Untied aid

Aid that is untied is freely and fully available to finance procurement from all donors adhering to the DAC Recommendation on Untying ODA, as well as substantially all aid recipient countries and territories. 

Tied aid, on the other hand, limits procurement to the donor country and/or to a group of countries which does not include substantially all aid recipient countries. This reduces aid effectiveness by increasing procurement costs by up to 30%.

Untying aid involves eliminating all formal and informal constraints that restrict competition in practice. For instance, issuing tender documents only in the provider’s language or designing overly narrow technical specifications can limit the ability of foreign suppliers to compete on equal terms. 

Adherents to the DAC Recommendation on Untying ODA commit to untie aid to least developed countries (LDCs), heavily-indebted poor countries (HIPCs), other low-income countries (OLICs), and countries and territories that are only eligible for financing from the International Development Association (IDA-only).  It excludes free-standing technical cooperation, humanitarian aid, food aid and core funding to NGOs. 

The DAC works to consistently enhance the effectiveness of its members’ ODA by limiting the aid and trade distortions linked to tied aid. 

• Introduced in 1987, the 'Guiding Principles for Associated Financing and Tied and Partially Untied ODA' helped restrict tied aid to priority development projects. 

• This was followed by the 'New Measures in the Field of Tied Aid' in 1992 to better target countries and projects with limited access to financing. These measures introduced international competitive bidding for large projects and the tied aid disciplines aligned with the rules of the 1991 OECD Arrangement on Officially Supported Export Credits. Compliance is primarily monitored by the Arrangement’s Participants.  

• This work culminated in 2001 with the adoption of the DAC Recommendation on Untying ODA. 

• The Recommendation was revised in 2026 to ensure it remains fit for purpose. The revision confirms the DAC’s commitment to untying and introduces important enhancements, including mainstreaming sustainable procurement practices into development co-operation, ensuring fair and open competition, promoting locally led development, and improving transparency and reporting.

Untying aid has also featured in major ODA-related commitments made by DAC members in international fora. These include the 0.7% ODA/GNI target agreed at the United Nations in 1970,  which should be untied in principle, the 2005 Paris Declaration on Aid Effectiveness and subsequent development effectiveness commitments, and the 2025 Sevilla Commitment adopted at the Fourth International Conference on Financing for Development.

In the Recommendation, Adherents commit to untie their ODA both de jure (formally) and de facto (in practice).  

To monitor de jure untying, Adherents report the tying status of their ODA commitments in the DAC Creditor Reporting System (CRS).

To monitor de facto untying, Adherents are required to advertise procurement opportunities on the DAC bulletin board ("ex ante notifications”). This maximises participation, ensures equal access to information and improves transparency. Following supplier selection, Adherents report on contract awards ("ex post reporting"), including the name and country of incorporation of the winning supplier. This allows assessment of whether aid is untied in practice, i.e. is not disproportionately awarded to suppliers from the donor country. 

Implementation is monitored through biennial reports, DAC peer reviews and a data dashboard.