DRAFT_SOW_CSL_TO_Aug_15_2013.pdf

DRAFT CSL Task Order – 15 Aug 2013

Section C – Statement of Work

Section C.1 – Background

The purpose of this Task Order (TO) is to serve as the primary vehicle through which USAID will procure and deliver family planning and other essential health products (EHP), and is also a primary vehicle that USAID will use to provide technical assistance in public health supply chain management and commodity security in partner countries.

The Bureau for Global Health’s portfolio includes programs and investments that represent the commitment and determination of the United States Government to prevent suffering, save lives, and create a brighter future for families across the globe. Successful implementation of USAID health programs in partner countries is dependent, in part, on an uninterrupted supply of EHP.

Health product donations, beginning more than 30 years ago with family planning commodities and expanding into other essential medicines and related supplies in recent years, has been an integral component of USAID’s health development assistance along with the necessary technical assistance to strengthen partner countries’ proper management of these health products to reach clients in need.

Since 2005, USAID has procured and delivered more than 4,300 different products valued at $2.4 billion, and has provided more than $500 million in supply chain assistance to strengthen partner country systems to more than 50 countries. These activities support USAID’s Global Health Bureau vision “a world where people lead healthy, productive lives and where mothers and children survive and thrive”.

This TO will be issued under the Office of Population and Reproductive Health (PRH), and will be available for all USAID Missions for procurement of contraceptives, condoms, and other essential health products, and for related in‐country technical assistance. This TO will also be available to USAID partners with procurement and technical assistance needs, in consultation with the Contracting Officer.

The Office of Population and Reproductive Health ‐‐ PRH provides strategic direction, technical leadership and support to USAID Mission programs in population, voluntary family planning, and reproductive health. It manages programs that advance and apply state‐of‐the‐art technologies, expand access to quality services, promote biomedical and social science research, promote healthy behaviors, broaden contraceptive availability and choices, strengthen policies and systems to address family planning and reproductive health needs, and improve data collection and use. PRH currently works with partners to ensure the long‐term availability of a range of contraceptive methods, supports procurement and delivery of contraceptives, condoms, and other essential health products, and supports system strengthening efforts so countries can better manage their health products.

USAID | DELIVER PROJECT – The USAID | DELIVER PROJECT is a single award IQC, that designs, develops, strengthens, and operates safe, reliable, and sustainable supply chains that provide a wide range of affordable essential health products, including drugs, diagnostics, and supplies to clients in country programs. The project also provides technical support to strengthen global and country environments for commodity security1, supporting policy development, financing, and advocacy.

1 Reproductive health commodity security is defined as the ability of every person to choose, obtain, and use quality essential reproductive health products whenever she or he needs them. Essential health

There are currently two active DELIVER task orders for Family planning activities, task order numbers 4 and 5. DELIVER TO4 provides a range of short and long‐term technical assistance to strengthen country management of health products. The Project maintains field offices in approximately 20 countries worldwide2. DELIVER TO5, the task order currently responsible for procuring contraceptives and other essential health products, currently makes about 260 annual outbound shipments of 55 different stock keeping units (SKUs), primarily composed of condoms and contraceptives. There are around 45 countries that purchase products from TO5. TO5 currently holds inventory of 16 products for fulfillment of country orders as well as manages direct drop shipments from manufacturers for certain products and order sizes. Historically, approximately 81% of commodity value is fulfilled from inventory with 19% being direct dropped from the manufacturer. Approximately 83% of commodity value is shipped to customers via ocean with 17% being shipped via air. Warehouses are currently positioned near DELIVER TO5’s supplier base with approximately 3,100 pallet positions of inventory held in the Netherlands and 3,300 pallet positions of inventory held in Singapore. In FY2012 the USAID/DELIVER project maintained a supplier base of 21 vendors. Non‐standard (i.e. essential medicines and other non‐family planning products) procurements totaled $46.4 million in FY2012, up from $17.3 in FY2011.

With the current supply chain structure, lead time expectations have been established by product, by shipping mode, and by customer. DELIVER TO5’s performance is primarily measured as the percentage of customer orders delivered within +/‐ 30 days of the deliver to promise date. TO5 has been expected to maintain above 95% for this performance metric. With this new TO, USAID is narrowing the +/‐ 30 day window to +/‐ 10 business days and maintain a minimum 95% delivery to promise measure.

For additional details please refer to Task Order 5, Procurement and Distribution of Essential Public Health Supplies, Annual Report FY2012.

For details regarding DELIVER Task Order 4 (TO4) please refer to Task Order 4, Technical Assistance for Supply Chain Strengthening and Commodity Security in Public Health: Annual Report, October 2010– September 2011:

http://deliver.jsi.com/dlvr_content/resources/allpubs/toandiqc/TO4AnnuRepo_Jan2012.pdf

For additional details please refer to Task Order 5, Procurement and Distribution of Essential Public Health Supplies, Annual Report FY2012:

http://deliver.jsi.com/dlvr_content/resources/allpubs/toandiqc/TO5_Annu_Repo_Dec2012.pdf

As summarized in the Global Health Supply Chain synopsis, which was posted in August 2012, USAID is restructuring its existing portfolio of projects related to commodity security and supply chain management of essential health products. This request for task order proposal is under the single‐ award IQC for “Procurement and Supply Chain Assistance”. It is intended that this TO will be awarded to a single implementing partner, who may subcontract with other entities as necessary for the fulfillment of the TO requirement. Note that the GH Supply Chain Group refers to the USAID management team responsible for oversight of the contracts.

product security is defined as when people can obtain and use essential health products when and where they need them.

2 A list of current country offices can be found in Annex 1.

Of critical importance to USAID in the transition from the existing DELIVER contracts to this new implementing architecture is ensuring an uninterrupted supply of products, a continuous provision of technical assistance, and a complete knowledge transfer between the existing implementing partners and the new implementing partners. To this end, the TO contract is required to operate in parallel with the existing contracts for a sufficient period of time to ensure a successful transition. This transition period is expected to last for a period of no longer than twelve months. This transition will require all existing and new contracting parties to collaborate as directed by USAID in support of the overall mission of improving global public health.

Section C.2 – Task Order Objective and Guiding Principles

The overarching objective of this contract is to increase the availability of essential health products in public and private services through strengthened supply chains and supportive environments for health commodity security, and provide superior customer support to USAID field programs to address their health commodity needs.

To accomplish this overall objective, the Contractor will need to 1) design, implement, and maintain a global supply chain for commodity donations, 2) maintain a robust technical capacity to improve country management of supplies to serve clients in need, and 3) leverage the capacities of stakeholders. Many of the technical approaches used today may not be appropriate a few years from now to achieve the objectives of this contract. The Contractor will therefore be expected to operate in a dynamic setting and adjust its implementation approaches accordingly, utilizing state‐of‐the‐art expertise, processes and technology.

Given the scale and scope of this TO, it is imperative that the Contractor actively collaborate with other partners to provide high quality services to USAID and client countries. The Contractor should actively seek opportunities to partner with entities with deeper functional knowledge, experience, and expertise in complementary areas, in order to accomplish the objectives of this TO. The Contractor is expected to maintain a lean and flexible organizational structure that should allow for flexible budget and staffing arrangements among sub‐Contractors to maximize responsiveness to USAID demands. The Contractor is expected to recruit, hire and maintain staff with the appropriate mix of skills or to engage expert sub‐ Contractors to accomplish the objectives of this TO. In addition, the Contractor is expected to identify efficiencies through collaboration with other partners and awards under the architecture, as well as within the TO, to achieve savings and best value for the USAID. All components of this contract should represent best value for the Government.

As the demand for health products has grown, so has the need for improved supply chain management and commodity security in the countries where these products are distributed. The Contractor is required to provide technical leadership at global, regional, and country levels in supply chain management and commodity security for health products.

The Contractor will be requested to operate global, and in some cases country, supply chains and provide related technical assistance on behalf of USAID Missions, Bureaus, operating units, other USAID agencies, public international organizations, local and international non‐governmental organizations, private sector entities, and/or partner countries. It should be noted that non‐USAID funded activities shall be counted against the ceiling price of the TO.

The Contractor’s technical assistance should complement, benefit, and coordinate with existing efforts by other partners to improve supply chain management and commodity security in each respective country. The Contractor shall build on existing supply chain activities supported by USAID and other USG and donor programs.

The Contractor, with USAID input, shall draft a performance management plan and maintain key performance indicators (KPIs) in order to evaluate its own processes and performance that can be independently verified for each objective area listed in the Task Order scope. Within 45 days of award, the Contractor and USAID shall agree upon targets, benchmarks, and potential baseline data to measure performance. The Contractor shall report periodic performance against targets for all KPIs throughout the life of the contract. Upon award the Contractor shall provide USAID with proposed KPIs. USAID shall approve the Contractor KPIs and may request additional KPIs.

USAID anticipates awarding a performance incentive component to this Task Order. Contractor delivery incentives under this Task Order are intended to apply a reward structure to improve the performance and delivery schedule of the successful Contractor by encouraging on‐time‐delivery of essential health products, and successful implementation of technical assistance. Additional details will be negotiated with the prospective bidders during the contract negotiation process.

C3. Task Order Scope/ Statement of Work

Objective 1: Global Commodity Procurement and Logistics – Expand the provision of public health supplies to USAID supported health programs while improving global supply chain efficiency, resilience and sustainability.

This TO will constitute one of USAID’s principle mechanisms for procuring family planning and other essential health products in support of Mission programs. Throughout the period of performance, USAID requires the Contractor to demonstrate and maintain the technical capacity, as well as to implement a commodity procurement process that is competitive, fair and transparent across the range of essential health products that are procured and distributed on behalf of the USAID Global Health Bureau and PRH. The Contractor shall be required to provide evidence sufficient to verify their respective proposals to meet or exceed established global supply chain benchmarks in procurement, logistics, operations, and management.

The Contractor shall provide public health supply chain management services to clients. Through this contract, the Contractor shall provide, as requested by USAID, planning, organization, management, implementation, and reporting services related to commodity forecasting, procurement, and supply chain management.

The Contractor will not receive a fee on the cost of products that it procures and distributes. The Contractor must develop an approach to procurement to be responsive to support USAID’s purposes and is required to meet the needs of health programs and any other USAID health initiatives. There is also the possibility that other governments, NGOs or public organizations may order, finance, obtain and report on products through this contract mechanism. If that need arises, and upon request from USAID, the Contractor will provide procurement services and/or related technical assistance for these other organizations.

The Contractor shall anticipate managing public health, family planning, reproductive health products procurement volume approximately at $120 million on an annual basis, 240+ SKUs, 20+ vendors and ship to an estimated 45+ countries. The exact type and value of the products cannot be predicted at this time. However, a catalog of the primary products currently procured through the USAID | DELIVER PROJECT TO5 can be found at http://deliver.jsi.com/dhome/mycommodities/productcatalog . The Contractor shall have the capacity to provide procurement services as detailed below on a worldwide basis to any country designated by USAID.

1.1 Procurement – Ensure strategic sourcing of quality‐assured products to achieve best value.

The Contractor shall manage all aspects of essential health commodity procurement including selection and administration of subcontracts with suppliers; insurance and delivery; and quality assurance as required. The Contractor’s procurement procedures must fully comply with the Federal Acquisition Regulations (FAR) and USAID regulations, and at the same time leverage volume purchasing to achieve prices comparable to the best prices obtained by USAID, private sector buyers, and/orother donors.

USAID expects the Contractor’s approach to be flexible, efficient, reliable, comprehensive and cost‐ effective. The Contractor shall be responsible for the timely delivery of quality assured EHP as specified in the purchase order and for ensuring and enforcing contractual remedies with suppliers (if the established contractual conditions regarding these elements are not met).

This activity includes, but is not limited to, the following elements:

a) Strategic sourcing ‐ The Contractor shall propose their strategic sourcing methodology, including all steps, and shall provide qualified staff and operate a commodity procurement management system that is capable of efficient and accurate processing of all procurements and subcontracts under this TO. The Contractor shall be responsible for strategic and efficient solicitation, evaluation, negotiation, award, management, administration and closeout of commodity subcontracts, under USAID technical guidance and in compliance with USG/USAID contracting rules and policies. It is the Contractor’s responsibility to ensure that all purchased products meet USAID quality standards.

Products to be procured under this task order will include, but are not limited to, the following:

Contraceptive Products Other Health Products

Condoms (male and female) Essential medicines

Contraceptive implants Medical supplies

Injectable contraceptives Medical equipment

Intrauterine devices (IUDs) Other products as requested

Oral contraceptives

Cycle Beads

The Contractor shall convene a Technical Oversight Committee (TOC), composed of procurement professional with private and public sector procurement expertise, USAID representatives and the contractor’s professional procurement staff. The overall objective of the TOC is to identify products to determine strategies for the procurement of new products, including market analysis, documenting and integrating best practices and/or validation or certification of processes to help ensure that cutting edge and effective procurement practices are part of the contractor’s procurement strategies.

b) Vendor contract and subcontract management ‐ The Contractor will be responsible for tendering and administering commodity contracts and subcontracts through the solicitation, evaluation, negotiation, award, management, and administration of supply subcontracts, under USAID technical guidance and in compliance with USAID contracting regulations. The Contractor will be responsible for securing competitive bids through open source international tenders or, where sole‐source or limited source procurement is required; the Contractor must assist USAID in securing the appropriate waivers by preparing necessary documentation for the waiver requests, and shall be responsible for developing sole‐source justification documentation when the situation warrants a sole‐source subcontract.

c) Manage supplier performance – The Contractor shall design and implement a Supplier Performance

Management framework, track and analyze supplier performance and review results with the USAID Task Order Contracting Officer’s Representative (TO COR) team and with the suppliers on a periodic basis. Evaluations shall be comparable over the life of the contract and across all products and suppliers (subject to USAID review and approval). Performance metrics may include on‐time delivery, supplier fill rate, defect rate, order cycle time, and other activities as directed by USAID.

d) Commodity procurement risk mitigation ‐ The Contractor shall develop, continuously update, and maintain risk management plans and product risk profiles to mitigate the most likely risks affecting supply. The Contractor shall also develop contingency plans for these risks, which may include, but are not limited to: changes in industry; production delays; disruption of raw material and component supplies; problems with manufacturing capacity; extreme changes in supply or demand of products; long lead times; theft; reduced accuracy of forecasting and planning, and other risks that may affect the timely availability and cost‐effective fulfillment of products. The supplier risk management strategy shall ensure continuous flow of key, critical products as designated by USAID.

The Contractor shall continuously monitor potential problems affecting supply, communicate such risks to USAID, and propose solutions to USAID that best address such issues.

e) Commodity supplier / procurement forecasts ‐ The Contractor shall maintain and communicate current, accurate procurement forecasts to its suppliers for products regularly purchased, as designated by USAID, as a part of this contract. These forecasts should take into account Contractor stock‐on‐hand, min/max stocking policies by item, and demand forecasts developed at both the global and country level.

Updates to procurement forecasts shall be done at least quarterly. These plans shall be based on estimates of procurement operations to be carried out in the specified period.

Data used to develop supplier / procurement forecasts shall include but are not limited to:

1) Forecasted demand (annual quantifications)

2) Consolidated supply plans with partners such as UNFPA

3) Placed orders

4) Historical orders

5) Required quantities

6) Delivery time and location requirements

f) Commodity cataloging ‐ The Contractor must continuously maintain updated, preselected lists of products and appropriate vendors that will be continually assessed, modified as new products become available, or newer, more stringent quality criteria are developed. Such cataloging should include all pertinent information for each item including but not limited to logistics information such as unit cost, weight, pack size, and carton dimensions; drugs shall be classified using EphMRI. The current, accurate version of this catalog shall be available online to USAID and other clients, and will be updated daily if needed to reflect current pricing and product information. The contractor should seek opportunities to harmonize the product catalog with those provided by the other task orders in this IQC.

g) Coordinated procurement ‐ When appropriate the Contractor will seek to coordinate commodity procurements and deliveries with other international donors, particularly the UN Population Fund (UNFPA), and partner country counterparts. The Contractor shall liaise with existing international donors and initiatives such as the UNCoLSC, FP2020, World Health Organization, The Bill and Melinda Gates Foundation (BMGF) and the Clinton Health Access Initiative (CHAI) to effectively coordinate in order to avoid unnecessary shortages or overstocks of products and protect fragile market segments. In some cases, USAID may call upon the Contractor to complete procurements on behalf of other international donors.

h) Continuous improvement ‐ The Contractor must have a demonstrated and industry recognized continuous improvement strategy, which will be submitted to USAID for approval and agreed to after award. The strategy must evaluate the internal procurement processes to promote increased accountability and efficiency and ensure data quality in all procurement transactions, reporting, and financial accounting. The Contractor shall conduct periodic internal and external reviews of procurement practices, management systems and results, and participate in the assessment of proposed alternatives. This process may include, but is not limited to, external audits of policies, procedures, and processes, and analysis of data quality, financial integrity, and performance history, as well as other activities.

i) Product Registration ‐ The Contractor will ensure that all USAID designated manufacturers/suppliers register the relevant family planning, reproductive health and other essential health products in client and other USAID‐supported countries in a timely manner, and shall maintain the status of registrations, which shall be shared with USAID monthly. The Contractor shall ensure there are no supply disruptions due to registration issues. In 2013, key client countries include:

Afghanistan Ethiopia Malawi Sierra Leone Angola Ghana Mali South Sudan Bangladesh Georgia Mozambique Tanzania Benin Guinea Nepal Togo Burkina Faso Haiti Nigeria Uganda Cambodia Kenya Pakistan Zambia Cameroon Liberia Rwanda Zimbabwe D.R. of Congo Madagascar Senegal

The Contractor shall maintain continuous communication and interaction with the Quality Assurance (QA) Contractor under the Global Health Supply Chain Architecture to ensure product registrations meet the appropriate requirements to support partner country governments’ efforts to monitor and regulate essential public health products in circulation. The Contractor shall immediately alert USAID of any product registration issues that may cause a shipment delay and provide supply disruption risk mitigation recommendations.

j) Best value ‐ The Contractor must identify supply sources and implement strategies that achieve best value for USAID funds. Best value in this context would represent the optimal balance between total landed cost and commodity quality and effectiveness, timeliness of delivery, extensiveness of country registration for a particular product, supplier reliability, supplier diversification, supplier country of origin, relevant small business and local producer designations, and other relevant factors as determined by USAID.

k) Performance management & KPIs ‐ Performance management is critical to the timely and affordable delivery of public health products including family planning, reproductive health and other essential health products. The Contractor will be responsible for defining, measuring and tracking KPIs and is expected to adjust operational procedures to meet established performance and cost‐effectiveness goals, as set forth by the USAID.

Both input and output KPIs shall be captured by the Contractor and used to measure operating efficiency. These may include but are not limited to operational expenditure, headcount, growth and customer satisfaction. The Contractor shall propose additional and/or alternative operating efficiency metrics specific to public health supply operations and distribution as part of this task order.

Traditional supply chain KPIs shall be captured by the Contractor and used to measure supply chain performance. These may include but are not limited to on‐time delivery, forecast accuracy, inventory turns, fill rate, total distribution cost and order fulfillment cycle time.

Fill‐Rate ‐ The Contractor shall provide delivery of ordered products with a minimum 90% fill‐rate as define below in the service level calculation. The fill‐rate shall be calculated on a monthly basis for family planning, other reproductive health and other health products as directed by USAID.

If the fill rate is less than 90%, the Contractor must be able (when requested) to provide documentation to USAID of its attempts to maintain product availability from the manufacturer. The supporting documentation may include, but is not limited to, documentation that supports the existence of an outstanding purchase order for the requested units/items. Failure to meet fill‐rates will be officially recorded as part of the contract performance which is available for public review and may also be considered as grounds for Termination for Cause if the poor performance is persistent.

Delivery to Promise – by date ‐ The Contractor shall provide delivery of ordered products with a minimum of 95% on‐time delivery as defined below in the on‐time delivery calculation. On time will be considered +/‐ 10 business days of the original DTP date, including customs clearance. The DTP rate shall be calculated on a monthly basis for family planning and other health products as directed by USAID.

, 1

Note: POD is Proof of Delivery, SO is Sales Order.

No ocean shipments shall be converted into air shipment for the purpose of meeting this goal, except by the written approval of the Mission and the TOCOR. Similarly, the total lead‐time committed to each USAID Mission (from receipt of order request by the Contractor to actual delivery at recipient site) shall not be altered unless the TOCOR gives his/her written consent.

The Contractor is encouraged to propose innovative approaches and additional or alternative processes and tasks that satisfy each of objectives, focusing on obtaining best value, reducing risk, and improving reliability of products.

1.2 Logistics – Ensure efficient and high‐performing logistics services for commodity delivery and related services at any level.

Under USAID guidance and over the entire period of performance of this TO, the Contractor shall be responsible for managing all logistics processes in delivery of products to any point in a given country, including but not limited to customer order fulfillment, freight forwarding, customs clearance, warehousing, transportation, and inventory management. The Contractor will develop and maintain logistics processes and procedures that are fully compliant with all applicable USAID contracting laws and regulations, including the Federal Acquisition Regulation (FAR) and USAID’s ADS policies and procedures.

This activity includes, but is not limited to:

a) Customer order fulfillment ‐ The Contractor must provide customer service and order fulfillment to

USAID Missions, in‐country partners, and other customers purchasing products via this task order.

The Contractor shall undertake all steps necessary to receive and fulfill orders from customers. The Contractor, at no charge to USAID, shall have the capability to provide online ordering and automated order reminders to its customers to assist customers in maintaining appropriate stocks at customer locations. The contractor should seek opportunities to harmonize the order fulfillment function with those provided by the other task orders in this IQC.

b) Order Receipt and Processing – The Contractor must monitor orders to ensure all requests receive a prompt and customer‐oriented response. Expected initial response time is within one business day (excluding weekends and holidays). The Contractor must ensure orders are accurately and quickly entered into the system. The contractor must ensure that products being shipped to countries have received proper registration or import waivers before the “green‐light” to ship is given. Tasks may include but are not limited to:

1. Review the system data integrity on a regular basis and resolve discrepancies.

2. Develop streamlined SOPs to ensure that country requests are handled in an efficient and timely manner.

3. Ensure order milestone data is accurately maintained and is transmitted to the Business

Intelligence contractor as orders and shipments move through different steps of the process.

4. Automatically transmit shipment data to the Reproductive Health Interchange (RHI) database managed by UNFPA.

5. Emergency order shall be processed3 within 48 hours of receipt (on days of business), and shall be identified within the system as such. Emergency order purchasing data shall be part of the customer’s purchase history. The Contractor shall notify USAID of repetitive emergency orders by Missions or other customers.

In addition to the functional tasks above, the Contractor will be expected to perform order management monitoring and reporting functions. Tasks may include but are not limited to:

1. Maintain an on‐time delivery log of all ongoing shipments and have an automated way of identifying when a procurement and /or shipments is going to be late.

2. Communicate with USAID/CSL as needed regarding shipments that are either ahead or behind schedule and develop a communications and risk mitigation plans

c) Financial Management ‐ The Contractor is expected to manage financial data according to standard accounting principles and practices, as well as track financial accounts by country, funding source, and funding type to be used in a variety of official USAID reports. The Contractor will be expected to assist USAID with determining funding requirements, maintaining an industry standard financial system, validating invoices for contract compliance, reconciling funding streams (e.g., central funding, field support, maternal child health, HIV/AIDS, and donor‐gifted funds), and making all accounts available online.

d) Inventory Management ‐ The Contractor shall be responsible for managing inventories of products ordered by its customers. This inventory management must include the development of strategies based on cost/service analytics as to which products to hold in inventory, where to hold inventory, what levels of inventory to hold, what business rules drive fulfillment and ordering rules, and other relevant factors. Where appropriate, the contractor should seek out opportunities to maintain stock at its point of manufacture. Where appropriate, the contractor may be called on to seek out opportunities to use third‐party distributors to fulfill emergency orders for customers. The Contractor should segment product by product therapeutic class, volume, and demand fluctuation.

Segmentation should consider historical, current, and planned demand volume, and production lead time, in addition to variability across demand and production.

The Contractor will continuously review its inventory strategy and maintain the ability to adjust the number, size, and location of its warehousing facilities to ensure best value for the Contractor’s logistics operation. The Contractor shall assume full responsibility for the management of products held in its possession, including but not limited to maintaining processes, procedures and reporting to safeguard and account for stock inventory.

e) Warehousing ‐ The Contractor shall identify and secure suitable, strategically‐located warehouse facilities, provide bonded, secure warehousing licensed to hold EHP and hazardous materials, and to meet cold‐chain requirements, if required. The Contractor shall ensure warehouse conditions shall adhere to the required conditions of the products stored in the facility as indicated by the commodity specifications. USAID property associated with these sub‐contracts needs to be

3 Processed is defined as executing the order in the ERP system and obtaining a freight quote. This assumes the order can be fulfilled from inventory, has appropriate funding and does not require additional clarifying information.

segregated from any other property being warehoused at the facility. The Contractor shall provide full‐replacement value insurance for goods in its care in the case of product loss. The sub‐ Contractors shall conduct cycle counting on an ongoing basis. The Contractor shall have electronic information systems or other records readily available to enable authorized USAID officials or agents to verify the USAID property and its movement. The Contractor shall comply with all local codes, licensure requirements and ordinances applicable to the ownership and operation of the warehouse and to obtain all necessary permits and related items prior to storing USAID product in the warehouses.

f) Freight Forwarding and Transportation ‐ The Contractor must provide, through two or more sub‐

Contractors, a full range of freight‐forwarding services that promote the efficient and secure delivery of procured supplies. The Contractor must ensure timely, accurate, safe, and cost‐effective freight‐forwarding services for all products to the countries designated by the USAID. Principal services include the following: shipping (including packing, labor, materials, shipping documentation, port fees, charges for shipping services and other charges), consolidation, in‐ country distribution, phase‐in and transfer of stockpile, shipment tracking, documentation, customs clearance, distribution, communications, reporting, troubleshooting, and disposal of goods due to expiry or damage.

The Contractor shall demonstrate that its approach to freight‐forwarding is both reliable and cost effective by competing the freight‐forwarding subcontracts annually. The Contractor shall demonstrate that its freight‐forwarding sub‐Contractors have an established representation in the key client countries served for historical countries served and that they have the capacity to both store and transport freight in‐country as required. A demonstrated lack of capacity by an in‐country freight representative should result in the transferring of the destination country’s shipping business to another representative. During implementation of the TO, the sub‐Contractors shall prepare price quotes and lead times for recipient organizations that identify freight and logistics charges by component (e.g., shipment costs, security costs) and the Contractor shall promptly update the information in the system (both specific order and average costs) accordingly.

The Contractor, in collaboration with the sub‐Contractors shall conduct periodic reviews of freight‐ forwarding practices and results, and participate in the assessment of proposed alternatives for improved performance.

The contractor shall periodically benchmark the shipment costs it is incurring with other shipping entities and other logistics providers to ensure best value. This benchmarking exercise should be done on a lane by lane basis, the results of which should be shared with USAID and with other external audiences. As appropriate, the contractor should set up longer term shipping contracts with multiple providers to ensure best value on the shipping lanes and modes in which it operates.

The Contractor shall be capable of shipping product wherever it is required, take responsibility for the immediate storage and/or movement of products when released by the suppliers, and maintain responsibility for the products until ownership of the products is transferred to the consignee in country.

The Contractor shall provide the TOCOR with up‐to‐date shipping lead times for air and ocean transport from each sub‐contracted warehouse and manufacturer to each customer.

The Contractor shall maintain documentation regarding chain of custody on file for any needed review by USAID.

The Contractor shall be accredited or authorized to act as a licensed freight forwarder or be associated with a licensed freight forwarder through a sub‐contract relationship.

Within 90 days of contract award, the Contractor shall ensure the sub‐contracted freight‐forwarders interact with the Contractor and/or those of the business intelligence contractor as directed by

USAID.

The Contractor may use the services of freight‐forwarding sub‐Contractors to provide freight‐ forwarding, and all related services required to effectively and efficiently transport contraceptives, condoms, and other public health products by land, ocean, and air from their various points of origin, and deliver them to their various required destinations. The Contractor will ship using a variety of modes with various origins and destinations as stipulated at the time of shipment per established INCOTERMS, including cold/cool chain and hazmat, if required. The sub‐Contractors may be required to provide additional security for certain products or destinations. The Contractor shall ensure that the best‐value shipping mode is used in each case, taking into account timely delivery, safety, and security of the product, as well as freight cost. The Contractor shall demonstrate its competitive prices and value to USAID by routinely conducting comparative cost analyses, and obtaining multiple bids as directed by USAID. The Contractor shall provide insurance for individual shipments. The costs for insurance will be competitive and paid on a reimbursable basis with copy of insurance certification.

g) Bar Code Labeling – The Contractor or sub‐Contractor shall have the capacity to both read (scan) and create bar code labels according to the bar code specifications provided by USAID, have a bar‐ code enabled warehouse record‐keeping system and also have the capability of receiving product without bar code labels.

h) Trouble Shooting ‐ The Contractor will be required to respond and adapt quickly to changing circumstances such as: the availability of product from the manufacturers; changing export packing requirements; re‐marking cartons; unpredicted documentation requirements; lost negotiable documents; unannounced changes in consignee addresses; manufacturer and carrier error in miss‐ loading or shipping product; canceled shipments; transshipment of goods from one country to another, and a variety of emergency requests.

The emergency requests could be additional shipments at short notice, changes in mode from ocean to air, special wording on select documentation, payment of import fees, to return product, and to mitigate loss.

The Contractor shall be responsible for identifying special or recurring delivery problems to USAID, and devise timely and cost‐effective solutions for them. Sub‐Contractors may from time to time be required to travel in relation to the services being provided under this TO.

i) Disposal of Goods ‐ When USAID determines that stocks have expired, damaged or deteriorated, the Contractor shall carry out the disposal of these goods in accordance with local municipal ordinances that control the disposal of these products, and shall provide USAID with a record of the disposal action taken.

j) Supply and Demand Forecasting – A process for supply and demand forecasting and coordination should be developed by the Contractor. These forecasts shall serve as input to a more comprehensive planning process – such as financial planning, budgeting, operations and inventory planning. The forecasting process shall match the planning process in terms of frequency and speed in which the forecast is produced. The forecasting horizon and accuracy of the forecast should be such that it enables the creation and execution of plans to take advantage of the forecasts.

Supply and demand forecasts may be shared with manufacturers and other industry stakeholders including but not limited to UNFPA, The Bill & Melinda Gates Foundation and the Clinton Health Access Initiative, and other organizations as directed by USAID.

Where appropriate, the Contractor must coordinate with other entities procuring the same products to improve forecast accuracy and coordinate commodity procurement and supply planning.

Continuous Improvement ‐ The Contractor must establish a continuous improvement process to evaluate and improve its operational processes. The Contractor must conduct periodic reviews and results, and participate in the assessment of proposed alternatives. The contractor may be called on to retain outside consulting service providers as a subcontractor to identify further opportunities for operational improvement.

1.3 Commodity Quality Assurance – Ensure products are of high quality to help ensure patient safety.

The Contractor shall maintain continuous communication and collaboration with the QA Contractor regarding:

1. Daily, operational issues relating to the quality of essential health products for specific procurements.

2. Higher‐level strategic issues that affect USAID’s essential health products portfolio and service to field programs. USAID expects that the majority of the essential health products procured on behalf of USAID will be procured through USAID pre–approved sources and framework contracts.

The QA Contractor shall communicate quality assurance approval to the Contractor prior to purchase for those essential health products that have not been pre–approved by USAID.

If directed by USAID, the Contractor will need to present a contingency plan to execute Quality Assurance activities under this task order. The contingency plan will include the essential elements of the Quality Assurance SOW under the new supply chain management architecture of USAID. Examples (not all inclusive) of essential elements of the QA SOW that the Contractor may be required to execute are described below.

a) The Contractor shall assure appropriate collection and shipment of essential health products samples that require quality testing. Sample collection could occur at any point in the supply chain.

b) The Contractor shall arrange for appropriate quality testing of pharmaceuticals and essential health products at laboratories that are ISO 17025 certified, prequalified by the World Health Organization, or are otherwise certified to conduct quality testing on essential health products.

c) The Contractor shall be responsible for acquiring and maintaining appropriate documentation supporting the quality certifications of essential health products (i.e. SRA certifications, GMP certificates) that are procured under this mechanism.

d) The Contractor shall execute vendor prequalification activities as required (see Section 1.1 b). This activity could include site visits to conduct good distribution practices (GDP) or good manufacturing practices (GMP) evaluations.

e) The Contractor shall manage all aspects of a drug recall or any essential health commodity recall, in close collaboration with USAID. These recalls might involve quarantining and/or destroying recalled products and notifying clients and stakeholders as directed by USAID.

Attention to QA/QC processes helps to mitigate risk of substandard essential health products from entering in to the supply chain and ensure essential health products meet contractual and product specifications in compliance with applicable USAID and country requirements.

1.4 Data Visibility – Ensure visibility of commodity procurement, logistics, and QA data.

The Contractor shall reference these requirements as set forth in the Data Visibility section of the IQC.

Objective 2: Systems Strengthening ‐ Strengthen individual and institutional capacity for supply chain management and commodity security to improve the performance of in‐country supply systems to reliably deliver health products.

Functional Areas for Technical Support

USAID’s technical assistance for supply chain management and commodity security has been critical in achieving positive health outcomes worldwide. Technical assistance to strengthen the performance of supply chains has resulted in reduced stock‐out rates of essential medicines. Sustained efforts to improve environments for commodity security in such areas as coordination, policy, and financing have helped galvanize and sustain broader host country commitment to providing health products in the long‐term.

Both performance (measured by product availability) and institutional development and commitment (measured by leadership, financing, technical capacities, and other indicators) are required to not only improve but sustain country supply systems without external assistance. The Contractor will be expected to demonstrate a capacity to improve performance, as well as to support greater country ownership in ensuring commodity security. Project performance indicators will be developed accordingly (see Section XX for PMP Requirements).

The Contractor must not only support the commodity availability required in the near‐ to medium‐term to support country health plans and global initiatives such as Family Planning 2020, UN Commission for Life‐Saving Commodities, AIDS Free Generation, and A Promised Renewed, but also help position supply systems to face the challenges and seize the opportunities of longer‐term trends, such as economic transitions, demographic shifts, evolving disease burdens, and public health priorities. The Contractor must demonstrate knowledge of these trends, their implications for supply systems and commodity security, and what can be done within the duration of this Task Order to improve and prepare supply systems and country environments for the future.

The range of technical assistance required under this task order can be broadly categorized under two functional areas: 1) Improve and Strengthen In‐Country Supply Chains and 2) Strengthen Environments for Commodity Security.

1. Improve and Strengthen In‐Country Supply Chains

Much of the Contractor’s effort to achieve the Task Order objective will focus on strengthening country management of supplies, including product selection, forecasting, financing, procurement, quality assurance, inventory management, storage, distribution (especially to ‘last mile’ points of service), logistics management information systems (LMIS), and disposal of medical waste. In this Task Order, the Contractor must be equipped to tackle the complexities of varying country supply chains for a range of health products to improve performance. This will include assessments, analyses, supply chain designs, and capacity building to ensure that in‐country supply chains are able to meet the basic health commodity requirements of clients and the programs on which they depend, and ‐‐ likely without a proportionate increase in the financial and human resources to operate supply chains ‐‐ accommodate the growing need for and influx of supplies across multiple disease and health areas. While performance and risk management in support of public health objectives remain paramount considerations, so too must efficiency and cost‐effectiveness factor more prominently in supply chain decision‐making.

The trend in increased availability of health products has already begun in recent years with additional donor and host country resources for health products as part of broader health and disease‐specific initiatives. Additionally, changing treatment protocols and new, more effective (and at times more expensive) health products are driving demand for health products – all of which must flow through country supply chains.

Many partner‐country supply chains are outmoded, or modeled along administrative boundaries rather than based on analysis and industry best practice. For many of these supply chains, slow, incremental changes will not be sufficient to enable them to meet the challenges of the next decade. With the introduction of new products, and of greater quantities of product, these supply chains will collapse under the added pressure. A new paradigm shift has to take place that will inform how supply chains should be designed and operated – based not on political or administrative divisions, but on sound logistics principles and data. This includes rethinking ‘traditional’ essential drug distribution systems to accommodate historically parallel, vertical supply chains such as those for vaccines.

Where local supply chains ‐‐ notably when implemented by public sector entities ‐‐ are inadequate to support near‐term health objectives, the Contractor may be required to directly provide for certain supply chain services, such as warehousing or transport, in order to ensure that products reach…