Technology Mechanism and procurement rules

Legal assistance paper

All reasonable efforts have been made to ensure the accuracy of this information at the time the advice was produced. However, the materials have been prepared for informational purposes only and may have been superseded by more recent developments. They do not constitute formal legal advice or create a lawyer- client relationship. To the extent permitted any liability is excluded. Those consulting the database may wish to contact LRI for clarifications and an updated analysis.

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Date produced: 27/02/2015

1. What are the rules for tying CTCN funds provided by parties to specific activities rather than general CTCN budget? Do UNFCCC or UNEP procurement rules apply? What are the rules about tying use of those CTCN funds to the use of specific partners, vendors, or service providers?

2. A recent CTCN report proposed setting up a ‘private entreprise engagement facility’ within the technology mechanism that would provide a direct channel for SMEs from developed countries to engage in technology activities with developing countries. Would such engagement mechanism be in line with existing best practices regarding:

– neutrality of technical advice and technical assistance provided by secretariats and associated consultants,

– neutrality of the secretariats themselves regarding to which member states to provide assistance and the content of that assistance, and

– most importantly, conflict of interest regarding access to member states by private sector actors and any advice or technical assistance provided thereby?

Advice:

Question 1

Project allocation is the decision of the CTCN Board, through consensus or ¾ majority vote, if no consensus can be reached. The Board, through the Secretary, shall “transmit to each member a proposed decision with an invitation to approve the decision.” Each member has the opportunity to comment. At the expiration of the comments period, the decision shall be approved if there are a minimum of five votes in favour from members referred to in paragraph 3(a) above from Annex I Parties and five votes in favour from members referred to in paragraph 3(a) above from non-Annex I Parties and no objections from members referred to in paragraph 3(a) and (b) above. (FCCC/CP/2013/10/Add.3, IX. Decision-Making, pp. 41-49. )

The CTCN Board is made up of a wide range of interests, including sixteen governmental representatives from Annex I and non-Annex I parties, TEC representatives, a member of the Green Climate Fund Board and Adaptation Fund, and three representatives taken from a range of varied interests of UNFCCC observer organization constituencies. (Id. at III. Members, pp. 3-11.)

In addition, the MOU between the COP and UNEP regarding hosting of the Climate Technology Centre states that the CTCN shall be “accountable to, and under the guidance of, the COP through the Advisory Board.” (Ibid.), and that “[t]he Director (UNEP) shall manage the financial resources of the CTCN in accordance with the United Nations Financial Regulations and Rules and the Financial Rules of UNEP, fiduciary, anti-fraud and anti-corruption policies and environmental and social safeguards. (Id. at p. 20.). The Financial Rules of UNEP are complex and detailed. However, they do mandate accountability and transparency of funds and expenditures.

The UNFCCC rules would apply if there is a conflict between those rules and that of the CTCN. As was decided at the 10th plenary meeting of 22 November 2013, “[i]n the event of any conflict between any provisions of these rules and any provision of the Convention, the Convention shall take precedence.” (FCCC/CP/2013/10/Add.3, at paragraph 62 of Section, XV. Overriding authority of the Convention.)

Procurement through the UNFCCC is done through the Secretariat who “procures requisite goods and services through competitive solicitations from qualified vendors included in the UNFCCC vendor roster.” (http://unfccc.int/secretariat/procurement/award_procedure/items/2568.php.)   For goods under USD $40,000 the UNFCCC requires a Request for Quotation. For goods and services over USD $40,000 it requires Invitation to Bid. And a Request for Proposal is required for, “the procurement of goods and services where the technical specifications or characteristics cannot be precisely determined, or are of a complicated / specialized technical nature which requires significant input form the supplier. By evaluating the proposals, the price may be only one of other considerations in award of the contract.” (Ibid.)

Therefore, it appears that the rules for tying CTCN funds to specific activities, rather than the general fund, would first need to be approved by the CTCN board after comments from its members, through transparent proposals.   It also appears that the fund requests, if keeping in line with the UNFCCC, should first be assessed through a bidding process by competitive solicitations for competent vendors.

As a result, with regard to Norway specifically “using the money pledged to fund the CTCN to create a website for which their own think tank, Det Norske Veritas, has the contract from the CTCN,” per the rules of the CTCN, UNEP and the UNFCCC, the CTCN Advisory Board, and the CTCN members would need to approve the web contract after competitive, transparent bids and time for comment. This may have been done through the reference of the CTCN’s design and development of its knowledge platform and web development in paragraphs 71 and 72 of the Joint annual report of the Technology Executive Committee and the Climate Technology Centre and Network for 2014. (2014FCCC/SB/2014/3, p. 17.)

Question 2

Any CTCN report proposing to set up a “‘private enterprise engagement facility’ within the technology mechanism that would provide a direct channel for SMEs from developed countries to engage in technology activities with developing countries” would need to go through the approval process set forth above prior to fund expenditures for the private enterprise.   The same would apply to any technical advice or assistance that is paid for by CTCN funds. It should be a transparent process, approved by the Advisory Board.

In addition, a Det Norske Veritas (DNV GL) CTCN partnership was set up by UNEP through formal encouragement of the Parties. DNV GL’s role is to support CTCN in the areas of “knowledge management, monitoring and evaluation, capacity-building and private sector engagement.” (FCCC/SB/2014/3, p. 13.) Therefore, the Private Sector Engagement (PSE) Summary Note prepared by the DNV GL at the Fourth meeting of the CTCN, ( 08-10 October 2014, AB/2014/4/10) encourages the development of existing and potential CTCN networks to coordinate and develop wider private sector partnerships. (Id.) The goal is to make the PSE to become an integral part of the CTCN. (Id.)

By the very nature of the intended flow of knowledge and expertise from the PSE to the CTCN, the Advisory Board should follow the rules of procurement, time for comment and transparency when any CTCN funds are used for these partnerships. If these best practices are followed it will enable the Parties and members of the Advisory Board to ensure the neutrality of the technical advice, the neutrality of the secretariat as to which member states receive assistance, and any conflicts of interest between the PSE and member states.