What we know so far about USAID's $17B NextGen contracts

The U.S. Agency for International Development plans to make one of the largest and most important award decisions in its history later this year — a 10-year, $17 billion suite of nine contracts that collectively fund the procurement and distribution of lifesaving health commodities to dozens of countries around the world. Together, these are known as USAID’s “NextGen Global Health Supply Chain.” The contracts will form the backbone of global health initiatives such as the U.S. President’s Emergency Plan for AIDS Relief and the President’s Malaria Initiative. The suite of contracts will replace the existing eight-year, $10.5 billion Global Health Supply Chain contract, including a $9.5 billion contract currently run by Chemonics. Rather than offering the majority of the business to a single prime contractor, nine prime contracts will be issued this round, according to the latest information on the NextGen home page, ranging in size from less than $50 million to more than $5 billion. When USAID designed the previous global health supply chain project, the agency had big hopes for its transformative potential. In Oct. 2013, Mark Rilling, a former USAID division chief, told industry representatives 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.” That vision has not come to pass. Instead, the next set of awards is for a longer period, and substantially larger. USAID’s efforts to design the new project began during former President Donald Trump’s administration. At a virtual “industry day” event on Jan. 13, 2021, which brought together representatives from potential implementing partners, USAID’s then-Chief of Staff William Steiger reminded participants that, “this suite of contracts, this program attracts a great deal of attention, as I think all of you know.” “Its predecessor is the largest contract in the agency's history. This suite will be even larger than that, and we know it will be a milestone for all of us and for our partnership with the private sector to get this right,” he said at the time. The size of the contracts means that the competition to win them could permanently alter the U.S. contracting landscape. More than 200 potential suppliers have expressed an interest in winning work on these contracts, including attending the industry day last year. Many of the largest development contractors in the U.S. have hired specialists to work on their bids, and are recruiting key personnel to include in proposals. Organizations hiring for these contracts have included high-profile USAID contractors such as DAI, PATH, and Palladium. The contracts break down the supply of health products into several separate sections, in order to allow companies to specialize in particular areas. Contractors will have to cooperate on delivery as a condition of winning the bids. For many contracts, prime contractors on one bid will not be allowed to be either prime or subcontractors on other NextGen contracts. One contract, the “control tower” — with a maximum value of just under $300 million — is intended to centrally coordinate the work of the other eight prime contractors. It is being procured via a task order through a “Governmentwide Acquisition Contract,” known as a GWAC, and a request for quotations was put out in August. GWACs are frameworks that allow many government agencies to come together to procure services, usually technology, and means that the winner of the contract is more likely to be a larger entity that is set up to provide services to multiple government departments. A task order is a type of agreement under which the government does not specify the amount of work required, but can instead procure as needed at short notice. Of the other eight contracts, two are listed on the NextGen site as currently at the draft request for proposal stage — one worth up to $2.8 billion for a procurement service agent for laboratory and molecular diagnostics, issued on Oct. 8, and one worth $4.1 billion for a procurement service agent for malaria, family planning and reproductive health, maternal and child health and nutrition and other health elements, known as the “Integrated PSA.” The NextGen site lists one request for proposal as having been issued in finalized form, for comprehensive technical assistance for Health Supply Chain and Pharmaceutical Management, worth $2.2 billion. This is an “indefinite duration, indefinite quantity award,” known as an IDIQ. USAID has already revised the request for proposal in response to lobbying from within the development industry. Unlock Aid, one of the bodies that lobbied for the changes, said the amendments would make the contract less restrictive, and more in line with Administrator Power’s rhetoric around locally level development. RFPs have not been issued for other five contracts, including the largest — a $5 billion procurement service agent contract for HIV. The most recent USAID business forecast gives the anticipated solicitation date for three of those contracts as earlier this month, but so far no information has been released on the USAID NextGen page. Michael Igoe contributed reporting to this piece.