Exclusive: Health supply chain results deemed 'unacceptable'

ACT kits assembled by the Global Health Supply Chain – Procurement and Supply Management staff in Mozambique in the Zimpete Ministry of Health central warehouse to facilitate distribution to community health workers. Photo by: GHSC-PSM

WASHINGTON — The U.S. Agency for International Development says the performance of its largest-ever contract “remains unacceptable,” while the agency’s implementing partner, Chemonics International, maintains the most recent report “marks a turning point for the project.”

The Global Health Supply Chain – Procurement Supply Management project, a $9.5 billion effort that coordinates the procurement, shipment, and monitoring of lifesaving global health commodities to 55 countries, released its latest quarterly report Thursday.

For the quarter ending on June 30, 2017, the project delivered 23 percent of its shipments “on time and in full.” While a 23 percent OTIF rate suggests a supply chain still riddled with delayed shipments, it represents a modest improvement from the 7 percent OTIF rate reported in the previous quarter.

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“As anticipated, GHSC-PSM’s ‘on time and in full’ rate showed improvement, to 23 percent for the quarter,” said USAID spokesperson Clayton McCleskey in a statement to Devex. “The OTIF remains unacceptable, and far from the contract’s target of 80 percent,” he said.

Devex first revealed problems with the project in August. It has since attracted attention from U.S. lawmakers, who intend to question USAID about its decision to award the contract to Chemonics in 2015.

Chemonics says the modest uptick — in addition to other indicators in the latest report — is evidence that a major project overhaul undertaken over the past six months is starting to yield better results. The company also acknowledged that the results described a project still working to overcome the major problems that led USAID to demand a corrective action plan in April.

“We are not satisfied with the OTIF rate as of June 30, 2017,” said Jane Gotiangco, director of strategic communications at Chemonics, in a statement to Devex.

“We are committed to holding ourselves to high standards and meeting USAID’s targets,” Gotiangco said. “Nothing less is acceptable, both for us and the communities we serve. We are implementing a thorough and rigorous improvement plan in partnership with USAID that we expect to show significant improvements in performance in the coming months.”

In the report, Chemonics points to a “lag” in the data’s ability to capture improvements that have already been implemented in the project, “because of how OTIF is measured.” A USAID official told Devex that the agency expects to see more significant signs of improvement reflected in the OTIF rate by the end of 2017.

According to internal project documents Devex obtained, Chemonics has committed to USAID that OTIF will be above 60 percent by December 2017.

“USAID is monitoring all shipments closely, and following up with the consortium on all delays, to ensure the most expeditious handling of deliveries,” McCleskey said.

“Our expectation is that the consortium delivers orders on time and in full,” he added.

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