USAID business forecast: Q1 2019

CANBERRA — Delays in past business forecast calls have seen the U.S. Agency for International Development skip Q4 of 2018 and move straight to Q1 of 2019. But the data and call from this quarter provide important insights into the year that was and the opportunities that will be. Trends in the reduced number of business opportunities between years have continued, along with the value of opportunities. A total of 166 opportunities are available this quarter worth a total of $7.9 billion. This is a significant decrease from the 204 opportunities worth up to $16.9 billion at the same time last year. The decline is part of growing procurement reform within the U.S. government aiming for better value and consistency in spending including through whole-of-government contract arrangements. And according to USAID, the coming year will see more efficiencies planned in contracts and opportunities. In our updated tableau interactive for Q1 of 2019, you can review the changing trends starting from Q1 of 2015. Here, we discuss business insights supporting USAID’s partners for the new year. New opportunity insights Despite the decreasing number of opportunities, there is still a total of 68 opportunities that are listed as new and not previously forecast in the new data. Four of these have an estimated value of between $50-100 million. The Air Export Program in Afghanistan will invest up to $100 million to provide technical assistance, transactional support, and other services to support improved export opportunities through major Afghan international airports. A to-be-determined aids prevention initiative for Malawi as well as the Social Services for AIDS-affected Orphans, Vulnerable Children, and Adolescents project in Malawi will deliver up to $200 million combined to support HIV awareness and prevention. And Supporting the Electronic Information Systems in Ethiopia to Improve will support the development and use of technology in Ethiopia, to push skills and economic growth. Opportunities by region By value of opportunities, only three regions have seen an increase in opportunities since the last business forecast call. North Africa and the Middle East have seen a spike of $618 million in opportunities from Q3 of 2018 thanks to two projects supporting work in crises and conflict: the USAID/Iraq Durable Communities and Economic Opportunities project and Syria Essential Services IDIQ project, with the latter operated by the Jordan Mission. In Southern Africa, a $209 million increase in opportunities has been seen since the Q3 of 2018. New opportunities include the to-be-determined Malawi initiative as well as the Attain and Sustain 95-95-95 project, a $100 million effort to prevent new infections and support hard-to-reach communities in in Eswatini through their South Africa Mission. And in West Africa, an $18.5 million increase has been seen despite the dropping number of forecast opportunities — thanks to the Integrated Health Service Delivery program in Senegal doubling in forecast value. Opportunities by sector By sector, declines have been seen in all but three, based on the value of opportunities. Bucking the trend, global health has additionally seen a boost of $675 million in opportunities thanks to a number of global HIV prevention initiatives — including the Meeting Targets and Maintaining Epidemic Control project, Translating Data for Implementation project, and a program targeting services for children and youth. Each project has a forecast value of up to $300 million. Thanks to increased investment in North Africa and the Middle East, working in crises and conflict has seen an increase of $269 million — but it is still significantly down on their peak of $3.1 billion in Q1 of 2018. And economic growth and trade has seen an increase of $205 million in opportunities, compared to Q3 of 2018, boosted by two programs worth $100 million each — the Air Export Program in Afghanistan and Matrix Support for Timely Economic Reform in Jordan. At the opposite end of the scale, the value of opportunities supporting investment in agriculture and food security has reached the lowest levels since 2015. A total of 16 opportunities will see $371 million invested in projects supporting Asia and Africa, down from $2.6 billion in Q1 of 2018. Feed-the-Future West Africa Trade and Investment Activity is the largest forecast opportunity in this sector, valued at up to $100 million. It is focused on improving private sector competitiveness, increasing the agricultural productivity and profitability of smallholder farmers in Nigeria, and promoting West Africa’s regional and international trade. The impact of the push to self-reliance For a large number of forecast opportunities, a focus of building economic development into the program is supporting USAID’s focus on creating sustainable development through self-reliance. During the business forecast call, questions were asked on how this impacts country programs — and the opportunities available to business partners. According to USAID, influence on country programming should be expected. “One could envision that where a particular country stands on their Journey to Self-Reliance would influence different types of possible approaches whether technical assistance, government to government, public-private partnerships, etc,” a USAID representative explained. For business partners, understanding the status and expected journey of the country to sustainable development will assist in planning and preparing for business opportunities with USAID. Summing 2018 results The business call for the quarter was also an opportunity to gain insight into the end of year results of business engagement with USAID. Mark Walther, acting director of USAID’s Office of Acquisition and Assistance, explained that the last fiscal year has seen USAID deliver approximately $17 billion in aid through acquisition and assistance mechanisms worldwide. Approximately 39 percent of this was delivered through USAID missions with the remainder through Washington. “That correlated to about 23,000-plus transactions both in our field missions and here in Washington,” he said. Of the $17 billion, Walther said, approximately $5.1 billion was delivered under acquisition instruments, $5.4 billion was for assistance under public international organizations, $6.4 billion was under assistance to NGOs, and the rest under inter-agency agreements. Small business utilization, one of the focus areas for USAID procurement reform over the past year, has seen the best results on record based on the percentage of total worldwide contract obligations that go to small businesses as well as the total dollar value. “We accomplished 14 percent, which is the first time we have ever, as an agency, gone over the 14 percent mark,” said Mauricio Vera, director of the office of small and disadvantaged business utilization. “In terms of dollars, we awarded about $685 million, which was a significant increase from fiscal year 17. We went over by about $50 million with about the same total base, which was close to $5 billion.” Within small business categories, there are additional measures for disadvantaged groups. Small disadvantaged businesses, service disabled veteran-owned small businesses, women-owned small businesses, and historically underutilized small businesses have targets which Vera said had mixed results and which could see more procurement targets in 2019. “We met our small disadvantaged goal,” he said. “We went over 7 percent on that, with a 5 percent goal. We got close in the woman-owned category. We were close to 5 percent — we were at about 4.5. We had increases in the other socio-economic categories, especially HUBZone [historically underutilized small businesses], which has been a challenge for us. We went up to almost half of 1 percent, which is better than we’ve done in the past. The only category where we struggled a little bit was in disabled veteran-owned small business, so we’re trying to do a little bit better in that this year.” Other initiatives include expanding the use of small businesses at USAID missions. “That’s an area where we started to focus a little bit more last fiscal year and we’re continuing that this year with our mission small business goaling program,” Vera said. “Last year we did a pilot with 16 missions and we’re doubling the number of missions we’re working with this year.” Ghana, Liberia, Tanzania, Uganda, Zambia, Bangladesh, Philippines, Vietnam, Pakistan, Ukraine, Bosnia and Herzegovina, Peru, Guatemala, Honduras, Jordan, and Morocco missions contributed to the program for 2018. 2019 will see an additional 15 missions joining the program, and all missions with acquisition obligations over $5 million will be added to the program by 2020. Efficiency targets impacting As part of government spending reforms, and to reduce waste and duplication in spending, best-in-class and spend under management goals target more efficient spending. And during the Q1 business call, USAID answered questions on what best-in-class and spend under management targets it would be aiming for, and how this may impact procurements. Deb Broderick, deputy director of the office of acquisition and assistance, explained that the 2018 target will be a 5 percent growth on the target that had been set for 2018. The spend under management target, across the various tiers associated with this spending reform, will be $3.7 billion for the 2019 fiscal year, with a best-in-class target of $84.7 million. “These will be challenging goals, so we’ve already started looking for opportunities,” Broderick said. “Where we have contracts with NAICS [North American Industry Classification System] and PSC [Product or Service Code] codes that match to either a GSA schedule [U.S. General Services Administration] or to a BIC [best-in-class] contract, we will be focusing on those and seeing if there is something we can do to move those.” But in bringing in these additional targets, there will need to be a balance to not impact other areas of procurement reforms. “We don’t want to hurt our small business goals or our reform efforts, so it’s a matter of ‘threading the needle,’” Broderick said. The 2019 fiscal year is expected to be one of change within USAID’s business opportunities — but with the agency increasing engagement with their partners and the wider private sector, it will hopefully be a smooth time for transformation. For further insights into the USAID business forecast, interact with our Tableau visualization and delve into business opportunities by sector and region.