US lawmaker presses USAID chief on health supply chain localization

The chairman of the U.S. Senate Foreign Relations Committee has asked USAID Administrator Samantha Power to explain how the agency will seize the opportunity of its largest-ever project to shift more funding to local partners. “USAID’s global health supply chain investments present an invaluable opportunity to model a future U.S. approach to global development that is more sustainable, results-oriented, and consistent with the kinds of partnerships we want to build with countries around the world,” Sen. Ben Cardin, a Democrat representing Maryland, wrote to Power in a May 16 letter published online by the advocacy group Unlock Aid. Cardin’s letter comes as the U.S. Agency for International Development is in the process of awarding contracts for the NextGen Global Health Supply Chain, a suite of major contracts that are expected to add up to roughly $17 billion in funding. It also signals a willingness, even among USAID’s key congressional allies, to push for promised reforms that have been slow to materialize. For years USAID has pledged to spend more money at the local level in the countries where it works — which is called localization — rather than keeping it in the hands of major international development contractors that are commonly awarded big projects. The agency’s own numbers show that progress on localization has been slow. The NextGen project has been billed as a major restructuring of USAID’s current global health supply chain effort, which has received criticism from independent watchdogs and was the subject of an investigation by Devex and the Bureau of Investigative Journalism last year. “There are few sectors as primed for local actors to take the lead as in healthcare and logistics,” Cardin wrote, noting that some of the world’s largest supply chain and logistics companies operate globally by working with local companies and affiliates. “What percentage of the $17 billion NextGen project does USAID plan to issue directly to local and private sector organizations?” Cardin asked in one of 10 detailed questions for Power. USAID did not respond to an inquiry from Devex. While Cardin’s letter focuses on USAID’s health supply chain efforts, his questions allude to a series of broader concerns about the agency’s overall progress toward shifting more of its funding to local organizations and private sector partners. He asked Power whether USAID has coordinated with other U.S. development agencies, including the U.S. International Development Finance Corporation, Millennium Challenge Corporation, and the U.S. African Development Foundation “that have an almost entirely local partner base.” Cardin expressed concern that USAID’s approach to accounting for its local funding only takes into account a portion of its programs, questioned the agency’s definition of “local partners,” and echoed criticism about a lack of transparency related to subcontracting from international to local partners. “How will USAID ensure that international firms hired by the Agency to manage large contracts genuinely involve local organizations in project design and implementation, as well as ensure that promised funding flows to them and other subcontracted partners?” Cardin asked.