3.) Grant recipients. Assessment of grant recipients’ capacity. Grant renewal process. Global Fund Has Improved Documentation of Its Basis for Funding Decisions

The Global Fund has improved its documentation of information  supporting its performance-based funding decisions. For example, the  Global Fund’s system now requires that portfolio managers consistently  document factors that may affect the decision to continue funding a grant,  especially when the grant falls short of its performance targets. In  addition, the Global Fund grant files that we reviewed consistently  contained explanations of funding decisions and contextual data  informing the decisions. Although we found many reports submitted by  grant recipients to the Global Fund do not provide explanations for all  unmet grant performance targets, according to Global Fund officials, fund  portfolio managers are able to obtain the needed information directly from  the grant recipients or other stakeholders. Grant Files Demonstrate Improved Documentation Supporting Funding Decisions

Our review of random samples of disbursement and phase 2 grant files  indicated that most files systematically explain a number of key factors  used to support disbursement and grant renewal decisions. Global Fund Did Not Implement Earlier Risk Model but Is Developing Comprehensive Risk Framework That Includes Early Alert and Response System

The Global Fund did not implement the risk assessment model that it was  developing at the time of our 2005 report, because it determined that the  model did not accurately identify grant risk. The organization relies on  elements of its structures and processes, including its initial technical  review, disbursement decision-making form, periodic grant ratings, CCM  oversight, information from technical partners, and LFA oversight, to  identify potential risks. Recognizing the need to establish a more  comprehensive approach to risk management, the Global Fund has begun  developing a risk assessment framework for the organization that includes  an early warning and response system to address poorly performing  grants. Rating grant progress for each disbursement request. Global Fund Has Limited Ability to Manage and Oversee Local Fund Agents’ Performance

The Global Fund lacks the information it needs to manage and oversee the  LFAs because of a lack of systematic assessments of LFAs’ performance. As a result, the Global Fund has limited  records of, and data on, LFA performance. Although the Global Fund  made a previous attempt to assess LFAs more systematically, this effort  was unsuccessful. However, Global Fund officials with  LFA management responsibility stated that formalizing the process would  allow the agency to establish LFA performance records and identify  situations in which more oversight of LFAs by the Global Fund may be  required. Agency Comments

Written comments on a draft of this report from the Departments of State  and Health and Human Services and the U.S. Agency for International  Development are represented in the unified response received from the  Office of the U.S. Global AIDS Coordinator. The Office of the  U.S. the Global Fund)  phase 2   Fund portfolio manager/cluster identification of material issues with  reliability of principal recipient’s data   Fund portfolio manager/cluster explanation for phase 2 rating   Fund portfolio manager/cluster explanation for phase 2 recommendation  (LFA phase 2 assessment) report-specific conditions identified by LFA for  ‘Conditional Go’ recommendations   Time-bound actions identified by portfolio manager/cluster for  ‘Conditional Go’ recommendations To assess the Global Fund’s progress in implementing a risk assessment  model and early warning systems for its grants, we followed up on the risk  assessment model and early warning system described in our 2005 report  with Global Fund officials.
Why GAO Did This Study

The Global Fund to Fight AIDS, Tuberculosis and Malaria has approved about $7 billion in grants to developing countries; the U.S. has contributed $1.9 billion. The State Department's Office of the Global AIDS Coordinator (OGAC) coordinates the U.S. government's overseas AIDS programs, with participation from the Department of Health and Human Services (HHS) and the U.S. Agency for International Development (USAID). In 2003, Congress directed GAO to report on the Global Fund every 2 years. This report assesses the Global Fund's (1) documentation of information used to support performance-based funding decisions, (2) progress in implementing a risk assessment model and early warning system, and (3) oversight of the performance of "local fund agents" (LFAs), which monitor grant progress in recipient countries. GAO reviewed the documentation for funding decisions and interviewed key officials.

What GAO Found

Since our 2005 review, the Global Fund has improved its documentation for decisions to disburse funds and renew grants. The Global Fund now requires that fund portfolio managers more consistently document factors, such as grant ratings and contextual information that support disbursement and grant renewal decisions. Our current review of 80 grant disbursements and 45 grant renewal decisions confirmed that Global Fund grant files consistently contained explanations of the information used in its funding decisions. For example, all grant disbursement files in our sample contained a written narrative explaining the ratings that portfolio managers gave the grants, based in part on reports completed by grant recipients. Although we noted that many of the grant recipients' reports lacked some information needed for disbursement and renewal decisions, Global Fund officials said that portfolio managers obtain this information informally from the recipients or other stakeholders. The Global Fund did not implement the risk assessment model that it was developing at the time of our 2005 report, because it determined that the model did not accurately identify grant risk. To identify risks that may affect grant implementation, the organization currently relies on elements of its structures and processes, including its initial technical review, disbursement decision-making form, periodic grant ratings, oversight by country stakeholders, information from technical partners, and LFA oversight. Recognizing the need for a more comprehensive approach to risk management, the Global Fund has begun developing a risk assessment framework for the organization that includes an early alert and response system to address poorly performing grants. The Global Fund has limited access to the information it needs to manage and oversee LFAs because it does not require systematic assessments of LFAs' performance. As a result, the Global Fund has limited ability to determine the quality of LFAs' monitoring and reporting and to identify situations in which more oversight of LFAs' performance may be required. Previously, the Global Fund introduced a tool to assess LFA performance more systematically; however, this effort was unsuccessful, because use of the tool was not mandatory. Numerous sources raise concerns about the quality of grant monitoring and reporting provided by LFAs, particularly their ability to assess and verify recipients' procurement capacity and program implementation.