tel: (+374 10) 543 981 Fax: (+374 10) 543 983 E-mail: [email protected]

6.3 Contracts

Only one Twinning contract is foreseen for this project.

7. IMPLEMENTATION SCHEDULE (INDICATIVE)

7.1 Launching of the call for proposals October 2008

7.2 Start of project activities June 2009

7.3 Project completion

Based on the indicative commencement date and the proposed implementation period, the project should be completed by June 2011.

7.4 Action’s implementation period

The implementation period will be 24 months + 3 months for the starting up and closure of the project.

8. SUSTAINABILITY ISSUES

The process of adaptation of existing legislation and normatives as they relate to the wider regulatory environment and its impact on Investment Attraction, business regulation and the provision of wider services to the population will have a wide impact on Government operations and civil society in general. It will also impact on the work practices of many civil servants, including issues of corruption at many levels. It can therefore be expected, that varying degrees of institutional resistance may occur, once the nature and ramifications of SCM is understood. Mitigating against this institutional risk, is the strong support for the implementation of SCM by the current management of the Ministry of Economy. In the event that major changes in the management of the Ministry of Economy was to be effected in the term of the project or if changes to structure or leadership of the wider Government of Armenia, support for the implementation of SCM may be affected. But in a wider context there is at present a strong political commitment in Armenia to rapidly introduce the European principles for Standard Cost Model and Regulatory Impact Assessment (RIA).

Page 37 9. CROSSCUTTING ISSUES

Each Twinning Partner is required to comply with the equal opportunities requirements as well as to the environmental requirements of the EU. In addition, and with particular relevance to SCM implementation, the issue of good governance is particularly relevant.

10. CONDITIONALITY AND SEQUENCING

10.1 Risks and Assumptions

There are many assumptions (and related risks) that could affect the swift and effective implementation of this Twining Project, the majority of which are well beyond the reach of the Project being linked to the political will, institutional changes and the BC resources available.

Moreover, the implementation of SCM requires new Governmental (SCM-CU) structures related to effective implementation of a new regulatory environment. Currently, strong commitment exists for the implementation of SCM at all levels of the Government, and although it is hoped and anticipated that this commitment will continue, the current positive environment might change. The involvement of wider stakeholders in the process, including, but not limited to, the business community, will require strong private-public sector cooperation. This means that the Project will need to be very flexible in terms of Work Plan implementation and that it should be prepared to reflect the situation in the country at the time of project start.

The following main assumptions and risks have been identified at this stage5:

Assumption Risk Political will for required inter-ministerial consultation Institutional setting and mandate of SCM-CU are not and wider stakeholder involvement clearly defined and affect its functioning. GoA will support the development of strong relations Lack of support from the political leadership of Armenia, between relevant national institutions and SCM-CU line ministries and other relevant national organisations which are efficient and effective Adequate staffing and financial resources for the SCM- Government of Armenia does not provide necessary CU to ensure future sustainability in the framework of office space, facilities and documentation, and SCM implementation allocations for new staff The SCM-CU can offer adequate salary levels and The Government does not allow for sufficient funding acceptable status to its employees and staffing of the SCM-CU Constructive relation between donor community Donor commitment to the process of Regulatory reform (including EU) and SCM-CU decreases, or competing methodologies create a less than optimal environment for the implementation of SCM Sufficient interest from Member State Administrations The call for proposal does not produce sufficient interest implementing SCM exists to attract strong interest to proceed with the Twinning project

10.2 Sequencing

5 Based on the Terms of Reference and own experience. Page 38 The various components outlined in this fiche, represent a broad representation of the many activities which need to be implemented to effectively operationalise this Twinning project. All components should be implemented concurrently, with strong attention paid to the proper sequencing of activities to move from strength to strength. Effective management from the RTA and a clear and effective Work Plan will be required to ensure swift and effective implementation and the realisation of rapid results, to ensure continued political support for the SCM implementation process.

It is anticipated that the launch of the Twinning project call for proposals will occur in October 2008. Selection is anticipated to occur in December 2008/early 2009, with finalisation of the Twinning contract completed in March 2009. It must be noted, that due to different Church Calendars, that negotiations/discussion between 19th December 2008 and 19th January 2009 will be very difficult. It is therefore incumbent that both sides (MS and Armenia) take this into account. An indicative date of June 2009 as indicated in Section 7 seems therefore realistic.

Page 39 ANNEXES TO PROJECT FICHE

Annex I: Logical Framework Matrix for the Twinning Project

Annex II: Implementation – Gantt chart

Annex III: Acronyms and Abbreviations

Annex IV: Draft Law on Regulatory Impact Assessment (Unofficial Translation.)

* * * * *

Page 40 Annex I: LOGICAL FRAMEWORK Support to the Department of Foreign Economic Cooperation and Investment Policy of the Ministry of Economy of the Republic of Armenia Intervention Logic Objective Verifiable Indicators (OVIs) Sources of Verification Wider Objective: The overall objective of The Regulatory environment in Armenia is Monitoring & Evaluation, reports, internal the proposed Twinning project is the strengthened with the implementation of monitoring and evaluation reports, feedback strengthening of the regulatory and business Standard Cost Model, in the wider context of from core Government officials environment in Armenia. Regulatory efforts of the Government of Armenia Project Purpose / Specific Objectives:

The Specific Objective(s) of the proposed Capability of the Government of Armenia to  State documentation (defining Twinning Project is the successful enhance the regulatory environment through the existence of institutions + introduction in Armenia of a regulatory creation of a self-sustaining institution management programme to be developed, responsible for active and wide stakeholder responsibilities of Institution) using the Standard Cost Model (SCM) participation in Regulatory Impact Assessment  Staff + budgetary allocation methodology leading to easily understandable utilising SCM. (different stages) for SCM (simplified) and transparent administrative Implementation practices lessening administrative burdens in  Frequency of involvement of order to increase attractiveness of Armenia Regulatory Impact Assessment and for investors. This will be achieved through the implementation of Five (5) components: SCM in intra-Governmental processes  Development of a Policy and  Protocols or meeting reports on Institutional Framework for wider stakeholder involvement (as Regulatory Management Interventions completed by RTA) (Component One);  Outputs to EC (Project Reports)  Development of Structures for the  Systematic application of standard Implementation of SCM (Component Two); RIA and SCM procedures  Institutional Capacity Building (Component Three);  Completion of one or more pilot SCM surveys (Component Four);  External Communication and Stakeholder Sensitisation (Component Five).

Results:

I: Development of a Policy and Institutional 1. Concept paper for Government outlining pre-  Protocols or meeting reports Framework for wider Regulatory conditions and necessary actions to be indicating preparation and approval Management Interventions undertaken by Government in the of paper implementation of a regulatory management system  Paper itself

2. Framework Vision for Twinning project development in the wider context of a comprehensive regulatory management  Outputs to EC (Project Reports) programme

3. A review of existing and normative acts and concrete recommendations in order to determine what legal norm(s) need to be amended to establish a regulatory management programme and a SCM Coordination Unit, and otherwise provide an enabling environment for the establishment Page 41 of SCM as an authoritative set of procedures under a wider regulatory management programme in Armenia;

II: Development of Structures for 1. A proposal for a structured and integrated Implementation of Standard Cost Model plan for the implementation of SCM in (SCM) Armenia that is line with EU best practice is presented to competent ministries and authorities focusing on Standard Cost Model (SCM);

2. Creation of the SCM-CU structure  Protocols or meeting reports responsible for the implementation of SCM indicating preparation and approval in Armenia and also an SCM Monitoring of paper Group (normally both of these structures have representation from the business  Budgetary allocation to such community, NGOs, experts in addition to structure Government staff);

3. International participation of the Ministry of Economy and other relevant bodies (SCM-  Correspondence or phone contacts CU) in International and European structures with such structures, beyond mere and networks involved in SCM initial contacts. implementation.

III. Institutional Capacity Building 1. A Human Resources Development plan (including a Training Needs Analysis Protocols, meeting reports and component) is created outlining the technical and human resources requirements to procedures agreed implement SCM in Armenia, to staff a SCM Coordination Unit;

2. Implementation of a Human Resources capacity development programme, involving Project report and monitoring reports multi-level training, a train-the trainer programme, study tours, and possible work placements culminating in the creation of sufficient institutional capacity to implement the SCM programme envisaged;

3. Ministry of Economy's institutional and technical capacity, with particular emphasis on SCM, is enhanced to a significant degree to effectively implement SCM in Armenia.

IV: Completion of pilot SCM survey(s) 1. Identification, with strong input from Project documents Government of Armenia, of 2-5 regulations that should form the basis of a pilot SCM effort;

2. Identification and implementation of relevant training for the implementation of a statistical  Project documents software package to support the  Training Materials implementation of pilot SCM survey(s);

3. Implementation of a first pilot SCM survey, Survey Documentation complete to the point of regulatory recommendations;

4. Presentation of the findings of the first pilot  Findings SCM survey to all stakeholders in a national  Minutes of Conference conference; Page 42 5. Institutional capacity to extend SCM to other regulations exist and process of institutional replication commences.

V: External Communication and Stakeholder 1. An external communication plan is prepared  Copy of Communications Plan Sensitisation and implemented, paving the way to the institutionalisation of a sustainable  Project Documents detailing communication mechanism within the GoA implementation and wider stakeholders with respect to SCM;

2. Effective awareness raising of stakeholders on matters related to SCM and the impact of regulation on Government services in the context of EU best practice;

3. Enhancement of the SCM-CU image as a client/stakeholder friendly organisation.

Page 43 Activities: Inputs: Budget: 3.4.0 General Activities RTA/PL/STE (EU and Armenian Project The maximum budget will be 1,100,000 Experts) Euros. Activity 3.4.0.1: Kick Off Meeting / Project  Project Coordination (PL): 40 MD Establishment  RTA: 24 Man Months Activity 3.4.0.2: Closing Conference  Legal/Strategy STE: 65 MD  SCM Experts (4 x 5 MD=20 MD) 3.4.1 Component I: Development of a  Legal and Institutional STE: 40 MD Policy and Institutional Framework for  Institutional STE:25 MD wider Regulatory Management  HRD and Training STE: 35 MD Interventions  HRD and Training STE: 35 MD  MIS/Web Site Development STE: 60 Activity 3.4.1.1 Assist the GoA to develop a concept paper (focusing on pre- MD conditions and necessary actions to be  Process management STE: 40 MD undertaken by the GoA to structure a sound  SCM Survey STE: 70 MD Project documents regulatory management programme),  Communication/PR STE: 50 MD including a review of legislation (including  RTA Assistance: 24 Man Months secondary legislation) and normative acts.  Translator/Interpreter: 24 Man Months

Activity 3.4.1.2 Organise an International Incidentals Conference on "The Impact of Regulation on  Seminars, in-country training Armenian Trade and Industry and the Positive Impact of SCM" and EU Member  Translation of Documents (As  Conference Minutes State best practice experiences. required)  Attendance information from conference  Audit Activity 3.4.1.3 Study Tour to examine the structure and role of EU Member State regulatory agencies/structures in the implementation of SCM in the wider context of A regulatory management programme  Project Documents  Program of Study Tour 3.4.2 Component II: Development of Structures for the Implementation of the Standard Cost Model (SCM)

Activity 3.4.2.1 Verification as to the current regulatory environment in Armenia, relevant organisational structure and management practices of the Ministry of Economy Project documents Activity 3.4.2.2 Propose a plan for the implementation of necessary structures (SCM Coordination Unit), Monitoring Unit, and adaptation of the regulatory framework for SCM in line with EU best practices.  Copy of plan  Proposed organizational chart Activity 3.4.2.3 Assist the Ministry of Economy to establish SCM Coordination Unit responsible for SCM Implementation and SCM Monitoring Group  MoE documents  Project documents 3.4.3 Component III: Institutional Capacity Building

Activity 3.4.3.1 Assisting Ministry of Economy in formulating and implementing a

Page 44 Human Resources Development plan with respect to SCM (related to the establishment of a SCM Coordination Unit and the  Meeting reports as to development of HR sensitisation of other key civil servants and plan stakeholders).  Draft HR Plan  Staffing plan for Coordination Unite Activity 3.4.3.2 Development and  Project documents implementation of capacity development programmes in SCM   Project documents as to capacity Activity 3.4.3.3 Study Tour to examine   Discussions with officials as to the structure and role of EU Member State capacity built regulatory agencies/structures in the implementation of SCM Study Tour Program Activity 3.4.3.4 Assisting Ministry of Economy in improving Management Information System (including integrating a functional statistical analysis software  Website operating package) and the development of a web site  On-line newsletter copies/access (including on-line newsletter).

Activity 3.4.3.5 Assisting Ministry of Economy in creating a SCM Best Practice Manual and reference documents to support the implementation of SCM in Armenia.

Activity 3.4.3.6 Supporting Ministry of  Copy of Manual Economy / SCM-CU in obtaining  Project documents international recognition by relevant international and European bodies involved in SCM and support the participation of SCM-CU staff in SCM Networks and  Working group documentation working groups of European and  Project documents International organisations, in order to align  Copies of materials from SCM its technical development with European and bodies used International best practices.

3.4.4 Component IV: Completion of pilot SCM survey(s)

Activity 3.4.4.1 Assist the Ministry of Economy / SCM-CU to complete a pilot SCM survey

Activity 3.4.4.2 Assisting Ministry of  Survey documentation Economy / SCM-CU in conducting a national  Press materials work shop on the findings of the pilot SCM survey

Activity 3.4.4.3 Assist the Ministry of Workshop documentation Economy / SCM-CU in continuing to complete its wider SCM implementation programme 3.4.5 Component V: External Communication and Stakeholder Sensitisation

Activity 3.4.5.1 Assist the Ministry of Economy / SCM-CU in the development of a communications plan to maximise communication with, and sensitisation of,  Copy of communications plan stakeholders on the impact of the regulatory  Samples of actual materials used in Page 45 environment and SCM on investment, sensitisation business and civil society

Activity 3.4.5.2 Assist Ministry of Economy / SCM-CU in developing and implementing a stakeholder awareness  Press materials campaign  Project documents  Copies of materials used by MoE

Main Deliverables

Page 46 Component 0: General Activities

 Kick Off Meeting and Project Operationally Established with sufficient resources and commitment from the Government of Armenia

 Closing Conference

Component I: Development of a Policy and Institutional Framework for wider Regulatory Management Interventions

 Concept paper for the GoA outlining pre-conditions and necessary actions to be undertaken by Government in the implementation of a regulatory management system

 Framework Vision for the Twinning project development in the wider context of a comprehensive regulatory management programme

 A review of existing and normative acts and concrete recommendations in order to determine which legal norm(s) need to be amended to establish a regulatory management programme and a SCM Coordination Unit, and otherwise provide an enabling environment for the establishment of SCM in Armenia;

Component II: Development of Structures for the Implementation of the Standard Cost Model (SCM)  A proposal for a structured and integrated plan for the implementation of SCM in Armenia;

 Creation of the SCM-CU structure;

 International participation of the Ministry of Economy and other relevant bodies (SCM-CU) in International and European structures and networks involved in SCM implementation.

Component III: Institutional Capacity Building

 A Human Resources Development plan (including a Training Needs Analysis component) is created outlining the technical and human resources requirements to implement SCM in Armenia, to staff a SCM Coordination Unit;

 Implementation of a Human Resources capacity development programme, involving multi-level training, a train-the trainer programme, study tours, and possible work placements culminating in the creation of sufficient institutional capacity to implement the SCM programme envisaged;

 Ministry of Economy's institutional and technical capacity, with particular emphasis on SCM, is enhanced to a significant degree to effectively implement SCM in Armenia.

Component IV: Completion of pilot SCM survey(s)

 Identify regulations (2-5 regulations) that should form the basis of a pilot SCM effort;

 Relevant training for the implementation of a statistical software package to support the implementation of pilot SCM survey(s);

 Implementation of a first pilot SCM survey,

 National conference of the findings of the first pilot SCM survey;

 Institutional capacity to extend SCM to other regulations exist

Component V: External Communication and Stakeholder Sensitisation

 An external communication plan is prepared and implemented;

Page 47  Stakeholders SCM and RIA awareness significantly increased especially as this relates to the impact of regulation on Government services in the context of EU best practice;

 SCM-CU viewed as a client/stakeholder friendly organisation.

Page 48 Annex III: Acronyms and Abbreviations

AEPLAC Armenian European Policy and Legal Advice Centre

AP Action Plan

BC Beneficiary Country

ENP European Neighbourhood Policy

ENP-AP European Neighbourhood Policy – Action Plan

EU European Union

FIAS Foreign Investment Advisory Service

GoA Government of Armenia

HRD Human Resources Development

IMF International Monetary Fund

MS Member State

NAP National Action Programme

NCU National Coordinating Unit

NGO Non-Governmental Organisation

NIP National Indicative Programme

PAO Programme Administration Office

PCA Partnership and Cooperation Agreement

PL Project Leader

PSC Project Steering Committee

RIA Regulatory Impact Assessment

RM Regulatory Management Page 49 RTA Resident Twinning Adviser

SCM Standard Cost Model

SCM-CU Standard Cost Model – Coordination Unit

STE Short Term Expert

TACIS Technical Assistance to the CIS

TNA Training Needs Assessment

WB World Bank

Page 50 Annex IV: Draft Law on Regulatory Impact Assessment (Unofficial Translation) LAW OF THE REPUBLIC OF ARMENIA ON MAKING AMENDMENTS IN RA LAW ON LEGAL ACTS

ARTICLE 1.To amend RA Law on Legal Acts No HO-320 dated April 3, 2002 (hereinafter called Law) with the new Article 27.1 after Article 27 as follows: ARTICLE 27.1 REGULATORY IMPACT ASSESMENT

1. Regulatory impact assessment is the analysis of possible changes and modifications, occurred in the result of adoption of standard legal acts. The body, responsible for developing the drafts of RA Government decrees in cases, envisaged by RA laws or annual programs of Government activities, will initiate regulatory impact assessment. Regulatory impact assessment of draft RA laws, developed by RA Parliament deputies and presented to RA Government will be carried out by state management body, authorised by RA Government and will be included in conclusions, presented by RA Government. 2. The body, responsible for developing the drafts of RA Government decrees, will submit the draft to corresponding executive state authorities, stipulated by the Government of the Republic of Armenia (hereinafter called “impact assessor”) for the mandatory regulatory impact assessment of administrative costs, faced by physical and legal entities in environmental, social, health, economic, small and medium entrepreneurship, competition, anti-corruption and budget spheres. In case if the body, responsible for the developing of drafts is an “impact assessor” in the spheres, mentioned above, the regulatory impact assessment will be carried out by the body, responsible for developing the drafts. In case of facing spheres other than stated in the given article of the draft, the regulatory impact assessment of draft legal acts can be carried out for these spheres as well at the discretion of the body, responsible for developing the drafts. 3. “Impact assessor” is obliged to carry out regulatory impact assessment and prepare regulatory impact assessment conclusion (hereinafter called “conclusion”) and submit it to the body, responsible for developing the drafts within 15 days period from the day of receipt of standard legal act draft. The conclusion shall include:

1) regulatory results,

2) impact assessment results in the corresponding sphere in case if the presented legal acts are not adopted,

Page 51 3) in case if an alternative legal act is proposed, which would be more beneficial for the corresponding sphere, based on the opinion of “impact assessor” and conducted estimates and surveys, the mentioned alternative together with necessary justifications should be submitted.

4) a schedule for evaluating the forecasted consequences in the result of introduction and application of standard legal act.

5) Policy and comparative statistics analysis of the given sphere.

The procedure for the implementation of regulatory impact assessment in corresponding spheres, as well as the procedure for evaluating the consequences, occurred in the result of introduction and application of standard legal act will be stipulated by the Government of the Republic of Armenia.

4. The body, responsible for developing the drafts in line with presenting draft of standard legal act to “impact assessor” will initiate public discussions on the draft, the purpose of which is to increase awareness of physical and legal entities about standard legal acts, as well as to receive feedback from them, which will serve as a basis for making necessary amendments in drafts of standard legal acts.

Public discussions are carried out by posting the draft of standard legal act and other materials, envisaged by the decree of RA Government in the official web site of the body, responsible for developing the drafts and at the discretion of the body, responsible for developing the drafts, public discussions, meetings with the beneficiaries, open discussions, public consultations, as well as involvement of mass media can be initiated.

Public discussions can be conducted within at least 15 days time period. The regulation for the organisation and implementation of public discussions will be stipulated by the Government of the Republic of Armenia.

Page 52 5. There can be cases when public discussions of draft laws, developed by the deputies of the Parliament of the Republic of Armenia and submitted to the Government of the Republic of Armenia may be not conducted.

ARTICLE 2. State the first part of Article 28 of the Law as follows:

§1. When submitting the draft of legal act to the newly established legal body for the discussion, the body, responsible for developing the drafts will attach the below stated documents to it: 1) justification for the adoption of legal act, including the information on those legal acts and at the discretion of the body, responsible for developing the drafts, on those materials, which served as a basis for the development of standard legal acts, 2) reference on making amendments and changes in other standard legal acts, as well as on necessity or absence of new standard legal acts to be adopted, including information on new standard legal acts to be adopted with regard to adoption of the draft, 3) reference on significant increase or decrease of costs and revenues in the budget of state or local self-governance body with regard to adoption of legal act, 4) in case if the legal act is developed by state bodies, legal and expertise conclusion of the legal department or legal person of the body, responsible for developing the drafts, 5) in cases, stipulated by the first part of Article 27.1 of the given law, conclusions, received from “impact assessors”, 6) summary of recommendations and comments on the draft law, their acceptance and rejection, in case of rejection, the reasons for rejection should be mentioned. The summary will include those recommendations and comments, received in the result of public discussions, which were accepted.

ARTICLE 3. Article 36 of the law:

1) State first paragraph of Part 7 as follows:

§7. The official translation of legal acts fro Armenian into English will be carried out by Ministry of Justice of the Republic of Armenia and from Armenian into other

Page 53 foreign language – by the body, which will adopt legal act or by Ministry of Justice of the Republic of Armenia.

2) amend new part 8 as follows:

§8. The implementation procedure for the official translation of legal acts will be stipulated by the Government of the Republic of Armenia.

ARTICLE 4. The given law will enter into force from January 1, 2009.

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