Global HIV/AIDS: A More Country-Based Approach Could Improve	 
Allocation of PEPFAR Funding (02-APR-08, GAO-08-480).		 
                                                                 
The President's Emergency Plan for AIDS Relief (PEPFAR) provides 
assistance for combating HIV/AIDS in 15 focus countries and	 
elsewhere, with global targets for prevention, treatment, and	 
care. The U.S. Leadership Against HIV/AIDS, TB and Malaria Act of
2003, which authorizes the $15 billion program, contains	 
directives to guide the Office of the U.S. Global AIDS		 
Coordinator's (OGAC) allocation of this funding. The act expires 
in September 2008. The President announced his intention to ask  
Congress to authorize $30 billion for these efforts for the next 
5 years. In 2007, the Institute of Medicine (IOM) recommended	 
eliminating the directives. GAO was asked to describe (1) the	 
views of HIV/AIDS experts on these directives, (2) an alternative
approach to allocating funds, and (3) potential challenges	 
related to this approach. GAO interviewed 22 experts, surveyed	 
PEPFAR officials in the 15 focus countries, and reviewed	 
pertinent documentation.					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-480 					        
    ACCNO:   A81551						        
  TITLE:     Global HIV/AIDS: A More Country-Based Approach Could     
Improve Allocation of PEPFAR Funding				 
     DATE:   04/02/2008 
  SUBJECT:   Acquired immunodeficiency syndrome 		 
	     Allocation (Government accounting) 		 
	     Appropriated funds 				 
	     Budget outlays					 
	     Cost analysis					 
	     Disease control					 
	     Disease detection or diagnosis			 
	     Disease surveillance				 
	     Federal aid to foreign countries			 
	     Foreign aid programs				 
	     Health care programs				 
	     Infectious diseases				 
	     International cooperation				 
	     International relations				 
	     Program evaluation 				 
	     Strategic planning 				 
	     Cost estimates					 
	     CDC Global AIDS Program				 
	     Global HIV/AIDS Initiative 			 
	     President's Emergency Plan for AIDS		 
	     Relief						 
                                                                 

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GAO-08-480

   

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Report to Congressional Requesters: 

United States Government Accountability Office: 

GAO: 

April 2008: 

Global HIV/AIDS: 

A More Country-Based Approach Could Improve Allocation of PEPFAR 
Funding: 

Global HIV/AIDS: 

GAO-08-480: 

GAO Highlights: 

Highlights of GAO-08-480, a report to the Chairman, Committee on 
Foreign Relations, U.S. Senate; and the Chairman, Committee on Foreign 
Affairs, House of Representatives. 

Why GAO Did This Study: 

The Presidentï¿½s Emergency Plan for AIDS Relief (PEPFAR) provides 
assistance for combating HIV/AIDS in 15 focus countries and elsewhere, 
with global targets for prevention, treatment, and care. The U.S. 
Leadership Against HIV/AIDS, TB and Malaria Act of 2003, which 
authorizes the $15 billion program, contains directives to guide the 
Office of the U.S. Global AIDS Coordinatorï¿½s (OGAC) allocation of this 
funding. The act expires in September 2008. The President announced his 
intention to ask Congress to authorize $30 billion for these efforts 
for the next 5 years. In 2007, the Institute of Medicine (IOM) 
recommended eliminating the directives. GAO was asked to describe (1) 
the views of HIV/AIDS experts on these directives, (2) an alternative 
approach to allocating funds, and (3) potential challenges related to 
this approach. GAO interviewed 22 experts, surveyed PEPFAR officials in 
the 15 focus countries, and reviewed pertinent documentation. 

What GAO Found: 

HIV/AIDS experts recognized that the Leadership Actï¿½s spending 
directives have ensured funding for prevention and treatment. However, 
many expressed concern about a directive to spend 33 percent of 
prevention funding on activities promoting abstinence and fidelity. 
Overall, the experts advocated replacing PEPFARï¿½s current allocation 
processï¿½based on the spending directivesï¿½with an approach based more on 
country-level data and needs. Experts also advocated that OGAC continue 
providing guidance and technical assistance to PEPFAR country teams. 

An alternative approach to allocating PEPFAR funds would include three 
elements of the current allocation processï¿½setting targets, selecting 
interventions, and considering costsï¿½but give country teams more 
responsibility for planning PEPFAR programs. OGAC would retain its 
leadership role, including reviewing and approving country plans. Teams 
would use country-level data to propose targets, and OGAC would work 
with teams to ensure these targets align with PEPFARï¿½s global targets. 
Teams would select interventions to meet the proposed targets, without 
the constraints of spending directives but subject to OGAC review. 
Teams would consider country-specific data on interventionsï¿½ costs 
using a consistent, OGAC-defined methodology; teams currently identify 
and analyze costs in varying ways. OGAC has not provided formal 
guidance or a methodology for identifying and analyzing costs, in 
contrast to federal standards that call for use of consistent 
methodologies to develop cost information. 

Most country team officials surveyed reported that the alternative 
approach to allocating funds would be feasible. However, some officials 
noted that reaching consensus on targets with external partners and 
within country teams could be a challenge. Officials also noted some 
ongoing challengesï¿½including lack of host country capacity and limited 
cost dataï¿½that they would likely continue to face in implementing the 
alternative approach. 

Figure: Alternative Approach to PEPFAR Funding Allocation Process. 

This figure is a flowchart of the alternative approach to PEPFAR 
funding allocation process. 

[See PDF for image] 

Source: GAO analysis of OGAC data; Map Resources (clip art and map). 

[End of figure] 

What GAO Recommends: 

If Congress decides to remove spending directives, it should encourage 
OGAC to adopt a more country-based approach to allocating funds, with 
OGAC guidance. GAO recommends that the Secretary of State direct OGAC 
to provide guidance to PEPFAR country teams on using cost information 
in their planning and budgeting. State agreed with this recommendation 
and noted that elements of a country-based approach to funding are in 
place. 

To view the full product, including the scope and methodology, click on 
[http://www.gao.gov/cgi-bin/getrpt?GAO-08-480]. To view the e-
supplement online, click on GAO-08-534SP. For more information, contact 
David Gootnick at (202) 512-3149 or mailto:[email protected]. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

Experts Generally Called for a More Country-Based Approach to 
Allocating PEPFAR Funds: 

Alternative Approach to Allocating Funding Could Strengthen Country- 
Based Programming: 

Most Country Team Officials Found Alternative Approach Feasible but 
Identified Potential Challenges: 

Conclusions: 

Matter for Congressional Consideration: 

Recommendation for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: List of Experts: 

Appendix III: Data-Gathering Tools Used: 

Appendix IV: Comments from the Office of the U.S. Global AIDS 
Coordinator: 

Appendix V: GAO Contact and Staff Acknowledgments: 

Related GAO Products: 

Figures: 

Figure 1: Stage of the HIV/AIDS Epidemic in PEPFAR Focus Countries, 
December 2007: 

Figure 2: Spending Directives and Guidance from the Leadership Act for 
Fiscal Years 2006-2008: 

Figure 3: PEPFAR's Planned Allocations for Prevention, Treatment, and 
Care, Fiscal Year 2007: 

Figure 4: Total Planned PEPFAR Funding Allocations for 15 Focus 
Countries, Fiscal Years 2004-2008: 

Figure 5: Timeline of PEPFAR's Planning and Allocation Process: 

Figure 6: Relationship between PEPFAR Global Targets, 5-Year Country- 
Level Targets, and Annual Country-Level Targets: 

Figure 7: Current Allocation Process Compared with Alternative Approach 
to Allocating PEPFAR Funds: 

Abbreviations: 

AB: abstinence/faithfulness: 

ABC: Abstain, Be faithful, or use Condoms: 

ARV: antiretroviral drugs: 

CDC: Centers for Disease Control and Prevention: 

COP: country operational plan: 

COPRS: Country Operational Plan and Reporting System: 

IOM: Institute of Medicine: 

NIH: National Institutes of Health: 

OGAC: Office of the U.S. Global AIDS Coordinator: 

OVC: orphans and vulnerable children: 

PEPFAR: President's Emergency Plan for AIDS Relief: 

PMTCT: Prevention of mother-to-child transmission: 

TB: tuberculosis: 

UNAIDS: Joint United Nations Programme for HIV/AIDS: 

USAID: U.S. Agency for International Development: 

WHO: World Health Organization: 

United States Government Accountability Office: 

Washington, DC 20548: 

April 2, 2008: 

The Honorable Joseph R. Biden, Jr.: 
Chairman: 
Committee on Foreign Relations: 
United States Senate: 

The Honorable Howard L. Berman: 
Chairman: 
Committee on Foreign Affairs: 
House of Representatives: 

The President's Emergency Plan for AIDS Relief (PEPFAR) is a $15 
billion, 5-year initiative to combat the global HIV/AIDS epidemic. 
Since its inception in 2003, PEPFAR has been credited with enabling the 
significant expansion of access to HIV/AIDS prevention, treatment, and 
care services in the 15 countries where it operates, while continuing 
to support other bilateral programs around the world.[Footnote 1] The 
U.S. Leadership Against HIV/AIDS, Tuberculosis and Malaria Act of 2003 
(Leadership Act),[Footnote 2] which authorizes PEPFAR, expires on 
September 30, 2008. PEPFAR's global targets call for preventing 7 
million new HIV infections by 2010, treating 2 million HIV-infected 
individuals by 2009, and caring for 10 million people infected and 
affected by HIV/AIDS, including orphans and vulnerable children, by 
2009. In May 2007, the President announced his intention to ask 
Congress to authorize the appropriation of $30 billion to continue 
PEPFAR's efforts over the next 5 years.[Footnote 3] 

The Leadership Act calls for an HIV/AIDS Coordinator to have primary 
responsibility for overseeing and coordinating PEPFAR resources and 
activities; in 2004, the Office of the U.S. Global AIDS Coordinator 
(OGAC) was established in the Department of State to carry out these 
functions.[Footnote 4] In addition, the act contains directives to 
guide the allocation of PEPFAR funding for HIV/AIDS prevention, 
treatment, and care. These spending directives include, among others, 
(1) a recommendation that 20 percent of funds appropriated to PEPFAR be 
dedicated to HIV/AIDS prevention[Footnote 5] (prevention directive) and 
a requirement that at least 33 percent of prevention funds be spent on 
programs promoting abstinence until marriage (AB directive[Footnote 
6]); (2) a requirement that at least 55 percent of the appropriated 
funds be dedicated to therapeutic medical care of HIV-infected 
individuals (treatment directive) and a recommendation that at least 75 
percent of treatment funds be used to procure antiretroviral drugs (ARV 
directive); and (3) a recommendation that 15 percent of the 
appropriated funds be spent on palliative care for those living with 
HIV/AIDS. These directives guide OGAC's allocation of funds for 
prevention, treatment, and care.[Footnote 7] 

In April 2006, we reported that the directive to spend 33 percent of 
PEPFAR prevention funding on AB programs had challenged the efforts of 
U.S. officials implementing PEPFAR funding in focus countries (country 
teams) to adopt evidence-based and country-level approaches to fighting 
HIV/AIDS[Footnote 8] as called for in OGAC's 5-year strategy.[Footnote 
9] Challenges cited by country teams included, for example, budgeting 
for abstinence-related activities separately from other prevention 
activities and difficulty delivering appropriate prevention messages to 
populations at high-risk of HIV/AIDS.[Footnote 10] In addition, a 
congressionally mandated study by the Institute of Medicine's (IOM) 
Committee for the Evaluation of PEPFAR Implementation, published in 
March 2007, found that the Leadership Act's spending directives hinder 
program implementation.[Footnote 11] While acknowledging PEPFAR's 
accomplishments, the IOM study recommends that Congress replace the 
spending directives with mechanisms that ensure country teams' 
accountability for results and link spending directly to overall and 
country-level PEPFAR targets. The IOM study does not specify the form 
that such mechanisms should take. 

We were asked to identify potential approaches that respond to the 
IOM's recommendation to replace the spending directives with an 
alternative approach. This report describes (1) views of leading HIV/ 
AIDS experts regarding the Leadership Act's spending directives and the 
current process of allocating PEPFAR funds under these directives; (2) 
absent the spending directives, an alternative approach to allocating 
PEPFAR funds, based in part on the experts' views; and (3) potential 
challenges related to implementing this alternative approach, as 
identified by PEPFAR country team officials. 

To address these objectives, we conducted semi-structured interviews 
with 22 HIV/AIDS experts[Footnote 12] and, based on our analysis of 
information from these interviews, outlined an alternative approach to 
allocating PEPFAR funds. In addition, we conducted initial and follow- 
up surveys of PEPFAR country team members. (Survey questions, results, 
and number of respondents per question are presented in an electronic 
supplement to this report, available at our Web site.[Footnote 13]) We 
also interviewed government officials from four PEPFAR focus countries 
as well as officials at OGAC and the U.S. Agency for International 
Development (USAID) in Washington, D.C., and we held meetings with 
officials at the World Health Organization (WHO); the Joint United 
Nations Programme on HIV/AIDS (UNAIDS); and the Global Fund to Fight 
AIDS, Tuberculosis, and Malaria in Geneva, Switzerland. In addition, we 
reviewed PEPFAR documents, such as the President's Emergency Plan for 
AIDS Relief Fiscal Year 2008 Country Operational Plan (COP) Guidance. 
(See app. I for a more detailed description of our scope and 
methodology.) We conducted this performance audit from May 2007 to 
March 2008 in accordance with generally accepted government auditing 
standards. 

Results in Brief: 

HIV/AIDS prevention and treatment experts whom we interviewed 
recognized that the Leadership Act's spending directives had some 
benefits, but many experts expressed concerns about the effect of the 
AB and ARV directives on country-based and evidence-based programming. 
More than half of the experts stated that the prevention directive 
helped protect funding for prevention, and a number of the experts said 
that the treatment directive helped expand access to HIV/AIDS treatment 
in the 15 focus countries. However, 13 of 22 experts expressed concern 
that the AB directive posed obstacles to the development of country- 
based and evidence-based programming. In addition, the same number of 
experts explicitly stated that PEPFAR's AB directive hindered the 
development of integrated prevention programs that appropriately 
balanced AB prevention activities with other prevention activities. 
Further, 12 experts stated that the ARV directive does not reflect the 
varying cost of ARV drugs. Overall, the experts advocated revising 
PEPFAR's current allocation process, which is based on the spending 
directives, with a more country-based approach. Several experts also 
advocated a leadership role for OGAC in providing guidance and 
technical assistance to country teams. 

A more country-based approach to the current process of allocating 
PEPFAR funds could strengthen country teams' ability to develop 
programs that respond to local needs. Building on the IOM 
recommendation to eliminate the spending directives, the proposed 
alternative approach in this report includes changes to three elements 
of the current allocation process--setting targets, selecting 
interventions, and considering costs--but gives country teams more 
responsibility for planning PEPFAR programs, subject to OGAC's 
continued review[Footnote 14]. Under the proposed approach, teams would 
draw on country-level data to propose targets, including annual and 
multiyear targets, that respond to each country's conditions; OGAC 
would work with teams to ensure that the proposed targets are aimed at 
meeting the global PEPFAR targets. In contrast, teams currently set 
annual targets to meet 5-year country-level targets established by 
OGAC. Country teams would also select interventions to meet their 
proposed targets, unconstrained by the spending directives, subject to 
OGAC's review. Currently, teams select interventions within the 
constraints of the spending directives. In addition, teams would 
consider country-level cost information according to a consistent, OGAC-
defined methodology; teams currently identify and analyze costs in 
varying ways. Although OGAC bases its country-level allocations in part 
on the proposed budgets in the teams' plans, OGAC has not provided the 
teams formal guidance or a methodology for identifying and analyzing 
cost information. In contrast, federal standards state that agencies 
should use consistent costing methodologies in their planning to 
provide reliable and timely information to federal managers and 
Congress[Footnote 15]. To ensure country teams' accountability for 
results under the proposed approach, OGAC would retain its leadership 
role, including approving country plans and leading efforts to monitor 
allocation of funds and progress toward targets. 


Most PEPFAR country team officials whom we surveyed reported that the 
proposed alternative approach to allocating PEPFAR funds would be 
feasible. However, some of the officials cited several key challenges 
that they might face in implementing the approach. With regard to 
proposing all country-level targets, most PEPFAR country team officials 
stated that it would not be difficult for country teams to do so. 
However, some country team officials identified reaching consensus on 
targets, both internally and with external participants--such as host 
country officials and implementing partners--as potential challenges. 
With regard to selecting interventions, officials noted a range of 
ongoing challenges--including measurement and evaluation difficulties, 
limited data, and lack of host country capacity--that would likely 
continue under the alternative approach. With regard to using cost- 
related data in their planning and budgeting, many officials said it 
would not be difficult for country teams to do so, but they cited a 
lack of complete and appropriate data and wide variations in costs as 
current obstacles that are also likely under the alternative approach. 

If Congress decides to remove the spending requirements as IOM 
recommended, we suggest that Congress encourage OGAC to adopt a more 
country-based approach to allocating funding, with OGAC providing 
overall leadership and guidance for setting country-specific targets, 
selecting interventions, and considering costs, as discussed in this 
report. In addition, to help ensure that PEPFAR country teams are 
better able to provide consistent and accurate cost estimates to OGAC, 
we recommend that the Secretary of State direct OGAC to provide 
appropriate guidance to PEPFAR country teams on identifying and using 
cost-related information in their planning and budgeting of PEPFAR 
programs. 

OGAC provided written comments regarding a draft of this report, which 
we have reprinted in appendix IV, as well as technical comments that we 
incorporated as appropriate. OGAC agreed with our recommendation to 
improve its guidance to country teams on how to identify and use cost 
information for planning and budgeting. In its written comments, OGAC 
emphasized that PEPFAR policies and procedures are intended to ensure 
country ownership consistent with applicable law. Our report's central 
finding--based on input we received from noted HIV/AIDS experts--that a 
more country-based approach could improve allocation of funds does not 
suggest that country-teams play no role in PEPFAR programming. However, 
a number of experts we interviewed observed that congressional spending 
directives and targets set by OGAC have constrained country-level 
programming. OGAC's written comments also suggested that our report 
demonstrated some misunderstanding of PEPFAR operations. In response, 
we added to our report more information about OGAC's annual allocation 
process. OGAC further challenged our presentation of expert concerns 
regarding the impact of the 33 percent AB spending directive. In 
response, we added a footnote detailing some of the experts' comments 
regarding the AB spending directive. In addition, OGAC stated its 
concern that the report does not address the potential consequences of 
eliminating the current 10 percent spending directive for programs 
serving orphans and vulnerable children (OVC). Although our work 
focused on the prevention and treatment spending directives, a number 
of individuals whom we interviewed noted that this directive helped 
protect programs for OVC. We also recognize that Congress may view the 
OVC directive as necessary to protect this vulnerable group. 

Background: 

More than 20 million people have died from AIDS since 1981. In 2007, an 
estimated 2.1 million died from AIDS and about 2.5 million people were 
newly infected with HIV. Data for 2007 from UNAIDS indicate that about 
33.2 million people worldwide are living with HIV/AIDS. More than two- 
thirds of these people live in sub-Saharan Africa, where adult HIV 
prevalence in 2007 was estimated by UNAIDS at 5 percent. 

HIV/AIDS Epidemic in PEPFAR countries: 

The nature of the AIDS epidemic varies among the 15 PEPFAR focus 
countries, 12 of which are in sub-Saharan Africa (see fig. 1). Although 
the epidemic in some focus countries is concentrated in certain 
populations, in other focus countries it has spread among the general 
population. In addition, the groups most vulnerable to HIV infection 
vary among the focus countries. For example, while girls and young 
women are most vulnerable in some countries, populations typically 
considered high-risk groups, such as intravenous drug-users or 
commercial sex workers, are most vulnerable in others. 

Figure 1: Stage of the HIV/AIDS Epidemic in PEPFAR Focus Countries, 
December 2007: 

This figure is a map showing the stage of the HIV/AIDS epidemic in 
PEPFAR countries, December 2007. 

[See PDF for image] 

Source: UNAIDS data. 

Note: According to UNAIDS and WHO, a concentrated epidemic is one in 
which HIV has infected at least 5 percent of individuals in defined 
subpopulation but is not well-established in the general population. In 
a generalized epidemic, HIV has spread among the general population, 
infecting at least 1 percent. 

[End of figure] 

Leadership Act's Spending Directives and Guidance: 

The Leadership Act specifies the percentages of PEPFAR funds to be 
allocated for HIV/AIDS prevention, treatment, and care activities for 
fiscal years 2006-2008. The act endorses the "ABC model" (Abstain, Be 
faithful, correct and consistent use of Condoms) for sexual prevention 
of HIV/AIDS.[Footnote 16] The act also requires that at least 10 
percent of PEPFAR funds be devoted to care for orphans and vulnerable 
children.[Footnote 17] (See fig. 2.) 

Figure 2: Spending Directives and Guidance from the Leadership Act for 
Fiscal Years 2006-2008: 

This figure is a combination of three pie graphs showing spending 
directives and guidance from the leadership act for fiscal years 2006-
2008. 

Large Pie Graph: 

Treatment: 55%; 
Prevention: 20%; 
 care: 15%; 
Orphans and vulnerable children: 10%. 

Treatment: 

Antiretroviral drugs: 75%; 
Related care: 25%. 

Prevention: 

Other Prevention activities: 66%; 
Abstinence/: 33%. 

[See PDF for image] 

Source: GAO analysis of 2003 Leadership Act. 

Note: The percentage shown for other prevention activities represents 
PEPFAR prevention funds remaining after the required allocation for 
abstinence/faithfulness activities. 

[End of figure] 

PEPFAR Funding: 

In fiscal year 2007, Congress appropriated about $4.52 billion for 
global HIV/AIDS efforts. Of this amount, approximately $4.48 billion 
was appropriated to four accounts: (1) the Global HIV/AIDS Initiative 
(GHAI), (2) the Child Survival and Health account, (3) the National 
Institutes of Health (NIH) budget account, and (4) the Centers for 
Disease Control and Prevention (CDC) Global AIDS Program.[Footnote 18] 
In this report, "PEPFAR funding" refers to funds appropriated to these 
four accounts.[Footnote 19] 

In fiscal year 2007, planned PEPFAR allocations for prevention, 
treatment, and care activities in the 15 focus countries totaled about 
$2.35 billion.[Footnote 20] Of that sum, about $488 million (21 
percent) was allocated for prevention; approximately $703 million (30 
percent) was allocated for care, which includes assistance for orphans 
and vulnerable children; and about $1.16 billion (49 percent) was 
allocated for treatment (see fig. 3). 

Figure 3: PEPFAR's Planned Allocations for Prevention, Treatment, and 
Care, Fiscal Year 2007: 

This figure is a pie graph showing PEPFAR's planned allocations for 
prevention, treatment, and care, fiscal year 2007. 

Treatment: $1.16 billion: 49%; 
Care: $703 million: 30%; 
Prevention: $488 million: 21%. 

[See PDF for image] 

Source: GAO analysis of budget data provided by OGAC. 

[End of figure] 

PEPFAR's annual planned allocations have increased significantly since 
the program received its first appropriation in January 2004. In fiscal 
year 2004, planned allocations to the 15 focus countries for 
prevention, treatment, and care activities totaled approximately $629 
million. Planned allocations to the focus countries for these 
activities were approximately $1.05 billion in fiscal year 2005, $1.4 
billion in fiscal year 2006, and $2.35 billion in fiscal year 2007. For 
fiscal year 2008, planned allocations to the focus countries for 
prevention, treatment, and care total about $3.16 billion.[Footnote 21] 
Figure 4 shows total planned PEPFAR funding allocations for fiscal 
years 2004-2008. 

Figure 4: Total Planned PEPFAR Funding Allocations for 15 Focus 
Countries, Fiscal Years 2004-2008: 

This figure is a vertical bar graph showing total planned PEPFAR 
funding allocations for 15 focus countries, fiscal years 2004-2008. The 
X axis is the fiscal year, and the Y axis is dollars in millions. 

Fiscal year: "2004"; 
Dollars in millions: 628.6. 

Fiscal year: "2005"; 
Dollars in millions: 1049.8. 

Fiscal year: "2006"; 
Dollars in millions: 1403.4. 

Fiscal year: "2007"; 
Dollars in millions: 2349. 

Fiscal year: "2008[A]"; 
Dollars in millions: 3162. 

[See PDF for image] 

Source: GAO analysis of budget data provided by OGAC. 

Note: As of March 31, 2008, OGAC had not yet approved fiscal year 2008 
planned allocations. 

[End of figure] 

PEPFAR Program Areas: 

PEPFAR guidance establishes several program areas that comprise 
activities undertaken for prevention, treatment, and care. For 
prevention, the guidance defines five program areas--abstinence/ 
faithfulness (AB); "other prevention," which includes condom activities 
("C"), management of sexually transmitted infections, and reduction of 
injection drug use; prevention of mother-to-child transmission (PMTCT); 
blood safety; and safe medical injections. These areas are divided into 
two groups: (1) activities aimed at preventing sexual transmission--AB 
and "other prevention," and (2) activities aimed at preventing 
nonsexual transmission--prevention of mother to child transmission, 
blood safety, and safe medical injections.[Footnote 22] 

In addition, PEPFAR guidance specifies three program areas for 
treatment: ARV drugs, which encompasses the cost of ARV drugs as well 
as logistical and supply chain support; ARV services, which includes 
training clinicians and other health care providers on ARV-related 
issues; and laboratory infrastructure. The guidance defines four 
program areas for care: basic health care and support; tuberculosis 
(TB) prevention and treatment; care of orphans and other vulnerable 
children affected by HIV/AIDS, including basic education and health 
care; and counseling and testing. 

Within each program area, OGAC has developed a number of indicators 
that it uses to measure progress. For example, two indicators under the 
PMTCT program area are the number of facilities providing the minimum 
package of PMTCT services and the number of pregnant women who received 
HIV counseling and testing for PMTCT and who received their test 
results. 

Office of the Global AIDS Coordinator: 

Established in January 2004, OGAC is responsible for developing a 
global HIV/AIDS strategy and administering PEPFAR. The Leadership Act 
authorizes the Global AIDS Coordinator to carry out international 
prevention, treatment, and care and other HIV/AIDS-related activities 
through nongovernmental organizations (NGO) and U.S. executive branch 
agencies.[Footnote 23] The act also charges the coordinator with 
primary responsibility for overseeing and coordinating PEPFAR 
activities. These duties include, among others, auditing, monitoring, 
and evaluating all PEPFAR programs; directly approving all PEPFAR 
activities, including funding; and establishing criteria needed to 
assess the measurable outcomes of PEPFAR activities.[Footnote 24] 

In the countries where PEPFAR operates, PEPFAR programs are managed by 
country teams, each consisting of staff from PEPFAR's implementing 
agencies and led, respectively, by the U.S. Ambassador for that 
country. Some focus country teams include a PEPFAR coordinator, who is 
responsible for coordinating with implementing agencies and the host 
country government, and for facilitating the development of that 
country's PEPFAR program. 

OGAC also monitors and evaluates PEPFAR funding and program results. 
For instance, OGAC requires country teams to submit semiannual and 
annual progress reports for each fiscal year; these reports describe 
program results and identifying obligations for the past fiscal year. 
OGAC uses this information to monitor country teams' progress toward 
the PEPFAR global targets. 

Current Process for Allocating PEPFAR Funding: 

The current process for allocating PEPFAR funding within the framework 
of the spending directives is a multistage annual process. These stages 
include, among others, OGAC's provision of an initial budget to each 
country team; each team's submission of an annual strategy, known as a 
country operational plan (COP); and OGAC's assessment of each team's 
opportunities, challenges, and progress in the previous year. Based on 
OGAC's assessment, PEPFAR's interagency headquarters leadership 
provides a new annual allocation for each country team. 

* OGAC provides each country team an initial planning budget, subject 
to annual appropriations, as well as COP technical guidance. In setting 
the initial planning budget for each country, OGAC takes several 
factors into account, including the country team's progress toward 
achieving the previous year's annual country-level targets; national 
coverage rates for individuals eligible for PEPFAR prevention, 
treatment, and care services; and financial obligation rates. For 
fiscal year 2007, OGAC provided each focus country team with an initial 
planning budget in June 2006. 

* On the basis of these budgets and guidance, the country teams develop 
their COPs--including annual country-level targets, selected 
interventions and the organizations that will implement them 
(implementing partners),[Footnote 25] and estimated costs of 
interventions--and submit them in late September. For fiscal year 2007, 
country teams submitted COPs by September 30, 2006. 

* The interagency headquarters team--comprising staff from OGAC and the 
agencies that implement PEPFAR--then conducts technical and 
programmatic reviews of the proposed programs, consulting with country 
teams to clarify and discuss issues related to the COPs. After these 
reviews are complete, the PEPFAR principals, which include the Global 
AIDS Coordinator and senior management from the PEPFAR implementing 
agencies, review the COPs and make recommendations to the Global AIDS 
Coordinator regarding their approval. 

* OGAC provides a series of notifications to Congress of the activities 
and budget functions it plans to implement under PEPFAR in the current 
fiscal year. For fiscal year 2007, OGAC submitted four congressional 
notifications, beginning in December 2006. 

* Funds are eventually released to the PEPFAR implementing agencies and 
country teams, which then allocate their funding to implementing 
partners according to their COP strategies. The process for 
transferring and obligating funds and the time required to complete 
this process vary by agency, but all implementing agencies are 
instructed to obligate their funds within the current fiscal year, with 
a few exceptions.[Footnote 26] 

* During each annual budget cycle, OGAC reassesses each country team's 
opportunities and challenges and review its progress in the previous 
year. Based on this assessment, PEPFAR's interagency headquarters 
leadership provides a new annual allocation for each country team. 

Country teams received fiscal year 2007 funding from January to May 
2007. Figure 5 shows the timeline for PEPFAR's planning and allocation 
process for fiscal year 2007. 

Figure 5: Timeline of PEPFAR's Planning and Allocation Process: 

This figure is a timeline of PEPFAR's planning and allocation process. 

[See PDF for image] 

Source: GAO analysis of OGAC data. 

[A] OGAC submitted four congressional notifications for fiscal year 
2007. 

[B] The process for transferring and obligating funds and the time 
required to complete this process vary by agency. The timeline depicts 
the general time frame during which country teams received USAID and 
CDC funds for fiscal year 2007. 

[End of figure] 

The development of country teams' COPs includes three elements: setting 
targets, selecting interventions, and considering costs. 

* Setting targets. OGAC set initial 5-year country-level targets for 
prevention, treatment, and care for each focus country that, when 
summed across countries, total PEPFAR's global targets.[Footnote 27] To 
achieve these 5-year country-level targets, each country team sets 
annual targets for prevention, treatment, and care.[Footnote 28] (See 
fig. 6.) For instance, each team sets annual targets for the number of 
individuals to receive HIV-related palliative care and the number of 
orphans and vulnerable children to be assisted that over 5 years should 
strive to achieve or exceed OGAC's 5-year country-level target for 
care. OGAC guidance urges country teams to do everything possible to 
meet the 5-year country-level targets.[Footnote 29] Although OGAC does 
not require that country teams' annual targets sum to the 5-year 
targets, it considers PEPFAR's global targets to be "hard" targets that 
it is committed to achieving. 

Figure 6: Relationship between PEPFAR Global Targets, 5-Year Country- 
Level Targets, and Annual Country-Level Targets: 

This figure is a chart showing the relationship between PEPFAR global 
targets, 5 year country level targets, and annual country-level 
targets. 

PEPFAR program: 

Global Targets: 

* 2 million people to be put on treatment by 2009; 
* 7 million infections to be prevented by 2010; 
* 10 million people to receive care by 2009. 

5-year country-level targets: 

* Set by OGAC; 
* Cover prevention, treatment, and care for 15 focus countries; 
* Developed based on estimates of country need. 

Annual country-level targets: 
after 5 years, should add up to 5-year country-level targets above: 

* Set by PEPFAR country teams in 15 focus countries; 
* Cover treatment, care, and specific aspects of prevention. 

----> Global targets and 5-year-country-level targets influence country 
team's selection of annual country-level targets. 

[See PDF for image] 

Source: GAO analysis of PEPFAR data; Map Resources (map); and Nova 
Development (clip art). 

[End of figure] 

* Selecting interventions. Each country team selects interventions to 
meet its annual targets, within the constraints of the spending 
directives and the context of the country's epidemic. OGAC provides 
guidance to country teams on selecting interventions. For example, OGAC 
guidance addresses developing and implementing prevention programs that 
use the ABC approach. 

8 Considering costs. Each country team estimates costs when setting 
targets, selecting interventions, and developing budgets. Country teams 
obtain as-needed technical assistance for conducting cost analyses from 
PEPFAR implementing agencies. OGAC bases its country-level allocations 
in part on the proposed budgets in country teams' annual COPs and each 
country's efficiency in achieving its targets. 

IOM's 2007 Recommendations: 

In its report,[Footnote 30] the IOM Committee for the Evaluation of 
PEPFAR Implementation concluded that, although the spending directives 
may have been initially helpful in ensuring that PEPFAR had a balance 
of activities for prevention, treatment, care, and orphans and 
vulnerable children, they have limited PEPFAR's ability to tailor its 
programs to the specific epidemic in each country. The committee 
recommended that Congress remove the spending directives and replace 
them with more appropriate mechanisms to ensure that PEPFAR country 
teams are held accountable to OGAC and Congress for achieving results 
and that spending is linked directly to overall and country-level 
PEPFAR targets. 

The report made several other recommendations. For instance, it called 
for PEPFAR to emphasize long-term strategic planning and capacity 
building to help build a sustainable response to the HIV/AIDS epidemic. 
The report also recommended that PEPFAR work to accumulate better data 
to determine the most appropriate prevention interventions for each 
country, empower women and girls by focusing on the factors that put 
them at greater risk for HIV/AIDS, and build workforce capacity by 
increasing support for educating new health care workers. 

Experts Generally Called for a More Country-Based Approach to 
Allocating PEPFAR Funds: 

Although more than half of the 22 experts we interviewed acknowledged 
benefits of PEPFAR's overall prevention spending directive, the same 
number of experts expressed concern about the AB directive's effect on 
country-based and evidence-based programming. Many of the experts 
stated that the prevention and treatment directives have, respectively, 
protected funding for prevention and helped expand access to HIV/AIDS 
treatment. However, 13 of 22 experts expressed concern that the AB 
directive has posed obstacles to country-based programming, and 13 
experts said it has hindered development of integrated prevention 
programs. In general, the experts advocated replacing the current 
allocation process with a more country-based approach for allocating 
PEPFAR funds.[Footnote 31] In addition, several experts advocated a 
leadership role for OGAC in providing guidance and technical 
assistance. 

Experts Acknowledged Some Positive Impact of Spending Directives for 
Prevention and Treatment: 

Consistent with the IOM 2007 study, experts we consulted generally 
agreed that PEPFAR has expanded HIV/AIDS prevention and treatment 
programs, supporting significant progress in combating the HIV/AIDS 
epidemic in the focus countries.[Footnote 32] Many of the experts 
acknowledged that the prevention and treatment spending directives had 
a positive impact during PEPFAR's first 5 years. 

* Thirteen experts noted benefits from the Leadership Act's directive 
to spend 20 percent of PEPFAR funding on prevention. In general, these 
experts said that the prevention directive ensured that PEPFAR 
continued to fund prevention in the face of an increasing focus on 
expanding access to treatment. For example, one commented that the 
prevention spending directive secured protection of prevention funding 
despite the call for a massive expansion of ARV treatment. Another 
expert observed that securing funding for prevention is extremely 
important because the AIDS epidemic will never be ended through 
treatment alone. 

* Nine experts agreed that PEPFAR's directive to spend 55 percent of 
funding on HIV/AIDS treatment helped expand access to ARV treatment in 
the focus countries. This result is consistent with IOM's conclusion 
that a primary accomplishment of PEPFAR has been to demonstrate that 
treatment can be rapidly scaled up in resource-constrained 
environments. For example, one expert stated that the treatment 
directive's strength was in securing a large amount of money to expand 
ARV therapy although it was considered very expensive at the time. 
However, another expert, qualifying his support for the directive, said 
that during the first phase, PEPFAR was disproportionately skewed 
toward treatment and that, although the treatment directive may have 
been useful to initiate the massive scale up of ARV treatment, it 
should be reconsidered for the next 5-year period. 

Experts Expressed Concerns about AB and ARV Directives and Called for a 
More Country-Based Approach to Allocations: 

A number of experts questioned the effect of the AB and ARV spending 
directives on country teams' ability to develop integrated, country- 
based programs. For example: 

* Thirteen of 22 experts expressed concern that the AB directive posed 
obstacles to the development of country-based and evidence-based 
programming.[Footnote 33] In addition, 13 experts explicitly stated 
that the AB directive hindered the development of integrated prevention 
programs that appropriately balanced abstinence-until-marriage 
prevention activities with other prevention activities.[Footnote 34] 
Experts also noted that the AB directive inhibits the integration of 
prevention, treatment, and care programs.[Footnote 35] In contrast, two 
experts highlighted the benefits of the directive, emphasizing the 
importance of programs promoting fidelity for sexually active adults in 
countries with generalized epidemics. 

* Twelve experts stated that the ARV directive does not reflect the 
changing price of ARV drugs. For example, seven experts noted that the 
cost of ARV drugs has decreased over the past 5 years.[Footnote 36] 

Several experts observed that it is important to set targets and select 
interventions that reflect country-level data and to base funding 
allocations on the needs and costs in each country. For example, 9 
experts suggested that it is important that PEPFAR targets be based on 
country-specific data, and 10 experts observed that such data are 
important for the selection of interventions. Other experts recommended 
determining funding levels based on the characteristics of each 
country's epidemic. In addition, several experts noted that to set 
appropriate targets, OGAC and country teams need to know the costs of 
interventions in each country. 

Experts Advocated That OGAC Provide Guidance and Technical Assistance: 

A number of the experts we interviewed said that OGAC should provide 
guidance and technical assistance to country teams during the next 
phase of PEPFAR.[Footnote 37] 

* Six experts stated that OGAC should provide guidance to country 
teams. Of these six, one expert pointed out that OGAC should provide 
guidance that lays out how PEPFAR country teams need to communicate 
with host country authorities. Another of these experts noted that 
currently OGAC provides limited guidance on how country teams should 
conduct outcome evaluations to determine whether programs are having an 
impact or how they can be more effective. This expert also suggested 
that it would be useful if OGAC provided more information to country 
teams about what is and is not working. According to one expert who did 
not support delegating key decisions to the country teams, in the 
absence of spending directives, OGAC should provide guidance for 
allocating funding for both generalized and concentrated epidemics. 

* Four experts suggested that OGAC should provide technical assistance 
to the country teams. For example, according to one of these experts, a 
key role for OGAC would be to provide advice on the effectiveness of 
given interventions. 

Alternative Approach to Allocating Funding Could Strengthen Country- 
Based Programming: 

A more country-based approach to the current process of allocating 
PEPFAR funds could strengthen country teams' ability to develop 
programs that respond to local needs. Building on the IOM 
recommendation to eliminate the spending directives, the proposed 
alternative approach includes changes to three basic elements of the 
current allocation process--setting targets, selecting interventions, 
and considering cost--but gives country teams greater responsibility 
for planning their country's PEPFAR programs, subject to OGAC's 
continued review (see fig. 7). Under the proposed approach, country 
teams would propose targets, including annual and multiyear targets, 
that respond primarily to the country's conditions; OGAC would work 
with the country teams collaboratively and iteratively to ensure that 
the proposed targets are aimed at meeting the global PEPFAR targets. 
The country teams would also select interventions to meet their 
proposed targets, unconstrained by the spending directives, subject to 
OGAC's review and with OGAC's guidance and technical assistance. In 
addition, the teams would consider country-level cost information 
according to a consistent, OGAC-defined methodology; currently, 
countries use costs in varying ways, with OGAC providing as-needed 
technical assistance but no formal guidance. OGAC would retain its 
leadership role under the alternative approach, including reviewing and 
approving COPS and monitoring country teams' progress toward global 
targets. 

Figure 7: Current Allocation Process Compared with Alternative Approach 
to Allocating PEPFAR Funds: 

This figure is a combination of two flowcharts showing the current 
allocation process compared with alternative approach to allocating 
PEPFAR funds. 

[See PDF for image] 

Source: GAO analysis of OGAC data; GAO analysis. 

[End of figure] 

Country Teams Would Propose Country-Level Targets to Reflect Country 
Conditions and Data, Subject to OGAC Review: 

Under the proposed approach, country teams would draw on local 
epidemiological information and cost data to propose targets, which 
could include annual and multiyear targets, that respond primarily to 
the country's conditions. OGAC would review the countries' proposed 
targets and, in a collaborative, iterative process, work with the 
countries to modify the proposed targets to reflect both PEPFAR's 
global targets and changing local conditions, such as trends in HIV/ 
AIDS infection rates among vulnerable populations. According to an OGAC 
official, in the absence of OGAC's 5-year country-level targets, OGAC 
would determine whether country teams' proposed country-level targets 
are on track to meet the global targets. 

* Twenty-eight of 38 country team officials responding to our first 
survey reported that allowing country teams to propose all targets 
would have a very positive or positive effect on prevention programs. 
Similarly, 23 of the 38 responding country team officials reported that 
allowing country teams to propose all targets would have a very 
positive or positive effect on treatment programs. 

* When asked to provide information on the effect of allowing teams to 
propose all country-level targets, nine country team officials said 
that this would make their programs responsive to local needs and 
conditions. In addition, six officials reported that proposing country 
level targets would enhance country teams' ability to consider country- 
specific information and team knowledge. 

Under the current approach, country teams' target setting reflects the 
combined influence of OGAC's 5-year country-level targets and country-
level information, according to country team officials we surveyed. 

* Most country team officials reported that OGAC's 5-year country-level 
targets greatly affect their process for setting annual country-level 
targets. Thirty-two of 38 survey respondents indicated that the 5-year 
country-level targets were extremely or very important in their process 
of setting annual country-level targets, and several country team 
officials reported challenges related to the 5-year country-level 
targets. For example, one noted that the targets set by OGAC did not 
correspond with the host country government's own goals. Another 
respondent stated that OGAC's 5-year country-level targets for care did 
not appropriately address orphans and vulnerable children or home-based 
care. 

* Most country team officials reported that other sources of 
information were also influential in their process of setting annual 
country-level targets. For example, 27 of 38 survey respondents 
indicated that information from the host country's national strategy 
and targets was extremely or very important, while 32 of 38 respondents 
reported that the PEPFAR country team's own analysis of country data 
was extremely or very important to setting annual targets. 

Alternative Approach Would Allow Country Teams to Select Interventions 
without Constraints of Spending Directives: 

Under the alternative approach, the country teams would select 
interventions based on country-level epidemiological and other 
evidence, without the constraint of the spending directives. OGAC would 
continue to review the selected interventions as part of the COP 
process and would provide guidance and technical assistance on proposed 
interventions. 

Under the current approach, country team officials we surveyed reported 
that three factors--the Leadership Act's spending directives, country- 
specific information, and input from other partners--influence their 
selection of interventions. About half said that the spending 
directives constrained the selection process. A number of country team 
officials also noted that guidance provided by OGAC influenced their 
selection of interventions. 

* Country team officials generally said that they considered data on 
effectiveness of interventions and past program performance as well as 
country-level information as major factors in their selection of 
interventions. For example, 37 of 38 respondents indicated that the 
effectiveness of interventions is an extremely or very important factor 
in their determination of which interventions to use. Also, 35 of 38 
country team officials reported that information about the past 
performance of ongoing programs is extremely or very important in 
determining which interventions to implement. In addition, almost all 
country team officials reported that they considered the following to 
be extremely or very important when selecting interventions: country 
capacity, country-level epidemiological data, cultural acceptability, 
and professional and technical expertise of in-country PEPFAR staff. 

* About half of the country team officials reported that the current 
spending directives constrained their selection of interventions. In 
response to our follow-up survey, 15 of 32 officials reported that the 
spending directives presented challenges to selecting interventions, 
with most respondents focusing on challenges posed by the prevention 
directives. For example, one respondent stated that the national 
universal access treatment target had not been met because the country 
team had to follow the spending directives.[Footnote 38] 

* Most country team officials reported collaborating with implementing 
partners, host country representatives, and major donor representatives 
in selecting interventions. Respondents most frequently characterized 
implementing partners as being heavily involved in determining which 
interventions to carry out: 35 of 38 respondents reported that 
implementing partners were extremely or very involved in selecting 
interventions. In addition, 34 of 38 respondents noted that host 
country technical working groups--groups organized by the host country 
government that are usually comprised of representatives from major 
donors as well as host government officials--were extremely or very 
important. In addition, 26 of 36 officials who responded to a question 
about country officials' participation in the selection of 
interventions reported that host country authorities were extremely or 
very involved in this process. 

* A majority of country team officials (23 of 38) reported that formal 
guidance provided by OGAC influenced their selection of interventions. 

Country Teams Would Consider Costs Using OGAC-defined Methodology: 

Under the alternative approach, each country team would analyze, in a 
manner consistent across all teams, country-level cost data to 
determine the funding needed for the interventions they select. In 
doing so, the country teams would use a consistent methodology defined 
by OGAC. In contrast, under the current approach, although most country 
teams reported using cost data in planning and budgeting, the teams 
reported using varying methodologies to identify and analyze this data. 
Although OGAC provides the country teams as-needed assistance and 
guidance in using cost data for budgeting and planning, it has not 
provided formal guidance or established a consistent methodology for 
conducting cost analyses, in accordance with federal accounting 
standards. 

Almost all country team officials who responded to our survey reported 
using cost information in their planning and budgeting. Specifically, 
35 of 38 respondents said that they use cost information when planning 
and budgeting PEPFAR programs, with about half of this group using the 
information to a great or very great extent and the other half using it 
to a moderate extent or to some extent.[Footnote 39] However, country 
team officials reported using varying methods to identify and analyze 
cost information to plan and budget PEPFAR programs. Some respondents 
reported calculating cost per unit for interventions or services, while 
others stated that they compare costs across implementing partners. For 
instance, 11 of 32 respondents said that they use information about the 
actual unit cost of specific interventions to a great or very great 
extent when planning and budgeting. Other reported methods for 
identifying and analyzing cost information include using cost data to 
discuss cost-effectiveness and to identify and complement other funding 
sources. 

* An official from one country team explained its attempts to estimate 
cost per intervention. The official provided an example related to a 
care intervention, noting that the country team first determines the 
level of funding available for care interventions and then identifies 
the most effective interventions for care--in this case, co- 
trimoxazole, an antibiotic that can be used to treat most of the 
opportunistic infections associated with HIV/AIDS--and the number of 
beneficiaries it hopes to serve. The country team then determines the 
cost of an average dose of the drug by using information from 
implementing partners, interagency technical working groups, and supply 
chain partners. Finally, the team calculates the cost of providing the 
drug to the identified beneficiaries. 

* Officials from another country team reported that the country team 
calculates rough costs for each implementing partner. For example, to 
estimate the cost per patient treated, the officials reported that they 
divide each partner's proposed budget by the number of patients the 
partner planned to treat with ARVs. The country team then compares the 
cost per patient across implementing partners to identify partners 
whose costs are much higher or lower than average. The country team 
then holds discussions with those implementing partners to determine 
the reasons for the variation. 

* Five country team officials also reported using cost information in 
other ways. For instance, in response to an open-ended question, 3 of 
35 respondents reported that they use cost data in discussions about 
cost-effectiveness of implementing partners or new interventions. Two 
of 35 respondents said they use cost information to help them identify 
and complement other funding sources, such as the host country 
government or other donors.[Footnote 40] For example, one of these 
respondents noted that cost information is used to help the country 
team determine how to complement other funding sources, such as the 
Global Fund and the Clinton Foundation, for interventions such as ARVs. 

Although OGAC bases its country-level allocations in part on the 
proposed budgets in country teams' annual COPs, OGAC has not provided 
the teams formal guidance on identifying and analyzing cost 
information, nor has OGAC developed a methodology that the teams could 
apply to identify and use cost information. Federal financial 
accounting standards state that agencies should use consistent costing 
methodologies in their planning to determine the full cost of resources 
that contribute to the production of outputs in order to provide 
reliable and timely information to federal managers and 
Congress.[Footnote 41] In 2006, OGAC conducted a high-level exercise to 
determine the cost of averting an infection, using several cost models 
that examine prevention program cost effectiveness.[Footnote 42] 
According to an OGAC official, although several country teams have used 
these models to plan their own prevention programs, other teams found 
that the model was too high level and not country specific enough to be 
useful. Instead of providing formal guidance, OGAC offers country teams 
assistance and guidance on an as-needed basis. For example, OGAC 
officials noted that staff from OGAC's Strategic Information unit 
provide informal technical assistance to country teams on performing 
cost analyses.[Footnote 43] In addition, from time to time OGAC 
distributes studies on the costs of interventions to the country teams 
to assist them in planning and budgeting their programs. Several PEPFAR 
country team officials indicated the need for guidance from OGAC on how 
or to what extent they should conduct cost analysis in planning or 
budgeting programs. These country team officials noted that it would be 
useful to receive more detailed guidance on (1) how much to spend on 
specific aspects of programs, such as human resources; (2) what 
methodology to use to determine and analyze costs; (3) the best methods 
to obtain cost-related data; and (4) how to conduct costing studies. 

OGAC Would Retain Leadership Role in Allocation Process: 

Under the alternative approach to allocating PEPFAR funds, OGAC would 
maintain its current leadership role. For example, in addition to 
collaborating with the country teams in setting targets, selecting 
interventions, and considering costs, OGAC would: 

* provide initial budgets to the country teams to facilitate the 
planning and development of COPs, 

* review and approve the COPs, 

* monitor and report on funds allocated to assure that programs are 
balanced and integrated, and: 

* monitor progress toward targets. 

To assure country teams' accountability for results, OGAC would 
continue to review country teams' annual progress reports and gather 
and analyze strategic information to monitor and evaluate PEPFAR 
programs. 

Most Country Team Officials Found Alternative Approach Feasible but 
Identified Potential Challenges: 

Most PEPFAR country team officials whom we surveyed reported that the 
proposed alternative approach to allocating PEPFAR funds would be 
feasible.[Footnote 44] However, some officials identified several key 
challenges that they might face in implementing the approach. With 
regard to proposing all country-level targets, most officials said that 
country teams could easily do so, although some county team officials 
identified reaching consensus on targets, both internally and with 
external participants, as potential challenges. With regard to 
selecting interventions, officials noted a range of challenges--such as 
measurement and evaluation difficulties, limited data, and lack of host 
country capacity--that they currently face and which, according to our 
analysis, they would likely encounter under the alternative 
approach.[Footnote 45] With regard to using cost-related data, many 
officials cited a lack of complete and appropriate data and wide 
variations in costs as current obstacles that are also likely to 
continue under the alternative approach. 

Proposing Targets Would Be Feasible, but Reaching Consensus Could Be a 
Challenge for Some Country Teams: 

Most of the PEPFAR country team officials we surveyed stated that 
proposing all country-level targets would not be difficult, although 
some officials cited potential challenges. Twenty-nine of the 32 
country team officials who responded to our follow-up survey said it 
would be easy or very easy for country teams to propose all country- 
level targets, which could include multiyear targets; 3 said it would 
be difficult to do so.[Footnote 46] When asked to explain their 
response, 10 of 23 who predicted an easy or very easy process mentioned 
country team experience as a key reason.[Footnote 47] Twelve of these 
23 officials also noted the existence of good data, including 
epidemiological data, data on partner contributions, and direct 
feedback from providers and consumers, as a key reason that proposing 
targets would be easy or very easy. In addition, 11 of these 23 
officials reported that they currently work closely with their 
implementing partners and host country government to develop annual 
country-level targets. These country team officials cited, among other 
things, strong collaboration mechanisms such as joint working groups 
and good access to government decision-makers. 

When asked to identify potential challenges related to proposing all 
targets, some country team officials said that reaching external and 
internal consensus about the targets could be difficult.[Footnote 48] 

* Reaching external consensus. About a third of 36 officials who 
responded to a question in our original survey about developing targets 
identified reaching external consensus on country-level targets with 
the host country government, implementing partners, or both, as a 
potential challenge. For example, one official stated that the process 
of reaching consensus with the national authorities regarding program 
priorities might be more challenging without the requirements imposed 
by OGAC. Another official in this group suggested that the host country 
government might in some cases push for its own health priorities such 
as investment in infrastructure. In contrast, all six host country 
officials we interviewed praised the strong collaboration between their 
governments and PEPFAR country teams and stated that it would not be 
difficult to reach agreement with country teams on country-level 
targets. 

* Reaching internal consensus. Some country team officials also 
reported that it could be difficult for the country team to reach 
internal consensus regarding the level of the targets. Specifically, 10 
of 36 officials who responded to a question in our original survey 
about developing targets noted that reaching consensus within the 
country team might be a challenge if the country teams were to propose 
all country-level targets. For example, one official cited different 
levels of technical expertise and understanding within the country team 
might make it difficult to reach consensus. Another official expressed 
concern that agencies would want to focus on targets in their 
particular area of expertise. However, two officials also noted that 
the process of shared analysis and planning involved in developing 
consensus with both external partners and within the country team could 
strengthen both interagency relations and the program itself. Another 
official acknowledged that such negotiations are a difficult but 
necessary part of the planning process. 

Some Current Challenges Could Continue to Affect Selection of 
Interventions: 

Challenges that country team officials associated with their current 
process for selecting interventions included measurement and evaluation 
difficulties, limited data, and lack of country capacity.[Footnote 49] 
According to our analysis, these challenges would likely continue under 
the alternative approach. 

* Measurement and evaluation difficulties. A number of country team 
officials cited concerns related to considering interventions' 
effectiveness. Thirty-seven of the 38 officials who responded to a 
question in our original survey about selecting interventions indicated 
that interventions' effectiveness is an extremely or very important 
consideration. However, 9 of 31 officials who responded to a question 
in our follow-up survey on selecting interventions noted that they had 
encountered challenges related to measurement and evaluation when 
selecting interventions to meet country-level targets for prevention, 
and one official reported such challenges when attempting to select 
interventions to meet country-level care targets. For example, several 
officials observed that it was difficult to measure the actual outcomes 
of prevention interventions, such as mass media activities. Another 
official cited the difficulties associated with measuring the success 
of a program designed to increase the likelihood of a nonevent such as 
preventing an infection. These difficulties in measuring the impact of 
interventions can make it harder for country teams to select 
interventions, because the links between the interventions and their 
ultimate effects may not be clear. 

* Limited data. Six of 31 officials who responded to a question in our 
follow-up survey about selecting interventions indicated that limited 
data on areas such as epidemiology and demography have challenged their 
ability to select interventions to meet PEPFAR's targets for 
prevention, treatment, and care. For example, one official noted that 
because data on the demography of high-risk groups are inadequate for 
designing prevention interventions to reach these groups, the country 
team instead selects interventions that reach the general population. 
As a result, according to the official, the interventions are weak and 
unfocused. 

* Lack of country capacity. Six of 31 country team officials who 
responded to a question in our follow-up survey about selecting 
interventions stated that a lack of human resources and infrastructure 
and weak absorptive capacity in their host country challenged their 
selection of interventions to meet PEPFAR targets. These shortfalls in 
country capacity make it more difficult for these country teams to 
select interventions that are likely to be effective. For example, one 
official mentioned that the lack of available human resources at the 
institutional and community levels made it difficult to track adherence 
to treatment. Another official noted that although home care needs 
continued to increase, fulfilling these needs is difficult owing to the 
"massive exodus" of trained physicians and nurses. 

Considering Costs Would Be Feasible, but Data Problems Could Pose 
Challenges: 

Twenty-three of 32 country team officials who responded to a question 
in our follow-up survey about considering costs said it would not be 
difficult for country teams to use information on the cost of specific 
interventions as part of their planning and budgeting.[Footnote 50] 
However, country team officials noted several challenges--including 
data gaps and wide variations in cost--that have made obtaining 
accurate data difficult.[Footnote 51] According to our analysis, these 
challenges would continue if the alternative approach were implemented. 

* Data gaps. Country team officials noted a lack of country- specific 
data as an obstacle to using cost data in planning and 
budgeting.[Footnote 52] For example, in a follow-up interview, an 
official from one country team stated that she did not know what the 
costs for treatment and care services should be in her host country, 
owing in part to the lack of any HIV/AIDS-related cost study by the 
host country government. An official from another country team cited 
the lack of country-specific cost data and reported that her country 
team had to look outside the host country for data on the costs of 
using a certain drug to treat opportunistic infections. In addition, 11 
of 16 officials who reported using cost information to a great or very 
great extent in their planning and budgeting cited the challenge of 
data not covering all populations within the host country as 
significant or very significant.[Footnote 53] 

* Cost variations. Country officials also cited varying costs as an 
obstacle to using cost information in their planning and budgeting. In 
response to an open-ended question,[Footnote 54] 10 of 38 country team 
officials who responded to a question in our original survey about 
considering costs noted that varying costs for programs, interventions, 
and persons served limited their ability to use cost data for planning 
PEPFAR programs. For example, one official observed that costs could 
vary depending on geographical differences. Another noted that costs of 
interventions can vary depending on whether an intervention is being 
implemented in a rural or an urban area or in a clinic or community 
setting. 

Conclusions: 

PEPFAR's contribution to expanding access to antiretroviral treatment 
and expanding prevention and care programs during its first 5-year 
phase has been widely recognized. Over the next 5 years, the U.S. 
bilateral contribution will likely remain the largest single source of 
funding to combat the global HIV/AIDS pandemic. Absent the current 
directives for allocating U.S. funds, a country-based approach, such as 
the alternative approach we describe, would increase the use of local 
evidence and country priorities and conditions in planning and 
implementing programs. This could enhance country teams' ability to 
address local needs and enable OGAC and country teams to meet the IOM 
criteria of assuring accountability for results and linking funding to 
achieving targets. 

Shifting some planning responsibilities from OGAC to country teams 
would support the more country-based approach suggested by the HIV/AIDS 
experts we consulted, while preserving OGAC's key leadership role. 
Country team officials generally found such an approach to be feasible, 
but some also identified continuing challenges, including reaching 
consensus and obtaining data on the cost of interventions in each 
country. Under both the current and the proposed approach, cost 
analysis is of key importance to planning and to ensuring 
accountability at the country level. Lacking formal guidance, country 
teams have relied on ad hoc approaches to obtain and analyze cost 
information and reported varying uses of cost analysis in budgeting and 
planning. Until OGAC develops clear guidance on how to identify and use 
cost information in planning and budgeting, country teams will likely 
remain unable to provide consistent or accurate cost estimates to OGAC. 
The lack of reliable data cited by country team officials also limits 
their ability to develop accurate cost estimates. As a result, OGAC may 
be limited in its ability to ensure accountable use of resources, and 
OGAC managers and Congress may lack full and accurate cost information 
when making decisions about resource allocation. 

Matter for Congressional Consideration: 

If Congress decides to remove the spending directives as IOM 
recommended, we suggest that Congress encourage OGAC to adopt a more 
country-based and evidence-based approach to allocating funding, with 
OGAC providing overall leadership and guidance for setting country- 
specific targets, selecting interventions, and considering costs, as 
discussed in this report. 

Recommendation for Executive Action: 

To help ensure that PEPFAR country teams are better able to provide 
consistent and accurate cost estimates to OGAC, we recommend that the 
Secretary of State direct OGAC to provide appropriate guidance to 
PEPFAR country teams for identifying and using cost-related information 
in planning and budgeting PEPFAR programs. 

Agency Comments and Our Evaluation: 

OGAC provided written comments about a draft of this report, which we 
have reprinted in appendix IV. OGAC also provided technical comments 
separately, which we have incorporated as appropriate. OGAC agreed with 
our recommendation to help provide consistent and accurate cost 
estimates to the field by strengthening guidance for identifying and 
using cost information for planning and budgeting. 

In its written comments, OGAC emphasized that PEPFAR policies and 
procedures are intended to ensure country ownership consistent with 
applicable law. Our report's central finding--based on the observations 
of noted HIV/AIDS experts--that a more country-based approach could 
improve allocation of funds does not suggest that country-teams play no 
role in PEPFAR programming. For example, our report describes country 
team involvement in developing country operational plans and the role 
of these teams in selecting interventions within the constraints of the 
spending directives. However, consistent with the Institute of 
Medicine's 2007 report and our 2006 report, a number of experts we 
interviewed observed that the congressional spending directives and 
targets set by OGAC have constrained country-level programming, 
particularly as a result of country teams' efforts to comply with the 
AB spending directive. 

OGAC's written comments suggested that our report demonstrated some 
misunderstanding about PEPFAR operations and that several aspects of 
the proposed alternative approach have been part of PEPFAR from its 
start. As our report states, the proposed approach includes changes to 
three basic elements of the current allocation process--setting 
targets, selecting interventions, and considering cost--but gives 
country teams greater responsibility for planning their country's 
PEPFAR's programs, subject to OGAC's continued review. In response to 
OGAC's comment, we added text to our report to clarify that OGAC's 
annual budget process includes a reassessment of each country team's 
opportunities and challenges and a review of its progress in the 
previous year, which guide new funding allocations for the recipient 
countries. (See page 16.) OGAC's technical comments did not challenge 
our overall description of its processes, and we addressed these 
technical comments with changes to the background section of our 
report. 

OGAC also challenged our presentation of experts' concerns regarding 
the impact of the AB spending directive. In response, we added a 
footnote further detailing the experts' comments regarding the AB 
spending directive (see page 22). In the footnote, we note that 13 
experts observed that the AB directive posed obstacles to developing 
evidence based programs and that 6 of these 13 stated that the 
directive negatively affected country-based programming. Additionally, 
1 of the 13 experts stated that AB programs are being implemented with 
no measure of effectiveness, and another noted that AB programs are too 
restrictive. Three of the 22 experts generally supported the spending 
directives. The remaining 6 experts did not comment on the directive's 
impact on evidence-based or country-based programming. 

OGAC further commented that our report does not address the potential 
consequences of eliminating the current statutory 10 percent allocation 
for programs serving orphans and vulnerable children (OVC). Because our 
work focused on the prevention and treatment spending directives, we 
did not specifically discuss the OVC spending directive with experts, 
host country officials, or PEPFAR officials. However, a number of those 
whom we interviewed noted that this directive helped protect programs 
for OVC. We recognize that Congress may view the OVC directive as 
necessary to protect this vulnerable group, although it may constrain a 
more country-based approach to allocating funds. 

Finally, OGAC described some steps it takes to allow a country-based 
approach within applicable law, including new guidance for fiscal year 
2008 that requires only countries with generalized epidemics (those 
with national prevalence rates exceeding one percent in the general 
population) to meet the AB spending directive; no AB justification is 
required for countries with only concentrated epidemics. OGAC also 
elaborated on three specific challenges and ongoing efforts to allocate 
PEPFAR funding using country-based and evidence-based approaches. 

Unless you release its contents earlier, we plan no further 
distribution of this report until 30 days after this date. At that 
time, we will send copies of this report to the Department of State, 
appropriate congressional committees, and other interested parties. We 
will also make copies available to others on request. In addition, the 
report will be available at no charge on GAO's Web site at [hyperlink, 
http://www.gao.gov]. If you or your staff have any questions regarding 
this report, please contact me at (202) 512-3149 or [email protected]. 
Contact points for our Offices of Congressional Relations and Public 
Affairs may be found on the last page of this report. GAO staff who 
made significant contributions to this report are listed in appendix V. 

Signed by: 

David Gootnick, Director: 

International Affairs and Trade: 

[End of section] 

Appendix I: Scope and Methodology: 

In March 2007, the Institute of Medicine (IOM) recommended that 
Congress remove the current spending directives for the President's 
Emergency Plan for AIDS Relief (PEPFAR) and replace them with 
alternative mechanisms that ensure accountability and link spending to 
performance targets. However, the IOM did not specify the form that 
such mechanisms should take. At the request of Congress, we identified 
a potential approach that responded to the IOM's recommendation. 

To obtain background information on PEPFAR's current approach to 
allocating funds under the Leadership Act's spending directives, we 
reviewed the 2003 Leadership Act; documentation from the Office of the 
U.S. Global AIDS Coordinator (OGAC), including the President's 
Emergency Plan for AIDS Relief FY08 Country Operational Plan (COP) 
Guidance and PEPFAR's Five-Year Global HIV/AIDS Strategy; and 
information from prior GAO reports. [Footnote 55] We also reviewed 
information from OGAC's Country Operational Plan and Reporting System 
(COPRS), a central U.S. government data system developed to support the 
collection and analysis of data related to PEPFAR planning and 
reporting requirements. We conducted interviews with officials from 
OGAC and the U.S. Agency for International Development (USAID) in 
Washington, D.C., to obtain information about the current approach to 
funding allocation. In addition, we met with officials at the World 
Health Organization (WHO); Joint United Nations Programme on HIV/AIDS 
(UNAIDS); and the Global Fund to Fight AIDS, Tuberculosis, and Malaria 
in Geneva, Switzerland. To understand processes used by PEPFAR field 
staff, we examined data from two surveys that we conducted from October 
to November 2007 (see below for more information). 

To determine HIV/AIDS experts' views of the Leadership Act's spending 
directives and identify their suggestions for an alternative approach 
to funding allocation, we conducted semi-structured interviews with 22 
leading experts in the field of HIV/AIDS from June 2007 to January 
2008. 

Our structured interview tool included questions related to the current 
PEPFAR targets and spending requirements, and alternative approaches to 
allocating funding.[Footnote 56] To develop questions to use in our 
semi-structured interviews, we reviewed IOM's report, PEPFAR 
Implementation: Progress and Promise. We also reviewed prior GAO work 
on PEPFAR.[Footnote 57] 

We identified and selected experts to interview by using a 
nonprobability selection methodology.[Footnote 58] First, to determine 
a population of experts, we started with a small group of core experts 
selected from those that participated in the IOM's evaluation of 
PEPFAR, and we asked these experts for suggestions of other experts to 
interview. Most of the experts we selected to interview were suggested 
by more than one other expert; in some cases, we included experts not 
suggested by more than one expert to obtain coverage across all of our 
selection criteria. We selected experts to interview based on numerous 
criteria, such as (1) educational background in medicine, public 
health, or both; (2) professional experience in working with HIV/AIDS 
organizations; and (3) leadership experience in addressing HIV/AIDS 
issues. With a few exceptions, all of the experts we selected fulfilled 
these three criteria. In addition, our selection criteria helped ensure 
that we obtained a wide range of viewpoints, including those supported 
by the faith-based community.[Footnote 59] We also selected experts who 
possessed expertise in prevention, treatment, and both prevention and 
treatment.[Footnote 60] We interviewed 22 HIV/AIDS experts in 17 
interviews. (For a list of experts interviewed, see appendix II.) In 
addition to interviewing the experts who participated in our semi- 
structured interviews, we also held general discussions about PEPFAR 
with four other experts from UNAIDS, WHO, OGAC, and Harvard Medical 
School and School of Public Health. These experts are also listed in 
appendix II. 

To summarize experts' responses to our semi-structured interviews and 
develop categories for our analysis, we conducted a comprehensive 
content analysis of all responses. We first grouped open-ended 
qualitative interview responses into a set of overarching issue areas, 
separating comments related to the Leadership Act's current spending 
directives and those related to an alternative approach to PEPFAR 
funding allocation. To categorize and summarize these responses, we 
performed a systematic content analysis of each set of the open-ended 
responses. Three GAO analysts and two methodologists reviewed the 
responses and independently proposed categories; to ensure the validity 
and reliability of our analysis, they met and reconciled any 
differences. A similar process was used to create subcategories. An 
analyst placed each of the experts' responses into one or more 
resulting categories, a second analyst reviewed the placement, and a 
methodologist reviewed the entire analysis and resolved any 
disagreements about the placement of text into categories. After coding 
the experts' suggestions on an alternative approach to allocating 
PEPFAR funding, we determined that the experts' suggestions generally 
fell into three areas. Based on our analysis of these three areas, we 
outlined an alternative approach that provides PEPFAR country teams 
greater authority to set country-based targets, choose interventions to 
achieve these targets and conduct rigorous costing analyses to support 
their planning and budgeting.[Footnote 61] 

To identify challenges to implementing the alternative approach to 
allocating PEPFAR funds, we conducted an e-mail survey of PEPFAR field 
staff from October to November 2007. We surveyed the Centers for 
Disease Control and Prevention (CDC) Chief of Party, the USAID health 
team leader, and the PEPFAR coordinator in each of the 15 focus 
countries. Four of these officials held both the PEPFAR coordinator 
position and the USAID health team leader positions; as a result, 41 
officials received our survey. Our survey included questions on setting 
country-based targets, selecting appropriate interventions, and using 
cost information to plan and budget PEPFAR programs. We pretested our 
survey with CDC and USAID staff that work on HIV/AIDS issues and had 
recently returned from the field. We achieved a response rate of 93 
percent (38 of 41). In collecting and analyzing the survey data, we 
took steps to minimize errors that might occur during these stages. 
Survey questions, results, and number of respondents per question are 
presented in an electronic-supplement, which may be accessed at GAO-08- 
534SP. 

To obtain additional information on country teams' experiences with 
setting targets, selecting interventions, and using cost information, 
we conducted a follow-up e-mail survey with respondents to our first 
survey. We obtained a response rate of 84 percent (32 of 38). In 
collecting and analyzing the survey data, we took steps to minimize 
errors that might occur during these stages. 

To analyze responses to open-ended questions in both of our surveys, we 
followed the same content analysis methodology described above for 
analyzing experts' comments. 

To obtain the perspectives of host country government officials from 
English-speaking PEPFAR focus countries with varying socioeconomic 
conditions, we conducted structured interviews in January 2008 with 
five government officials and one former official government official 
in the health ministries or national governmental HIV/AIDS 
organizations in four countries--Namibia, Nigeria, Uganda, and Zambia. 
We selected these officials based primarily on availability. With the 
assistance of two methodologists, we developed a structured interview 
tool. We pretested this tool with three individuals who had previous 
experience working in the governments of countries that receive PEPFAR 
funding. Information from the six interviews are used anecdotally in 
the report and are not representative of the views of all officials in 
these countries or the views of officials from countries not 
interviewed. Because of the limited use of these data in the report, we 
determined that the data from these interviews were sufficiently valid 
and reliable for our auditing purposes. 

We conducted this performance audit from May 2007 to March 2008 in 
accordance with generally accepted government auditing standards. Those 
standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe that 
the evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. 

[End of section] 

Appendix II: List of Experts: 

To address our first two objectives, we conducted 17 structured 
interviews with 22 HIV/AIDS experts from June 2007 to January 2008. At 
some of these interviews, we spoke with more than one expert; we have 
identified group interviews below. In addition, we conducted interviews 
with four other experts to obtain their general views on PEPFAR. 

List of Experts Participants in Semi-structured Interviews: 

Dr. Stefano Bertozzi, Director of Health Economics and Policy, School 
of Public Health of Mexico, National Institute of Public Health: 

Dr. James Curran, Professor of Epidemiology and Dean, Rollins School of 
Public Health, Emory University: 

Dr. Kevin de Cock, Director, Department of HIV/AIDS, World Health 
Organization: 

Dr. Helene Gayle, President and Chief Executive Officer, CARE: 

Dr. Eric Goosby, Chief Executive Officer and Chief Medical Officer, 
Pangea Global AIDS Foundation: 

Dr. Edward C. Green, Director, AIDS Prevention Research Project, 
Harvard Center for Population and Development Studies: 

Dr. Norman Hearst, Professor, Family Medicine and Epidemiology, 
University of California, San Francisco: 

Dr. Michel Kazatchkine, Executive Director, Global Fund to Fight AIDS, 
Tuberculosis, and Malaria: 

Dr. Peter Lamptey, President, Public Health Programs, Family Health 
International: 

Dr. Richard Marlink, Executive Director, Harvard AIDS Initiative, 
Harvard School of Public Health, Harvard University; Scientific 
Director, Care and Treatment, Elizabeth Glaser Pediatric AIDS 
Foundation: 

Dr. Anne Peterson, Director, Center for Global Health, World Vision 
International: 

Dr. Peter Piot, Executive Director, Joint United Nations Programme on 
HIV/AIDS; Under Secretary-General, United Nations: 

Dr. James Sherry, Professor and Chair, Department of Global Health, 
School of Public Health and Health Services, George Washington 
University: 

Mr. John Stover, President, The Futures Institute: 

Centers for Disease Control and Prevention: 

Dr. Deborah Birx, Division Director, Global AIDS Program, Centers for 
Disease Control and Prevention: 

Dr. Elizabeth Marum, Team Leader, Counseling and HIV Testing, HIV 
Prevention Branch, Global AIDS Program, Centers for Disease Control and 
Prevention: 

Dr. Lawrence Marum, Team Leader, Medical Transmission, HIV Prevention 
Branch, Global AIDS Program, Centers for Disease Control and 
Prevention: 

Dr. Dorothy Mbori-Ngacha, Chief, Prevention of Mother-to-Child 
Transmission Section, Global AIDS Program--Nairobi, Kenya, Centers for 
Disease Control and Prevention: 

Partners in Health: 

Dr. Paul Farmer, Founding Director, Partners in Health; Professor of 
Medical Anthropology, Department of Social Medicine, Harvard Medical 
School, Harvard University; Associate Chief, Division of Social 
Medicine and Health Inequalities, Brigham and Women's Hospital: 

Dr. Joia Mukherjee, Medical Director, Partners in Health: 

United Nations Children's Fund: 

Dr. Chewe Luo, Senior Program Advisor, HIV/AIDS, United Nations 
Children's Fund: 

Dr. Doreen Mulenga, Acting Chief, HIV/AIDS, United Nations Children's 
Fund: 

Other Experts Interviewed: 

Dr. Paul Delay, Director, Evidence, Monitoring, and Evaluation, Joint 
United Nations Programme on HIV/AIDS: 

Ambassador Mark Dybul, U.S. Global AIDS Coordinator, Office of the U.S. 
Global AIDS Coordinator: 

Dr. Charles Gilks, Director Coordinator of Antiretroviral Therapy and 
HIV Care Team, HIV Department, World Health Organization: 

Dr. Jim Kim, Professor of Health and Human Rights, Harvard School of 
Public Health; Professor of Medicine and Social Medicine, Harvard 
Medical School; Chief, Division of Social Medicine and Health 
Inequalities, Brigham and Women's Hospital; Director, Franï¿½ois Xavier 
Bagnoud Center for Health and Human Rights; Chair, Department of Social 
Medicine, Harvard Medical School. 

[End of section] 

Appendix III: Data-Gathering Tools Used: 

To address our objectives, we used several data-gathering tools. To 
obtain experts' views of the Leadership Act's spending directives and 
identify their suggestions for an alternative approach to funding 
allocation, we used a structured interview tool. To gather information 
on challenges to implementing the alternative approach to allocating 
PEPFAR funds, we conducted an e-mail survey and a follow-up e-mail 
survey. 

Expert Interviews: Structured Interview Tool: 

We asked the following questions in the semi-structured interviews we 
conducted with 22 experts. 

Background: 

1. What do you consider your primary area of expertise related to HIV/ 
AIDS? (e.g., epidemiology, HIV/AIDS research; treatment; evaluation; 
program management, etc.) 

* Would you say that your experience is primarily in prevention, 
treatment, or a combination of the two? Can you describe your 
experience in this area? 

2. Have you had any first-hand experience with programs that received 
PEPFAR funding? 

3. Did you participate in the 2007 IOM study? If yes, what were your 
roles and responsibilities in the IOM study? 

Prevention: 

4. Regarding the first-phase target of preventing 7 million HIV 
infections, do you think this target should be modified for PEPFAR's 
second phase or remain the same? 

5. As you know, the Leadership Act requires that 20 percent of total 
PEPFAR funding be directed to prevention activities and 33 percent of 
this amount be used for abstinence-until-marriage programs. 

* What are the strengths and limitations of the overall 20 percent 
prevention requirement? 

* What are the strengths and limitations of the 33 percent requirement 
for abstinence-until-marriage programs? 

6. The IOM report recommends doing away with these spending 
requirements and adopting alternative mechanisms that (1) are based on 
adaptive, evidence-based programming; (2) ensure accountability; and 
(3) are linked to and commensurate with efforts to achieve overall and 
country targets. 

a. Should the spending requirements be replaced with different spending 
requirements, or with a different approach? b. What ideas or 
suggestions do you have for alternatives to these spending mechanisms 
for prevention? 

Criteria: 

a. How is this mechanism based on adaptive, evidence-based programming? 
b. How does this mechanism promote accountability? c. How is the 
mechanism linked to overall and country prevention targets? d. How 
would the mechanism help the program to meet its targets? 

Feasibility: 

e. What suggestions do you have for determining the feasibility of this 
mechanism? 

* With regard to our field survey of PEPFAR implementers-- what topics 
or questions do you suggest we address with PEPFAR implementers? 

- Do you know of anyone we should talk to with experience applying 
similar mechanisms to the one you have suggested? 

h. How does the mechanism you've outlined as an alternative to the 
current PEPFAR approach contrast with other alternatives or approaches 
that other experts are considering at this point in time? 

i. Are these mechanisms specific to prevention-related activities, or 
could they be applied to treatment activities as well? 

Treatment: 

7. Regarding the first-phase target of providing ARVs to 2 million 
people, do you think this target should be modified for PEPFAR's second 
phase or remain the same? 

8. As you know, the Leadership Act requires that 55 percent of total 
PEPFAR funding be directed to treatment activities. Also, 75 percent of 
this amount is to be used for the purchase and distribution of ARVs. 

* What are the strengths and limitations of the overall 55 percent 
treatment requirement? 

* What are the strengths and limitations of the 75 percent ARV purchase 
and distribution requirements? 

9. The IOM report recommends doing away with these spending 
requirements and adopting alternative mechanisms that (1) are based on 
adaptive, evidence-based programming; (2) ensure accountability; and 
(3) are linked to and commensurate with efforts to achieve overall and 
country targets. 

a. Should the spending requirements be replaced with different spending 
requirements, or with a different approach? 

b. What ideas or suggestions do you have for alternatives to these 
spending mechanisms for prevention? 

Criteria: 

c. How is this mechanism based on adaptive, evidence-based programming? 

d. How does this mechanism promote accountability? 

e. How is the mechanism linked to overall and country prevention 
targets? 

f. How would the mechanism help the program to meet its targets? 

Feasibility: 

g. What suggestions do you have for determining the feasibility of this 
mechanism? 

* With regard to our field survey of PEPFAR implementers-- what topics 
or questions do you suggest we address with PEPFAR implementers? 

- Do you know of anyone we should talk to with experience applying 
similar mechanisms to the one you have suggested? 

h. How does the mechanism you've outlined as an alternative to the 
current PEPFAR approach contrast with other alternatives or approaches 
that other experts are considering at this point in time? 

i. Are these mechanisms specific to treatment-related activities, or 
could they be applied to prevention activities as well? 

Other: 

10. Are there any other issues regarding PEPFAR reauthorization that 
you would like to discuss? 

a. Areas of the report that warrant further GAO focus? 

b. Issues IOM left out of the report that warrant further study? 

Survey of PEPFAR Country Team Officials: 

The questions, results, and number of respondents per question from our 
first survey of PEPFAR country team officials are provided in the 
electronic supplement to this report [GAO, Global HIV/AIDS: Survey of 
PEPFAR Country Team Officials, GAO-08-534SP (Washington, D.C.: April 
2008)], available at [hyperlink, http://www.gao.gov]. 

Follow-up Survey of PEPFAR Country Team Officials: 

The following questions were sent as a follow-up to the 38 PEPFAR 
country team officials who responded to our initial country team 
survey. 

1 a. How easy or difficult would it be for country teams to set all 
country-level targets? 

Select one: 

___very easy: 

___easy: 

___neither easy nor difficult: 

___difficult: 

___very difficult: 

1 b. Why would it be easy or difficult? 

2 a. What challenges, if any, have you encountered while selecting 
interventions to meet country-level targets for prevention? 

2 b. What challenges, if any, have you encountered while selecting 
interventions to meet country-level targets for treatment? 

2 c. What challenges, if any, have you encountered while selecting 
interventions to meet country-level targets for care? 

3. To what extent do you use information about the actual unit cost of 
specific interventions in your country when planning and budgeting? 
(For example, the cost per person of PMTCT services in a given region): 

Select one: 

__very great extent: 

__great extent: 

__moderate extent: 

___some extent: 

___little or no extent: 

Please explain your answer: 

4 a. How easy or difficult would it be for country teams to use 
information on the costs of specific interventions as part of their 
planning and budgeting? 

Select one: 

___very easy: 

___easy: 

___neither easy nor difficult: 

___difficult: 

___very difficult: 

4 b. Why would it be easy or difficult? 

[End of section] 

Appendix IV: Comments from the Office of the U.S. Global AIDS 
Coordinator: 

Note: GAO comments supplementing those in the report text appear at the 
end of this appendix. 

United States Department of State: 
Assistant Secretary for Resource Management and Chief Financial 
Officer: 
Washington, D.C. 20520: 

March 25, 2008: 

Ms. Jacquelyn Williams-Bridgers: 
Managing Director: 
International Affairs and Trade: 
Government Accountability Office: 
441 G Street, N.W.: 
Washington, D.C. 20548-0001: 

Dear Ms. Williams-Bridgers: 

We appreciate the opportunity to review your draft report, "Global 
HIV/AIDS: A More Country-Based Approach Could Improve Allocation of 
PEPFAR Funding," GAO Job Code 320504. 

The enclosed Department of State comments are provided for 
incorporation with this letter as an appendix to the final report. 

If you have any questions concerning this response, please contact 
Clint Fenning, Foreign Affairs Officer, Office of the US Global AIDS 
Coordinator, at (202) 663-2420. 

Sincerely, 

Signed by: 

Bradford R. Higgins: 

cc: GAO ï¿½ Audrey Solis:  
S/GAC ï¿½ Mark Dybul: 
State/OIG ï¿½ Mark Duda: 

Department of State Comments on GAO Draft Report 

GLOBAL HIV/AIDS: A More Country-Based Approach Could Improve Allocation 
of PEPFAR Funding (GAO-08-480, GAO Code 320504) 

On behalf of the U.S. Department of State (DOS), the Office of the U.S. 
Global AIDS Coordinator (OGAC) appreciates the opportunity to comment 
on the draft report from the Government Accountability Office (GAO) 
entitled, "Global HIV/AIDS: A More Country-Based Approach Could Improve 
Allocation of PEPFAR Funding" (GAO-08-480). We appreciate the report's 
emphasis on country ownership because that is one of the fundamental 
principles of the President's vision for development. 

The President's Emergency Plan for AIDS Relief (PEPFAR) has been on the 
cutting edge of implementing the President's vision for development. 
This vision is based in the power of partnerships, representing a new 
era in development based in the intrinsic dignity, equality and worth 
of every human life. Because PEPFAR is a partnership between equals, 
PEPFAR strives to implement the principles of the Monterrey Consensus, 
beginning with the key aspects of country ownership and results-driven 
development. PEPFAR was one of the original co-sponsors of the UNAIDS' 
Three Ones approach that is also based in country ownership. Since its 
inception, PEPFAR has put policies and practices in place to ensure 
country ownership. A key aspect of this approach is the administration 
of resources in-country ï¿½ a fundamental characteristic of PEPFAR. 

As the Institute of Medicine said, PEPFAR is a "learning organization," 
and it pursues new opportunities to improve all aspects of the program 
ï¿½ including its country-ownership and results-based focus. As such, 
OGAC appreciates the review and insights provided by GAO. However, 
there seemed to be some fundamental misunderstandings about how PEPFAR 
operates. In fact, several of the aspects of the new approach that were 
recommended have been part of PEPFAR from the earliest days of the 
initiative. 

(See comment 1.): 

As part of the results-based approach, each country was provided with 
five-year prevention, treatment, and care goals in 2004. The initial 
country allocations for Fiscal Year (FY) 2004 were based on these goals 
and other parameters, including country capacity. With each annual 
budget cycle, there is a re-assessment of country opportunities and 
challenges, and a review of progress in the previous year/s. Based on 
this assessment, PEPFAR's interagency headquarters leadership provides 
a new annual allocation for each country. As can be seen below, several 
countries have already exceeded their initial goals for treatment and 
care. However, if there are opportunities for expanded services in the 
coming year, additional resources will be provided. 

(See comment 2): 

Table: 

[See PDF for image] 

[End of table] 

Table: 

[See PDF for image] 

[End of table] 

Under PEPFAR guidance, each country team is provided an overall funding 
level in the late spring/early summer of the year preceding the fiscal 
year to use in planning an appropriate country response. For example, 
an FY 2008 planning level was provided in May-June 2007, along with 
planning guidance. These planning levels are subject to the annual 
appropriation of resources. 

Upon receiving the country planning level, each PEPFAR country team 
works to design a program tailored to the country epidemic; this 
program is reflected in the team's submission of the Country 
Operational Plan (COP) in September along with targets for each program 
set by the country team through an iterative process with stakeholders. 
See attached guidance on target-setting as provided to teams in the FY 
2008 COP guidance. 

Country teams do operate within the context of congressionally mandated 
budgetary directives. However, the COP guidance states that "If meeting 
any of the mandatory requirements is not reasonable from a programmatic 
perspective, please submit a justification with the COP." See attached 
FY 2008 COP guidance. 

The guidance further states, "For other bilateral country programs, 
however, only those with generalized epidemics (i.e. national 
prevalence rates exceeding 1% in the general population) are expected 
to meet AB budgetary requirements. New for FY 2008 is that no AB 
justification is required for countries that have concentrated 
epidemics, with national prevalence below 1%." 

As these documents make clear, PEPFAR agrees that a country-based 
approach to planning investments is criticalï¿½that is why PEPFAR has 
specifically been designed to allow a country-driven approach 
consistent with applicable law. PEPFAR has been implemented accordingly 
throughout the past five years. 

Regarding the directive for abstinence and faithfulness programs, the 
report notes that 12 of 22 of the experts consulted ï¿½ one more than 
half -- expressed concern about its impact. The report then presents 
data on the treatment directive and concludes that "Overall, the 
experts recommended revising PEPFAR's current allocation process." 
(page 4) ï¿½ a key basis for the report's recommendation. The two 
directives are very different in their purposes and impact to date, so 
the reference to an "overall" expert view may create confusion. We are 
concerned that some may misread the report as a whole to imply a 
broader consensus against the abstinence and faithfulness directive 
than the data suggest, and to accord much more weight to the views of 
one group of 12 experts than another group of 10 experts. More effort 
throughout the report to convey the diversity of views on the 
abstinence and faithfulness directive could help to prevent such 
misunderstanding. 

(See comment 3.): 

Also of concern is the report's lack of discussion of the consequences 
of elimination of the current statutory allocation of 10 percent for 
programs serving orphans and vulnerable children (OVCs). During 2007, 
in light of the urgent need for additional programs in this area, 
PEPFAR asked country teams to submit proposals for additional funding 
for OVC programs ï¿½ but proposals fell far short of available resources. 
This experience suggests that the directive plays an important role in 
ensuring at least minimal funding for OVC programs, and provides an 
important counterpoint to other views on funding allocations ï¿½ a 
counterpoint from which the report would have benefited. 

(See comment 4.): 

PEPFAR will continue and strengthen the country-based, country-led 
approach with a Partnership Compact model under a second five-year 
authorization. OGAC also agrees with the report's recommendation to 
strengthen guidance on the costing of HIV/AIDS interventions. 

In the paragraphs below, we elaborate on three specific challenges and 
ongoing efforts to allocate PEPFAR funding utilizing country-based and 
evidence based approaches. 

1. Country setting of prevention targets. OGAC recognizes the 
difficulty of setting outcome level targets for prevention 
interventions, such as mass media activities, as well as the near 
impossibility of routine direct measurement of the impact of programs 
designed to prevent HIV infections (page 35). For this reason, in the 
area of behavioral prevention, country teams are only asked to set 
output targets (i.e., number of people reached with behavior messages). 
The current and ongoing Next Generation of Indicators project, through 
PEPFAR agency and community consultation, is intended to provide an 
improved set of program monitoring output indicators. Routine 
monitoring of outcomes such as behavior change, however, will not be 
possible due to the difficulty of measurement. Therefore, for this 
information we will continue to require special studies (i.e., Public 
Health Evaluations, behavioral surveys) or population-based evaluations 
(i.e., Demographic and Health Surveys, or AIDS Indicator Surveys). 

As a result of the above-mentioned difficulties and the fact that 
incidence testing technologies currently under development are not yet 
ready for extensive use, measuring the impact of HIV prevention 
programs on incidence and infections averted requires statistical 
modeling. PEPFAR currently uses a population-based model to estimate 
the number of infections averted as a result of all activity in 
country. While the statistical models are formed at headquarters, they 
are reviewed and approved by the USG country teams before they are 
finalized.

Unfortunately, this population-based model will not provide specific 
program intervention information. The gaps in the body of scientific 
knowledge around effectiveness or cost-effectiveness of prevention 
interventions make it difficult to model impact at a program level with 
any degree of certainty. However, we continue to work with program 
impact models. As the body of knowledge around prevention interventions 
grows, these types of models will become increasingly useful. 

2. Producing cost guidance. PEPFAR does have a number of models ranging 
from John Blandford's study, "Cost of Comprehensive HIV Treatment in 
Emergency Plan Focus Countries"ï¿½an intensive multi-country study 
conducted in Nigeria, Uganda, Ethiopia, Botswana and Vietnamï¿½to country-
driven estimation of treatment costs. The data gathered from the multi-
country study, which allow disaggregation by cost component, 
programmatic activity and source of support, are being utilized in the 
development of a cost-projection model for use by PEPFAR country teams 
to estimate resource needs for treatment. A user-friendly model has 
also been piloted to allow PEPFAR country teams and country partners to 
project resource needs to support the purchase of antiretroviral 
medications and associated buffer stock. Similar to PEPFAR's work in 
partner portfolio monitoring, OGAC can start to distribute guidance 
that sets minimum standards for cost analyses, e.g., outlier analysis, 
determination of unit costs, and also provide options for more 
intensive studies by fiscal year 2010. 

3. Evaluating country-set targets. To be consistent with the Three 
Ones, it is important that PEPFAR and its other multilateral partners 
(Global Fund, UNAIDS, World Health Organization, and the World Bank) 
have common indicator, target setting, and reporting guidance to 
improve the quality of targets and results reporting and to avoid 
duplicative efforts. OGAC's Strategic Information unit, in coordination 
with its interagency partners, has worked for two years through the 
UNAIDS Monitoring and Evaluation Reference Group (MERG) to harmonize 
indicator guidance. This guidance document is being released during the 
first quarter of this year. PEPFAR will use this harmonized work as the 
basis for the Next Generation of indicators. 

As the report notes, country-set targets are not always realistic 
and/or rooted in current data. PEPFAR expects that the annual review 
and reconciliation of data at the country level will improve with the 
availability of data and the collaborative target setting process. 
Since 2005, PEPFAR has met with the multilateral agency headquarters 
(WHO, UNAIDS, UNICEF, and Global Fund) to review and harmonize data 
reported from multiple sources on the number of patients receiving 
antiretroviral treatment (ART). The goals of this activity have been 1) 
to identify and reconcile discrepancies in reported data; and 2) for 
all multilateral organization publications to report one reconciled 
national number of individuals on treatment. In February 2008, this 
exercise was extended to five of the PEPFAR country-level indicators 
(ART, ARV prophylaxis, counseling and testing, OVC, and tuberculosis 
treatment) during the 2007 UNGASS data reconciliation meeting in 
Geneva, Switzerland. 

While the practice of data reconciliation among the multilateral 
agencies and PEPFAR has helped to improve the quality and consistency 
of data reported in publications at the international level, it is 
widely recognized that in order to best support the "Third One," one 
national reporting system, this process would be most effective taking 
place at the national level. This new practice would allow national 
programs to begin to ascertain the underlying reasons for systematic 
discrepancies and begin taking steps to rectify those discrepancies. 

PEPFAR country teams are strongly encouraged to organize or attend data 
reconciliation meetings with appropriate stakeholders in country prior 
to the submission of semi-annual progress reports to review country-
level indicators. At a minimum, participants at this in-country data 
reconciliation meeting should include the Global Fund, the UNAIDS 
monitoring and evaluation officer, and the appropriate host country 
government representative. This data reconciliation meeting should be 
scheduled in advance of the Semi-Annual Program Results submission in 
order to give sufficient time for maximum stakeholder participation in 
the process. Implementing each of these steps noted also will enhance 
the abilities of national and USG teams to improve the setting of 
realistic targets. 

In conclusion, the current PEPFAR funding allocation process is country-
based and consistent with the authorizing legislation. PEPFAR has 
specifically been designed to allow a country-driven approach, which 
has given the host countries the flexibility to implement effective 
HIV/AIDS programming. PEPFAR is a learning organization that will 
continue to adjust and adapt its guidance to strengthen its ability to 
meet the challenges in fighting HIV/AIDS around the world.

We appreciate GAO's examination of these important issues and their 
recommendations. We look forward to working with Congress to further 
develop our processes that ensure country-owned and results-based 
programs. 

Attachment 1: Guidance on Mandatory Budget Requirements 

For FY 2008, as in prior years, there are three mandatory budgetary 
requirements for all focus countries: (Abstinence and Be Faithful (AB), 
Orphans and Vulnerable Children (OVC) and Treatment). For Other 
Bilateral countries, only the AB requirement applies. There have been 
some minor modifications in both the OVC and AB guidance for the FY 
2008 COP. 

* Track 1.0 central budgets (from headquarters) will be attributed to 
these mandatory requirements (see further explanation below). 

* If meeting any of the mandatory requirements is not reasonable from a 
programmatic perspective, please submit a justification with the COP 
(see the COP Planning section on the Extranet for the format of the 
justifications). You should engage your Core Team Leader in discussions 
of any necessary justifications. 

* Integrated programs should be distributed, as appropriate, across 
program areas. For more information, please see the guide to allocating 
activities across program areas on page 59. 

Prevention: Abstinence And Be Faithful: 

Note: Special instructions for Other Bilateral Countries at the end of 
this section. 

ABC ï¿½ Abstinence, Being faithful, and the correct and consistent use of 
Condoms for people engaged in high-risk behaviors ï¿½ is the most 
effective, evidence-based approach to the prevention of sexual 
transmission of HIV (as described in PEPFAR's ABC Guidance). In each of 
the focus countries except Vietnam, the primary mode of HIV 
transmission is sexual contact; therefore, a significant proportion of 
prevention funding should be dedicated to ABC activities to prevent 
sexual transmission of HIV. 

In FY 2008, each country should strive to dedicate 50% of total 
prevention funds to sexual transmission, and within sexual transmission 
funds, to dedicate 66% to AB. If a country does not meet these 
expectations, a written justification is required. 

However, failure to meet the 50% requirement for sexual transmission 
within all prevention programs would not justify failure to reach the 
66% requirement within sexual transmission prevention funds for AB 
activities. In some countries, based on epidemiology, it may not make 
programmatic sense to devote 66% of sexual prevention funds to AB, and 
in such cases, a written justification would be appropriate. 

An example of when a justification would be appropriate is if the 
country is experiencing a concentrated epidemic, in which case a higher 
proportion of sexual transmission funds would likely be directed to 
correct and consistent condom use among people engaged in high-risk 
behaviors, within the context of the ABC approach. 

AB Funding + Condoms and Other Prevention Funding / Prevention Funding 
=%Sexual Prevention: 

Note: Prevention Funding = PMTCT Funding + AB Funding + Injection 
Safety + Blood Safety + Condoms and Other Prevention Funding: 

AB Funding/Sexual Prevention Funding=%AB: 

Please note: in a generalized epidemic, a very strong justification 
will be required if a country does not meet the 66% AB or 50% sexual 
prevention requirement. Again, please inform your Core Team Leader as 
soon as possible if you think these budgetary requirements will present 
a problem, and consider requesting technical assistance from the 
Prevention TWG. 

Generally speaking, the percentage of sexual prevention funds dedicated 
to AB programming in the country should not decrease between FY 2007 
and FY 2008. However, if new evidence or priorities warrant decreasing 
the percentage of sexual transmission funds dedicated to AB 
programming, then please provide an explanation for the proposed 
decrease in the justification narrative. 

Special Instructions For Other Bilateral Countries: 

For other bilateral country programs, however, only those with 
generalized epidemics (i.e. national prevalence rates exceeding 1% in 
the general population) are expected to meet AB budgetary requirements. 
New for FY 2008 is that no AB justification is required for countries 
that have concentrated epidemics, with national prevalence below 1%. 

Orphans And Vulnerable Children (OVC): 

All focus countries must allocate 10% of total prevention, care, and 
treatment resources towards OVC programs. Given the maturity of the 
PEPFAR program and the magnitude of the problem, there is an 
expectation that countries are bringing OVC programs to scale. New for 
FY 2008, pediatric treatment will not be counted towards the 10%. This 
is in no way intended to lessen the focus on Pediatric treatment, which 
is also highly important; however, pediatric treatment funds should be 
attributed only to the treatment budgetary requirement, not to OVC. 

Please submit a justification if your FY 2008 COP does not meet the 10% 
OVC requirement.

Treatment: 

To reach the goal of 2 million, and to meet the Congressional 
directives that the Emergency Plan allocate 55% of its program 
resources to antiretroviral treatment (ART), in FY 2008 the 55% 
budgetary requirement for treatment will continue to apply to all focus 
countries. Please submit a justification if your FY 2008 COP does not 
meet the 55% treatment requirement. 

ARV Drugs Funding + ARV Services Funding + Lab Funding / Prevention 
Funding + Treatment Funding +Care Funding = %Treatment: 

Attachment 2: Guidance on Target Setting: 

The information below is to provide countries some information on how 
to set targets. This is not meant to be a formula or template to follow 
in setting your targets, but simply to give you a better idea of what 
roles different individuals play in target-setting, what documents 
would be useful in setting your targets and key concepts that relate to 
target setting. 

What is target-setting in the context of PEPFAR? Target-setting is an 
iterative, group process integral to program planning and program 
management. Targets are set at the partner-level, program- level, 
country-level and international level using standardized indicators to 
outline measurable future achievements for PEPFAR. 

Who does target-setting? 

Target setting is a collaborative group process that is best conducted 
with the active participation of program managers/project officers 
(e.g. cognizant technical officers or CTOs), budgetary staff, 
implementing partners, strategic information staff (HQ SI advisors, in-
country SI liaisons and other SI technical area personnel), core team 
staff (HQ and in-country) and technical work group members, who each 
have roles and responsibilities in the group process. All USG agencies 
in country should agree to and follow the same target-setting processes 
to arrive at consistent partner-, program- and country-level targets. 

The following are our comments regarding the March 25, 2008, letter 
from the Office of the U.S. Global AIDS Coordinator. 

GAO Comments: 

1. Our report's central finding--based on the observations of noted 
HIV/ AIDS experts--that a more country-based approach could improve 
allocation of funds does not suggest that country-teams play no role in 
PEPFAR programming. For example, our report describes country team 
involvement in developing country operational plans and the role of 
these teams in selecting interventions within the constraints of the 
spending directives. 

2. We added text to our report, in response to OGAC's written comments, 
to clarify that OGAC's annual budget process includes a reassessment of 
each country team's opportunities and challenges and a review of its 
progress in the previous year, which guide new funding allocations for 
the recipient countries (see p. 16). OGAC's technical comments did not 
challenge our overall description of its processes, and we addressed 
these technical comments with minor changes to the background section 
of our report. 

3. We added a footnote in our report stating that 13 of 22 experts 
observed that the AB directive posed obstacles to developing evidence- 
based programs and 6 of these 13 experts said that the directive 
negatively affected country-based programming (see p. 22). One of the 
13 experts stated that AB programs are being implemented with no 
measure of effectiveness; another noted that AB programs are too 
restrictive. Three of the 22 experts generally supported the spending 
directives. The remaining six experts did not comment on the 
directive's impact on evidence-based or country-based programming. 

4. Because our work focused on the prevention and treatment spending 
directives, we did not specifically discuss the 10 percent spending 
directive for OVC with experts, host country officials, or PEPFAR 
officials. However, a number of those whom we interviewed noted that 
this spending directive helped protect programs for OVC. We recognize 
that Congress may view the OVC directive as necessary to protect this 
vulnerable group, although it may constrain a more country-based 
approach to allocating funds. 

[End of section] 

Appendix V: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

David Gootnick, Director (202) 512-3149 or [email protected]: 

Acknowledgments: 

In addition to the contact named above, Audrey Solis (Assistant 
Director), David Dornisch, Amanda Miller, Susan Tieh, Eve Weisberg, and 
Tom Zingale made key contributions to this report. Technical assistance 
was provided by Sylvia Bascope, Muriel Brown, Aniruddha Dasgupta, Leah 
DeWolf, Carlos Diz, Etana Finkler, Reid Lowe, Joy Labez, Grace Lui, 
Jeff Miller, Mary Moutsos, Jackie Nowicki, Diahanna Post, and Eddie 
Uyekawa. 

[End of section] 

Related GAO Products: 

Global Health: Global Fund to Fight AIDS, TB and Malaria Has Improved 
Its Documentation of Funding Decisions but Needs Standardized Oversight 
Expectations and Assessments. GAO-07-627. Washington, D.C.: May 2007. 

Global Health: Spending Requirement Presents Challenges for Allocating 
Prevention Funding under the President's Emergency Plan for AIDS 
Relief. GAO-06-395. Washington, D.C.: April 2006. 

Global Health: The Global Fund to Fight AIDS, TB and Malaria Is 
Responding to Challenges but Needs Better Information and Documentation 
for Performance-Based Funding. GAO-05-639. Washington, D.C.: June 2005. 

Global Health: U.S. AIDS Coordinator Addressing Some Key Challenges to 
Expanding Treatment, but Others Remain. GAO-04-784. Washington, D.C.: 
June 2004. 

Global Health: Global Fund to Fight AIDS, TB and Malaria Has Advanced 
in Key Areas, but Difficult Challenges Remain. GAO-03-601. Washington, 
D.C.: May 2003. 

[End of section] 

Footnotes: 

[1] Approximately two-thirds of funds appropriated for PEPFAR are 
directed to HIV/AIDS initiatives in 15 focus countries: Botswana, Cote 
d'Ivoire, Ethiopia, Guyana, Haiti, Kenya, Mozambique, Namibia, Nigeria, 
Rwanda, South Africa, Tanzania, Uganda, Vietnam, and Zambia. 

[2] Pub. L. No. 108-25, 117 Stat. 711. 

[3] The President's announcement proposes to revise PEPFAR's global 
targets to prevent 12 million infections, treat 2.5 million infected 
individuals, and provide care for 12 million people affected by HIV/ 
AIDS by 2013. 

[4] The act outlines the duties of the HIV/AIDS Coordinator as 
including, among others, auditing, monitoring, and evaluating all 
PEPFAR programs; directly approving all PEPFAR activities, including 
funding; and establishing criteria needed to assess the measurable 
outcomes of PEPFAR activities. (Pub. L. No. 108-25, ï¿½ 102(a)(2).) 

[5] This provision was included as a sense of Congress in the 
Leadership Act. OGAC has followed this provision in its allocation of 
PEFAR appropriations. 

[6] The Leadership Act endorses the "ABC model" (Abstain, Be faithful, 
correct and consistent use of Condoms) to prevent the sexual 
transmission of HIV (Pub. L. No. 108-25, ï¿½ 301(a)(2)). Since January 
2004, OGAC has defined abstinence-until-marriage programs as comprising 
both activities promoting abstinence (A) and activities promoting 
fidelity (B). 

[7] In this report, "allocating PEPFAR funds" refers to the 
distribution, across and within the country teams, of funds that have 
been appropriated for PEPFAR. 

[8] Our 2006 report recommended that the Global AIDS Coordinator 
collect and report information regarding the effect of the abstinence-
until- marriage spending requirement on country teams' sexual 
prevention programming. See GAO, Global Health: Spending Requirement 
Presents Challenges for Allocating Prevention Funding under the 
President's Emergency Plan for AIDS Relief, GAO-06-395 (Washington, 
D.C.: April 2006). 

[9] OGAC's 5-year strategy calls for evidence-based policy decisions 
and programs that respond to local needs and social and cultural 
patterns. 

[10] OGAC permits country teams to apply for exemptions from the 33 
percent abstinence-until-marriage requirement. For example, OGAC 
guidance states that it would be appropriate for a country team in a 
country with a concentrated epidemic--in which HIV has infected at 
least 5 percent of individuals in defined subpopulation but is not well-
established in the general population--to seek an exemption from this 
requirement. 

[11] Institute of Medicine, PEPFAR Implementation: Progress and Promise 
(Washington, D.C.: National Academies, 2007). 

[12] These experts included individuals affiliated with the U.S. 
government, the faith-based community, academia, and multilateral 
organizations such as the United Nations Children's Fund (UNICEF), the 
Joint United Nations Programme on HIV/AIDS (UNAIDS), and the World 
Health Organization (WHO). We selected these experts on the basis of 
several criteria, including educational background in public health and 
medicine, experience working with major HIV/AIDS organizations, and 
leadership experience in addressing HIV/AIDS. (See app. II for more 
information on these experts.) 

[13] GAO, Global HIV/AIDS: Survey of PEPFAR Country Teams, GAO-08-534SP 
(Washington, D.C.: April 2008), available at [hyperlink, 
http://www.gao.gov]. The survey, which included a primary survey and a 
short follow-up, requested information on issues such as setting 
targets, selecting interventions, and using cost information. The 
country team members surveyed included Centers for Disease Control and 
Prevention (CDC) Chiefs of Party, U.S. Agency for International 
Development (USAID) health team leaders, and PEPFAR coordinators in the 
15 PEPFAR focus countries. Survey percentages reported do not include 
nonresponses to each question in our survey. 

[14] The proposed alternative approach is based on our analysis of the 
views and comments of the 22 experts, the PEPFAR country teams, and 
OGAC officials. For more information about our methodology, see 
appendix I. 

[15] See Statement of Federal Financial Accounting Standards No. 4, 
Managerial Cost Accounting Standards and Concepts (Washington, D.C.: 
2007).  

[16] Pub. L. No. 108-25, ï¿½ 301(a)(2). The ABC model is based, in part, 
on the experience of Uganda, which implemented an integrated and 
comprehensive ABC campaign in the 1980s and observed a decline in HIV/ 
AIDS prevalence by 2001. Many researchers who have studied the Ugandan 
experience emphasize the importance of all three components of ABC and 
have concluded that all three aspects of the model contributed to 
Uganda's decline in HIV prevalence. Although substantial debate exists 
about the extent to which each component of the model is responsible 
for reducing HIV prevalence in Uganda and other countries, there is 
consensus in the public health community that using an integrated, 
comprehensive ABC model can have a positive impact in fighting HIV/AIDS 
(W. Cates, M. M. Cassell, H. D. Gayle, E. C. Green, D. T. Halperin, N. 
Hearst, D. Kirby, and M. J. Steiner, "The Time Has Come for Common 
Ground on Preventing Sexual Transmission of HIV," Lancet, vol. 364 
(2004). 

[17] Pub. L. No. 108-25, ï¿½ 403. 

[18] The remaining $37 million in global HIV/AIDS funding was 
appropriated to other accounts to support global HIV/AIDS efforts. 
These accounts include the Economic Support Fund, which is intended to 
advance U.S. strategic goals through economic assistance, and Foreign 
Military Financing, which provides support to foreign militaries. 

[19] For fiscal year 2004, Congress appropriated funds to NIH for 
global HIV/AIDS, but those funds supported international HIV/AIDS 
research rather than efforts in the PEPFAR focus countries. Therefore, 
funds for NIH for fiscal year 2004 are not included in our calculations 
of PEPFAR funding for that year. In addition, in fiscal year 2004, 
Congress appropriated funds to the Prevention of Mother to Child 
Transmission (PMTCT) account; this account expired at the end of fiscal 
year 2004, but some country teams carried over PMTCT funds to fiscal 
year 2005. Therefore, for fiscal year 2004 and 2005, this report 
includes funding to the PMTCT account. Although the PMTCT account 
expired, OGAC continues to fund PMTCT activities through the remaining 
accounts. 

[20] We report planned allocations rather than obligations or 
expenditures because our report focuses on the PEPFAR allocation 
process (see app. I for more information on the scope and methodology 
of our report). The total allocation of $2.35 billion for prevention, 
treatment, and care differs from the $4.48 billion appropriated because 
the remaining $2.13 billion was not allocated to prevention, treatment, 
and care activities in the focus countries: about $754 million was 
allocated to international partners, such as the Global Fund; 
approximately $368 million was allocated to HIV/AIDS programs in 
nonfocus countries in which PEPFAR operates; about $362 million was 
allocated for National Institutes of Health HIV/AIDS research; about 
$81 million was allocated to tuberculosis efforts; approximately $40 
million was allocated to microbicides; about $29 million was allocated 
to the International AIDS Vaccine Initiative; and about $497 million 
was allocated for other costs, which include strategic information and 
management and staffing. The total planned allocation for fiscal year 
2007 differs from data that OGAC reported to Congress for that year, 
because OGAC's reported funding included these other costs, which were 
not reported as program area funds until fiscal year 2006. To be 
consistent with our prior work, we do not include these costs in our 
calculations of PEPFAR funding. 

[21] As of March 31, 2008, planned allocations for fiscal year 2008 had 
not yet been approved by OGAC. The total allocation amount was obtained 
from OGAC's Country Operational Plan and Reporting System (COPRS) on 
February 6, 2008, and may be subject to revision. 

[22] To meet the AB spending directive, OGAC mandated in its ABC 
guidance that PEPFAR country teams spend at least half of prevention 
funds on sexual transmission prevention and two-thirds of those funds 
on AB activities. 

[23] Pub. L. No. 108-25, ï¿½ 102(a)(2). The agencies primarily 
responsible for implementing PEPFAR are USAID, the Department of Health 
and Human Services' Centers for Disease Control and Prevention (CDC), 
and the Department of State. Other agencies involved in PEPFAR are the 
Peace Corps and the Departments of Defense, Labor, and Commerce. 

[24] Pub. L. No. 108-25, ï¿½ 102(a)(2). 

[25] Implementing partners carry out interventions, such as 
administering ARV drugs or providing HIV testing. 

[26] All unobligated funds undergo a carryover approval process during 
the first quarter of the following fiscal year. 

[27] According to OGAC, the global targets were developed from the 5- 
year country-level targets. OGAC identified 50 percent of the need for 
prevention, treatment, and care in each country and used those figures 
to set the 5-year country-level targets. These targets were then added 
together across countries to produce the global targets. OGAC set the 5-
year country-level targets in 2004, and the targets are fixed. The 5- 
year country-level targets include the accomplishments of PEPFAR's own 
programs, as well as the results of host governments' and other donors' 
programs that receive U.S. government support. Country teams are to 
achieve the 5-year country-level care and treatment targets by 
September 30, 2009; they are to meet the prevention target by September 
30, 2010. 

[28] Owing to the difficulty in estimating the number of infections 
prevented, country teams are not required to provide annual country- 
level targets for infections averted. Country teams set annual country- 
level prevention targets only for PMTCT activities, such as providing 
HIV counseling and testing to pregnant women. Thus, for prevention, 
country teams' annual country-level targets are not intended to sum to 
the 5-year country-level targets. 

[29] OGAC guidance states that if the 5-year country-level targets are 
unrealistic, annual targets should not be set to show that the 5-year 
targets will be met. 

[30] The IOM report is available at [hyperlink, 
http://www.iom.edu/CMS/3783/24770/41804.aspx]. 

[31] All results from our expert interviews come from our standardized 
structured instrument (see app. III). 

[32] In this report, we narrowed our scope to include prevention and 
treatment and did not specifically ask the experts questions about care 
and orphans and children spending directives. 

[33] Thirteen of the 22 experts stated that the AB directive posed 
obstacles to developing evidence-based programs, and 6 of the 13 stated 
that the directive negatively affected country-based programming. One 
of the 13 experts stated that AB programs are being implemented with no 
measure of effectiveness, and another noted that AB programs are too 
restrictive. Three of the 22 experts generally supported the spending 
directives. The remaining six experts did not comment on the 
directive's impact on evidence-based or country-based programming. 

[34] Consistent with this argument, in April 2006, we reported that 8 
of 15 PEPFAR country teams indicated that segregating AB from "other 
prevention" funding compromised the integration of their prevention 
efforts. See GAO-06-395, p. 35. 

[35] Five of six host country officials whom we interviewed also noted 
that the AB directive does not reflect their country-level needs and 
conditions. 

[36] First-line drugs are initial ARV regimens. In some cases, patients 
are switched to more expensive regimens because of occurrence of side 
effects and/or drug resistance. 

[37] Although our structured interview did not include a question 
regarding OGAC's role, some experts chose to comment on this topic. 

[38] The results in this subsection were based on responses to three 
open-ended questions related to selecting interventions for prevention, 
treatment, and care: "What challenges, if any, have you encountered 
while selecting interventions to meet country-level targets for 
prevention/treatment/care?" 

[39] To obtain cost-related information, officials reported drawing on 
a wide variety of sources, including implementing partners, their own 
PEPFAR country team, and their own U.S. government agency. Overall, 
most officials found these sources to be useful--for example, 29 out of 
37 officials found information from implementing partners to be very 
useful. 

[40] The open-ended question was: "How do you use information on the 
costs to PEPFAR of specific interventions in your planning and 
budgeting process?" 

[41] Federal standards further state that reliable information on the 
costs of federal programs and activities is crucial for effective 
management of government operations. This information should be used by 
program managers to improve operating economy and efficiency. In 
addition, this information can be used by Congress and federal 
executives in making decisions about allocating federal resources, 
authorizing and modifying programs, and evaluating program performance. 
See Statement of Federal Financial Accounting Standards No. 4, 
Managerial Cost Accounting Standards and Concepts (Washington, D.C.: 
2007). 

[42] One such model used by OGAC in this exercise was the Futures 
Group's GOALS model, which enhances planning by linking program goals 
and resource allocation levels. 

[43] The Strategic Information staff at OGAC, among other things, 
measure progress toward the global targets; support international 
agencies and host country government for program management and 
reporting systems; and use surveillance, survey, and program data to 
help improve programs' design and focus. 

[44] Survey questions, results, and number of respondents per question 
are presented in an electronic supplement to this report, which may be 
accessed at our e-supplement (GAO-08-534SP). Survey percentages 
reported do not include nonresponses to each question in our survey. 

[45] While we did not specifically ask about the feasibility of 
selecting interventions under the new approach, the main challenges 
cited by respondents to selecting interventions were related to the 
constraints posed by the directives. 

[46] Three CDC officials predicted that it would be difficult for 
country teams to set all country-level targets because it would require 
host country involvement and prioritization by country teams, the 
targets set by host country governments are problematic, and some 
targets are hard to quantify. Each of these responses was selected by 
one official, with some officials selecting more than one response. No 
respondent said that it would be very difficult for country teams to 
propose all country-level targets. 

[47] Country team officials were asked to provide an open-ended 
response to the close-ended question "Why would it be easy or difficult 
(to set all targets at the country level)?" We do not know, therefore, 
how many of the remaining respondents would have had similar or 
different views on the issue of data availability. 

[48] The open-ended question asked was: "What would be the potential 
challenges in your country if all PEPFAR country-level targets were set 
by the country team rather than by OGAC?" 

[49] We asked three open-ended questions related to selecting 
interventions for prevention, treatment, and care: "What challenges, if 
any, have you encountered while selecting interventions to meet country-
level targets for prevention/treatment/care?" 

[50] Country team officials were asked, "How easy or difficult would it 
be for country teams to use information on the costs of specific 
interventions as part of their planning and budgeting?" 

[51] Other challenges that officials frequently cited as extremely or 
very significant included concerns about data reliability (28 of 37 
respondents) and data not being available (26 of 36 respondents). 
Respondents were asked to select from a list of potential challenges; 
figures indicate the total number of respondents who responded to each 
individual challenge. 

[52] This challenge was cited as extremely or very significant by 21 
out of 37 survey respondents who responded to a closed-ended question 
on the extent to which a lack of country-specific data posed a 
challenge to obtaining using cost information. 

[53] In contrast, among the 18 officials who used costing information 
to a moderate or some extent, only 5 individuals found the lack of data 
covering all populations within the host country to be a significant or 
very significant challenge. 

[54] These additional challenges resulted from an open-ended follow-up 
to our close-ended question on challenges asking for any other 
challenges officials have experienced. 

[55] GAO, Global Health: Spending Requirement Presents Challenges for 
Allocating Prevention Funding under the President's Emergency Plan for 
AIDS Relief, GAO-06-395 (Washington, D.C.: Apr. 4, 2006); Global 
Health: Spending Requirement Presents Challenges for Allocating 
Prevention Funding under the President's Emergency Plan for AIDS 
Relief, GAO-06-1089T (Washington, D.C.: Sept. 6, 2006). 

[56] See appendix III for our structured interview questions. 

[57] See GAO-06-395 and GAO-06-1089T. 

[58] Because we used a nonprobabilty selection methodology, our overall 
list of potential interviewees is not a complete list of all HIV/AIDS 
experts or all experts on PEPFAR. Our findings cannot be generalized to 
all HIV/AIDS experts or all individuals with expertise on PEPFAR. 

[59] We modified our selection criteria to include experts supported by 
the faith-based community in response to congressional interest. We 
determined that including these criteria was appropriate for our design 
and objectives. 

[60] Given our limited scope and time frames, we chose to select 
experts with experience in prevention and/or treatment. 

[61] We consulted OGAC officials regarding this approach, and they 
agreed that the current funding allocation process includes the three 
parts noted above. 

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