I. Objectives and Principles
1. Members of the OECD’s Development Assistance Committee (DAC) agree to the objective of untying their bilateral Official Development Assistance (ODA) to the Least Developed Countries (LDCs) and Heavily Indebted Poor Countries (HIPCs) as a means to:
• foster co-ordinated, efficient and effective partnerships with developing countries;
• strengthen the ownership and responsibility of partner countries in the development process;
• demonstrate responsiveness to the requests from partner countries and others to increase the use of untied aid in order to promote aid effectiveness; and
• contribute to broader efforts with partner countries to promote their integration into the global economy.
2. This Recommendation reflects the results of discussions in the DAC to respond to the Mandate provided at its 1998 High Level Meeting (see Annex III). It also reflects the subsequent decision by the DAC to revise the Recommendation in 2008 to extend its coverage to include the non-LDC HIPCs (the list of non-LDC HIPCs as of 1 January 2014 is provided in Annex II), to introduce provisions inviting non-DAC donors to untie their aid in parallel with DAC Members and inviting those responsible for procurement to promote respect for internationally agreed principles of corporate social and environmental responsibility. Finally, it also reflects the outcome of the 2013 review of the provision to extend the geographic coverage of the Recommendation to include non-LDC HIPCs. The shared intentions of DAC Members are to:
• untie their ODA to the LDCs and HIPCs to the greatest extent possible;
• promote and sustain adequate flows of ODA in terms of quality, volume and direction, in particular to the LDCs and HIPCs and ensure that ODA to these countries will not decline over time as a result of the implementation of this Recommendation;
• achieve balanced efforts among DAC Members.
3. The report “Shaping the 21st Century: the Contribution of Development Co-operation”, set out the relative dependence of LDCs on aid and their relative need for accelerated progress towards the International Development Goals. However, HIPCs not part of the LDC group are also aid dependent and need to make progress towards these same goals. Therefore, this initiative aims to capture, for all these countries, the benefits of open procurement markets.
4. In promoting the above objectives, DAC Members consider that reinforcing partner country responsibility for procurement, with appropriate guarantees for effectiveness, accountability, probity and transparency is intrinsic to this initiative. Similarly, promoting local and regional procurement in partner countries is a shared goal. DAC Members will work with partner countries to identify needs and to support efforts in both areas.
5. This Recommendation does not restrict the prerogative of DAC Members to untie ODA to a greater extent than set out herein. DAC Members are invited to continue to provide untied ODA in areas not covered by the Recommendation when they already do so, and to study the possibilities of extending untied aid in such areas. Neither does this Recommendation pre-empt positions that DAC Members may take in discussions on related issues in other fora.
6. Promoting effort-sharing among DAC Members is an integral part of this Recommendation. Variations in the structures and geographical orientations of DAC Members’ aid programmes, together with the coverage provisions of this Recommendation, can result in sizeable differences in the extent to which their ODA to the LDCs and HIPCs is presently untied, and in respect of their aid performance in these countries more generally.
7. This Recommendation sets out objectives, principles and procedures for DAC Members untying aid in order to increase the effectiveness of that aid. In a global market for procuring aid funded goods, services and works, these good practices have a broader applicability and interest beyond DAC Members and have reference for all other countries providing aid to the developing countries. Accordingly, non‑DAC donors are also invited to consider the provisions concerning untied aid set out in this Recommendation and to take them into the fullest account possible in their aid relations with developing countries.
8. Untying is a complex process. Different approaches are required for different categories of ODA, and actions by DAC Members to implement the Recommendation will vary in coverage and timing. Bearing this in mind, DAC Members will untie their ODA to the LDCs and HIPCs to the greatest extent possible and in accordance with the criteria and procedures set out in this Recommendation:
i)DAC Members agreed to untie ODA -- to the Least Developed Countries by 1 January 2002, and to non-LDC Heavily Indebted Poor Countries by 1 October 2008 -- in the following areas: balance of payments and structural adjustment support; debt forgiveness; sector and multi-sector programme assistance; investment project aid; import and commodity support; commercial services contracts, and ODA to Non-Governmental Organisations for procurement related activities.
ii)In respect of investment-related technical co-operation and free standing technical co‑operation, it is recognised that DAC Members’ policies may be guided by the importance of maintaining a basic sense of national involvement in donor countries alongside the objective of calling upon partner countries’ expertise, bearing in mind the objectives and principles of this Recommendation. Free-standing technical co-operation is excluded from the coverage of the Recommendation.
iii)In respect of food aid, it is recognised that DAC Members’ policies may be guided by the discussions and agreements in other international fora governing the provision of food aid, bearing in mind the objectives and principles of this Recommendation.
9. Promoting a more balanced effort-sharing among DAC Members is a necessary process. Pursuant to paragraphs 2, 5, and 6 of this Recommendation, DAC Members agree to undertake their best endeavours to identify and implement supplementary effort-sharing actions in accordance with the mechanism set out below.
10. To this end, DAC Members should apply the following reference indicators matrix and procedures:
• Reference indicators matrix
11. The situations of DAC Members and their evolution over time with respect to initial positions and reference points will be set out in a reference indicators matrix (see Annex I). The elements of this matrix will be used in conjunction with DAC Member performance profiles (see below) to monitor and assess the progress made by DAC Members towards more balanced effort-sharing.
• DAC Member performance profiles
12. DAC Members will prepare annual country profiles setting out their positions in respect of the reference indicators matrix and, on that basis, identify initial and medium term supplementary actions to promote effort-sharing. Peer review of these profiles by the DAC will be used to help DAC Members identify and undertake supplementary actions in furtherance of a more balanced effort-sharing in respect of the reference indicators matrix.
13. The implementation of this part of the Recommendation will be assessed as part of the annual reports covering all aspects of this Recommendation. These reports will be considered by the DAC High Level Meeting, which may recommend further actions, as well as in the peer reviews of individual DAC Member’s development co-operation policies. An overall review of the effort-sharing mechanism and procedures was conducted in 2009 which confirmed that a more balanced effort-sharing had been achieved.
c) Procurement regime
14. The procurement of goods and services covered by this Recommendation should follow the DAC’s Good Procurement Practices for Official Development Assistance.
15. In conducting procurement of aid-supported goods and services, and in partnership with developing countries, DAC Members should apply relevant commitments and guidance such as:
• The 1996 DAC Recommendation on Anti-Corruption Proposals for Aid-Funded Procurement [DCD/DAC(96)11/FINAL];
• The 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Recommendation of the Council for Further Combating Bribery of Foreign Public Officials in International Business Transactions [C(2009)159/REV1/FINAL].
16. Those responsible for procurement should promote respect from suppliers with agreed international standards of corporate social and environmental behaviour. This could be done through reference to environmental and social considerations in tendering procedures.
17. For untied aid offers covered by this Recommendation, DAC Members should, and in collaboration with partner countries as appropriate, provide or ensure ex ante notification. This provision does not apply to activities with a value of less than SDR 700,000 (SDR 130,000 in case of investment related technical co-operation).
18. DAC Members should respond promptly and fully to requests by other DAC Members for further information on, or clarification concerning untied aid offers covered by this Recommendation.
19. DAC Members should ensure that the DAC will be provided with information on contract awards pertaining to the untied aid offers covered by this Recommendation.
20. For individual aid offers, DAC Members may, in exceptional circumstances, take measures inconsistent with the terms of this Recommendation, in situations where they believe it to be justified on the basis of overriding, non-trade related, development interests. Derogations are to be justified in a letter to the Secretary-General of the OECD and to the DAC Chair and will be followed up in review procedures.
f) Monitoring and evaluation
21. The DAC will monitor all aspects of this Recommendation through a combination of different mechanisms:
• Annual reports covering all aspects of the Recommendation, as well as the experience in delivering its objectives. These reports, which will be reviewed by the DAC in time for its annual High Level Meeting, will, inter alia:
- assess the impact of the Recommendation on the volume, quality and directions of ODA flows;
- set out DAC Members’ policies in respect of investment-related technical co-operation and food aid;
- review the implementation of this Recommendation with respect to promoting effort-sharing among DAC Members in accordance with the mechanism set out in section IIb above;
- review DAC Members’ procurement practices and patterns for untied aid offers;
- assess progress towards strengthening partner countries’ local procurement capacities and improving the access of partner countries’ enterprises to aid funded procurement;
- address, in addition to the provisions for bilateral consultations set out above, specific concerns that may be raised by individual DAC Members in respect of the Recommendation.
• The annual reports will also provide input for the peer reviews of individual DAC Member’s development co-operation programmes.
• A comprehensive evaluation of its implementation and impact was carried out by the High Level Meeting in 2009. That evaluation concluded that DAC Members fully met the commitments in the Recommendation to untie agreed categories of ODA and that improvements in effort sharing were significant and sustained.
• At the scheduled review of the extension of the coverage of the Recommendation to non-LDC HIPCs in 2013, the DAC decided to renew this extension for a further five years. The next review will take place in 2018, at which time a DAC Member may decide to use, after that date, tied aid as part of its ODA to a non-LDC HIPC, in which case it is required to notify the country/ies concerned and the DAC Chair of its decision to do so.
22. DAC Members will work with stakeholders, particularly partner countries, to ensure the Recommendation delivers its objectives.