20. pants

U.S.

Technology and Equipment

By funding this TA, USTDA seeks to

promote the project objectives of the Host Country through the

use of U.S. technology, goods, and services. In recognition of

this purpose, the Grantee agrees that it will allow U.S.

suppliers to compete in the procurement of technology, goods and

services needed for Project implementation.

[THE REMAINDER

OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the Government

of the United States of America and the Government of the

Republic of Latvia, each acting through its duly authorized

representative, have caused this Agreement to be signed in the

English language in their names and delivered as of the day and

year written below. In the event that this Grant Agreement is

signed in more than one language, the English language version

shall govern.

For the Government of the

United States of America

For the Government of the

Republic of Latvia

By: Catherine Todd

Bailey

By: Krišjānis Peters

Date: September 12, 2006

Date: September 12, 2006

Witnessed:

Witnessed:

By:_______________

By:_______________

Annex I -- Terms of Reference

Annex II -- USTDA Mandatory

Clauses

Annex I

Terms of

Reference

The Latvian Ministry of

Transportation is interested in conducting a comprehensive review

of port security at the Ports of Riga, Ventspils and Liepaja that

would lead to an overall integrated master security plan for the

three ports. The plan would be designed to protect people,

infrastructure and equipment against security incidents and their

devastating effects. Recognizing that Latvia is a small nation

with limited resources, the plan would need to make the best use

of existing resources, ensure that actions taken achieve clear

improvements in overall port security with the greatest economy

of actions, and that new technology and equipment recommended for

purchase under this endeavor would be effective and, when

properly used, be able to discern illegal and hazardous

materials, their components, and other contraband. The goal of

this TA is to re-engineer the security processes of each port

authority, terminal operators, and other entities operating

within the port to provide a layered security system that meets

the security needs of each component but which, working together

as a designed system, achieves overall port security that can be

centrally managed. The TA would determine equipment, training,

information technology (IT) support, and other requirements for

the port security operating system.

Task 1: Planning

and Analysis

The Contractor shall initially

review the cargo flows through the three ports of Riga, Ventspils

and Liepaja, including the types of cargo and the origins and

destinations, to get a basic understanding of the ports' economic

conditions and the risk imposed by the cargo. The Contactor shall

conduct research to gain an understanding of ports' operations,

and shall interview persons via phone and email who have direct

knowledge of ports' operations and issues prior to departing for

work in-country.

The Contractor shall perform

sufficient research to gain an in-depth understanding of the

economics of the ports and their risk conditions prior to

departure for Latvia so as to maximize the use of time while

in-country focusing on operational and security issues. The

Contractor shall provide a brief report on the findings from the

research gathered.

Task 2: Review

of Security Assessments, Security Plans, Security Training,

Information Technology Support and Security Infrastructure

The Contractor shall review the

current security measures that the terminals and other firms

operating in the ports developed in response to threat

assessments and the International Maritime Organization's (IMO)

International Ship and Port Security Code (ISPS) requirements.

The initial review shall include collecting all previous security

assessments and security plans for the terminals and other firms

and any assessments and plans that have been done by the port

authorities. The Contractor shall, if required by the Grantee,

enter into confidentiality and/or non disclosure agreements with

the firms and the port authority. The Contractor shall respect

the confidentiality provisions of the ISPS code and shall carry

out the review and evaluations recognizing the confidentiality

requirements and shall maintain close control of documents and

information. In some cases certain security reviews and

assessments are classified as confidential, and the Grantee will

not be able to fully disclose those documents to the Contractor.

In these cases, the Grantee shall provide summaries or other

descriptive materials that will be sufficient to allow the

Contractor to conduct the reviews. The Contractor shall conduct

an inventory of all security assessments, security plans,

security procedures, security training, security equipment,

security infrastructure, access controls, IT infrastructure that

supports security, and other information it deems necessary to

construct a baseline of the current security capabilities in each

of the ports. The review shall include all areas within the

territory of each port, including waterside operations and

approaches to each port, areas adjacent to the port and other

areas that have a direct bearing on port security.

Deliverable: The Contractor

shall prepare a comprehensive report on the current security

conditions within the ports that shall serve as a baseline for

recommendations to create port-wide security plans.

Task 3: Evaluate

the Overall Security Conditions of the Ports

The Contractor shall evaluate the

overall state of security within each of the ports. The

Contractor shall identify best practices where security is being

carried out in an exemplary manner. It shall identify gaps in

security in terms of processes, training, equipment,

infrastructure, cooperation among entities, or any other matter

having an adverse impact on achieving high levels of security

within the ports.

Deliverable: The Contractor

shall prepare a comprehensive evaluation of the overall security

conditions of the ports, built on the baseline established in

Task 2.

Task 4: Defining

a Port Security Model and Implementation Plan for the Ports

The Contractor shall construct a

working definition of port security appropriate for each of the

three ports that comports with the ISPS Code, European Union (EU)

Code EU/2004/725 on enhancing ship and port facility security,

2005/65/EC on enhancing port security, and other relevant EU

regulations. The Contractor shall then construct a strategy which

can be implemented by the ports that will allow for centralized

coordination and oversight by the port authorities and that will

achieve high degrees of security within each of the three

ports.

The end product of the TA shall be

an integrated plan to manage all the diverse elements that

operate within each port using a "systems" approach to security

management. Each component of security within each of the ports

is now managed to optimize the security performance of each

separate element within each port, and there is only rudimentary

oversight of the entire port. The goal of this task is to create

a security master plan for each port authority and to modify or

revise the component parts so as to contribute to the

optimization of the overall port security system. The approach

would bring an economy of actions in that it will maximize the

use of equipment and resources that are already in the ports, and

will reorient their use to support the overall security plan. The

goal of this task is to provide a layered security system that

meets the security needs of each component and which, working

together as a designed system, achieves overall port security

that can be centrally managed, thus establishing a "systems"

approach to security management. The Contractor shall determine

equipment, training, IT support, and other requirements necessary

to design and implement the port security operating system. The

implementation plan shall meet the needs of the three ports to

demonstrably increase levels of port-wide security and to be in

consonance with the regulatory requirements of the European

Union.

The Contractor shall present the

revised master security plans for each port as recommendations to

the Grantee. The Grantee shall review the recommendations with

other governmental entities and shall provide comments and/or

requests for changes to the master security plans to the

Contractor. The final determination by the Grantee on the

implementation of the recommendations and security master plans

will be made in accordance with governing procedures within

Latvia.

Deliverable: The Contractor

shall prepare a comprehensive strategy and implementation plan

that can be implemented by each of the ports; that will provide

for centralized coordination and oversight by each of the port

authorities; and that will achieve high degrees of security

within each of the three ports. The implementation plan will

include a training curriculum for managers and employees within

the three ports that Latvian port officials and the Grantee may

use in developing specific training for port and public sector

employees related to the port.

Task 5:

Financing assessment

The Contractor shall identify the

likely financing sources for the full implementation of the

recommendations of the TA, including multilateral development

banks (such as the European Bank for Reconstruction and

Development), export credit agencies, commercial lenders, and

special environmental funds, and determine the terms and

conditions of utilizing those funds relative to the TA and the

implementation of its recommendations.

Deliverable: The Contractor

shall provide a detailed overview of the available financing

options, including guarantees, direct loans and grants, along

with the principal terms and conditions. The Contractor shall

also provide an assessment of the effect that the available

financing options would have on the implementation of the TA

recommendations for the project structure and schedule. Finally,

the Contractor shall provide a TA description and term sheet to

be used by the Grantee in initiating negotiations with possible

financial institutions.

Task 6:

Environmental and Developmental Impact Assessments

The Contractor shall perform a

preliminary environmental impact assessment of the TA. The

primary objective of this task is to ensure that the TA and the

implementation plans will comply with all relevant Latvian and

European Union environmental regulations.

The Contractor shall also prepare

a report on the potential Development Impact of the TA in Latvia.

In the report, the Contractor shall focus on what the economic

development outcomes will be if the recommendations of the TA are

fully implemented. While specific focus should be paid to the

immediate impact of the TA, the Contractor shall include, where

appropriate, any additional developmental benefits of the TA,

including spin-off and demonstration effects. The analysis of

potential benefits of the TA should be as concrete and detailed

as possible. The Development Impact factors are intended to

provide the TA's decision-makers and interested parties with a

broader view of the TA's potential effects on Latvia. The

Contractor shall provide estimates of the TA's potential benefits

in the following areas:

- Infrastructure: a statement on

the infrastructure impact giving a brief synopsis.

- Market-Oriented Reform: a

description of any regulations, laws, or institutional changes

that are recommended and the effect they would have if

implemented.

- Human Capacity Building: a

description of the number and type of positions that would be

needed to fully implement the recommendation of the TA as well as

the number of people who will receive training and a brief

description of the training program.

- Technology Transfer and

Productivity Enhancement: a description of any advanced

technologies that will be implemented as a result of the TA. A

description of any efficiency that will be gained.

- Other: any other developmental

benefits to the TA, including spin-off or demonstration

effects.

Deliverables: The

Contractor shall prepare a preliminary environmental impact

assessment report. In the report, the Contractor shall identify,

and propose remedies for, any potential air, water, or noise

pollution increases that might result from implementing the

recommendations of the TA, as well as any environmental impacts

that may result from the installation of new equipment. The

primary objective of this task is to ensure that the proposed

Project will comply with all relevant Latvian and European Union

environmental regulations, and with the criteria of the

Export-Import Bank of the United States covering port projects

financed with credits or guarantees provided by the bank. The

Contractor shall also prepare a comprehensive report on what the

developmental impacts of the TA will be when it is fully

implemented.

Task 7: Final

report

The Contractor shall prepare a

detailed and comprehensive Final Report in accordance with Clause

I of Annex II of the Grant Agreement. The Final Report shall

incorporate the key findings, recommendations, and conclusions of

the TA and shall incorporate all other documents and/or reports

provided pursuant to Tasks 1 through 6 above. It is the

Contractor's responsibility to identify prospective U.S. Sources

of Supply in the Final Report to be submitted to USTDA and the

Grantee in accordance with Clause I of Annex II of the Grant

Agreement. The U.S. Suppliers list shall identify the

capabilities of each of the suppliers. The Final Report shall

also include proposed methods of financing the Project.

Conditions of

Work Effort

During the course of the TA the

Contractor shall work closely with the staff and management of

the Grantee, who shall cooperate fully in the timely completion

of all TA tasks. The Grantee shall arrange for the prompt and

complete submittal of all technical data necessary and

appropriate for carrying out the TA. Recognizing that the

documentation supporting the security programs is quite

extensive, the Grantee shall provide translated summaries in

English of documents as the government deems appropriate. The

Contractor shall be responsible for preparing all reports and

other documents resulting from the TA in English.

Notes:

(1) The Contractor is responsible

for compliance with U.S. export licensing requirements, if

applicable, in the performance of the Terms of Reference.

(2) The Contractor and the Grantee

shall be careful to ensure that the public version of the Final

Report contains no security or confidential information.

(3) The Grantee and USTDA shall

have an irrevocable, worldwide, royalty-free, non-exclusive right

to use and distribute the Final Report and all work product that

is developed under these Terms of Reference.

Annex II

USTDA Mandatory Contract

Clauses

A. USTDA Mandatory

Clauses Controlling

The parties to this contract

acknowledge that this contract is funded in whole or in part by

the U.S. Trade and Development Agency ("USTDA") under the Grant

Agreement between the Government of the United States of America

acting through USTDA and the Government of the Republic of

Latvia, acting through the Ministry of Transportation ("Client"),

dated ___________ ("Grant Agreement"). The Client has selected

________________ ("Contractor") to perform the technical

assistance ("TA") for the Integrated Master Port Security Plan

Project ("Project") in Latvia ("Host Country"). Notwithstanding

any other provisions of this contract, the following USTDA

mandatory contract clauses shall govern. All subcontracts entered

into by Contractor funded or partially funded with USTDA Grant

funds shall include these USTDA mandatory contract clauses,

except for clauses B(1), G, H, I, and J. In addition, in the

event of any inconsistency between the Grant Agreement and any

contract or subcontract thereunder, the Grant Agreement shall be

controlling.

B. USTDA as

Financier

(1) USTDA

Approval of Contract

All contracts funded under the

Grant Agreement, and any amendments thereto, including

assignments and changes in the Terms of Reference, must be

approved by USTDA in writing in order to be effective with

respect to the expenditure of USTDA Grant funds. USTDA will not

authorize the disbursement of USTDA Grant funds until the

contract has been formally approved by USTDA or until the

contract conforms to modifications required by USTDA during the

contract review process.

(2) USTDA Not a

Party to the Contract

It is understood by the parties

that USTDA has reserved certain rights such as, but not limited

to, the right to approve the terms of this contract and

amendments thereto, including assignments, the selection of all

contractors, the Terms of Reference, the Final Report, and any

and all documents related to any contract funded under the Grant

Agreement. The parties hereto further understand and agree that

USTDA, in reserving any or all of the foregoing approval rights,

has acted solely as a financing entity to assure the proper use

of United States Government funds, and that any decision by USTDA

to exercise or refrain from exercising these approval rights

shall be made as a financier in the course of financing the TA

and shall not be construed as making USTDA a party to the

contract. The parties hereto understand and agree that USTDA may,

from time to time, exercise the foregoing approval rights, or

discuss matters related to these rights and the Project with the

parties to the contract or any subcontract, jointly or

separately, without thereby incurring any responsibility or

liability to such parties. Any approval or failure to approve by

USTDA shall not bar the Client or USTDA from asserting any right

they might have against the Contractor, or relieve the Contractor

of any liability which the Contractor might otherwise have to the

Client or USTDA.