Guidelines for MOUs between PR and SRs

While the Grant Agreement names the PR and, in some cases, Sub-Recipients, additional documentation is needed to bind the implementing partners together and define their relationships.  The Memorandum of Understanding (MoU) is used for this purpose.  The MoU should be seen as a stable document throughout the whole period of the Program, rather than one that changes regularly. Thus it should focus on explaining the relationships, roles and responsibilities, and the factors and processes that may fundamentally change the implementing relationship.

In some cases, MoUs will be legally binding agreements, in other cases not. Regardless, an effective relationship between implementing parties requires very clear definition of the relationship, roles and responsibilities as confusion and lack of certainty in this regard can rapidly undermine relationships and lead to program implementation failure. 

In preparing a MoU, PRs (and Sub-Recipients where they establish links with Sub Sub-Recipients) will generally instruct their Legal Officers to provide technical expertise in preparation of MoUs (or adaptation of standard MoUs to new grants).  Peer Global Fund PRs may make available their MOUs as sample documents to assist in preparation. The NCCM Secretariat may also provide technical guidance and samples of MoUs.

It is critical in constructing a MoU that the language used facilitates the building of two-way communication and easy information flow rather than simply a delegation of responsibilities. Further, it is essential that the PR and SR work on other aspects of an effective relationship that are likely to be more dynamic than those items contained within a stable document like a MoU. Such dynamic elements beyond the MoU include:

• Detailed reporting timelines and arrangements;
• Detailed communication channels – i.e. who communicates with whom on various matters and what the relevant phone numbers, email and office addresses are;
• Detailed meeting arrangements to jointly review program performance;
• Detailed financial management arrangements with bank account details, and fund disbursement benchmarks to allow parties to plan accordingly;
• In-process quality assurance activities to ensure program is on track;
• Risk assessment, risk mitigation and contingency plan development.

Without seeking to be comprehensive, the following provides a sample list of elements that might be included in a MoU:

1. Introduction and purpose
2. Broad responsibilities of PR
3. Broad responsibility of SR
4. Effective date
5. Termination process and required notice
6. Force Majeure
7. Termination or suspension of agreement due to failure of conditions precedent or special conditions
8. Limitations of PR liabilities and indemnification
9. Governing language for communication
10. Applicable law of agreement
11. Compliance with laws
12. Dispute resolution process
13. Maintenance of required licences and legal existence of SR
14. SR free from claims inhibiting capacity to fulfil program
15. SR not double funding activities
16. Duty of parties to communicate
17. No discrimination in implementation
18. Bank account
19. Interest on account
20. Social marketing revenue
21. Appointment of auditors
22. Submission of SR audit reports to PR
23. Audits of SSRs and submission of such to PR
24. Accounting records – standard and retention
25. List of medicines to be procured
26. Insurance where reasonable
27. Responsibility for Loss or Theft
28. Procurement practice
29. Taxes and duties
30. Conflicts of interest & anti-corruption and disclosure of any possible conflicts
31. Use of Global Fund or PR logo
32. Quarterly (& other) report submission and access to report format advice
33. Budget and Costs for activities
34. Quarterly disbursement of funds by PR to SR
35. Refunds by SR to PR of disbursed funds
36. Compliance with workplan
37. MOUs between SRs and SSRs
38. Assessment by SR of SSR capacity
39. Special audits or investigations of SR as required by PR, including right of access