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Steve Cutts: ODA and the Donation of Surplus COVID Vaccines, March 2023

stevecutts
May 1, 2023
16 min read

Updated: 1 day ago

About this paper

How were donations of surplus Covid-19 vaccines counted as Official Development Assistance (ODA)? In this paper dated 22 March 2023, Stephen Cutts examines allegations of overcounting, the OECD Secretariat’s response and the evidence available at the time.

The analysis reviews four OECD documents, considers the USD 6.72 valuation used for 2021 donations, and sets out conclusions and recommendations on reporting, purchase prices, transparency and vaccine shelf life.

Editorial note: This is a full transcription of Steve’s historical analysis. Its judgments, figures, quoted guidance and conclusions are preserved in their 2023 context. The cover is dated 22 March 2023, although a passage refers to writing in February 2023. The original also lists Slovenia in both the group reporting below USD 6.72 and the group using USD 6.72 throughout; that inconsistency is retained here.

Paper by Stephen Cutts, ODAReform@icloud.com — 22 March 2023


Have Donors Claimed Excessive ODA for Donating their Surplus COVID-19 Vaccines?


I. Background

Numerous allegations[1] have been made, including by the author of this analysis, that the DAC’s guidance for claiming ODA for the donation of surplus COVID-19 vaccines originally purchased by DAC Members for domestic use has allowed some donors to claim ODA in excess of the prices they actually paid for the vaccines brand new.

However, the DAC has counter-claimed in paragraph 6 of document DCD/DAC/STAT(2022)33 that:

“In many cases the USD 6.72 average price was an under-estimate of real costs incurred by members (as they had donated a mix of vaccines, including higher priced ones) and therefore served as an effective safeguard against ODA inflation. The Secretariat confirmed individually with members that, when they had donated mostly lower-price vaccines, they had adjusted their figures not to overstate their ODA, in line with the Secretariat’s guidance.” [my underlining here and subsequently]

Paragraph 8 added that:

“All members but one followed the Secretariat’s guidance, i.e. applying a price of USD 6.72. By construction, this put a cap on ODA reporting for donations (members that donated lower-price vaccines adjusted their figures downwards, not to overstate their ODA).”

And paragraph 9 condemned the critiques:

“Despite the conservative approach adopted and the limited impact on ODA, the CSOs perceived the reporting of excess donations as having negative consequences and strongly reacted against it. They still considered that crediting members for donating their surplus doses inflated ODA, and could encourage hoarding of vaccines. Despite the Secretariat’s efforts put into explaining the method to the public, several articles misrepresented the facts by claiming that members were able to count vaccine donations at a higher price than what they had actually paid.”

Footnote 9 provided links to some of the critical articles, while footnote 8 gave a link to a blog[2] dated 6 April 2022 by Haje Schütte, Senior Counsellor and Head, Financing for Sustainable Development Division, DAC Secretariat, which includes the statement that:

“In many cases, the USD 6.72 average price will be an under-estimate of real costs incurred by DAC countries (as they will have donated a mix of vaccines, including higher-priced ones) and will therefore serve as a powerful safeguard against ODA inflation. If donor countries donated mostly lower-price vaccines, they will adjust their figures not to overstate their ODA. In all cases, when preliminary ODA data are published in April 2022, vaccine spending will be clearly identified. Each donor can therefore be held accountable for its reporting.”

In view of the apparent discrepancy between the numerous allegations of over-counting and the DAC Secretariat’s rejection of them, this paper attempts to provide clarity by analysing currently available documentation.


II. Analysis

Below is an analysis of four key documents issued by the DAC Secretariat, which strives to explain the background to the allegations of ODA over-counting and establish the facts of the matter.



Document 1: DCD/DAC/STAT(2021)29/REV1, Valuation of donations of excess COVID-19 vaccine doses to developing countries in ODA, 24 January 2022

This is the key document and, arguably, the source of the confusion.

Paragraph 4 sets out the basic proposition that a fixed price of US$ 6.72 should be used for scoring ODA:

“For the purpose of valuing donations of excess COVID-19 vaccine doses in 2021 ODA, the Secretariat proposes applying a weighted average price of USD 6.72 per dose as determined by Gavi.” (a footnote explained that this “figure is a weighted average of the donated doses delivered to Gavi COVAX AMC eligible countries by 18 October 2021”).

Paragraph 5 listed a number of “safeguards”, the most pertinent of which for the purposes of this paper were the following:

• “Donations can be recorded in ODA disbursements when the beneficiary country has taken delivery of dose. Pledges should not be reported in ODA.

• Expired doses are not eligible. As a default, donated doses should have a shelf life of minimum 10 weeks upon arrival in-country. An exception is justified when a recipient country has indicated its willingness and ability to absorb doses with shorter shelf lives[3].

• Should members pay ancillary costs (shipment and additional costs such as syringes) in addition to donating doses, they should report these costs in their ODA as a separate item, in addition to the donations.” (a footnote noted that “it seems justified to count these costs in ODA on top of the donations when they are actually incurred by providers and paid out of an ODA budget.”)

However, after the bullet points in paragraph 5, there is the following text:

“In CRS, donations are reported under purpose code 12264 – COVID-19 control along with the COVID-19 keyword. For the sake of ODA integrity, members should verify the aggregate ODA figure reported for donations against their actual outlay in 2021 and make an adjustment if needed.”

Nowhere else in the document is there reference to this apparent safeguard, nor clarity provided regarding its application…and either the overlooking or misinterpretation of this passage seems to be at the heart of the later allegations. Nor is this text clear. Given the emphasis throughout this document indicating that a single price – $6.72 – should be applied, the words “make an adjustment if needed” does not constitute a clear instruction or guidance to a member to claim ODA below this single price.

On the OECD website “COVID-19 related activities in official development assistance”, published much later and after some of the critiques mentioned above had already appeared, the Secretariat subtly changes the wording of the safeguard: “For the sake of ODA integrity, members should verify the aggregate ODA figure reported for donations against their actual outlay in any given year and make a downward adjustment if needed, in order not to overstate their donations”. The addition of the underlined words suggests an acknowledgement by the Secretariat that the original guidance lacked this clarity.

Certainly, there is nothing else in the document to indicate that donors who paid less than $6.72 for their COVID vaccines new should only claim ODA for this lower figure:

• In the section “Narrative for counting the donations in ODA”, paragraphs 6-11, the document defends the $6.72 price for “setting the right incentives to expand the roll out of vaccines to the world’s poorest and most vulnerable countries, while also protecting the integrity of ODA and avoiding ODA inflation…” (para 8)

• It also defends the use of a single price as it “complies with the principles of simplicity, efficiency and robustness.” (para 9)

• Paragraph 9, also notes that “The complexity of the vaccine market and the confidentiality/lack of the information are additional arguments for using an overall average price”.

The upshot of all this is that the document as a whole, even with the reference in paragraph 5 to making adjustments depending on “actual outlay”, could easily have been read as encouraging all DAC members to claim a flat $6.72 of ODA per dose, regardless of the original purchase price.


This statement justified the scoring of ODA for donated excess vaccines as follows:

“The longstanding DAC Reporting Directives allow donations in kind to be reported as ODA in addition to direct contributions of finance. Donors’ donations of excess vaccine doses are a form of aid in kind. On the basis of Reporting Directives, related costs including syringes, delivery and storage are eligible for reporting as ODA.” (Paragraph 3)

Paragraph 4 justified the use of the average price of $6.72:

“In the case of COVID-19 vaccines, this issue is complicated by the fact there is no single price paid by donors. To ensure consistency, transparency and comparability in ODA reporting the OECD proposed that the average price for vaccines donated to COVAX…should be applied, which is USD 6.72.”

Paragraph 5 notes that:

“DAC members have not all agreed on a single price. Consequently, the DAC Secretariat has issued guidance…on how this activity should be reported as ODA, applying a price of USD 6.72. The OECD’s guidance includes safeguards, including that members have the right to report their vaccines at cost if the actual price is lower.”

In this version, the Chair is stating that DAC members are allowed to claim lower ODA if their original purchase price was lower than $6.72, but that there is no requirement for them to do so. This suggests that the Chair was reading the reference in the guidance (that “members should verify the aggregate ODA figure reported for donations against their actual outlay in 2021 and make an adjustment if needed”) as something that should be left to each member to decide.

Paragraph 5 of Chair’s statement states that it includes a link to the “issued guidance”. In fact, the link is to a document entitled “Frequently Asked Questions on the ODA Eligibility of COVID-19 Related Activities” (updated February 2022), discussed below.


On its first page, this document summarises its contents as follows:

“Highlights on the valuation of donations of excess COVID-19 vaccine doses in ODA (see FAQ 2):

• More than 86% of all contributions to ACT-A pledged to date (and 90% of contributions to COVAX) have come from DAC members.

• The longstanding DAC rules allow for gifts in kind to be reported as ODA. In the case of vaccines, this issue is complicated by the fact there is no single price paid by donors.

• To ensure consistency, transparency and comparability in ODA reporting, the OECD proposed that an average price of USD 6.72 should be used, in alignment with the average price for vaccines donated to COVAX.

• The OECD has issued guidance on how this activity should be reported as ODA, applying a price of USD 6.72 with necessary safeguards. ODA scored will be identified and DAC statistics will make it easy to identify which donors are reporting aid of this kind.

• It is important to note that expired doses are ineligible and that donated doses are required to have a shelf life of a minimum 10 weeks upon arrival in-country.”

For the purposes of our analysis FAQ 2, the relevant section of the paper, is reproduced in full here:


“FAQ 2. Does provision of vaccines/tests/treatments for COVID-19 to developing countries count as ODA?

Yes, the costs of providing vaccines/tests/treatments to developing countries are eligible as ODA.


Secretariat’s guidance for reporting donations of excess COVID-19 vaccine doses in 2021 ODA:

For the purpose of valuing donations of excess COVID-19 vaccine doses in 2021 ODA, the Secretariat recommends applying a price of USD 6.72 per dose with safeguards as detailed in DCD/DAC/STAT(2021)29/REV1. Using this price and the associated safeguards will protect the integrity and credibility of ODA and DAC statistics, provide a simple and robust solution, aligned with COVAX, while ensuring transparency and comparability in members’ reporting.

If a member decides not to report in line with this guidance, that member is requested to include information on the price it has paid as well as the vaccine names and the number of doses. If confidentiality constraints prevent from indicating the price, the Secretariat recommends applying the price of USD 6.72 per dose instead, or abstaining from reporting the donations in ODA.”

It is noteworthy that this includes no specific wording about DAC members either being obliged to, or even “having the right to report their vaccines at cost if the actual price is lower” as the DAC Chair stated, using this document as a reference. Indeed, nowhere does the document contain any explicit statement of its own to guide or even permit donors that paid less than $6.72 per dose to claim lower ODA. It only refers back to “the safeguards as detailed in DCD/DAC/STAT(2021)29/REV1” which, as detailed above, includes just one rather oblique reference to the issue.



Document 4: ODA Levels in 2021 – Preliminary data: Detailed Summary Note (dated 12 April 2022)

The detail found in this document, the annual DAC release about ODA figures, issued almost three months after the guidance, provides the first real evidence that could be seen to support the Secretariat’s assertion (in DCD/DAC/STAT(2022)33) that “several articles misrepresented the facts by claiming that members were able to count vaccine donations at a higher price than what they had actually paid”.

The relevant information is found in footnote b) on page 12 of the document, under Table 3a: Share of COVID-19 Vaccines in DAC Members’ ODA. The footnote reads as follows:

"The Secretariat verified that countries applied its guidance in reporting vaccine donations and confirmed that members’ ODA figures were checked against their actual outlay in 2021 and that, where relevant, an adjustment was made. SG - members followed the Secretariat's Guidance; N - did not follow the Secretariat's guidance and applied a higher price than recommended. Hungary opted to use their actual purchasing prices rather than a lower fixed average price as recommended by the Secretariat’s Guidance. Had they done so their ODA for vaccine donations in excess of domestic supply would have amounted to USD 22.9 million. For more information on the valuation of vaccines see here: https://www.oecd.org/dac/financing-sustainable-development/FAQs-ODA-eligibility-of-COVID-19-related-activities-FEB-2022.pdf"

The table shows that the following donors “followed the Secretariat guidance” and are marked “SG”:

Austria, Belgium, Canada, Czech Republic, Denmark, France, Germany, Ireland, Italy, Japan, Korea, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, United Kingdom, Israel, Latvia, Lithuania, Romania, Croatia

Only Hungary is reported as “N – did not follow the Secretariat’s guidance”, and this is reported transparently in para 6 of DCD/DAC/STAT(2022)33: “Hungary opted to use their actual purchasing prices rather than the lower fixed average fixed price of USD 6.72 as recommended by the Secretariat”.

Of the donors claiming ODA for vaccine donations but being designated neither “SG” nor “N”, the following reasons are provided:

Footnote d): “Australia and Greece are still collecting data on vaccine donations and will include the figures in their final ODA reporting”.

Footnote e): “The Netherlands and the United States did not consider donations of vaccines from their domestic supply in their ODA.” [the Netherlands counted nothing at all and the United States counted only “doses bought specifically for developing countries”][4]

In addition, footnote f) notes that, although the figure for vaccine donations is not included in the table “Switzerland included vaccine donations in its ODA but cannot indicate the related figure, for confidentiality reasons. The Secretariat did however verify that reporting was in line with its Guidance.”


III. Conclusions

• Member countries were never given a formal instruction to report less than $6.72 per dose if they paid less, but only rather ambiguous “guidance”. DAC documents explicitly envisaged two possible alternatives to following this guidance, first that “a member decides not to report in line with this guidance” and second, “abstaining from reporting the donations in ODA”. In the end, the Secretariat had to ask members after the fact whether they had complied with the guidance.

• In particular, it was easy to miss the only reference in the Safeguards included in the January 2022 document DCD/DAC/STAT(2021)29/REV1 to the guidance not to report more than what had been paid. The precise meaning of this reference was open to interpretation, while the rest of the document tended to give the impression that $6.72 would be applied whatever the purchase price of the donated vaccines. The Secretariat could and should have been far clearer and more explicit in explaining this issue.

• The Secretariat has advised that it was rigorous in checking the data reported as ODA for the donation of excess Covid vaccinations, though it has published neither the question it asked nor the assurances it was given. Neither do we know whether the reassurances were given formally, officially in writing and/or at an appropriate level of seniority within the respective aid agency/government ministry.

• There is still nowhere near full transparency (apparently because of confidentiality agreements with the drug companies) around actual prices paid per dose, how many doses of which vaccines were supplied to which countries with what expiry dates, and whether these were ever successfully administered. There is also no clarity on whether vaccines that had been suspended from use in the donor country were among those re-shipped to developing countries and scored as ODA.

• The Covax purchase price was for new vaccines delivered; yet donors were allowed to add their own “ancillary costs” on top of this price.

• Arguably donors should have only been allowed to claim ODA at a lower rate than the purchase price as the “second hand” vaccines donated were closer to their use-by dates (and may have even breached the guidance that donated vaccines should have a shelf life of at least 10 weeks, given that developing countries had no incentive to reject donations of free vaccines whatever their remaining shelf life).

• In many cases, the vaccines’ effectiveness will have declined due to the emergence of new COVID variants, again suggesting that an average of the new purchase price should not have been the ODA benchmark.

• It could even be argued that allowing donors to claim ODA for donating surplus vaccines, when their own early over-buying had limited global availability and pushed global vaccine prices beyond the reach of many developing countries, is unjust.

• The evidence that donors did not claim ODA at levels above the cost they had paid for the vaccines is, at the time of writing, still far from conclusive – we only know that there were assurances (as yet unpublished) given by donors to the Secretariat. In this regard, despite the promise in Mr Schütte’s blog that “In all cases, when preliminary ODA data are published in April 2022, vaccine spending will be clearly identified” and “each donor can therefore be held accountable for its reporting”, the transparency on donors’ individual transactions necessary for true accountability is dismal (see here).

• At the time of writing of this paper in February 2023, the CRS data shows that only six DAC Members (Austria, Belgium, Czech Republic, Slovakia, Slovenia and Spain) adjusted downwards the ODA they reported to below $6.72 (to between $3.97 and $6.26 respectively). Eight DAC members used $6.72 across all their donations (Canada, Denmark, France, Germany, Japan, Norway, Portugal and Slovenia), and of these only Norway verified in the text that the average cost of all its donated vaccines had been higher than $6.72, without saying whether any had been purchased at below $6.72. This means that, for all these countries, some individual shipments of cheaper vaccines (e.g. AstraZeneca) were scored at $6.72, when their actual purchase price may have been lower. Five countries (Ireland, Korea, New Zealand, Poland and the United Kingdom) which had reported an ODA total for surplus vaccine donations failed to report the amount claimed per dose, while Switzerland had said earlier that it included vaccine donations in its ODA but would not report even the total. The Secretariat has stated that it has followed up with those donors to try to obtain the missing information and that the database will be updated accordingly.

• The Secretariat’s guidance therefore failed to ensure any consistency around reporting. Some DAC members claimed $6.72 ODA per dose though they either did or might have paid more for the vaccines; some reported less than $6.72 because they paid less; one (Hungary) reported more than $6.72 because it paid more; two (the Netherlands and the USA) reported zero because they “did not consider donations of vaccines from their domestic supply in their ODA”; and one (Switzerland) told the Secretariat that it followed the guidance but refused to report its figure. And the data reflects the usual hotchpotch of variable reporting, with some donors providing full transparency and others virtually none.

• It is perhaps not surprising that allegations of ODA overcounting for COVID vaccine donations have flourished so widely, given the DAC's recent demonstrated record of overcounting other ODA items. The DAC's decision-making on the vaccine issue was also typically opaque, closed, and political, breaching the OECD’s own Recommendations on Good Statistical Practice and damaging its hard-won and usually justified reputation for sound statistics.

• Nevertheless, there is as yet no evidence that donors who paid an average of less than $6.72 per dose claimed total ODA exceeding this figure per dose, although it seems likely that some DAC members whose average price was above $6.72 per dose have applied this fixed price to all their individual shipments, including those of vaccines that had cost them less than $6.72 per dose (which is one possible interpretation of the Secretariat’s guidance).

• The Secretariat has now issued its guidance for reporting the donations of excess Covid vaccines in 2022. Aside from reducing slightly the guided price from $6.72 to $6.66, the principal change is that in 2022 the “default expectation” for the minimum shelf life of donated vaccines has been extended from 10 weeks to a “minimum six months upon arrival in country”. However, it remains unlikely that a country being offered free vaccines that it cannot obtain otherwise (at least not free of charge) will decline such an offer, if only to avoid disobliging the donor. Certainly, in 2021, it seems that in a number of cases surplus vaccines were donated that did not comply with even the 10-weeks shelf life minimum.


IV. Recommendation

To clear up public confusion on this issue, the OECD Secretariat should, at a minimum, publish the survey question it put to members about their reporting of this item, and all responses received. To clear up any remaining doubt, it should also ask DAC members the additional specific question of which, if any, specific shipments of vaccines for which they have reported an ODA amount based on $6.72 per dose to the Creditor Reporting System were originally purchased at less than this figure, and what that original purchase price was.

Secondly, the Secretariat should ask donors to flag clearly, in their individual reports on vaccine deliveries, whenever the minimum shelf-life expectation was not met.


Source notes and references

[1] A selection: https://www.telegraph.co.uk/global-health/science-and-disease/using-leftover-donations-covid-vaccines-foreign-aid-could-slash/ https://www.thebureauinvestigates.com/stories/2022-03-10/uk-could-use-vaccine-donations-to-slash-140m-from-foreign-aid-spending https://www.cgdev.org/blog/lies-damned-lies-and-aid-statistics https://www.foreignaffairs.com/world/unkept-promises-western-aid?check_logged_in=1 https://www.ft.com/content/dc55dbfa-9b43-4469-adfe-733072769c38 https://cgdev.org/blog/vaccine-mark-counting-more-oda-we-paid-vaccines-illogical-immoral-and-unpopular https://www.devex.com/news/uk-s-labour-calls-to-reform-oecd-dac-s-rules-on-assistance-104903?mkt_tok=Njg1LUtCTC03NjUAAAGJ6aDVGnSeuBbkObeAv-mONaM00ZdQGvtjYOQy2A66joEg4wZU9oTLskloNsC0x_xyaAdEJ-Yx6nUiqEUQ0TvCOA74g9WNnI_RVn60o_SKheRPbyA&utm_content=cta&utm_medium=email&utm_source=nl_newswire&utm_term=article https://odi.org/en/insights/what-prospects-for-aid-in-2022-and-beyond/#:~:text=In%20reality%2C%20the%20ODA%20increase,%2D%20and%20middle%2Dincome%20countries

[3] This underlined passage shows that, while there was a safeguard against using doses about to expire, this could be waived with the agreement of the recipient country (and ODA at $6.72 per dose could still be claimed). It is assumed that the permissible “exception” only applies to doses approaching the end of their shelf life, and not to those that had expired, but this should have been made clearer.

[4] No reason is given for these two countries’ reluctance to report ODA for donating surplus vaccines originally purchased for domestic use. However, they may be among the countries that opposed the idea of counting such donations when the matter was first raised. Document DCD/DAC/STAT(2021)21 reports that, at a workshop held on 3 June 2021, “several” participants “expressed the view” that “transferring their doses to developing countries” “should not necessarily count as ODA”, and that they gave the following reasons: “[1] Developed countries bought the doses for their own use but, given the lower attrition rate than expected, they have received far more doses than needed. The original intent of buying the doses has nothing to do with an objective to benefit developing countries. By signing so many contracts, they actually contributed to the lack of doses available to other countries. [2] There is no opportunity cost for the donor in handing over the doses to developing countries. [3] Participants also voiced the concern that the donation of excess vaccine doses, if counted in ODA, could replace much-needed ODA for e.g. health systems rather than representing additional investments. [and 4] There could also be perverse incentives in allowing providers to score ODA for their donation of vaccine in excess. Indeed, this could encourage them to stick to bilateral deals, and discourage them to fund multilateral initiatives. This could also legitimise hoarding strategies that led to the current inequitable access situation.”

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