How will USAID's NextGen contracts fit together?

The U.S. Agency for International Development is currently working on its largest ever suite of contracts: nine 10-year agreements, some of which have multiple awards, collectively known as the NextGen Global Health Supply Chain. It’s a massive undertaking, with an overall value of $17 billion. However, the contracting process appears to have been hit by delays. Requests for proposals on all contracts were due to be issued by last week at the latest, according to a USAID business forecast in December, with all contracts to then be awarded by November. But so far, only four calls have been published, with two of those in draft form. And on Monday, USAID published a new business forecast, pushing back the dates that RFPs will be published and moving some final award dates into late 2023. The NextGen contracts are successors to the existing Global Health Supply Chain contracts. They represent a change of approach from USAID, which previously collected most of the supply chain work into a single very large contract, currently administered by Chemonics. The nine NextGen contracts vary in size, with the smallest worth up to $50 million and the largest potentially valued at more than $5 billion. An announcement on who has won the first contract — known as the “Control Tower” contract — is tentatively expected by bidders in April. Devex spoke to individuals who have previously worked on USAID contracts or who have insight into the current bidding process, all of whom spoke on condition of anonymity. They said that they understand the delays to be in part because USAID is taking a “safety first” approach, following criticism of their handling of the previous contract award. They said that USAID’s priority appeared to be avoiding potential criticism and litigation, and this meant the agency would take extra time to ensure that RFPs, once issued, were watertight. The last set of contracts were subject to congressional criticism for not giving sufficient weight to previous experience, and were also contested by the previous incumbent. This creates a dilemma over the new set of contracts. On the one hand, some within USAID are keen to provide more opportunities for small businesses, and particularly for locally led organizations, as outlined in a keystone speech by Administrator Samantha Power. But those favoring the “safety first” approach are likely to prefer larger organizations with existing experience. Consortia of bidders have been lining up for all contracts for several months, with around 100 organizations likely in the mix, sources told Devex. Almost all of USAID’s existing largest suppliers have positioned themselves as bidders for one or more, and Devex understands that at least two bidders who have previously specialized in bidding for Department of Defense supply chain contracts have not only positioned themselves to bid, but have been involved in actively recruiting development specialists to complement existing supply chain management expertise. We look at how much progress has been made on each contract up until now, and how the various contracts fit together. Control Tower The Control Tower organization will act as a data hub. Other organizations will share information with it about what they are doing, and draw on it to access information about the actions of other contractors. The Control Tower contract is listed in previous business forecasts as being worth $100 million to $299 million, although those close to the contract suggest it may be closer to the lower end of that range. It is being procured via a task order through a “Governmentwide Acquisition Contract,” known as a GWAC, and a request for quotations was put out in August. A final announcement could come as soon as April. GWACs are frameworks that allow many government agencies to come together to procure services, usually technology — and Control Tower procured via GWAC means that the winner of the contract is likely to be a larger entity that is set up to provide services to multiple government departments. A task order is a type of agreement under which the government does not specify the amount of work required, but can instead procure as needed at short notice. Procurement service agents There are three procurement service agents contracts, which involve sourcing and buying drugs and other health commodities, with all the associated strategic sourcing and demand planning, and delivering those commodities to the countries where they will be administered. The responsibility of the PSAs will largely end when drugs arrive, though they will be expected to coordinate with local delivery services. Because the process of procuring and transporting the commodities involves the most expense, these contracts make up more than two thirds of the total value of the NextGen suite. The PSAs are divided according to the commodities being procured: One PSA — worth more than $4 billion — will cover both malaria, and maternal and family health. This was originally intended to be two separate contracts but has been merged into one, known as the integrated PSA. An RFP for this contract was issued in draft in September. December's USAID business forecast said that a final RFP was slated for publication on Oct. 1 of last year. This week’s forecast indicated it was due to be published Monday but it has not yet been issued, according to the USAID NextGen site. Another PSA, potentially worth more than $5 billion, covers HIV. The final PSA covers lab and diagnostic services and is worth more than $2.5 billion. A draft RFP of the latter was issued Oct. 8. Both PSAs were scheduled to have final RFPs published Jan. 14, but that deadline has now been pushed to March 30. In-country logistics Once medical commodities are procured and transported to central depots within the target country, the responsibility then moves to the provider of in-country logistics. This contract, worth up to $1.5 billion, involves receipt of inbound shipments, warehousing, and transportation of the health commodities USAID has funded. Calls on this contract were slated for Jan. 14 but have now been pushed back to March 18. Technical assistance Technical assistance will involve supply chain forecasting, monitoring, and support to host country governments. It will strengthen host country supply chains and pharmaceutical management systems. USAID envisions the technical assistance contracts to involve support and mentorship rather than execution. The main award here will be the Comprehensive Technical Assistance awards, known as Comp TA. Unlike other contracts, there are likely to be multiple smaller awards — perhaps four larger awards and two smaller — under the Comp TA banner. These contracts will be open-ended arrangements known as “indefinite duration, indefinite quantity,” or IDIQ. Under these arrangements, USAID will be able to call on as much or as little of a contractors’ service as needed, for as long as needed. The Comp TA contracts are cumulatively worth up to $2.5 billion. They saw a final RFP posted on Dec. 17, after a number of amendments were added at draft stage, with particularly intense lobbying around measures to improve access for smaller firms. A smaller — up to $500 million — contract, known as the Technical Assistance Marketplace, is designed to create a group of smaller specialist providers who can offer similar assistance. The prime contractor’s role will be to build up that provider network and ensure their services are accessed as appropriate. This was originally slated for Sept. 30, 2021, but has been pushed back more than a year. The anticipated release date is now Dec. 31, 2022, and the projected award date is Sept. 30, 2023. Strategy, scrutiny, support Two final awards will play a governance role: The Qualifying, Testing, Issuing award, worth up to $300 million, is focused on quality control. The QuTI contractor will provide frameworks for deciding which products can be bought, monitor orders, and sample and test as needed. QuTI was slated for release Friday and is still set for that date in the most recent business forecast, but it has not been issued, according to the USAID site. The Strategic Risk Management award is by far the smallest NextGen award, worth up to about $50 million over a decade. The contractor will have an overall monitoring role, identifying overarching macroeconomic and global risks, connecting these to known supply chain risks, and recommending mitigation measures. This RFP was originally set for Sept 30, 2021, but has now been pushed to Jan. 18, 2023, with the final award date rescheduled to Dec. 31, 2023.