DRAFT_SOW_IQC_Aug_15_2013.pdf

SECOND DRAFT IQC SOW – 15 August 2013

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Section C – Statement of Work

Section C.1 – Background

The purpose of this Indefinite Quantity Contract (IQC) is to serve as the primary vehicle through which USAID will procure and provide essential health commodities to partner countries. In addition, this contract is a vehicle that USAID will use to provide technical assistance to improve supply chain management and commodity security in partner countries.

The United States Agency for International Development (USAID) is the U.S. Government’s (USG’s) principal implementing organization for international development assistance. This IQC will serve the needs of USAID, other U.S. Government (USG) agencies, partner country governments, NGOs, and other entities. USAID is headquartered in Washington, D.C. and maintains USAID Missions in more than 75 countries across the globe. USAID/Washington is comprised of five geographic bureaus (Africa, Asia, Europe and Eurasia, Latin America and the Caribbean, and Middle East) and four functional bureaus, (1) Global Health, (2) Economic Growth, Education and Environment, (3) Democracy, Conflict, and Humanitarian Assistance, (4) Bureau for Food Security, that conduct Agency programs globally.

The Bureau for Global Health has the overarching goal of improving human health. The Bureau for Global Health portfolio includes programs that represent the commitment of the USG to prevent suffering, save lives, and create a brighter future for families across the globe.

Successful implementation of USG health programs in partner countries is dependent in part on an uninterrupted supply of essential health commodities.

Procurement of essential health commodities has been a focus of the USAID Bureau for Global Health for over 30 years. 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 technical assistance in more than 50 countries. These activities support USAID Global Health Bureau’s vision “a world where people lead healthy, productive lives and where mothers and children survive and thrive”.

The Bureau for Global Health includes three Offices that procure essential health commodities for USAID programs and Presidential initiatives globally: the Office of Health, Infectious Diseases, and Nutrition (HIDN); the Office of HIV/AIDS (OHA); and the Office of Population and Reproductive Health (PRH). These three offices plus the Office of Health Systems (OHS) provide in‐country technical assistance related to supply chain management and commodity security.

These offices provide global leadership and technical support to USAID Missions, and undertake research and innovation to achieve the Global Health Bureau’s health objectives.

Office of Health, Infectious Diseases and Nutrition – HIDN manages a diverse portfolio.

It is responsible for managing the Global Health Bureau’s activities in child health, maternal health, and infectious diseases (including tuberculosis, malaria, avian influenza, and neglected tropical diseases). The activities also include programs in

‐ 2 ‐ nutrition/micronutrients, food security, health policy and health systems strengthening.

USAID’s major malaria program is the President’s Malaria Initiative (PMI), and is implemented out of the HIDN office. PMI is a collaborative USG effort led by USAID and implemented together with the Department of Health and Human Services (U.S. Centers for Disease Control and Prevention), the Department of State, the Department of Defense, the White House, and others. HIDN is responsible for managing PMI’s central commodity procurement and supply chain technical assistance portfolio.

Office of HIV/AIDS – OHA provides HIV/AIDS technical leadership for the Agency and has primary responsibility for leading the Agency’s efforts within the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR). This responsibility entails ensuring the technical integrity of USAID/Washington and USAID Mission strategies; providing global technical leadership on the full range of issues related to HIV/AIDS prevention, care, and treatment; managing numerous research and USAID Mission support programs;

managing PEPFAR’s central commodity procurement and supply chain technical assistance portfolio; and monitoring and reporting on the impact of the Agency’s HIV/AIDS program.

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 is responsible for managing the Global Health Bureau’s central contraceptive procurement and supply chain technical assistance portfolio.

Office of Health Systems Strengthening – The Office of Health Systems leads the development of USAID’s agenda and strategy to promote effective, sustainable, country‐owned health systems capable of advancing maternal, neonatal and child health and nutrition; combating infectious diseases including HIV/AIDS, malaria, tuberculosis and neglected tropical diseases; and addressing emerging public health priorities. OHS leads the Agency’s health systems research efforts including development of a research portfolio and of metrics and tools for measuring health systems improvements. OHS tracks and works to align USAID resources, funds and programs for health systems strengthening with this agenda. OHS also works to influence the priorities of others to support this agenda and strategy, including other USG agencies, partner country governments, donors, firms, and civil society. The goal of OHS is to provide worldwide leadership and technical expertise in health systems strengthening.

The four offices described above currently work with various implementing partners to procure and deliver essential health commodities and provide technical assistance to strengthen supply

‐ 3 ‐ chain management and commodity security. The current supply chain and commodity security mechanisms are described in brief below.

USAID | DELIVER PROJECT – The USAID | DELIVER PROJECT (DELIVER) is a single‐award IQC that is implemented by John Snow, Inc. (JSI), in collaboration with 3i Infotech; Abt Associates; The Center for International Health and Development at Boston University School of Public Health; Crown Agents Consultancy, Inc.; FHI 360; Fuel Logistics Group (Pty) Ltd.; The Manoff Group, Inc.; MAP International; PATH; UPS Supply Chain Solutions; and U.S. Pharmacopeia. The USAID | DELIVER PROJECT provides global procurement and delivery of essential health commodities for non‐PEPFAR programs as well as technical assistance in many of the countries where these commodities are consumed. The project designs, develops, strengthens, and, on request, operates safe, reliable, and sustainable supply chains that provide a wide range of affordable essential health commodities, including drugs, diagnostics, and supplies to clients in country programs. The project also provides technical support to strengthen global and country environments for commodity security, supporting policy development, financing, advocacy, etc. There are currently four active task orders in the USAID | DELIVER PROJECT. Task order 4 relates to in‐country technical assistance for USAID’s PRH office.

Task order 5 relates to global procurement and logistics for PRH. Task order 6 relates to USAID’s response to emerging and pandemic threats. Task order 7 relates to global procurement and logistics as well as in‐country technical assistance for USAID’s HIDN office. The project’s technical support strengthens all aspects of in‐country supply chains including forecasting, procurement, distribution, management information systems, quality assurance, storage and infrastructure, and medical waste disposal. The USAID | DELIVER PROJECT supports, through supply chain strengthening and other technical assistance, a range of essential health commodities, including contraceptives and condoms, malaria treatment medicines, insecticide‐treated bed nets, and rapid diagnostic tests for malaria, essential medicines, maternal and child health, infectious diseases, avian influenza(AI), and other emerging pandemic threats.

Supply Chain Management System (SCMS) – SCMS is a single‐award IQC that is implemented by the Partnership for Supply Chain Management, a non‐profit consortium of 13 organizations led by John Snow Inc. Research & Training Institute and Management Sciences for Health (MSH). Other partners include Booz Allen Hamilton, Crown Agents USA, Inc., The Manoff Group, MAP International, North‐West University, Northrop Grumman, RTT, UPS Supply Chain Solutions, Voxiva, and 3i Infotech. SCMS delivers essential lifesaving medicines and products to HIV/AIDS programs around the world as part of the U.S. PEPFAR. SCMS works to strengthen supply chains to enable the scale‐up of HIV/AIDS care and treatment in partner countries. SCMS operates a safe, secure, and reliable supply chain to buy and distribute high‐quality, low‐cost essential medicines including antiretroviral (ARVs) drugs, HIV test kits, laboratory supplies, male circumcision supplies and other products. SCMS strengthens the capacity of national supply chains to ensure long‐term sustainability. SCMS supports supply chain

‐ 4 ‐ collaboration and information‐sharing among global and local partners in the HIV/AIDS community.

System for Improved Access to Pharmaceuticals (SIAPS) – The SIAPS project is a cooperative agreement implemented by Management Sciences for Health (MSH) with four core partners, Accreditation Council for Pharmacy Education (ACPE), Harvard University, Logistics Management Institute (LMI) and University of Washington.

Specialized resource partners include Africa Medical and Research Foundation (AMREF), Ecumenical Pharmaceutical Network, Results for Development (R4D), RTT Group, Village Reach, and William Davidson Institute. The SIAPS project aims to ensure the availability of quality‐assured pharmaceutical products and effective pharmaceutical services needed to achieve desired health outcomes by applying systems‐strengthening approaches and principles of country ownership, integration of health programming, sustainability, and improved performance metrics. The SIAPS result areas address the intersections of five health systems components (governance, human resources, information, financing, and service delivery) as they relate to medicines policies, management and use, including a focus on patient safety and therapeutic effectiveness.

Potential interventions are designed to ensure that they respond to health elements and cross‐cutting concerns in support of health system strengthening.

Promoting the Quality of Medicines (PQM) – The Promoting the Quality of Medicines (PQM) program is a cooperative agreement that is implemented by the United States Pharmacopoeia (USP), works to strengthen quality assurance mechanisms at the country level by improving medicines quality control laboratories and systems for monitoring the quality of medicines in the marketplace, in addition to collaborating with worldwide efforts to combat counterfeit and substandard medicines. The latter includes support for regional initiatives to develop regulatory capacity, sharing of information on product quality, and developing improved tools and approaches to detect counterfeit and substandard medicines. PQM is working as well to expand the pool of WHO‐prequalified manufacturers of second line TB medicines.

Current Supply Chains for USAID Global Health Commodities

Below are summary figures related to scale and scope of USAID’s supply chains in calendar year 2012.

DELIVER TO5 currently makes about 260 annual outbound shipments of 55 different stock keeping units (SKUs), primarily composed of contraceptives and condoms. There are around 45 countries that purchase commodities from DELIVER TO5. DELIVER TO5 currently holds inventory of commodities for fulfillment of country orders as well as manages direct drop shipments from manufacturers for certain commodities and order sizes. 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

‐ 5 ‐ base with approximately 3,100 pallet positions of inventory held in the Netherlands and 3,300 pallet positions of inventory held in Singapore. With the current supply chain structure, lead time expectations have been established by product by shipping mode by customer. DELIVER TO5’s performance is primarily measured as the percentage of customer orders delivered within +/‐ 30 days of the desired receipt date. TO5 is expected to maintain above 95% for this performance metric.

DELIVER TO7 currently makes about 219 annual outbound shipments of 105 different SKUs, primarily composed of malaria commodities. There are around 25 countries that purchase commodities from DELIVER TO7. DELIVER TO7 holds emergency inventory in the Netherlands only to hedge against the risk of supply interruption, but fulfilled 93% of customer orders as direct drops from the manufacturer. Approximately 74% of commodity value is shipped to customers via air with 26% being shipped via ocean.

SCMS currently makes about 3,102 annual outbound shipments of 2,720 different SKUs, primarily composed of HIV/AIDS‐related commodities. There are 36 countries that purchase commodities from SCMS in 2012 (over 50 countries over the life of the project). SCMS maintains inventory in 3 regional warehouses located in Africa. Approximately 1,347 monthly/16,164 annual pallet positions are maintained in Kenya, 651 monthly/7,812 annual pallet positions are maintained in Ghana, and 1,038 monthly/12,456 annual pallet positions are maintained in South Africa. Approximately 51% of commodity value is fulfilled from inventory with 49% being direct dropped from the manufacturer (For ARVs, these numbers are 83% and 17%, respectively.). Approximately 85% of commodity value is shipped inbound to the SCMS warehouses via ocean (69% of commodities if measured by weight) and 15% is shipped inbound to the warehouses via air (31% of commodities if measured by weight). Approximately 40% of commodity value is shipped outbound to customers via air with 60% of commodity value being shipped to customers via truck or rail. Where trucking is available, this percentage is 82%.

NB. The Government of Nigeria does not currently allow pharmaceutical shipments via road/land. With the current supply chain structure, lead time expectations have been established by product by shipping mode by customer. SCMS’s performance is primarily measured as the percentage of customer orders delivered within +/‐ 14 days of the desired receipt date. SCMS is expected to maintain above 80% for this performance metric.

The table below provides a summary of technical assistance provided by USAID through its existing essential health commodity procurement and supply chain assistance contracts.

Supply Chain Technical Assistance by USAID Global Health Bureau, FY2009 to FY2012

Project TA

DELIVER TO1/4 $138M

DELIVER TO3/7 $52M

SCMS TO1/2/3 $260M

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USAID posted the Global Health Supply Chain synopsis in August, 2012. USAID is restructuring its existing portfolio of projects related to commodity security and supply chain management of essential health commodities. The Global Health Supply Chain contract architecture continues to evolve with an updated contract architecture described in the public notice to bidders posted with this IQC revision. A diagram of the new portfolio of projects is illustrated in Figure 1 below. This request for proposal is for the single‐award IQC for “Procurement and Technical Assistance”. It is intended that this IQC will be awarded to a single implementing partner, who may subcontract with other entities as necessary for the fulfillment of the IQC requirement.

Note that the GH Supply Chain Group in the figure below refers to the USAID management team, or its designee, responsible for oversight of the contracts.

One new development since the posting the Global Health Supply Chain synopsis is the probability of including a fourth task order to be issued as a part of this IQC. This fourth task order is for the global procurement and technical assistance for the maternal and child health (MCH) commodities. This task order will be issued on behalf of the HIDN Office which is responsible for MCH programming for USAID’s Global Health Bureau. USAID does not intend to award this task order until after the other task orders have been established. Please refer to fbo.gov for draft posting at some point in the future.

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Of critical importance to USAID in the transition from the existing DELIVER and SCMS contracts to this new implementing architecture is ensuring an uninterrupted supply of commodities, 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 IQC 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 up to one year or until a full transition has been made. 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.

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Section C.2 – Overall Objective and Guiding Principles

The overall objective of this contract is to improve the availability of essential health commodities through global procurement and logistics, systems strengthening, and collaboration. To accomplish this overall objective, the contractor will need to design, implement, and maintain a supply chain management and commodity security program that incorporates activities required by the USAID Global Health Bureau and Presidential health initiatives.

Given the scale and scope of this IQC, it is imperative that the contractor actively collaborate, coordinate, and communicate with other partners to provide high quality services to USAID, and the contractor should actively seek opportunities to partner with entities with deeper functional knowledge, experience, and expertise to accomplish the objectives of this IQC. The contractor shall be expected to maintain a lean and flexible organizational structure that should allow for flexible budget and staffing arrangements among subcontractors to maximize responsiveness to USAID demands. The contractor is expected to recruit, hire and maintain staff with the appropriate mix of skills to either provide services directly, or to engage appropriate subcontractors to accomplish the objectives of this IQC. In addition, the contractor is expected, whenever possible, to identify efficiencies through collaboration with other partners and awards under the architecture, as well as within the IQC, to achieve savings and best value for the USG. All components of this contract should represent best value for the

USG.

As the demand for essential health commodities has grown, so has the need for improved supply chain management and commodity security in the countries where these commodities are distributed. The contractor must provide global technical leadership in supply chain management and commodity security for essential health commodities. Capacity development within partner country institutions and organizations is expected to be a guiding principle of such leadership.

The Contractor may be requested to operate global supply chains and provide related technical assistance on behalf of USAID Missions, USAID Bureaus, operating units, other USG agencies, public international organizations, local and international non‐governmental organizations, private sector entities, and/or partner countries. In all cases, the Task Order Contracting Officer Representative’s (TOCOR) written approval is required. NB. Non‐USG funded activities shall not be counted against the ceiling price of the IQC.

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

The contractor shall maintain key performance indicators (KPIs) to evaluate its own processes and performance. KPIs will be established at the task order level, but the contractor may be

‐ 9 ‐ called on to seek KPIs that are harmonized across multiple task orders under the IQC. The contractor shall provide USAID with baseline data, agreed upon targets, and periodic performance against targets for all KPIs throughout the life of the contract.

USAID anticipates to award different types of task orders including hybrids that include cost reimbursement, fixed price types and/or incentives. However, the contractor will not receive a fee on the cost of commodities that it procures and distributes. The contractor may recover cost of the level of effort as a direct cost.

The purpose of incentives contracts is to improve the performance and delivery schedule of the successful contractor against specific targets. Delivery incentives under this IQC are intended to apply a reward and penalty structure to encourage on‐time‐delivery of health commodities.

Incentives will be specified at the task order level and will be negotiated with the prospective bidders during the contract negotiation process.

Section C.3 – Scope of Work

Components of the Overall Objective

To accomplish the overall objective, the contractor shall address the activity components illustrated in Figure 2 below.

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Objective 1: Global Commodity Procurement and Logistics – Improve provision of essential health commodities.

The Bureau for Global Health has a broad portfolio that includes a wide array of programs and investments that represent the commitment and determination of USG to prevent suffering, save lives, and create an environment that encourages development. Successful implementation of USAID’s health programs is dependent on an uninterrupted supply of essential health commodities. Within the Bureau for Global Health, there are three offices that procure commodities for USAID programs and Presidential Initiatives globally. The offices are HIDN, OHA, and PRH.

Essential health commodities have played a critical role toward achieving PMI’s goal to halve the burden of malaria in 70 percent of at‐risk populations in sub‐Saharan Africa (approximately 450 million people). Ensuring an adequate supply of malaria‐related commodities will continue to be a key component of PMI’s continued efforts to further reduce the burden malaria.

Under PEPFAR, USAID’s efforts to ensure an adequate supply of quality medicines and diagnostic equipment for HIV programs has contributed significantly to PEPFAR’s ability to provide care and treatment for 4.5 million persons living with HIV/AIDS. Maintaining an adequate supply of high quality essential medicines is critical to achieving President Obama’s goal of putting six million people on treatment by the end 2015 ‐ two million more people than the Administration’s original goal.

USAID has been a leader in efforts to meet the reproductive health needs of women and couples. While access to family planning services has improved dramatically, currently the USG’s goal is to prevent 54 million unintended pregnancies and increase the modern contraceptive prevalence by up to two percentage points annually on average across partner countries.

This IQC will constitute one of USAID’s principle mechanisms for procuring commodities through the life of the contract. Throughout the period of performance on this IQC contract, the contractor must implement a global procurement and logistics program that is cost‐ effective, high‐performing, transparent, and flexible. Detailed requirements of these activities are described below and in this IQC’s corresponding task orders.

This IQC is primarily to serve the global procurement and logistics needs of USAID. However, USAID may direct the contractor to procure and distribute essential health commodities on behalf of other governments, NGOs and other entities. In such cases, all business processes and contract terms and conditions should apply.

Multiple task orders will be issued against this IQC, with multiple TOCORs from differing Offices within the USAID GH Bureau. Each Office has particular and unique programmatic needs with varying levels of overlap and commonality across Offices. The contractor must propose an approach that realizes the synergies across the Offices’ global procurement and logistics

‐ 11 ‐ operations while at the same time achieving each Office’s unique programmatic goals. The contractor is expected to continuously identify and bring to the attention of the TOCORs opportunities to realize synergies across the multiple task orders in this IQC.

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

Under USAID’s guidance, the contractor must be responsible for the timely delivery (or timeliness), quality, and complete procurement of commodities and supplies on behalf of the Global Health Bureau, and USAID Missions and other USG health initiatives overseas. The contractor must develop and maintain procurement processes and procedures that are fully compliant with all applicable USG contracting laws and regulations, including the Federal Acquisition Regulation (FAR) and USAID’s Automated Directives System (ADS) policies and procedures, OMB circulars, CFR, and others.

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

a) Commodity Strategic Sourcing – The contractor must develop and maintain overarching sourcing strategies that set the direction for its commodity procurement operations.

The contractor must continuously review the marketplace for commodities and continuously review its supply contracts to ensure strategic alignment with USAID goals and to ensure that the USG is receiving best value. The contractor must develop flexible sourcing strategies that account for the emergence of new essential health commodities used in addressing maternal and child health, HIV/AIDS, malaria, family planning, and other health priorities and/or unforeseen events such as new commodities used in family planning, pandemic threats, cholera, tuberculosis, and others. The contractor must also maintain the flexibility to manage commodity transitions in the phase‐out of existing commodities and the introduction of new commodities as per applicable guidelines.

b) Commodity Cataloging – The contractor must continuously maintain updated, pre‐ selected lists of commodities and appropriate supply sources/vendors for USAID procurement with respect to requirements, such as quality and efficacy. The list of quality products and vendors 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. The current, accurate version of this catalog shall be available online to the USG and its clients and will be continuously updated to reflect current pricing and product information. The contractor must maintain an accurate and up‐to‐date table of commodity information at all times, including all necessary fields as directed by USAID.

c) Commodity Procurement and Subcontract Management – The contractor will be responsible for tendering and administering commodity subcontracts through the

‐ 12 ‐ solicitation, evaluation, negotiation, award, management, and administration of supply subcontracts, under USAID technical guidance and in compliance with USG contracting rules. 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 the USG 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. The contractor must provide and operate procurement management system(s) that is/are capable of efficient processing of all procurement transactions, including recurring procurements and one‐off procurements. For recurring procurement and where appropriate, the contractor is expected to purchase commodities via framework contracts. The contractor shall also have the ability to manage multiple short‐term contracts for certain items as directed by USAID. These items could be low volume commodities, equipment, non‐recurring procurement, etc.

Such procurements will likely be required on an ongoing basis for the life of the contract. As directed by the COR, the contractor will provide commodity subcontracts for USAID review or for review by third‐parties to identify further opportunities for securing best value for USG funds.

d) Commodity Procurement Risk Mitigation – The contractor shall develop, continuously update, and maintain contingency plans and product risk profiles to mitigate the most likely risks affecting supply. These risk factors may include, but are not limited to 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, registration and customs delays, and other risks that may affect the timely availability of products. The contractor shall maintain a supplier risk strategy that ensures continuous flow of key, critical commodities of all commodities to all customers 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 Forecasts – The contractor shall maintain and communicate current, accurate order forecasts to its suppliers for commodities 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, as appropriate.

f) Product Registration – The contractor must identify supply sources that meet global and country registration requirements for the projected products and quantities. While compliance with country registration requirements and other registration requirements remains the responsibility of the suppliers, the contractor will likely be called upon to accelerate or facilitate the registration process. For commodities requiring country

‐ 13 ‐ registration, the contractor may be called upon to maintain a current, accurate database of what product is registered in which countries.

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

h) Commodity Supplier Performance Management – The contractor shall track supplier performance by maintaining and circulating supplier performance scorecards to the USG. Evaluation criteria shall be consistent and comparable across multiple years of the contract and across the variety of commodities and suppliers. These metrics are likely to include percentage of on‐time supplier deliveries, supplier defect rate, supplier order cycle time, percentage of delivered orders as expected and documented, etc.

i) Coordinated Commodity Procurement – The contractor must seek to coordinate procurements and deliveries with other international donors, partner country counterparts, and other entities. The contractor shall liaise with existing international donors and initiatives such as the Global Fund to Fight AIDS, Tuberculosis, and Malaria (GFATM), the Roll Back Malaria Global Partnership, the World Health Organization, PEPFAR, UNICEF, UNFPA, and the Clinton Foundation and the Bill and Melinda Gates Foundation to ensure a coordinated approach for the forecasting, purchasing, tracking and delivering of commodities. The contractor shall find means to effectively coordinate so as to avoid unnecessary shortages or overstocks. In some cases, the contractor may be called upon to complete procurements on behalf of other international donors, in collaboration with USAID.

j) Continuous Improvement – Over the life of the project and at the task order level, the contractor must establish a continuous improvement process to evaluate and improve its internal commodity procurement processes. The contractor must conduct periodic reviews of procurement practices 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 and performance history, as well as other activities. The continuous improvement process also includes identifying special and reoccurring procurement delays and devising timely and cost‐effective solutions for them.

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

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Under USAID guidance and over the entire period of performance of this IQC, the contractor shall be responsible for managing any and all logistics processes to delivery any commodity to any point in country, including but not limited to customer order fulfillment, freight forwarding, customs clearance, warehousing, transportation, and inventory management. The contractor must develop and maintain procurement processes and procedures that are fully compliant with all applicable USG contracting laws and regulations, including the Federal Acquisition Regulation (FAR) and USAID’s Automated Directives System (ADS) policies and procedures, OMB circulars, CFR, and others.

a) Customer Order Fulfillment – The contractor must provide customer service and order fulfillment to USAID Missions, in‐country partners, and other customers purchasing supplies via this mechanism. In‐country personnel authorized by the USG will typically approve final commodity orders, in collaboration with the appropriate other parties such as national health programs. The contractor shall undertake all steps necessary to take and fulfill orders from customers. The contractor 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.

b) Warehousing and Inventory Management – The contractor must establish and continuously maintain appropriate inventory strategies for the commodities being purchased on behalf USAID for distribution in partner countries. These strategies should seek to strike the right balance between cost (inventory, operating, transportation, capital deployment, etc.) with service (lead time, stockouts, on‐time deliveries, etc.).

These strategies should determine where best to locate inventory stores, what level to set inventory minimums, maximums, identify which commodities to warehouse, and reorder points by commodity, and should achieve best value of cost and service for USAID. In addition, the network of supplier locations and country destinations is expected to change over the life of the contract to some degree. The contractor must continuously review its supply chain design 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 will ensure that discrepancies between physical inventory and inventory that are reported in the MIS are negligible and accounted for. The contractor shall be responsible for commodities while commodities are within the contractor’s custody. A control system must be in effect to maintain the property and ensure adequate safeguards to prevent theft, product expiration, damage, quality assurance failures, and other shrinkage factors of the commodities. The recipient must maintain appropriate insurance equivalent to insurance the recipient maintains for its own property. Any loss, damage, or theft must be investigated and fully documented, and the recipient must promptly notify the COR, CO and IG as required. The recipient may be liable where insurance is not sufficient to cover losses or damage.

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c) Freight Forwarding and Transportation – The contractor must provide freight forwarding, insurance, customs clearance and consignment that promote efficient, high‐ performing, and secure delivery of procured commodities. The contractor shall seek to minimize transportation costs while ensuring high‐performing order fulfillment through strategies such as establishing competitive terms with transport providers, mode selection, and other means. The contractor must ensure timely, accurate, safe, and cost‐effective freight‐forwarding services for all commodities procured through this mechanism. The contractor will be responsible for the secure distribution of these commodities from the point commodities are released by the suppliers, to the point that ownership is transferred to in‐country consignees. The contractor must also possess sufficient insurance to cover the value of the products in transit and/or storage and shall ensure secure chain of custody until the commodities are consigned. The contractor must also provide support for customs clearance, warehousing and transport of commodities not procured by the USG, as requested. Directly related to this, the contractor must maintain responsibility of the consignment and chain of custody directly within its own subcontractor control up to the point of customer consignment in country. The contractor must maintain documentation regarding chain of custody on file for any needed reviews by USAID.

d) Commodity Demand Planning – The contractor must work with appropriate in‐country partners to forecast demand for commodities, identifying the type, quantity, and timing of commodities to be procured under this mechanism. Where appropriate, the contractor must coordinate with other entities procuring the same commodities to improve forecast accuracy and coordinate commodity procurement and supply planning. Commodity forecasting accuracy should be tracked across the life of the contract, over time and across commodities and countries.

e) Continuous Improvement – For the life of the project at the task order level, the contractor must establish a continuous improvement process to evaluate and improve its supply chain. The contractor must conduct periodic reviews of logistics practices 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 and performance history, as well as other activities. The continuous improvement process also includes identifying special and reoccurring delivery problems and devising timely and cost‐effective solutions for them.

f) In‐Country Commodity Distribution – The point at which commodities are consigned in‐ country should be appropriate such as to ensure the physical security and integrity of the commodities to their point of consumption. As USAID determines necessary, the contractor shall be capable of distributing products to the end customer as requested by USAID using multiple channels – public, private and community. The contractor shall be capable of distributing products from the central level down to the “last mile” as requested by USAID. Within USAID’s current commodity portfolio, the final destination of commodities varies across programs (e.g. HIV/AIDS, reproductive health, malaria) and

‐ 16 ‐ across commodities (e.g. ARVs are traditionally delivered to the central level; ACTs and RDTs are traditionally delivered to the central or regional level, whereas nets may be delivered to the household level, etc.). The level of distribution will vary by task order.

In addition to the capability for commodity delivery to the “last mile”, the contractor must also have the capacity to provide related technical assistance (e.g. IEC/BCC on proper use of nets or how to hang nets) as well as having the capacity to collect logistics and related data at the “last mile.” In addition, the contractor must have the capacity to provide supply chain and logistics support for both routine and campaign approaches to in‐country distribution.

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

At the task order level, the contractor will be responsible for ensuring that appropriate commodity quality assurance and quality control (QA/QC) processes are established and maintained. In collaboration with the QA contractor or USAID designee, the contractor will be responsible for ensuring that that appropriate documentation supporting the quality of commodities purchased under this mechanism is available. These QA/QC processes help ensure that the quality of the commodities meet the requirements of USAID.

a) Collaboration with Quality Assurance (QA) Contractor or other USAID Designee – It will be the responsibility of the contractor, in collaboration with USAID and the QA contractor (or other USAID designee), to ensure compliance with applicable USG and country requirements regarding quality. As directed by USAID, the contractor is expected to fully cooperate with the QA contractor or other USAID designee in the assurance of quality commodities. This cooperation may include the design and implementation of efficient and effective quality systems across both organizations, cooperative evaluations of the quality of prospective commodity suppliers, evaluation of contractor storage conditions, maintaining continuous communication, data transparency across organizations, and other activities.

b) Adherence to USAID’s Quality Assurance Requirements – Only quality assured commodities that have been approved by USAID may be purchased by the contractor.

The contractor must ensure that its supply plans take into account the lead time necessary for adhering to these quality requirements and obtaining approval for purchases when necessary. For example, some commodities have been pre‐approved by USAID (e.g. ARVs, RTKs for HIV) and can readily be purchased. However, for those commodities that have not been pre‐approved by USAID, the contractor must seek approval from USAID or other USAID designee prior to purchase. Another example where QA has lead time implications is with condoms, which require sampling and testing for each PO placed with the manufacturer.

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c) Managing Product Recalls – At the direction of USAID and with guidance from the QA contractor or other USAID designee, the contractor shall be responsible for implementing and tracking product recalls resulting from quality problems. The contractor shall track chain of custody to the original consignee and, if needed, assist host governments and in‐country partners to further identify all recipients of defective products. As part of the product recall process, contractor may also be directed to collect recalled product, quarantine and/or destroy recalled product, obtain reimbursement from the vendor as required, and notify other stakeholders as directed by USAID. In the event of product recall, the contractor may be called on to lead the coordination of recalls across multiple customers who have obtained the problematic commodity from the contractor.

d) In‐House QA Capability– As described in the task orders, QA services for the HIV/AIDS and the family planning task orders, will be provided by the QA contractor.

Accordingly, for the HIV/AIDS and the family planning task orders, the contractor will not be required to maintain its own in‐house QA capability. At the task order level however, the contractor must be prepared to propose and demonstrate the ability to independently establish a quality assurance operation, including some or all of the elements laid out in the scope of the Quality Assurance statement of work, if directed to do so by USAID. Refer to the Quality Assurance IQC statement of work as posted on www.fbo.gov for further details on scope. If the contractor is directed by USAID to implement QA services, the contractor will be required to implement some or all elements of the QA contractor’s scope of work within 60 calendar days of notification by

USAID.

For malaria products and other commodities procured under the malaria task order refer to the malaria task order for required in‐house QA capability requirements. The QA contractor will provide QA for the malaria task order only at the specific request of USAID malaria TOCOR.

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

As the use of information is critical to effective management, USAID places emphasis on information accessibility, by USAID and other stakeholders, as well as on the capacity to generate reports and analyze relevant information for supply chain management. The contractor must have information systems that support all of its commodity procurement, logistics, and quality assurance processes described in objectives 1.1, 1.2, and 1.3 and elaborated on in this IQC’s task orders.

Pre‐Existing IT Capability – The enterprise resource planning (ERP) system currently being used by the incumbent projects to support commodity procurement and logistics is based on the Orion ERP system developed by i3 infotech. Under this IQC, the contractor can choose to use the Orion ERP system or use a different, but already existing, ERP system with the capabilities

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1.2 and 1.3. Upon contract award and based on the chosen ERP system, USAID will decide, in consultation with the contractor, on the modifications required to successfully execute this contract.

The IT system should at a minimum perform the following functions:

a) Online catalog

b) Supply planning

c) Demand planning

d) Procurement

e) Customer Resource Management/online ordering

f) Inventory management

g) Order management and Fulfillment

h) Freight and logistics management, including detailed milestone tracking

i) Financial management

j) EDI/e‐commerce

k) KPI/metric reporting

a) Documentation – Throughout the life of this contract, the contractor shall fully document and regularly update systems used to achieve these objectives. This documentation shall include, at a minimum, business cases for USAID‐funded modifications, system requirements and design, and user documentation. If the contractor is requesting funding of minor modifications to their system for USAID‐ specific functionality, the desired changes shall be documented with business cases, functional and technical requirements, design modifications, user documentation, estimated level of effort, timeline and cost. These documents shall be compared to the baseline system documents, also provided by the contractor, to ensure the modifications are according to USAID protocol.

b) IT Asset Management – The contractor shall track all IT assets procured for execution of this contract including but not limited to hardware, software, and patch implementation.

c) IT Operation and Disaster Recovery Center – As directed by USAID, the contractor must utilize data centers to enable the system to be up 24/7 to meet the needs for world wide access to the system and to allow for fast system response time. The contractor must utilize the latest technologies such as virtual machines to enable system recovery due to hardware/software failures or other reasons. The contractor shall maintain an active backup or redundant system as well as implement and regularly practice disaster recovery plans that will allow for the IT system to be recovered quickly (in a new location as necessary) if (catastrophic) failure happens at the existing data center.

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The contractor shall implement best practices in IT service management and adopt Information Technology Infrastructure Library (ITIL) standard for the operation and maintenance of the IT systems. The contractor shall establish standard software across the project management office and any contractor field offices to implement service desk and to enable easier trouble shooting and system updates.

d) Data – The specific data to be tracked will be specified by USAID in the task orders associated with this contract. The contractor will, at a minimum, be expected to maintain a data warehouse with data from predecessor projects plus other information required for the successful execution of requirements laid out in this contract.