The U.S. Agency for International Development plans to make one of the largest and most important award decisions in its history later this year: a 10-year, $17 billion suite of nine contracts that collectively fund the procurement and distribution of lifesaving health commodities for dozens of countries around the world. Together, these are known as USAID’s “NextGen Global Health Supply Chain.”
Given the size of this project and its critical importance to U.S. government efforts to end HIV, fight malaria and tuberculosis, and support family planning, among other global health goals, Devex intends to devote sustained attention to this award through a series of articles over the next several months.
If you have information, concerns, or insights about this award that you would like to share, please contact Devex Senior Reporter Michael Igoe at michael.igoe@devex.com and Business Editor David Ainsworth at david.ainsworth@devex.com.
What we know so far about USAID's $17B NextGen contracts
USAID is procuring its largest ever suite of contracts: the 10-year, $17 billion NextGen Global Health Supply Chain contracts. Here's what we've learned so far.
In 2015, the U.S. Agency for International Development shook up the U.S. global health contracting landscape by awarding a $9.5 billion contract to a consortium led by Chemonics International, unseating the organizations that had previously managed these efforts. While Chemonics was already among the largest USAID contractors, taking over the global health supply chain project put the company’s annual revenue in the billions of dollars.
Chemonics’ takeover of the project was not exactly straightforward. USAID’s decision led to legal disputes, startup delays, and early implementation challenges that brought enormous scrutiny.
As Devex examines the NextGen Global Health Supply Chain, USAID’s selection of implementing partners, and a contract that many in the U.S. development community will be watching closely, here is a recap of our reporting since USAID’s award decision seven years ago:
May 5, 2015 — After USAID awards the Global Health Supply Chain - Procurement and Supply Management contract — or GHSC-PSM — to a consortium led by Chemonics, Devex reports that the previous award holders have protested the decision with the U.S. Government Accountability Office. “We think this was a wrong decision that could cost the taxpayers a great deal of money and perhaps put people's lives at risk,” says Joel Lamstein, co-founder and president at John Snow Inc.
Aug. 12, 2015 — Devex reports that GAO has denied the bid protest, rejecting the argument that USAID failed to adequately evaluate proposed costs and past experience. It allows project transition activities to move forward.
Aug. 25, 2017 — Devex reveals that the supply chain project, now implemented by Chemonics, is failing to meet its key performance targets. Specifically, between Jan. 1 and March 31, 2017, only 7% of the health commodity shipments delivered through the GHSC-PSM project arrived at their destination “on time and in full.”
Aug. 28, 2017 — In an exclusive interview, USAID’s administrator tells Devex he is “angry” about the project’s challenges. “This is not the reason I wanted to reform procurement, but it certainly doesn’t push me away from wanting to reform procurement,” Mark Green says.
Chemonics issues a response to Devex’s reporting, acknowledging “challenges” and offering assurance that it has “made the necessary changes to ensure progress.”
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Sept. 29, 2017 — Rep. Chris Smith, a Republican from New Jersey, tells Devex he plans to seek answers about the supply chain project. “I intend to hold a hearing that will require USAID to account for how this contractor was chosen, why this problem was allowed to fester and what is being done to fix it,” he writes.
Nov. 15, 2017 — Devex reports on a letter to USAID’s Office of Inspector General from U.S. Sens. Jeff Flake and Bob Corker requesting that the watchdog “carry out independent oversight” of the supply chain project. They cite their concern that “disruptions with the supply chain as a result of unsatisfactory performance by the contractor are so serious that the life and health of millions of people may be at risk.”
Dec. 4, 2017 — Devex publishes an in-depth examination of how the supply chain project went off track. “There’s a lot of people in key places on that contract who don’t know anything about international development, or these supplies, or third-world supply chains,” says one former contractor on the project.
May 18, 2018 — Devex reports on a hearing held by U.S. lawmakers to question U.S. Global AIDS Coordinator Deborah Birx and USAID Senior Deputy Administrator Irene Koek about the supply chain project. Among their questions: Does USAID have the authority to penalize underperforming contractors?
Oct. 16, 2018 — Devex details a report released by the U.S. House Foreign Affairs Committee at the conclusion of a congressional oversight investigation. It finds that “significant mistakes were made by all parties” involved in the project “at virtually every level and stage of the contract.”
July 9, 2019 — Devex reports on two “requests for information” issued by USAID as it prepares to design the next version of the global health supply chain project. The agency aims to gather input from organizations that might inform the process.
Oct. 9, 2019 — In an interview with Devex, Chemonics Executive Vice President Jamey Butcher — who has since become CEO — describes how the supply chain project evolved under the company’s management, saying, “We're delivering a more exceptional service than has been received by the U.S. government previously.”
Oct. 29, 2019 — Devex reports that Chemonics managers are reassuring supply chain project staff that even though other companies are trying to recruit employees for the next iteration of the project, USAID intends to extend the period of performance for the current project “through at least 2023.”
Dec. 10, 2021 — Chemonics CEO Jamey Butcher speaks with Devex about the company’s decision to launch a subsidiary called Connexi, which will provide supply chain services in the development sector. “We wanted an entity that would allow us to share those private sector practices more widely across the NGO and public sector,” he says.
Jan. 20, 2022 — In a statement to Devex, Chemonics’ Executive Vice President Christopher Scott writes: “Despite the extreme supply chain challenges caused by the COVID-19 pandemic, USAID’s program, implemented by Chemonics, successfully achieved an on-time delivery rate of above 85 percent for the tenth consecutive quarter, ensuring that the health commodities we procured and delivered made it to their intended destinations and into the hands of those that need them most.”