/ Global Fund Observer
Newsletter
Issue 225: 21 August 2013
GFO is an independent newsletter about the Global Fund.
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CONTENTS OF THIS ISSUE:
1. COMMENTARY:Greater Value for Money Through Enhanced Pooled Procurement
Better procurement systems are an essential element of the Global Fund’s drive to increase value for money and impact, writes Mark Dybul, the Fund’s Executive Director. The Global Fund expects to achieve big savings, he says, as a result of the increasingly proactive approach to procurement it is taking.
2. NEWS: Pilot Project Launched to Assist CCMs to Engage Key Populations
The Global Fund has started a pilot project with 10 country coordinating mechanisms whereby the CCMs receive additional funding to engage key populations in the country dialogue and in concept note development.
3. NEWS: Aidspan Removes Alert About Global Fund Grant Data on the Aidspan Website
Aidspan has removed from its website an alert concerning the quality of Global Fund grant data on the site. The problem was caused by the fact that the Global Fund had been providing erroneous data for grant agreement amounts and related fields on the grant pages of its website.
4. NEWS: Letter from Board Leadership Sets Out Priorities for the Next Two Years
Nafsiah Mboi, the new Chair, and Mireille Guigaz, the new Vice-Chair, have sent a letter to Global Fund Board members outlining where they believe the Board should focus its energy over the next two years.
5. NEWS:African Leaders Taking More Interest in Global Fund
African leaders are taking a more active role in fundraising for the Global Fund. They have held several meetings where they have expressed commitment to work with the Fund in fighting AIDS, TB and malaria in the continent.
6. NEWS: France Awards Funds for Technical Support for Global Fund Grants
Fourteen projects will be funded from the latest calls for proposals under France’s 5% initiative. The projects are related to governance and to procurement and supply management.
See section near the end of this newsletter listing additional articles available on GFO Live.
ARTICLES:
1. COMMENTARY:Greater Value for Money
Through Enhanced Pooled Procurement
By Mark Dybul
From January to June of 2013, the Global Fund to Fight AIDS, Tuberculosis and Malaria has saved $42.5 million in procurement. And our goal is to double that in the remaining six months of the year. As an example, earlier this year, the Tanzania National Malaria Programme acquired 16 million rapid diagnostic test kits for malaria by accessing the Global Fund’s pooled procurement facility. What was unusual about the transaction was not just its size but the fact that the price tag was less than half of what was originally budgeted for the purchase. Even more remarkable, the diagnostic kits were procured at a price per kit that was about one-third of what was paid in previous procurements of this vital tool in our fight against malaria.
These big savings are the result of an increasingly proactive approach at the Global Fund to procurement, aimed at bringing down prices for high-quality products and managing the supply chain to extract maximum value and ensure timely delivery. Running a smooth procurement process not only delivers better value for money, it also allows the Global Fund to better support countries to reach more people with life-saving programmes.
The Global Fund is one of the largest buyers of pharmaceuticals and health products in global health. More than 40% of Global Fund grant spending is for products ranging from drugs to treat HIV, TB and malaria; to mosquito nets; and to diagnostics that can ensure children are treated appropriately when they have a fever, and can ensure drug-resistant TB is detected within hours rather than weeks.
Our objective is to make the Global Fund the best possible partner to support national procurement mechanisms to obtain the greatest value for money in commodity and supply purchase and distribution. We aim to be their benchmark organisation in global health for sourcing and procurement by building collaborative relationships with partner agencies, including funders and suppliers to best meet country needs. That means harnessing the Global Fund’s enormous buying power – $1 billion for drugs and another $1 billion on health equipment, goods and services annually – to negotiate the best possible terms from our suppliers.
The Global Fund is working with national procurement agencies to develop simple leading-edge processes and tools that meet their needs and that will be “branded” as their own procurement systems for accessing globally negotiated prices. But our strategy is about more than just lower prices. At the heart of our effort is a programme to improve the way we manage pooled procurement by cutting out waste and activities that do not add value; and by ensuring effective governance and watertight compliance.
About half of the procurement supported by the Global Fund is currently managed through the pooled mechanism. To increase the return on investment, we plan to work with countries to ensure that the system meets their needs and that, increasingly, it becomes their mechanism of choice. This would enable us to raise the share of procurement done through the pool to about 80% within two years.
To ensure that we get the greatest value for money for the long term, our strategy includes working with the other large procurers for each commodity to develop long-term agreements with suppliers; forecasting demand more accurately; and ensuring a smooth supply chain that minimises delays in delivery and eliminates stock-outs. For example, the Global Fund is collaborating with organisations such as the (UK) Department for International Development, the (US) President’s Emergency Plan for AIDS Relief and UNICEF to better manage supply markets and relationships with manufacturers of health products, thereby increasing our negotiating leverage and security of supply. Until recently, we made “spot” purchases of relatively small amounts of medicines and paid a significant premium as a result. Long-term supply deals with drugs makers obviate that need by ensuring that purchase orders are in synch with production cycles of pharmaceutical companies, thus ensuring the best value for money. Standardising our procedures by narrowing the number of products that we procure to an approved list will also drive down costs.
One significant issue is counterfeit medicines and loss of commodities as they move through parts of the supply chain. We are working with international and national partners to establish rigorous systems to detect and weed out counterfeit drugs. We have recently introduced a “track and trace” system which locates the exact whereabouts of much of what the Global Fund procures, by means of an online tracking tool. For example, track and trace will keep tabs on the diagnostic kits ordered by Tanzania as they move from a manufacturer, across the ocean and through ports; and from central medical stores into the hands of health workers.
Better procurement systems are just one of the many ways that the Global Fund is putting more rigorous systems of accountability and transparency in place to increase value for money, while supporting national procurement systems to develop long-term capacity. But because of the large part of the Global Fund’s portfolio that supports the purchase of commodities and supply, it’s an essential element of our strong forward progress to maximise impact and save and lift up more lives.
Mark Dybul is Executive Director of the Global Fund.
[This article was first posted on GFO Live on 19 August 2013.]
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2. NEWS:Pilot Project Launched to Assist CCMs to Engage Key Populations
Additional funding under the new funding model (NFM) is being provided to 10 country coordinating mechanisms (CCMs) that are proactively engaged during country dialogue and concept note development with people living with or affected by the three diseases and with key affected populations.
This pilot project was announced in the 21 July issue of the Global Fund’s News Flash.
CCMs in the 10 countries – Democratic Republic of Congo, Lesotho, Sri Lanka, Swaziland, Uganda, Moldova, Thailand, Guyana, Nigeria and the Philippines – will each receive between $10,000 and $50,000, depending on the country’s size and disease burden.
The countries were selected because they were interim applicants, because their CCM is applying for CCM funding in 2013; or because the country is applying for funding for a large grant.
The intent of the initiative is to strengthen the ability of the CCMs to identify programmatic gaps and intervention needs, and to create “safe spaces” for key affected populations, especially those who are criminalised and marginalised, to engage in the process.
Each country will select a regional or global organisation to support the CCM and give feedback to the Secretariat on how the pilot is working.
The pilot project is expected to last until the end of 2013. Then, the Global Fund Secretariat will evaluate the initiative and decide whether to roll it out to all CCMs applying for funding in 2014.
[This article was first posted on GFO Live on 7 August 2013.]
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3. NEWS: Aidspan Removes Alert About Global Fund Grant Data
on the Aidspan Website
Aidspan has removed an alert on the portion of its website devoted to information on Global Fund grants. The alert had warned users to interpret the grant data with caution because the Global Fund had recently made changes to the grant data that it provided and because Aidspan needed some time to reflect these changes on its website.
On 10 July, GFO reported that the Global Fund was providing erroneous data for grant agreement amounts and related fields on the grant pages of its website. In that article, GFO reported that the Global Fund had recently implemented a new web services platform to correct the problem.
Aidspan is now satisfied that that the grant agreement and disbursement data on its website now match the data provided by the Global Fund on its new web services platform and, by extension, on the Fund’s grant pages.
[This article was first posted on GFO Live on 16 August 2013.]
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4. NEWS: Letter from Board Leadership Sets Out Priorities for the Next Two Years
One of the priorities of the new Chair and Vice-Chair of the Global Fund Board (“Board leadership”) is to assist implementing country delegations to be more fully engaged in strategic decisions taken by the Fund, “including those that have immediate impact at the country level.”
This was one of the messages in a letter that Chair Nafsiah Mboi and Vice-Chair Mireille Guigaz sent to Board members outlining the areas where they believe the Board should focus for the next two years.
The Board leadership said that the Board can learn from the capacity-building process recently undertaken by its two African constituencies.
The leadership said that continuous improvement in the management of human resources is crucial. “By focusing more on ethics, corporate values, clarification of our position vis-à-vis our organizational risk appetite, systematic personal and global quantitative and qualitative assessment, training and career prospects, we can achieve high levels of satisfaction and excellence in our human resources.”
With respect to how the Global Fund manages its overall resources, the Board leadership said that the priority for the rest of 2013 is to complete the design of the new funding model so that it can be fully rolled out in 2014. In 2014, they said, the Board will need to focus more of its attention on its fiscal strategies and practices, “to ensure that resources are managed by the Fund as effectively and efficiently as possible.” The leadership said that a discussion will be launched at the first Board meeting of 2014 on the way the Global Fund manages its own assets (at the World Bank).
The Board leadership said that at its meeting in Sri Lanka in June, the Board affirmed the need to maintain the focus on holding the Global Fund accountable for the achievement of measurable targets and standards. The Board will be asked to approve new key performance indicators (KPIs) at its November 2013 meeting. The leadership said that progress against these KPIs will be an important part of the Executive Director’s annual performance assessment. In addition, some of the KPIs will be relevant to the annual performance assessment of the Inspector General.
The Board leadership said that the Global Fund’s current risk management framework will be revised by February 2014. The leadership is recommending that the Board place a risk oversight discussion on its annual Board calendar, “so that we are collectively discussing risk tolerances, their determination, and appropriate responses more routinely than in the past.”
The Board leadership said that in 2014 the Board will be asked to continue the conversation on evolving the Partnership Forum mechanism. “Used well and with value for money principles also in mind, the mechanism presents a powerful opportunity for us to keep the Global Fund focused on being a true partnership,” they said.
The leadership said that it would like to ensure that the Board achieves more effective coordination of key cross-cutting issues such as assessing performance against the KPIs and overseeing risk management.
Another priority for the Board, the leadership said, is the mid-term review of progress related to the Fund’s 2012–2016 Strategy. The review will start in 2014.
The letter from the Board leadership included a section on principles, in which the leadership said that the Board should adhere to the path created by the previous Board “without changing models even before their implementation.”