POST RECOMMENDATIONS ON GLOBAL FUND PHASE 2

UNCLAS JAKARTA 012944

SIPDIS

SIPDIS
SENSITIVE

DEPT FOR S/OGAC/JKOLKER/NALRUTZ
DEPT ALSO PASS TO USAID/OHA/YAMASHITA/PICK/MMILLER/JWRIGHT
DEPT ALSO PASS TO HHS/WSTEIGER/MWYNNE
BANGKOK FOR USAID/RDM/A

E.O. 12958: N/A
TAGS: SOCI KHIV TBIO EAID ID
SUBJECT: POST RECOMMENDATIONS ON GLOBAL FUND PHASE 2
RENEWALS: INDONESIA HIV/AIDS COMPREHENSIVE CARE GRANT
NUMBER: IND-405-GO4-H

REF. SECSTATE 138078


1. (SBU) Summary. Approve Phase 2 funding, at requested
level of funding, $33,905,951, with conditions. End
Summary

Indonesia's Global Fund HIV/AIDS Program Summary
-------------- --------------

2. (U) Indonesia received two Global Fund AIDS grants:
Round 1 and Round 4, for a total of $72.9 million. To
date, absorption capacity by the Principal Recipient (PR),
Ministry of Health (MOH),is low so disbursements have been
low. For Round 1, only 44 percent of the total funds have
been disbursed and for Round 4, only 25 percent of the
total funds have been disbursed.


3. (U) The PR uses Global Fund monies to scale up
counseling and testing (CT) services; provide
antiretroviral therapy (ART); support Injecting Drug Use
(IDU) programs, including methadone replacement therapy;
support programs addressing men who have sex with men (MSM)
and IDU in prisons; and increase HIV awareness and reduce
stigma associated with HIV/AIDS.


4. (U) Indonesia was categorized as conditional go in Round
1, due to poor program management and performance.
Additionally, Indonesia also had poor performance in
quarters 1 to 3, Round 4. By the end of quarter 5, Round
4, nearly all of the Q5 prevention targets had been
achieved. However, performance levels for treatment
interventions were not met. By the end of Q5 the PR met,
only 61 percent (23,677 people) of the CT target, and 50
percent (3,438 people) of the ART treatment target.
However, preliminary results for the first nine weeks of Q6
show improvement in most treatment indicators.

Country Coordinating Mechanism (CCM)
--------------

5. (SBU) The CCM chaired by the Director General of
Infectious Diseases Control and Environmental Health, MOH
and is currently comprised of 42 members. Usually, less
than 50 percent of the CCM members attend the meetings and
the chairperson recuses himself due to conflict of
interest. The Vice Chairperson does not attend the meetings
regularly. In the past, the CCM has been weak and non
functioning. This has been a major concern to USG and
other donors who have made concerted efforts to strengthen
the CCM. Due to recent changes in CCM representation,
function and responsibilities, a few CCM members are
becoming more active and developing strong leadership among
key stakeholders. The CCM is currently reviewing its
structure and may revise its membership and elect a new
chair person. The CCM has made an additional
recommendation that an HIV/AIDS sub CCM, chaired by the
Secretary of the National AIDS Commission (KPA),be

SIPDIS
established.


6. (SBU) We feel that strengthening of the CCM is essential
and must be completed immediately for the successful
implementation of phase 2 funding. Additionally, there
needs to be better governance by the CCM leadership and
better communication flow between the PR, CCM Secretariat
and CCM members. We feel the establishment of an HIV/AIDS
sub CCM will strengthen the HIV/AIDS leadership and provide
better communication with all members and the PR.

USG Technical Assistance Efforts
--------------

7. (SBU) USG staff and 4 US based contractors, through the
Capacity Project, provided extensive technical assistance
to the PR and Global Fund program in the areas of program
management, human resources, financial management and
monitoring and evaluation. The team made recommendations to
improve both the program management and performance in the
above mentioned areas. This assistance has been well
received and PR has started implementing the TA team's
recommendations. Overall, USG was favorably impressed with
the acceptance and implementation of the recommendations
and we have seen positive effects from the TA efforts.
However, there were some minor exceptions to the
implementation and some recommendations were not
implemented in a fair and transparent process. Through all
of these efforts, improvements in program performance
results are expected to be achieved by the end of Q7
(December 2006).



Phase 2 HIV/AIDS Application
--------------

8. (U) The phase 2 application was submitted on September
30, 2006 at the original approved funding level of
$33,905,951. The PR requested that unspent money from
phase 1 be carried over into phase 2. CCM members were
very active in the process and approval of the application,
which helped to strengthen the program and ensure that it
met the needs of Indonesia and followed the National
HIV/AIDS Strategy.


9. (U) The application prioritizes expanding coverage of
counseling and testing, ARV treatment (first and second
level drug therapies),and expanding programs focusing on
IDU. The application also proposes a second PR for funding
to non-governmental organizations (NGO) and local partners.


10. (SBU) The current PR has not been able to effectively
fund or manage NGOs and other local partners, so the CCM
recommended that a second PR be selected. A sub committee
of the CCM has developed selection criteria and identified
a potential second PR, however we are not convinced the
identified organization is able to effectively manage the
NGO program and we have concerns that the selection process
was not fair and transparent; only one organization was
identified and asked to submit a proposal. The CCM should
widely distribute a solicitation of interested
organizations to identify potential organizations and
develop proposal review criteria to select the
organization. An option for the Board to consider is to
recommend that a sub recipient for NGOs be identified
rather than a second PR.


11. (SBU) Due to low absorptive capacity by the PR and
problems with program management, the Board should not
approve the request to carry over funds from Round 4, Phase

1.

Donor Coordination
--------------

12. USG has had close consultations with other bilateral
donors, including Government of Australia, and have agreed
that we need to send strong and consistent messages to the
GOI and PR regarding management of GFATM funds and program
implementation. We agreed that the PR needs to establish,
and consistently apply, clear and transparent processes.
Additionally, we are discussing sending a joint letter to
the MOH stating our concerns, outlined in this cable, and
requesting that they fully implement all recommendations
made by the USG TA team as well as develop a system to
regularly and routinely report on GFATM implementation to
all CCM members.

Recommendations
--------------

13. (SBU) After careful consideration and consultation with
Mission leadership and other bilateral donors, USG strongly
believes Phase 2 funding should be approved with
conditions. However, the Board should not approve the
request to carry over funds from Round 4, Phase 1.


14. (SBU) The Board may want to consider requiring an
interim management PR to manage the GFATM program, while
the current PR establishes fair and transparent processes
for all recruitment of staff, requests for proposals and
proposal review processes; and program management,
reporting and financial management systems.


15. (SBU) The Board should consider approving a second PR
or a sub recipient to manage the NGO funding, however, the
CCM should develop and document a fair and transparent
system for identifying and selecting the organization.
HEFFERN