The Chief Procurement Officer may recommend to the Executive Director any required amendments to these Procurement Regulations.

Regulations PROCUREMENT REGULATIONS 12 March 2015 1 Introduction 1.1 Purpose, Scope and Applicability The Global Fund to Fight AIDS, Tuberculosis and Malaria (the Global Fund ) Procurement Regulations (the Procurement Regulations ) set out the general principles and conditions related to the procurement of goods and services. Unless otherwise waived by the Global Fund for justifiable reasons and approved by the Management Executive Committee (MEC) of the Global Fund, or otherwise indicated herein, these Procurement Regulations cover all procurements for goods and services financed in whole or in part by the Global Fund, and undertaken by the Global Fund as a procuring entity, acting on behalf of the Principal Recipients 1 of Global Fund Grants or on its own behalf, subject to the provisions of the Procurement Procedures issued by the Chief Procurement Officer and amended from time to time. It applies to all Global Fund officers, employees, consultants, contractors and suppliers who are directly or indirectly involved in the procurement of goods or services for, or on behalf of, the Global Fund. Whenever a Principal Recipient of Global Fund Grants applies its own procurement policies and procedures as a procuring entity in accordance with a Global Fund Grant Agreement, the Principal Recipient shall keep the Global Fund continuously informed about the policies and practices that it shall use to contract for goods and services under such Grant Agreement, and shall ensure that such policies and practices are followed at all times. If the Principal Recipient uses the policies and procedures of the Global Fund, then these Procurement Regulations shall apply. 1.2 Ownership These Procurement Regulations are issued by the Executive Director in consultation with the Finance and Operational Performance Committee of the Global Fund s Board. These Procurement Regulations are issued in accordance with the Global Fund Procurement Policy (Purchase of Services and Goods) (2008, as amended from time to time). The Chief Procurement Officer may recommend to the Executive Director any required amendments to these Procurement Regulations. 1.3 Links These Procurement Regulations should be considered together with the following Global Fund documents: 1 This term may also refer to Sub-Recipients under a Global Fund Grant Agreement, as applicable. Procurement Regulations, 12 March 2015 1

Procurement Policy; Policy on Ethics and Conflict of Interest for Global Fund Institutions (2002, as amended from time to time); Code of Conduct for Suppliers (2009, as amended from time to time); Code of Conduct of the Global Fund to Fight AIDS, Tuberculosis and Malaria (2013, as amended from time to time); Guide to Global Fund Policies on Procurement and Supply Management of Health Products (2012, as amended from time to time); Operational Policy Notes, as applicable; Any applicable procurement template; Any applicable travel Regulation; Finance Regulations and Procedures; and The Global Fund Signature Authority Procedures (as amended from time to time). 2 Basic Principles All procurements shall be conducted in accordance with the procurement principles of the Global Fund Procurement Policy, in particular: A Value for Money Procurement shall be conducted with the aim of obtaining value for money (VFM). In determining what represents VFM, due consideration shall be given to factors such as: the direct and indirect costs of the goods or services over the whole procurement cycle; the quality and fitness for purpose of the goods or services to be procured; the proposed supply time-frame for the goods or services; the performance history of each prospective supplier and the strategic importance and/or risks of engaging particular suppliers; the appropriateness of contracting options (for example, contract extension options); and the potential risks associated with the procurement of the goods or services. Procurement Regulations, 12 March 2015 2

B Competition Procurement shall be carried out in an open competitive basis to the maximum practical extent. All eligible bidders shall be given equal opportunity to compete in providing goods and/or services to the Global Fund or its Principal Recipients, as the case may be. C Efficient and Effective Procurement Procurement shall be conducted in a manner that maximises the efficient use of the Global Fund s resources and ensures that the goods and/or services procured effectively meet the requirements of the users. D Impartiality, Transparency and Accountability Procurement shall be conducted in an impartial, transparent and accountable manner, and all eligible bidders shall be given the same information. Fairness and transparency in the procurement process require that all suppliers and consultants competing for a specific contract do not derive a competitive advantage from having provided services related to the contract in question. Therefore, the procuring entity shall, when practicable, make available to prospective bidders all reasonable and material information that would, in that respect, give a supplier or consultant a competitive advantage. E Procurement Ethics All procurements should not be in violation of the Global Fund s Policy on Ethics and Conflict of Interest for Global Fund Institutions, Code of Conduct for Suppliers, and Code of Conduct of the Global Fund to Fight AIDS, Tuberculosis and Malaria. Furthermore, the Global Fund considers a conflict of interest to be a situation in which a party has interests that could improperly influence that party s performance of official duties or responsibilities, contractual obligations, or compliance with applicable laws and regulations. The Global Fund will take appropriate action to manage such conflicts of interest, or may reject a tender or proposal for award, if it determines that a conflict of interest has flawed the integrity of any procurement process. 3 Eligibility An eligible supplier or consultant is an organization or an individual that complies with the Policy on Ethics and Conflict of Interest for Global Fund Institutions and the Code of Conduct for Suppliers, and is determined by the procuring entity to be a supplier or consultant that satisfies the following criteria: a. The supplier or consultant is legally and financially capable of providing the goods or services in the country or countries where such goods or services are to be provided; b. The supplier or consultant has no ethical restrictions limiting it from providing the required goods or services, and it provides written contractual undertakings that it complies with the internationally recognized standards for human rights, labour, the environment and anticorruption, as reflected in the Global Fund Code of Conduct for Suppliers; and Procurement Regulations, 12 March 2015 3

c. The supplier or consultant does not have an actual or potential conflict of interest when entering into a contract with the Global Fund. 4 Misprocurement The Global Fund finances expenditures for procurements that are undertaken in accordance with the Procurement Policy, these Procurement Regulations, and the Grant Agreement, as applicable, as well as other policies and guidelines referred to therein. If procurement is not carried out as agreed or prescribed, the Global Fund may declare misprocurement and, in cases falling under a Grant Agreement, normally cancel that portion of the Global Fund Grant allocated to the goods and/or services that have been misprocured. In appropriate cases, the Global Fund may permit a retendering after declaring misprocurement. The Global Fund may, in addition, exercise other remedies provided under its policies and the Grant Agreement, if any. Even if a contract is awarded after it has been reviewed and/or approved by the Global Fund, the Global Fund reserves the right to declare misprocurement if it concludes that its review and/or approval was made on the basis of incomplete, inaccurate or misleading information, or the terms and conditions of the contract had been substantially modified without the appropriate approval. 5 Procurement Process Overview 5.1 Procurement Practices At a minimum, the policies and practices governing all procurement undertaken by the Global Fund and Principal Recipients shall conform with the following requirements: a. Contracts shall be awarded on a transparent and, subject only to established exemptions, on a competitive basis. b. All solicitations for contract tenders must be clearly notified to all prospective bidders, which shall be given a sufficient amount of time to respond to such solicitation. c. Solicitations for goods and services shall provide all information necessary for a prospective bidder to prepare a tender and, as such, shall be based upon a clear and accurate description of the proposed terms and conditions of the contract and the goods or services to be acquired. d. The conditions of participating in a contract tender shall be limited to those that are essential to ensure the participant s capability to fulfil the contract in question and compliance with domestic procurement laws, if applicable. e. Contracts shall be awarded only to responsible suppliers and consultants that possess the ability to successfully perform the contracts. f. No more than a reasonable price (as determined, for example, by a comparison of price quotations and market prices) shall be paid to obtain goods and services. g. The Principal Recipient and its representatives and agents shall not engage in any of the prohibited practices described in the Code of Conduct for Suppliers. Procurement Regulations, 12 March 2015 4

h. Records shall be maintained to document the receipt and use of goods and services acquired, the nature and extent of solicitations of prospective suppliers of goods and services acquired, and the basis of award of contracts and orders. 5.2 Methods of procurement Procurement may be undertaken by any of the following, or similar, means: a. Open tendering and request for proposals; b. Restricted tendering; c. Request for quotations; and d. Single-source procurement. A request for information may be issued to discover the number of suppliers in the market that have the capability and capacity to provide the required goods or services, and to establish a shortlist of potential suppliers or consultants. A request for information may or may not lead to a formal procurement process. Procurement Procedures, issued by the Chief Procurement Officer and amended from time to time, provides the specific requirements and processes for procurement and contracting activities undertaken by the Global Fund. 5.2.1 Open tendering and request for proposals Except as otherwise provided in these Procurement Regulations, procurement shall be by means of open tendering. The objective of open tendering is to provide all eligible suppliers or consultants with timely and adequate notification of requirements and an equal opportunity to bid for the required goods or services. In turn, this is expected to lead to competitive pricing, product innovation and performance improvements, and help ensure that the Global Fund gets the best VFM. The procuring entity shall open all tenders at the stipulated time and place, and tenders received after the stipulated deadline may be rejected, as stipulated in the procurement document. Open tendering may be conducted by issuing a request for proposals, especially when it needs to consider the financial aspects of proposals separately, and only after completing the examination and evaluation of the technical, quality and performance characteristics of the proposals. 5.2.2 Restricted tendering Procurement may be undertaken by means of restricted tendering when: a. The subject matter of the procurement, by reason of its highly complex or specialized nature, is available only from a limited number of suppliers or consultants; or b. The time and cost required to examine and evaluate a large number of tenders would be disproportionate to the value of the subject matter of the procurement. Procurement Regulations, 12 March 2015 5

5.2.3 Request for quotations Procurement may be undertaken by means of a request for quotations from approximately three suppliers or consultants, to assure competitive prices, for the procurement of readily available goods or services, or standard specification commodities of small value. Requests for quotations shall indicate the description and quantity of the goods or services, as well as the desired delivery (or completion) time and place. The evaluation of quotation shall follow the basic principles provided in these Procurement Regulations. Quotations may be submitted by letter, facsimile or by electronic means. The terms of the accepted offer shall be incorporated in a purchase order or brief contract. 5.2.4 Single-source procurement Single-source procurement may be undertaken in the following exceptional circumstances: a. The subject matter of the procurement is available only from a particular supplier or consultant, or a particular supplier or consultant has exclusive rights in respect of the subject matter of the procurement, such that no reasonable alternative or substitute exists, and the use of any other procurement method would therefore not be possible; b. In exceptional cases when there is an extremely urgent need for the subject matter of the procurement, such as in response to natural disasters, and engaging in any other method of procurement would be impractical because of the time involved in using those methods; c. The procuring entity, having procured goods, equipment, technology or services from a supplier or consultant, determines that additional supplies or services must be procured from that supplier or consultant for reasons of standardization or because of the need for compatibility with existing goods, equipment, technology or services, taking into account the effectiveness of the original procurement in meeting the needs of the procuring entity, the limited size of the proposed procurement in relation to the original procurement, the reasonableness of the price and the unsuitability of alternatives to the goods or services in question; d. The procuring entity determines that the use of any other method of procurement is not appropriate for the protection of essential security interests or confidential information; or e. When the estimated value of the procurement contract is regarded as low value under the applicable regulation. 5.3 Combining or Splitting Requirements Splitting requirements to avoid the open tendering requirement of these Procurement Regulations is not allowed. Effective procurement planning utilizes the aggregation of demand for specific goods or services across the procuring entity rather than conducting a large number of individual transactions. Economies of scale may be obtained not only in the pricing of the goods or services, but also in the administrative effort involved. Procurement Regulations, 12 March 2015 6

5.4 Procurement Documentation All procurement documents and other relevant documents should normally be in English. Where another language is used, or when more than one language is used, the English translation or version, as the case may be, shall prevail. The procurement documents shall be worded in such a way as to permit and encourage international competition, and shall set forth clearly and precisely the services to be carried out, the location of the services, the goods to be supplied, the place of delivery or installation, the schedule for delivery or completion, minimum performance requirements, and the warranty and maintenance requirements, as may be applicable, as well as any other pertinent terms and conditions. In addition, the procurement documents, where appropriate, shall define the tests, standards and methods that will be employed to judge the conformity of goods as delivered, or services as performed, with the specifications. Drawings shall be consistent with the text of the specifications, and an order of precedence between the two shall be specified. The procurement documents shall specify any factor, in addition to price, that will be taken into account in evaluating tenders, and how such factors will be quantified or otherwise evaluated. If tenders based on alternative designs, materials, completion schedules, payment terms or similar provisions, are permitted, conditions for their acceptability and the method of their evaluation shall be expressly stated. All prospective bidders shall be provided the same information, and shall be assured of equal opportunities to obtain additional information on a timely basis. A pre-bid conference may be arranged whereby potential bidders may meet with the procuring entity to seek clarifications (in person or online). Any material additional information, clarification, correction of errors or modifications of the procurement documents shall be sent to each recipient of the original procurement documents in sufficient time before the deadline for receipt of tenders, to enable bidders to take appropriate actions. If necessary, the deadline may be extended. 5.5 Negotiation Negotiation is the process of discussions that precedes contracting to ensure a complete understanding of the procurement requirement. Contract negotiations may be conducted to clarify all aspects (both technical and commercial) of the delivery of the goods or performance of the services. This process of discussions with the prospective supplier or consultant prior to contract signature is aimed at creating certainty of the terms and identifying elements of the activity that are considered crucial for successful contract performance, and for both parties to agree on all points prior to contract signature. 5.6 Contract Signing The contract shall be signed by both parties after contract negotiations are successfully concluded. When a requirement for particular goods or services is identified on a recurring basis, or when goods or services are being procured under a pooled mechanism, a framework agreement may be established. A purchase order for each requirement can be placed referencing such framework agreement. 5.7 Inquiries After Contract Award Any supplier or consultant that wishes to ascertain the grounds on which its proposal or offer was not selected may request an explanation from the procuring entity. The procuring entity may Procurement Regulations, 12 March 2015 7

provide an explanation of why such proposal or offer was not selected, either in writing or in a debriefing meeting, as stipulated in the procurement document. The requesting supplier or consultant shall bear the costs of attending a debriefing. 6 Contract Performance Evaluation Contract performance evaluation may be undertaken to measure deliverables based on the performance requirements set out in the contract. The purpose of contract performance evaluation is to monitor performance throughout the contract lifecycle and trigger contract performance improvement by introducing consistent performance measurement and management. Contract performance should be measured using Key Performance Indicators (KPIs) that are predefined in the contract. KPIs measure performance and monitor adherence to the terms of the contract. When set correctly, KPIs give an early indication of when the activity is below standard and enables the development of action plans for contract performance improvement. 7 Procurement Agents The procuring entity may recruit a firm that specializes in handling procurement to act as a procurement agent and undertake procurement activities on behalf of the Global Fund or the Principal Recipients of Global Fund Grants. The selection and engagement of procurement agents shall be in accordance with these Procurement Regulations, and the procuring entity shall ensure that the procurement procedures and activities of such procurement agents are consistent with the basic principles in these Procurement Regulations 8 Procurement from Specialized Agencies There may be situations in which the procuring entity may consider procurement directly from specialized agencies, such as those of the United Nations, acting as suppliers or contractors and following their own procedures, particularly in the following instances: (a) small quantities of readily available goods or services; (b) specialized products or services where the number of suppliers or contractors is limited; or (c) in exceptional cases, such as in response to natural disasters and emergency situations recognized by the Global Fund. 9 Procurement by Electronic Means To promote transparency, VFM, competition, efficiency and effectiveness in procurement operations, information and communications technology may be utilized by the Global Fund in the performance of procurement activities on its own behalf or on behalf of the Principal Recipients of Global Fund Grants, in accordance with these Procurement Regulations. A Principal Recipient of Global Fund Grants or other third parties may also be allowed by the Global Fund to access and utilize such information and communications technology, subject to this section. The specific procedures and process that govern the use of such information and communications technology are outlined in the Global Fund E-Procurement Procedures issued by the Chief Procurement Officer and amended from time to time. Procurement Regulations, 12 March 2015 8

10 The Procurement Review Committee 10.1 Purpose As stated in Section 1.5.1 of the Procurement Policy, the role of the Procurement Review Committee (PRC) shall be to review and make recommendations on the proposed award of a contract for the procurement of goods or services, or the proposed modification of an existing contract, that represents a high cost and/or high risk to the Global Fund, as defined in these Procurement Regulations and in the Global Fund Guidance on the Definition of High Risk in Procurement, issued by the Chief Procurement Office and amended from time to time. 10.2 Composition The PRC shall have three voting members and one non-voting member. The voting members are: a. The Chief Financial Officer; b. The Head of the Legal and Compliance Department; and c. A Division Head, other than the requesting Division Head. 2 The PRC shall be chaired by the Chief Financial Officer. The Chief Financial Officer or Executive Director may request the participation of additional staff, in an advisory, non-voting capacity, to support the review of a particular PRC submission. In consultation with the other members, each PRC member shall designate a suitably qualified and experienced alternate PRC member to replace him/her in the following circumstances: a. In the event that he or she cannot participate in a particular PRC review process; and b. If his or her involvement in the particular PRC review process may give rise to an actual or potential conflict of interest, as defined in the Policy on Ethics and Conflict of Interest for Global Fund Institutions, or the appearance thereof. Notwithstanding the designation of alternate PRC members, during the absence or incapacity of the Chief Financial Officer, the Head of the Legal and Compliance Department shall chair the PRC; and in the absence or incapacity of both the Chief Financial Officer and the Head of the Legal and Compliance Department, the third member Division Head shall chair the PRC. In no case shall the PRC convene or handle any matter during the absence or incapacity of all three voting members; provided that, if all three voting members are incapable of performing their functions by reason of a conflict of interest, then the most senior alternate PRC member shall chair the PRC. 2 The current designation of a PRC voting member shall refer to the equivalent position holding the same level of authority and similar responsibilities at the Global Fund, in case there is any subsequent change in title or role. Procurement Regulations, 12 March 2015 9

10.3 Roles and Responsibilities The Chair of the PRC shall be responsible for: a. Admitting submissions for PRC review; and b. Chairing PRC meetings. Secretariat support to the PRC will be provided by the Legal Officer Procurement of the Legal and Compliance Department, who shall have the following responsibilities: a. Maintain a log of PRC submissions and actions; b. Ensure timely and complete distribution of relevant information to the PRC; c. Take minutes during PRC meetings; d. File the completed PRC Briefing Memorandum Template, including the PRC recommendations; and e. Keep statistics on the work and the recommendations of the PRC. The PRC members shall be responsible for reviewing submissions for adherence to the Procurement Policy and these Procurement Regulations, particularly with regard to the following: a. Verifying that the procurement process has been competitive, fair and transparent; b. Verifying that the proposed selection of a supplier or consultant is in the best interest of the Global Fund; and c. Verifying that the proposed contractual arrangement takes into account the basic principles provided in the Procurement Regulations. The requesting Department shall be responsible for: a. Providing clarification and additional information in connection with PRC submissions, if requested; and b. Sending a representative to PRC meetings, if requested. The Sourcing Department shall be responsible for: a. Preparing submissions for the review and action of the PRC, including completion of the PRC Briefing Memorandum, in close consultation with the requesting Department; b. Informing the PRC of any significant changes to the scope or the terms of a proposed contract award in the period following the communication of the procurement result to suppliers or consultants; Procurement Regulations, 12 March 2015 10

c. Ensuring all the proposals, procurement documentation and other related documentation pertaining to a proposed contract can be provided to the PRC upon request; d. Providing clarification and additional information in connection with a submission, if requested; and e. Sending a representative to PRC meetings, if requested. 10.4 Matters for PRC Consideration Except as otherwise referred to it by the Executive Director, the PRC shall only have the authority to review and make recommendations for procurements undertaken by the Global Fund and contracts resulting therefrom; and specifically, the following matters shall be submitted to the PRC for decision: a. A proposal to use a procurement method other than open tendering, when the estimated value of the contract amounts to more than US$10,000,000, or when the procurement concerned is determined to be high risk; b. A proposed contract for the procurement of goods or services, when the total contract value amounts to more than US$10,000,000, or when the procurement concerned is determined to be high risk; provided that, once a framework agreement has been approved by the PRC, the individual purchase orders shall not be submitted for PRC approval even if the value of the purchase order amounts to more than US$10,000,000; c. A proposed contract for the procurement of goods or services, which constitutes a high risk to the Global Fund; additionally, when signing contracts, the Chief Financial Officer or the Executive Director may refer to the PRC any contract or contractual arrangement that he or she considers to be high risk; d. A proposed contract modification, amendment or renewal of a contract that amounts to more than US$10,000,000, or that was previously considered to be high risk, when combined with prior contract modifications, amendments or renewals, would increase the original contract amount by at least 15%; e. A proposed contract modification, amendment or renewal that, when combined with prior contract modifications, amendments or renewals, would increase the original contract amount to more than US$10,000,000; f. A proposal that varies the essential terms and conditions that formed the basis of a decision taken previously by the PRC in the same case; g. In circumstances where there have been significant changes to the scope or the terms of a proposed contract award in the period following the communication of the procurement result, a PRC review may be conducted at the discretion of the PRC; and h. Any procurement matter that may be referred to the PRC by the Chief Financial Officer or Executive Director. Procurement Regulations, 12 March 2015 11

10.5 Method of Work PRC reviews shall be conducted prior to a communication of the procurement result. The reviews may be by electronic circulation or formal PRC meeting, as decided by the Chair, in consultation with the PRC members. Submissions to the PRC shall be in writing using the PRC Briefing Memorandum and shall be prepared by the Sourcing Department, in close consultation with the requesting Department. The PRC Briefing Memorandum shall be signed by the Director of the requesting Department before being submitted to the PRC Chair, through the PRC Secretariat. The PRC decisions shall be made by majority vote. The PRC decisions should be included within the relevant section of the PRC Briefing Memorandum and signed by the Chair, on behalf of the PRC. A hardcopy of the PRC decision shall be filed by the PRC Secretary, and a copy (preferably electronic) shall be sent to the requesting Department, the Sourcing Department and the Executive Director for information. Procurement Regulations, 12 March 2015 12