'Significant mistakes' in USAID global health supply chain, House says

Medical supplies in Madagascar. Photo by: Lan Andrian / GHSC-PSM

WASHINGTON — The United States House Committee on Foreign Affairs on Monday found in a report that “significant mistakes were made by all parties” in handling the U.S. Agency for International Development’s global supply chain contract with Chemonics International. The report was released at the conclusion of a congressional oversight investigation after Devex last year revealed the agency’s $9.5 billion contract faced chronic problems.

The global health supply chain procurement and supply management contract is USAID’s largest ever and is the primary way USAID delivers life-saving global health commodities for most U.S. government global health initiatives. The contract governs supply, procurement, and delivery in 60 countries, technical assistance in 40 countries, and field offices in 33 countries.

The mistakes were made “at virtually every level and stage of the contract — from contract solicitation and the evaluation of proposals, through the transition, and into implementation,” the report found. There was no evidence that the supply chain issues interrupted treatment for any patients who were already receiving care, the report found.

“Nevertheless, these mistakes did result in delays and unacceptable performance under USAID’s largest-ever contract, jeopardizing U.S. global health priorities and undermining the program’s value to American taxpayers,” the report said.

The contract was signed on April 15, 2015, between Chemonics and USAID as the “primary vehicle through which USAID will procure and provide health commodities for all USAID health programs, including but not limited to HIV/AIDS, malaria, family planning and maternal and child health.”

According to the report, the committee first learned of the decline in on-time delivery rates from media reports, including the one by Devex, in late August 2017. The House decided to open a congressional investigation in October 2017 after additional reports that life-saving commodities were out of stock in some countries.

House Committee on Foreign Affairs staff conducted around 35 interviews and reviewed thousands of pages of documentation for insight into how decisions were made throughout the contract process. In January 2017, they conducted bipartisan field interviews and research in Ethiopia and Uganda.

The investigation also included a House hearing on the contract in May in which lawmakers questioned U.S. Global AIDS Coordinator Debbie Birx and USAID Deputy Assistant Administrator Irene Koek in USAID’s Global Health Bureau. Rep. Chris Smith, a Republican from New Jersey, who chaired that hearing, said Monday those proceedings proved the need for Congressional oversight of federal contracts.

“People around the world with HIV, malaria and other ailments rely upon the timely delivery of vital medications in our flagship PEPFAR program, and there must be sufficient oversight and accountability to ensure that our global supply chain delivers treatment as quickly and efficiently as possible,” Smith said in a statement. “Accountability reforms for federal contracts, including penalties for non-performing entities, should be on the table.”

USAID Administrator Mark Green said in a statement Monday that he welcomed the House review of the global health supply chain contract and that such oversight strengthens the agency’s operations.

“We have a duty to the American people to ensure we spend each and every taxpayer dollar wisely, effectively, and efficiently,” Green said. “At USAID, we look forward to working with the Committee and other stakeholders to address the issues raised in the report, and to make the improvements necessary to ensure proper stewardship of U.S. taxpayer dollars.”

The House investigation provided several recommendations for how management and execution of the global health supply chain contract can be improved: USAID must improve its solicitation and evaluation process for the contract prior to re-competing; it must improve transitions between different contractors to ensure critical data is retained and passed on; USAID and the State Department must improve oversight, and communication and coordination; and USAID should improve performance evaluation across contracts so performance by different contractors may be compared.

The investigation also said USAID and the State Department should evaluate whether one, $9.5 billion global health supply chain contract, functions better than previous arrangements between 2005 and 2016, in which the work was split into two separate, smaller contracts.

USAID’s inspector general is also investigating the Chemonics contract and is expected to release a report in the spring of 2019.

House Committee on Foreign Affairs Chairman Ed Royce, a Republican from California, said U.S. global health assistance not only saves lives but also promotes U.S. economic and security interests.

“That’s why no amount of waste or mismanagement can be tolerated. I’m encouraged that, thanks in part to this committee’s work, USAID last week approved a new position at the Global Health bureau to serve as a senior supply chain leader, coordinating strategic planning and working to improve the supply chain program,” Royce said in a statement. “We’ve got to get this right.”

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About the author

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    Teresa Welsh

    Teresa Welsh is a reporter with Devex based in Washington, D.C. Prior to joining Devex, Teresa wrote about Latin America from McClatchy's Washington Bureau and covered foreign affairs for U.S. News and World Report. She worked as a reporter in Colombia, where she previously lived teaching English. Teresa earned bachelor of arts degrees in journalism and Latin American studies from the University of Wisconsin.