GLOBAL FUND OBSERVER (GFO), Issue 140: 3 February 2011.

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GLOBAL FUND OBSERVER (GFO), an independent newsletter about the Global Fund provided by

Aidspan to over 8,000 subscribers in 170 countries.

Issue 140: 3 February 2011.

(For formatted web, Word and PDF versions of this and other issues, see www.aidspan.org/gfo.)

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CONTENTS

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1. COMMENTARY:

Donor Timidity

" The last ten days

have shown how timid some of the Global Fund's donors can be when the going

gets tough. Clearly, the task of detecting fraud is more challenging than the

Fund recognised until last year. But at least the Fund is tackling the issue

forcefully and openly. Yet the Fund has been severely penalised, by the media

and some of its donors, for doing what similar institutions have not had the

courage to do. "

2. NEWS: TRP Report

Comments on Technical Quality of Round 10 Proposals

In its report on the

Round 10 proposals it reviewed, the Technical Review Panel (TRP) made a number

of observations concerning the technical content of the proposals. This report

should be of great interest to future applicants.

3. NEWS: TRP

Reiterates Concerns about New Applications for Funding Being Made Prematurely

The TRP says that it is

concerned about new applications for funding being submitted when lessons on implementation

have yet to be drawn from the applicant's existing grants. This article reports

on this and on several other observations that the TRP made on the Round 10

applications process.

4. NEWS: Bold New

Targets Set at Board Retreat

The Global Fund Board

says that the Fund's new strategic plan should have " bold, ambitious and

measurable objectives " - including tripling the number of lives saved and

the number of infections averted between 2011 and 2016.

5. NEWS: Global

Fund Says Its VPP Programme Contributes to Price Stabilisation and Market

Sustainability

The Global Fund says

that its Voluntary Pooled Procurement (VPP) programme has resulted in increased

pooling of demand, and has contributed to price stabilisation and market

sustainability for the medicines that it covers - but it adds that a number of

challenges remain.

6. NEWS: Global

Fund Seeks Ways to Better Respond to Humanitarian Emergencies

The Global Fund should

be more effective in responding to humanitarian emergencies, according to the

Board's Portfolio and Implementation Committee. One way of doing that would be

to ensure that populations affected by humanitarian emergencies are better represented

on country coordinating mechanisms (CCMs) and on the Global Fund Board.

7. NEWS: Phase 1 of

AMFm Now Fully Underway

With seven out of the

nine grant amendments signed with PRs as of mid-November 2010, Phase 1 of the

Affordable Medicine Facility - malaria (AMFm) is formally underway. The first

countries to receive medicines under the AMFm were Ghana

and Kenya.

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1. COMMENTARY: Donor Timidity

by

Bernard Rivers

In June 2002, Feachem, who had just been

appointed as the Global Fund's first Executive Director, painted an

unconventional vision for the Fund in a speech he made in Washington

DC. " We will take risks. We

will fail. We will make mistakes. We will learn, and we will move ahead. "

A few months later, Feachem told the Global Fund

board that the Fund's work could be defined by three priorities: " Raise

it, Spend it, Prove it. " At that time, a lot of people, including me,

thought that " Raise it " would be the hardest part, and " Spend

it " would be the easiest part. We were wrong. Spending billions of dollars

transparently, accountably, effectively, and in ways that allow grant planning

and implementation to be " country led " , is very hard - which is the

main reason why the Fund currently has six hundred staff rather than the fifty

that it originally anticipated.

The last ten days have shown not only how hard

it is to be the flexible innovative institution that Feachem envisioned, but

also how timid some of the Fund's donors can be when the going gets tough.

To illustrate why " Spend it " is not a

simple matter, let's take a look at the Fund's grants to Mauritania, where, as reported in

GFO 107, 125 and139,

there was extensive fraud lasting several years. With the wisdom of hindsight,

we can see that those particular grants represented a " perfect storm "

of risk factors. First, by Global Fund standards, the grants were small, so

they were originally overseen in Geneva

by a fund portfolio manager (FPM) who was relatively junior and who was also

responsible for two other countries. Second, a different FPM was then assigned

almost every year since then. Third, much of the funding was, quite

legitimately, forwarded by the principal recipients (PRs) to sub-recipients

(SRs) and sub-sub-recipients (SSRs), thereby putting the management of that

money at one or two steps removed from the people who were assigned to oversee

the PRs. Fourth, many of the approved grant activities involved transient

things like training sessions conducted by the SRs and SSRs, which made it relatively

easy for them to invoice the PRs, with fabricated backup documentation, for

fictitious events that never took place - which is what happened, to an

astonishing degree. (For some examples of fraudulent documentation, see

" Fraud and Abuse in Global Fund grants " here.)

Fifth, the grants focussed almost entirely on the supposed delivery of

services, and did not devote any meaningful amounts of money to strengthening

managerial skills within the PRs. (If they had, the corruption might have been

avoided, or detected at an early stage.) Finally, the Fund did not spell out

clearly how the responsibility for detecting possible fraud by SRs and SSRs was

supposed to be divided between the PRs, the FPM, and the local fund agent

(LFA), not to mention the CCM.

Of course, the Global Fund spotlight is now

shining hard on Mauritania,

where the Fund has suspended one grant and closed two others at the end of

Phase 1, where people have been arrested for corruption, and where the

government has been required to return money to the Fund.

Clearly, the task of detecting fraud is more

challenging, and the cost of doing so is greater, than the Fund recognised

until last year. But at least the Fund is tackling the issue forcefully and

openly. As I asked in my Commentary on this topic last week, how many grant-making institutions such

as Pepfar, DFID, USAID, UNDP, Gates Foundation, Norad, SIDA and the World Bank

have committed to publish at their website, unedited, the findings of an

Inspector General who has the freedom to investigate grant recipients at will?

I have yet to find one who has.

The plain fact is that the Global Fund has been

severely penalised, by the media and some of its donors, for doing what similar

institutions have not had the courage to do.

Let's go through the sequence. First, the Global

Fund's Office of the Inspector General (OIG), as per its mandate, conducted

in-depth audits and investigations in multiple countries and, when it

encountered fraud, the Fund published the OIG's reports at the Fund's website. Then the Global Fund board discussed these

findings extensively at its meeting in December. Then, on January 23, the

Associated Press published anarticle entitled " Fraud Plagues Global Health Fund " (which

contained no data beyond those already-public findings). The story was picked

up by 250 media outlets around the world. On witnessing the enormous press

coverage, Germany and Ireland

immediately expressed great concerns and put their contributions to the Fund on

hold. (Sweden

had already done so, upon reading the OIG's reports.) " We have initiated a

special enquiry and stopped all German payments into this fund until further

notice, " a spokesperson for Dirk Niebel, the German development minister, said.

Niebel's press office told Nature that the media's corruption reports had come as a surprise.

" We are surprised that Germany is surprised, " tartly

responded the Global Fund's spokesperson Jon Liden. Germany is represented on the

Global Fund board, had received the OIG's reports last year, and had

participated in the Board's December discussions about all this several weeks

before the AP ran its story.

Certainly, and deservedly, the Global Fund

Secretariat is a bit shell-shocked, having learned some sharp lessons about the

need to be constantly on the watch for corruption (and about the

unpredictability of the press). What annoys me is the inconsistent position taken

by some of the donors on the Global Fund board. A responsible board for any

organisation should devote considerable energy to checking whether it has solid

confidence in the Executive Director and the Secretariat that he/she leads. If

any board members do not have this confidence, they should say so, and they

should be willing to resign if things don't improve. Otherwise, board members

should firmly back the organisation and its Executive Director. No board

members resigned when this matter was fully discussed at the December board

meeting, and no resolution was passed criticising how things had been handled.

But I've only found two donor board members (namely, the Global Business

Coalition, representing the private sector, and the Gates Foundation)

that, since the AP story, have issued statements backing the Fund.

One problem with the Global Fund board is that

the representation is, in many cases, not senior enough. Mid-level bureaucrats

represent their countries on the board, where they discuss issues in

mind-numbing detail. But then when things get hot, some of their ministers take

new positions in order to satisfy their own constituencies.

The Global Fund is far from perfect. But it is

doing a credible and improving job on corruption - and on being open about its

methods and findings. It deserves better support from its donors as it

continues to implement the vision of flexible innovation that Feachem

first enunciated in 2002.

Bernard Rivers (rivers@...) is Executive Director of Aidspan and Editor of GFO.

STOP PRESS:

As GFO was going to press, we learned of a 2

February news story by Fox News entitled " Exclusive: Global Fund Backed by

Bill Gates to Launch Probe in the Wake of Fraud. " The story said:

" An independent probe into fraud allegations ... will

be announced later this week ... Fox News has learned. ... Its imminent

announcement was officially confirmed to Fox News by Jon Liden, a spokesman for

the Global Fund ... who added that 'an independent, trusted individual' will be

named as head of the probe, which the fund prefers to call a 'review.' ...

According to Liden, 'all donor countries' to the fund would be invited to

participate in the review. ... German Development Minister Dirk Niebel, who

initially sparked the funding freeze, has said that the funding freeze will

stay in place until the investigation finishes its work, which he anticipates

will be this summer. According to Germany's Niebel, the fund has

'given an assurance that the ongoing treatment of sick people will not be

compromised at any point by the investigations.' But according to the fund's

spokesman, 'any withholding of a German contribution for 2011 will affect our

ability to sign grants approved for funding in December 2010.' "

As of 10:30 am Geneva time on 3 February, this news does not

feature at the Global Fund web site.

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2. NEWS: TRP Report Comments on Technical Quality of Round 10 Proposals

" Applicants do not

understand how gender inequality should be addressed "

TRP concerned about

proliferation of sub-recipients

Editor's Note: This article, and

the following one, report some of the observations of the Technical Review

Panel (TRP) on the Round 10 proposals it reviewed. This is a very important

document for future applicants to read because it provides important insight

into what the TRP thinks should be included in proposals. The report can be

downloaded from the Global Fund website; see the link at the end of each

article.

OBSERVATION: In general,

Round 10 applicants did not understand how gender inequality should be

addressed in their proposals. Many proposals " compartmentalised "

gender in a dedicated section of the proposal form, when instead they should

have been integrating and mainstreaming gender throughout the proposal.

OBSERVATION: Many Round

10 proposals requested funding for behaviour change communication (BCC)

interventions without providing or demonstrating sufficient evidence of

programme-level impact in the context of their particular country. Furthermore,

applicants tended to only include output indicators for BCC activities - i.e.,

no impact or outcome indicators.

OBSERVATION: Many of the

budgets submitted with the Round 10 proposals lacked the required detail,

clarity and accuracy.

These are three of the many observations made by

the Technical Review Panel (TRP) on the technical quality of the Round 10

proposals that it reviewed. The observations are contained in a section on

lessons learned in a report presented to the Global Fund Board at its meeting

last December.

The TRP said that it was concerned about the

proliferation of sub-recipients (SRs) in Global Fund grants. Because each SR

has its own overhead costs, the TRP stated, the amount of funding going towards

SR overheads " may not represent good value for money. " The TRP also

said that when there are numerous SRs, coordination becomes more challenging.

In addition, the TRP expressed concern about

what it called the " limited inclusion in proposals of existing human

rights instruments and measures to address stigma and discrimination. "

According to the TRP, issues of stigma and discrimination must be addressed

together and must complement measures to address gender inequality. The TRP

said that applicants should include interventions to address stigma and

discrimination rather than just making token mention of stigma and discrimination

in the text of the proposal. The TRP also urged applicants to address the

criminalisation of key populations, and to demonstrate the role of civil

society organisations in the " social de-criminalisation " of these

populations.

The TRP report also contained several

recommendations directed at future applicants. For example, The TRP

recommended:

that applicants increasingly

consider the use of community approaches to improving adherence to ARVs;

that all requests for patient

support include supporting evidence to allow the TRP to assess the

feasibility and impact of such activities; and

that applicants provide strong

justification in their proposal in cases where U.N. agencies are nominated

as either PRs or SRs.

Other recommendations directed at the Secretariat

and partner organisations may also affect applicants in future rounds. (See

next article.)

The TRP's observations are

contained in " Recommendations and Lessons Learned from the Round 10

Proposal Review Process, " which is 15 pages long, and which constitutes

Part 5 of the " Report of the Technical Review Panel and the Secretariat on

Round 10 Proposals. " The report is available, in its entirety, on the

Global Fund website at www.theglobalfund.org/en/trp/reports.

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3. NEWS: TRP Reiterates Concerns about New Applications for

Funding Being Made Prematurely

TRP recommends MARP stream be

continued in future rounds

The Technical Review Panel (TRP) says that it is

concerned about new applications for funding being submitted when lessons on

implementation have yet to be drawn from the applicant's existing grants. This

is one of the many observations made by the TRP in its report on Round 10

proposals.

The TRP has raised this issue several times

previously. In its report, the TRP said it is urgent that this issue be

addressed before Round 11. The TRP " strongly recommended " that the

Global Fund Board clearly define the rules for applying for new funds on a repeat

basis, especially in situations where countries have an unsigned grant or are

in the early stages of a recently signed grant.

The TRP report covered many topics. We present a

few highlights below. Readers should consult the full report to obtain more information.

Consolidated proposals: The TRP said that the experience with consolidated proposals in

Round 10 was, overall, " positive. " In general, applicants did a good

job addressing the weaknesses of existing programmes, of explaining how these

programmes would be modified, and of distinguishing between existing activities

and (proposed) new activities.

MARPs proposals: The TRP said that the quality of the proposed interventions for

most-at-risk populations (MARPs) was greatly enhanced in Round 10, not only in

MARPs proposals themselves, but also in other HIV proposals. The TRP attributes

this to a greater focus on this topic brought about by the introduction of a

separate reserve for MARPs funding. The TRP recommended that the MARPs stream

be retained in future rounds, and possibly expanded.

Removal of a limited set of

elements: In

Round 10, compared to prior rounds, the TRP had increased authority to

recommend a proposal for funding conditional upon the removal of a limited set

of elements. The TRP exercised this authority, removing a total of about $96.5

million from the lifetime budgets of 14 proposals. (See " TRP Removed Parts of 14 Round 10 Proposals

Recommended for Funding, " in GFO 138.) The TRP said that decisions concerning the removal of elements

would be better made when the applicant is responding to requests for

clarification from the TRP. The TRP said that removing specific elements was

especially challenging in the case of consolidated proposals; the TRP

recommended that the Global Fund Secretariat provide clearer guidance to both

applicants and the TRP on the removal of specific elements from consolidated

proposals for Round 11.

Human resources: Noting that significant funding is requested for human resources,

the TRP said that the way compensation is currently addressed in Global Fund

financing could lead to " mismanagement, 'internal brain drain' and,

potentially, destabilization of the rest of the health care system. " The

TRP recommended that, before Round 11, the Global Fund set strict rules for

compensation. The TRP also recommended that, in their proposals, applicants

provide a strategy on how they plan to try to retain their current health

workers. In addition, the TRP recommended that all in-service training requests

be based on a training needs assessment and include a plan for a training

impact assessment. Finally, the TRP recommended that impact indicators be

developed to measure the effect of training efforts.

Financial gap analysis: The TRP said that " too often " applicants " fail to

present a robust and accurate financial gap analysis. " The TRP recommended

that, before Round 11, technical partners provide support to countries in

developing clear, detailed and evidence-based financial gap analyses for the

diseases and for the health sector. This could include supporting countries

with costed national strategies and strategic plans, as well as forecasting

pipelines from national and other sources.

Other topics covered in the TRP's report were

the role of U.N. agencies, performance and evaluation frameworks, grant

performance reports, cost-sharing, technical assistance and translations.

The " Report of the

Technical Review Panel and the Secretariat on Round 10 Proposals " is at www.theglobalfund.org/en/trp/reports.

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4. NEWS: Bold New Targets Set at Board Retreat

Board wants to triple number

of lives saved and number of new infections averted by 2016

No consensus on whether to

alter the Global Fund's mandate

The Global Fund Board says that the Fund's new

strategic plan should have " bold, ambitious and measurable

objectives " - including tripling the number of lives saved and the number

of infections averted between 2011 and 2016. This information is contained in a

report prepared by Dr. Tedros A. Ghebreyesus, Chair of the board, on the

board's recent retreat, which was held prior to its regular meeting in December

2010 in Sofia, Bulgaria.

in addition to the objectives related to lives

saved and infections averted, the board said that the Global Fund needs to do more

to leverage the impact of its investments, particularly with respect to health gains for women and children; to increase efforts to

maximise value for money; to increase efforts to ensure protection of human rights

and access to prevention, treatment, care and support for all, including the

poorest and most marginalised populations; and to increase efforts to ensure

the sustainability of programmes to which the Global Fund is currently

contributing.

One area where the board failed to reach a

consensus at the retreat concerns the mandate of the Global Fund. There were

divergent perspectives on whether the objectives related to the number of lives

saved and infections averted should be phrased in a way that allow the Global

Fund to progressively expand its mandate. According to the report,

" While some of the

participants strongly felt that the objectives of the new strategy should

clearly reflect an intention to expand the mandate, others felt that it was not

yet the right time to do so, primarily because in the current

resource-constrained environment this could lead to a partially unfunded

mandate, but also because efforts to make the Global Fund even more effective

and efficient need to progress further. "

Board members agreed that this issue would have

to be resolved at another time.

The timetable for the development of the new

strategic plan is as follows:

a first draft of a strategy

framework will be ready for discussion at the 23rd board meeting in May 2011;

discussions will take place at

the partnership forum scheduled for June 2011;

a broad consultation process

will be launched around the same time; and

the board will approve the plan

by the 24th board

meeting at the end of 2011.

Board members agreed that the reform measures

currently underway should be implemented swiftly, and should not be delayed

while the new strategy is developed. The reforms are focusing on three broad

areas: board reform; reform of the Global Fund Secretariat; and reforms to

other core structures and processes, including country-level processes from

proposal development through programme implementation and evaluation. (Aidspan

reported on the reform package in GFO 130 - see " New Country Team Approach " Adopted

for Managing Grants. " )

In his report, the Chair said that participants

at the retreat " reflected on our major successes to date, but also on the

many challenges we face today.... There was consensus that we have done well

and that the challenge now is to do even better. "

The information for this

article was taken from " Board Chair's Summary - Board Retreat: December

10-11, 2010, " which may be posted soon at www.theglobalfund.org/en/board/meetings/twentysecond/documents.

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5. NEWS: Global Fund Says VPP Programme Contributes to Price

Stabilisation and Market Sustainability

Forty-two countries have

participated

The Global Fund says that its Voluntary Pooled

Procurement (VPP) programme has resulted in increased pooling of demand, and

has contributed to price stabilisation and market sustainability for the

medicines that it covers. However, a number of challenges remain. This

information is contained in a report prepared for the Global Fund Board meeting

in December 2010.

The VPP is a mechanism that allows participating

principal recipients (PRs) to procure a large number of health products through

a global pooled procurement service operated by third party procurement agents

selected by the Global Fund.

The Global Fund said that, so far, 42 countries

representing 83 grants have participated in the VPP, far exceeding expectations.

A total of $384 million in orders were confirmed by September 2010, 91% of

which were for core products - long-lasting insecticide treated nets (LLINs)

(78%), antiretrovirals (ARVs) (10%) and artemisinin-based combination therapies

(ACTs) (3%).

Master supply agreements were signed with

manufacturers of most ARVs and ACTs. Between June 2009 and September 2010, an

average decrease of 14% in the price ceilings for both ARVs and ACTs was

achieved.

Under the VPP, $220 million worth of health

products, representing 57% of confirmed orders, have been delivered to PRs.

Average time for delivery was 6-8 months. The Global Fund said that an earlier

analysis of procurement processes at the national level showed an average of

5-18 months for delivery.

One of the challenges faced by the VPP is how to

ensure the long-term participation of countries in the programme, especially

when there are changes in PRs. Other challenges include the difficulty of

aggregating demand effectively (due to various country- and grant-specific

factors); the fact that emergency orders account for 40% of requests; and the

difficulty of sourcing health products other than LLINs, ARVs and ACTs, which

are not core VPP products but which nevertheless are critical for grant

implementation.

Information for this article

was taken from the " Report of the Market Dynamics and Commodities Ad-Hoc

Committee, " December 2010, Document GF/B22/10, which should be available

shortly at www.theglobalfund.org/en/board/meetings/twentysecond/documents.

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6. NEWS: Global Fund Seeks Ways to Better Respond to

Humanitarian Emergencies

Populations affected by humanitarian emergencies

should be better represented on country coordinating mechanisms (CCMs) and on

the Global Fund Board. This is one of the observations of the board's Portfolio

and Implementation Committee (PIC), which has been discussing ways to make the

Global Fund more effective in responding to such emergencies.

In its discussions, the PIC distinguished

between acute and protracted emergencies. For acute emergencies, the PIC

suggested that the Global Fund Secretariat explore opportunities to

re-programme existing grants; and explore the feasibility of establishing a

special emergency fund, or similar mechanism.

For protracted emergencies, the PIC suggested

that populations affected by these emergencies be included in the definition of

" key populations " ; that proposal guidelines emphasise the need to

include these populations in proposals, where appropriate; and that affected

countries explore the possibility of submitting regional proposals.

The PIC said that given the significant public

health needs of these countries, and the often challenging administrative and

management environment, the secretariat should take a more focused and

strategic approach to strengthening grant performance in countries with

humanitarian emergencies.

Information for this article

was taken from the " Report of the Portfolio and Implementation

Committee, " December 2010, Document GF/B22/5, which should be available

shortly at www.theglobalfund.org/en/board/meetings/twentysecond/documents.

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7. NEWS: Phase 1 of AMFm Now Fully Underway

Ghana, Kenya

- first countries to receive medicines

As of mid-November 2010, seven out of nine grant

amendments had been signed with PRs in countries that are involved in Phase 1

of the Affordable Medicine Facility - malaria (AMFm). The first countries to

receive medicines under the AMFm were Ghana

and Kenya.

The AMFm is a mechanism designed to expand

access to affordable artemisinin combination therapies (ACTs) for malaria

through the private sector by reducing the cost of ACT drugs, and by ensuring

that additional activities, such as public information campaigns, are carried

out. The AMFm is currently being piloted in eight countries - Cambodia, Ghana,

Kenya, Madagascar, Niger,

Nigeria, Tanzania (mainland and Zanzibar)

and Uganda.

As Aidspan reported in GFO 136, the Global Fund Board decided at its December 2010 meeting to

extend Phase 1 of the AMFm by six months, to November 2012, due to delays

experienced in getting Phase 1 underway.

Kenya has undertaken a media launch to formally initiate AMFm

implementation in that country. Ghana

and Nigeria

have organised workshops with stakeholders to establish timelines for their

launches. Kenya, Madagascar, Niger

and Tanzania

have identified sub-recipients (SRs) to implement AMFm marketing activities. In

addition, master supply agreements that outline the contractual relationship

between the Global Fund and ACT manufacturers have been concluded with all

eligible AMFm Phase 1 manufacturers.

As of mid-November 2010, 110 buyers from all but

one of the AMFm Phase 1 countries had signed a " First Line Buyer

Undertaking. " The majority of buyers (104) and orders are from the private

sector and NGOs. (The relative lack of public sector procurement is due to the

need for the public sector to use tenders, and to country procurement procedures

that frequently are time-consuming.)

As of mid-November 2010, the Global Fund

Secretariat had received 51 requests for co-payment of ACTs costing $21.5

million - enough to provide almost 21 million treatments.

Under the AMFm, the Global Fund pays for a

portion of the cost of the drugs. The Global Fund established an AMFm

Co-Payment Fund and solicited contributions from other organisations. As of

mid-November 2010, contributions to the co-payment fund totalling about $216

million have been received from UNITAID, the United Kingdom Department for

International Development (DfID) and the Gates Foundation.

Information for this article

was taken from the " Report of the AMFm Ad-Hoc Committee, " December

2010, Document GF/B22/10, which should be available shortly at www.theglobalfund.org/en/board/meetings/twentysecond/documents.

" Reproduced from the Global Fund

Observer Newsletter (www.aidspan.org/gfo), a service of Aidspan. "

Forwarded by:

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