Board Decisions


Approved by the Board on: 27 April 2007

Re-tendering of Local Fund Agent Contracts

The Board urges the Secretariat to develop and implement a grant-associated risk assessment framework as soon as possible, noting that the Local Fund Agents (LFAs) are an inherent part of the Fund's assurance framework.

The Board directs the Secretariat to re-tender LFA contracts on a 4-year basis, with contracts subject to the right of the Secretariat to cancel such contracts based on a mid-term performance review of the LFA, to be initiated between month 18 and 24 of the contract.

The Board provides the following recommendations, as indicated in the Report of the Portfolio Committee (GF/B15/7), on key principles to guide the Secretariat in the process of re-tendering:

  1. LFAs should act in a timely, open and reliable manner in order to be responsive to program needs;
  2. LFAs themselves should be subject to more rigorous performance assessment (including through the use of penalties);
  3. There needs to be a balance between the requirement for knowledge of local circumstances and the need to avoid potential conflicts of interest;
  4. LFAs must be able to monitor financial management performance and program performance, and link the two components;
  5. The Portfolio Committee (PC) cautioned against building up new institutions or architecture in-country;
  6. The tender process should provide open space to encourage a diversity of participants, including civil society, possibly setting up a process to encourage consortia applications; and
  7. While recognizing that LFAs need a diversity of skills, there is a need for clear lines of accountability so country program implementers and the Secretariat can deal with a single reporting entity.

The Board recognizes the urgent need for protocols to be developed to guide LFA communication with CCMs, PRs and technical operations partners in-country.

The Board also affirms that the PC's recommendation that the re-tendering process proceed in a way that optimizes, to the extent possible, the Global Fund's partnerships, with key technical agencies, such as UNAIDS and WHO.

The Board recognizes that the primary responsibility for sub-recipient (SR) oversight resides with the Principal Recipient.

However, the Board directs that the Terms of Reference of LFAs shall include the assessment of the systems and procedures that PRs possess for the oversight of SRs, which shall include both initial capacity assessments and ongoing implementation oversight. The LFA's fulfilment of this function shall be an element in the Secretariat's ongoing evaluation of LFA performance, including at the mid-term review.