USAID extends HIV supply chain project by two years

Faced with the “massive endeavor” of replacing its global health supply chain project with a new collection of contracts, USAID has decided to extend the current portion of the project that handles HIV commodities for an additional two years and roughly $2 billion more in funding. USAID’s Bureau of Global Health proposed the extension late last year, requesting approval of a contract modification that will keep Chemonics International at the helm of the HIV supply chain until November 2026. Chemonics has led USAID’s global health supply chain efforts since 2016 after it was awarded a $9.5 billion contract whose design and implementation later faced criticism from Congress, independent watchdogs, and some U.S. global health officials. The request to extend one of the largest pieces of that contract was approved in January, and the document outlining USAID’s justification for extending the contract without an open competition was published online last week. The justification — sent by Atul Gawande, USAID’s assistant administrator for global health — underscores the life-or-death stakes of the global health supply chain, USAID’s cautious approach to transitioning from its current contracts to the new ones, and the agency’s view that neither country governments nor other contractors are capable of bridging the gap. “If the flow of life-saving commodities or the provision of supply chain technical assistance is suspended without a viable alternative, millions of people living with HIV will not have access to antiretroviral treatment, pre-exposure prophylaxis, essential medicines, and diagnostic and testing tools for viral load and early infant diagnostics,” Gawande wrote. USAID’s years-long process of designing and awarding the new global health supply chain contract — a roughly $17 billion effort known as NextGen — has been closely scrutinized. Last month Sen. Ben Cardin, a Democrat from Maryland and chair of the U.S. Senate Foreign Relations Committee, wrote a letter to USAID Administrator Samantha Power pressing her to disclose what percentage of NextGen’s funding would go to local and private sector organizations. USAID initially indicated it would award all of the NextGen supply chain contracts in 2021, but has so far awarded only two of an expected nine contracts. The new timeline means that the transition from the current supply chain project to NextGen will likely span three presidential terms of office. USAID did not respond to an inquiry from Devex. In his request for approval to extend the current HIV-related portion — known as a “task order” — Gawande emphasized that USAID is committed to ensuring 12 to 18 months of overlap between the current contracts and the new ones to mitigate problems in the transition. Gawande wrote that the need for such overlap has been repeatedly highlighted by oversight bodies and was a “critical lesson” from the previous transition. “The design and procurement of NextGen is a massive endeavor with nine separate contracts that interrelate and need to be synchronized,” Gawande wrote. The transition from the current project to NextGen will be “staggered,” he added, with the current project winding down activities whenever NextGen-funded projects can take over. Gawande wrote that USAID considered at least one option other than extending the current contract with Chemonics. “USAID considered the option of awarding a bridge contract using full and open competition, which would allow the Agency to obtain additional value or better contractual terms, but concluded that this is not a viable alternative,” Gawande wrote, citing the risk of undertaking “multiple transitions” and the “cost of start-up and close-out of a new contract in such a short period of time.” “Regarding in-country supply chains, particularly those that are fragile and/or need assistance to manage their health systems, country governments may be unable to fill funding gaps provided by the [U.S. government],” he wrote. In lieu of other options, the approved extension will raise the current task order’s ceiling by over $2 billion and increase the “level of effort” for field operations by 2.8 million hours.