Senators ask USAID watchdog to examine health supply chain project

WASHINGTON — Two prominent U.S. senators have called on the U.S. Agency for International Development’s Inspector General to conduct an inquiry into USAID’s largest-ever contract, a $9.5 billion project managed by Chemonics International.

Senators Bob Corker and Jeff Flake, both Republicans and chairs of the Committee on Foreign Relations and Subcommittee on Africa and Global Health Policy respectively, sent a letter Tuesday, which Devex obtained, to Ann Calvaresi Barr, USAID’s inspector general. The senators outlined their “great concerns” about the performance of the “Global Health Supply Chain – Procurement Supply Management” project. They requested that the development watchdog initiate work on the supply chain project and report back to the Foreign Relations committee with their findings.

“Information we have received indicates 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 in the countries that receive U.S. assistance through the President’s Emergency Plan for AIDS Relief (PEPFAR), the President’s Malaria Initiative, and other health programs,” Corker and Flake wrote.

“We are looking to you to carry out independent oversight of this issue to help solve the problem,” they continued.

The senators cited specific concerns about the project’s struggle to deliver shipments on time, which Devex first revealed in August. “News media reports based on Chemonics’ quarterly reports indicate that in the first three months of this year, only seven percent of health commodity shipments were delivered to final destination on time,” they wrote.

Chemonics Spokesperson Jane Gotiangco responded to Devex in a statement.

“GHSC-PSM has committed to achieving an on-time delivery rate of 60 percent by December 2017, and to consistently deliver 80 percent on time shortly thereafter,” Gotiangco wrote.

“Our ongoing monitoring data validation shows that we exceeded the 60 percent target in October, two months ahead of schedule. In addition, over 95 percent of orders have been delivered in in full,” she added.

After Devex reported on the project’s declining “on time and in full” delivery performance, USAID Administrator Mark Green said he planned to review the agency’s procurement practices, and another member of congress, Rep. Chris Smith from New Jersey, told Devex he intended to hold a hearing to question USAID about its decision to award its largest-ever contract to Chemonics in 2015.

Senators Corker and Flake raised two issues they hope USAID’s Inspector General will examine. “First is the depth of knowledge and ability of USAID procurement and contracting personnel to evaluate contract proposals and performance, given the complex nature of the global supply chain from manufacturer to delivery in-country,” they wrote.

“Of equal importance is the performance of Chemonics and its ability to meet contract requirements,” they added.

Chemonics’ most recent quarterly report showed a modest improvement in its delivery rates — rising from 7 percent of shipments delivered on time and in full during the first quarter of 2017, to 23 percent in the quarter ending on June 30. Chemonics referred to this uptick as a “turning point,” but acknowledged that the project still needed to demonstrate significant improvement.

Even in the latest report, only 3 percent of shipments of adult antiretroviral treatments for HIV arrived on time and in full.

USAID called the latest reported results “unacceptable,” but acknowledged that significant efforts that have already been made to improve project performance would not immediately show up in its performance indicators. A USAID official who spoke on background told Devex that the project must deliver better results by December, in order to meet the expectations of an action plan developed between the agency and Chemonics in April.

Update, Nov. 15: This story has been updated with a response from Chemonics.

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