USAID goes back to the drawing board for global health supply chains

WASHINGTON — The U.S. Agency for International Development is gathering input as it looks ahead to the next version of one of its largest projects, a multibillion-dollar effort to deliver health commodities around the world. In late May, USAID released two requests for information aimed at informing the design of whatever the agency’s global health bureau decides should replace the Global Health Supply Chain Program-Procurement and Supply Management project, a multibillion effort managed by a consortium led by Chemonics International. How USAID decides to restructure and recompete the project will be closely watched given the size of the contract, its importance to a range of U.S. global health priorities, and the high-profile challenges encountered early on in the project under the current contractor. Both USAID and Chemonics have cited improvement in the GHSC-PSM project’s performance since the agency first took major corrective action in 2017, and USAID officials have said they are incorporating lessons from these early struggles as they look ahead to the next health supply chain project. Agency officials have also drawn links between their plans for USAID’s future global health supply chain work and the agency’s broader vision — spearheaded by administrator Mark Green — to help countries progress along their “journeys to self-reliance.” The current supply chain project is managed under a $9.5 billion “indefinite delivery, indefinite quantity” contract, which Chemonics won by unseating the incumbent implementer, John Snow International, in 2015. A USAID spokesperson would not confirm when the transition to the next project would begin, describing this as “procurement sensitive.” One of the requests for information that USAID issued asks for feedback to aid in the design of what the agency is currently referring to as the “Global Health Next Generation Supply Chain.” “The ultimate objective is to design a new, forward-looking global health supply chain for USAID programs that leverages best practices from both the public and private sector,” reads the RFI, which closes on July 15. The RFI asks a range of questions, including about “barriers to successful implementation and sustainability of supply chain systems in middle and low income countries,” “key performance indicators USAID should consider to monitor supply chain improvement and success,” and how the agency should “prioritize its investments in strengthening health supply chains.” “While the design work is procurement sensitive, USAID is actively seeking input from a wide range of stakeholders on industry best practices and lessons-learned to help shape our thinking for future designs,” a USAID spokesperson wrote to Devex. A second RFI issued the same day — but which closed July 5 — is intended “to help [USAID] identify Africa-based organizations and African private sector entities with the capability to provide the U.S. Government (USG) with integrated supply chain services.” “USAID intends to strengthen private sector engagement and transition procurement and supply chain services for health commodities to Africa based organizations for delivery within various countries, starting with HIV/AIDS pharmaceutical and diagnostic commodities,” this request reads. That goal appears to be in line with a policy directive made by U.S. Global AIDS Coordinator Deborah Birx last July. Birx said that she has told all of the agencies implementing programs on behalf of the U.S. President’s Emergency Plan for AIDS Relief to channel more of that funding through “indigenous organizations — those based in the countries where the programs are operating. Birx directed these agencies, including USAID, to reach a benchmark of directing 40% of their PEPFAR funding to “indigenous” organizations by the end of 2019, and to reach 70% indigenous funding by the end of 2020. “If we’re going to have a sustained program, it has to be completely indigenous. We know we have to get to 100% — and I don’t mean as [subcontractors]. I mean as [prime contractors],” Birx said at the time. Asked to comment on the questions USAID has distributed — and on whether the current supply chain approach should continue, or be overhauled — a Chemonics spokesperson wrote to Devex that, “the information solicited is very much in line with the “journey to self reliance” and is consistent with our approach on GHSC-PSM to utilize commercial and other best practice approaches to harness the capacity of local entities to accomplish program goals.” Some experts have warned that transitioning to nationally-managed and implemented supply chains should not imply reduced support from international donors. “In many countries, especially low and middle-income countries, as development assistance is waning, many of these governments can be slower to fill resulting gaps,” said Janeen Madan Keller, senior policy analyst at the Center for Global Development. “What we see is many patients start to turn to the private sector. We know that in the private sector prices can be quite variable, quality can be unreliable, and oftentimes families are paying out of pocket,” she said. Keller, who participated in a major study on the future of global health procurement, also urged USAID to make performance measurement, data, and analytics a bigger focus in the next supply chain project. “One example would be improving and standardizing how performance is assessed and measured across contracts so that performance can be benchmarked and compared,” she said. The current supply chain project has highlighted a combination of “on-time delivery” and “on time, in full” delivery, which measure slightly different aspects of supply chain performance, and which can vary from project to project in terms of how they are reported. When USAID designed the current supply chain project, the agency’s health leaders consolidated various disease-specific supply chain contracts into a single suite of awards in an effort to improve efficiency. According to Chemonics, “USAID has been able to achieve incredible benefits and economies of scale by integrating the predecessor supply chain projects into this one large project, GHSC-PSM.” Consolidation has come with a cost though, as some USAID officials have acknowledged. In testimony to Congress last May, USAID’s senior deputy administrator Irene Koeke wrote, “While unifying our global supply-chain across health programs might have gained some efficiency, it also increased our vulnerability, and reinforces the need for strong risk-mitigation measures in project-design, procurement, and management.” In a 2018 interview with Devex, former Acting USAID Administrator Wade Warren, who was involved in the design of the current award, defended the design and procurement process of the current project. “I think it was a thoughtful design to the new contract. But what the concern is ... is the performance of the awardee,” Warren said. Part of USAID’s original intention in creating such a large award in the first place was to pave the way for a future in which countries might be able to manage their own health supply chains. “By the time this suite of awards comes to an end, we expect that the supply chain world in developing countries, especially Africa, will look markedly different than it does today,” said Mark Rilling, a former USAID division chief, at an “industry day” event in Oct. 2013. “We want to be clear that the purpose of this suite of awards is not simply to continue the vital work currently performed ... but to transform the industry and the environment of the international health community to such an extent that in five or eight years, we will not have a need for another such set of awards,” Rilling said at the time. Update, July 10, 2019: This article has been updated to clarify that the interview with former Acting USAID Administrator Wade Warren took place in 2018.