Strengthening of PSM Services and Risk Mitigation
To strengthen procurement and supply management (PSM) services and risk mitigation, the UNDP Procurement Services Unit (PSU) and the UNDP Global Fund/Health Implementation Support Team have entered into commercial long-term agreements (LTAs) for insurance and freight. Use of these LTAs does not require further internal approvals (via Contract, Asset and Procurement (CAP) and/or Advisory Committee on Procurement (ACP)).
Information on the current LTA holders for insurance and freight can be found here.
Stock-out and expiration risk management are the responsibility of the Country Office (CO), which must regularly monitor the Global Fund health products stock status. This includes close monitoring of the consumption rates, of stock on hand and on order, and of expiry dates of products in stock so that the CO can make informed decisions and take the necessary actions to avoid emergency orders, stock-outs and expiration of products.
COs are advised to monitor supply chain management indicators and expiry of products at least quarterly, using the provided monitoring tools, and to submit completed tools to the PSM team at least once a year, or as indicated by the PSM team in communications to the COs.
For further information, the UNDP PSU or the UNDP Global Fund/Health Implementation Support Team will need to be informed in order to advise on how to proceed.
Global Fund direct payment method
The Global Fund offers the opportunity for direct payments of grant funds to third parties (rather than to the Principal Recipients (PR)), and this service is primarily used for procurement of health products. However, UNDP cannot use the direct payment mechanism as it is not allowed by the UNDP comptroller.
Global Fund Pooled Procurement Mechanism option
The Global Fund launched the Pooled Procurement Mechanism (PPM), with the aim of obtaining better prices for quality-assured health products by leveraging the Global Fund’s position to influence market dynamics.
Generally, the use of the PPM is voluntary for Global Fund PRs; however, for UNDP COs acting as PR, the PPM is not an option, as it is not allowed under current UNDP Financial Regulations and Rules or procurement procedures.
Overseeing procurement by Sub-recipients
UNDP has determined that direct procurement by Sub-recipients (SRs) constitutes significant organizational and operational risks to UNDP, for a number of reasons, including the process itself, the amount of money involved, the risk of procuring sub-standard products, paying too much and the potential for fraud. As a result, UNDP does not permit SRs to procure health products for their activities. Procurement within the framework of SR agreements should be limited to minor office supplies and other similar items of limited value, as well as services. Capital assets should be procured by the CO. In no instance should the SR be authorized to procure for more than 10 percent of the SR agreement’s amount or US$100,000 (whichever is less) on procurement.