1. Global Fund Assessments Part I: Processes and Tools Geneva – December 2005

2. 1 Purpose The aim is to maximize speed to implementation and efficient and effective use of funds. Accordingly, the Global Fund together with assistance from all actors must: 1.determine if the nominated Principal Recipient’s existing systems and capacities are sufficient to implement successfully the approved proposal; and 2. identify critical capacity gaps (if any) that need to be addressed in the short- and/or long-term. It is important to remember that what is being assessed is the capacity of the nominated PR to implement successfully the program described in the proposal. Approval of the proposal by the Board is approval of the technical merit of the proposal (based on the TRP’s recommendation) and is not approval of the PR, implementation arrangements etc.

3. 2 Timing The steps to grant signing are as follows: 1. 2. 3. 4. 5. 6. 7. 8. Deadline for signing grants = 1 year from approval of proposal The Proposal TRP Clarifications Implementation arrangements defined and plans prepared LFA Assessments Capacity building (as necessary) Grant Signing Capacity building during implementation and fulfillment of CPs

4. 3 The Role of the Local Fund Agent (LFA) Reflecting the importance of the LFA to the Global Fund’s operations. LFA Assesses PR(s) Identifies capacity building needs Reviews budgets and intended results Assists with grant negotiations Prior to signing of grant agreement & first disbursement of funds Approves PR(s) Signs grant agreement with PR(s) – incorporating capacity strengthening requirements + program indicators During program implementation – Performance Based Funding Receives and reviews PR’s reports Performs ad-hoc verifications Advises Global Fund on PR performance Advises Global Fund on disbursement requests Advises on Phase 2 renewal process Decides on disbursements and/or other actions Decides on funding beyond the first two years - based on performance Global Fund PR Prepares draft implementation plans Responsible for sub-recipients Implements program according to approved plans Provides periodic reports on performance

5. 4 The Role of the LFA (Cont.) Selection: Appointed by competitive process – may have already been selected for a country Skills: Various skills necessary, including: country knowledge, budget analysis, program management, monitoring and evaluation, procurement and supply management (esp. health products) …. Role: Involves assessment of capacities, verification of programmatic and financial results, maintaining knowledge of context and actors, communication with Global Fund Note: -LFA represents and advises the Global fund and not other actors -LFA cannot be involved in the design, management or implementation of a program -LFA does not have authority to “approve” on behalf of the Global Fund → LFA advises Global fund but Global Fund makes final determinations

6. 5 The Principal Recipient Assessment Report The PR Assessment Report is the written product of the LFA’s assessments and is the document that the Global Fund relies on for grant negotiations. There are now two standard form PR Assessment Report templates - one for new PRs and one for repeat PRs: PR Assessment Background Analysis? Principal Recipient Assessment Report "A", "B" or "C" rating 1 2 FMSI+PM+EPSM Usually full assessments required Incremental assessments PR (REPEAT) Assessment Report "A", "B" or "C" rating New PR Repeat PR Existing recent and reliable assessments (GF and other donor?) FMSI+PPSMM+E

7. 6 Scope and Focus of Assessments Four functional areas: 1.Institutional and Programmatic (Program Management) 2.Financial Management and Systems 3.Monitoring and Evaluation 4.Procurement and Supply Management Systems Extent of assessments depends on many factors:  Publicly available recent and reliable information  Size of grant  Country context  Particular risks?  Extent of program activities  Perceived capacity weaknesses Ranges from full on-site assessment to limited assessment. Scope and focus of assessments agreed by LFA and FPM before assessments begin (although may be extended as necessary during review process).

8. 7 Assessment Tools The Global Fund has developed “tools” to help guide the LFA in conducting its assessments for each functional area The tools are not required to be completed in all cases In any particular case, additional questions may be tailored for specific circumstances Monitoring and Evaluation: –M&E Toolkit –M&E Self-assessment checklist –M&E Guidelines Procurement and Supply Management Systems: –Guide to Global Fund Procurement Policy –Guide to Writing a PSM Plan –Article 18/19 of the Grant Agreement

9. 8 The Global Fund will use the LFAs assessment rating to decide whether: i.to enter into a grant agreement with the nominated PR (A1 – B2) ii.Any capacity strengthening measures are required (B1 – B2) The Global Fund may also adjust its initial disbursement amount and disbursement frequency based on the PR rating Exceeds A1 Fully satisfies Sufficient but manageable capacity issues Major risks – Interim PR may be required A2 B1 B2 C1 Major risks – No PR potential C2 Sufficient but material capacity issues Assessments - Requirement for Overall Rating of PRs

10. 9 Translating assessment results into better implementation arrangements Most PRs are assessed in the “B” category (even an “A” rating for overall capacity may have a “B” rating in one functional area) The question is how and when to address the capacity issues identified (See Part II: Understanding Assessment Results - Conditions Precedent) How? –LFA makes recommendation –PR has self-assessed and has plans and suggestions –CCM involvement –Partners offer assistance → Collaborative process When? –A “B1” rating generally suggest that capacity issues can be addressed concurrently with implementation –A “B2” rating generally suggests that capacity issues need to be addressed before implementation begins (if they are not addressed in time, another entity may need to be brought in as an additional or replacement PR) → Aim is to ensure that PR can move to effective program implementation as soon as possible

11. 10 Pre Grant signature issues 1 CCM Grant Proposal not designed with implementation arrangements in mind Delay in confirming implementation arrangement Implications for LFA assessment (timing and extent and cost) 2PR Lack of Capacity Ability to access funds to build capacity prior to grant signing Conditions Precedent – program management milestones - a warning flag? CCM PR

12. 11 Lessons Learnt Political commitment Strong leadership and direction by the program managers, including clear decision-making lines and reporting lines and defined roles and responsibilities A responsible CCM with true representation from all stakeholders Good advance planning, including workable M&E and procurement plans Systems in place to manage sub-recipients and ensure correct and complete reporting (including by ensuring rapid progress to signing agreements between PR and each SR) Identifying problems early on and seeking assistance Good communication with all relevant parties, including alerting the FPM early on if problems are identified Procedural rules that strike the right balance between protections and control and efficient management (e.g. so that disbursements to SRs are not held up by procedural problems but at the same time the decision to disburse is made based on performance) Quality LFA feedback – key for Global Fund to know what is going on and how to mobilize support to free up a bottleneck

13. 12 Technical Assistance Areas where partner support and technical assistance can be critical to successful future implementation: Good advance planning, including workable M&E and procurement plans Systems in place to manage sub-recipients and ensure correct and complete reporting (including by ensuring rapid progress to signing agreements between PR and each SR) Identifying problems early on and seeking assistance Good communication with the FPM, including alerting the FPM early on if problems are identified

14. 13 Conclusion Ideally, the assessment process should be an inclusive process that helps to ensure that once the grant agreement is signed, all actors know what is required of them, trust has been established, sources of support have been identified and engaged and all parties are moving in the same direction to maximize speed to implementation and efficient and effective use of funds so that people in need can be reached quickly and effectively.