USAID GLOBAL HEALTH SUPPLY CHAIN PROGRAM Procurement and Supply Management The Journey T o Self-reliance: Public-private partnership to achieve pharma-compliant warehousing for public health commodities in Nigeria Ladi Stephen July 2019
Project Objectives After several years of efforts to establish a standardized central warehousing for public health commodities, Nigeria still has a significant gap in the availability of adequately-sized and effectively- maintained pharmaceutical-grade ‘central storage hubs’ for the storage of public health commodities; and the need to harness best practice through a private sector operator, to address A central medical store in Lagos . Photo credit: Google challenges related to inventory management, human resources and quality assurance” USAID GLOBAL HEALTH SUPPLY CHAIN PROGRAM-Procurement and Supply Management 2
Project Objectives • Increase availability of • Build capacity of the Public Pharma-Grade Public Sector in benefiting from Health infrastructures with the Private Sectors greater efficiency through technical expertise, management by the experience and efficiency private sector • Transfer of project related • Access to substantial risks to the Private sector financial resources of the private sector • Strengthen collaboration between the Government of Nigeria and the Private Sector USAID GLOBAL HEALTH SUPPLY CHAIN PROGRAM-Procurement and Supply Management 3
PPP Concept Development - Background “The genesis of the Project in Nigeria (at the LIFT workshop) was in response to the substantial supply gap for Federal warehousing for the storage of donated public health commodities; and the need to harness best practice O&M processes through a private sector operator, to address ongoing challenges related to inventory management, human resources and quality assurance” USAID GLOBAL HEALTH SUPPLY CHAIN PROGRAM-Procurement and Supply Management 4
PPP Concept Development - Background • Workshop laid the groundwork interest in PPP’s in Nigeria’s medical LIFT Supply Chain with various Warehousing and Distribution experts. WORKSHOP • As well as preliminary strategic planning for the design, structure and APRIL 2012 execution of the Abuja & Lagos Warehouse Facilities. • In 2015, USAID & FMoH signed an MoU to finance the development of two Pharma Grade Warehouses – Abuja and Lagos • MoU anticipated that a private sector operator, would provide the MOU BTW quality assurance and operational sophistication required to maintain FMOH AND USAID the facilities to best practice standards. • This agreement led to the formation of a Project Delivery Team (PDT) – comprising of persons responsible for driving the process • FGoN through FMOH, contributed the land for both the Abuja and Lagos Warehouse facilities. FGN also contributed to the warehouse WAREHOUSE Project through the waiver of building fees. DEVELOPMENT • USAID and Global Fund contributed the cost of building the facilities, in the amount of approximately 10 million USD. USAID GLOBAL HEALTH SUPPLY CHAIN PROGRAM-Procurement and Supply Management
Funding Structure: USAID, Global Fund and Federal Ministry of Health Collaboration • FMoH provided land asset for the warehouse • USAID and Global Fund contributed the cost of building the facilities, as shown in the table below: Donors Contribution Value USAID $7,043,735 Global Fund $3,091,767 T otal $10,135,503 Honourable Minister of Health cuts the ribbon at the official opening of the Lagos Federal Medical Warehouse Photo credit: GHSC-PSM Sanumi Dawodu USAID GLOBAL HEALTH SUPPLY CHAIN PROGRAM-Procurement and Supply Management 6
PPP Planning and Stakeholder Engagement • PPP in Nigeria is defined by the • The Ministry of Finance was National council for Public consulted to minimize risks and private partnerships as a contingent liabilities arising from “contractual agreement such projects between a public agency and a • A transaction advisor (TA) was private entity”. engaged by the PMT through • The focus is on real partnership competitive bidding process were risks and rewards are under the Public procurement shared Act 2007 • Following the project was identified by the MDAs and its partners, the MDAs involved and engaged the ICRC prior to commencement USAID GLOBAL HEALTH SUPPLY CHAIN PROGRAM-Procurement and Supply Management 7
Outline Business Case: Options Analysis The FGN had two principal options for operationalizing the Medical Warehouses: • To manage the facilities directly OR • To partner with a private sector operator under a PPP scheme USAID GLOBAL HEALTH SUPPLY CHAIN PROGRAM-Procurement and Supply Management 8
Approach to Determine Procurement Choice OBC-stage: To determine the most appropriate method for operationalising the facilities, a six-step approach was followed: Evaluate Various PPP Models Establish a Case for Private and Identification of Suitable Identify and Analyze Key Risks Sector Participation PPP Option Conduct Value for Money Conduct Financial Analysis of Assessment using Base Public Recommend Procurement Identified PPP Option Sector Comparator and Risk- Choice Adjusted PSC USAID GLOBAL HEALTH SUPPLY CHAIN PROGRAM-Procurement and Supply Management 9
Procurement Option: The Management Contract • Ownership of the facilities • In the classic model, the private remain with the Government partner is paid a predetermined rate for operating costs plus an • Private sector partner is agreed management fee, or a flat contracted to operate and fee maintain the infrastructure for a fixed contract term • Operational performance: o Minimum key performance • Private partner would have the indicators (KPIs) included in the technical know-how, managerial contract agreement expertise and related experience to operate this type of facility USAID GLOBAL HEALTH SUPPLY CHAIN PROGRAM-Procurement and Supply Management 10
Competitive Bidding – Evaluation Committee • The PDT in its entirety was represented at the Prequalification and Technical Proposal evaluations • The Evaluation Committee comprised representatives of each Unit within the larger body: o PPP/Diaspora Department of the Federal Ministry of Health; o Procurement Department of the Federal Ministry of Health; o Legal Department of the Federal Ministry of Health; o Food and Drugs Department of the Federal Ministry of Health; o USAID/Nigeria; o GHSC-PSM o Infrastructure Concession Regulatory Commission (ICRC); and o Transaction Advisor. USAID GLOBAL HEALTH SUPPLY CHAIN PROGRAM-Procurement and Supply Management 11
Full Business Case Approval & Contract Signing • The FBC was submitted along with the ICRC Certificate of Compliance to the Federal Executive Council through the Minister of health, for Approval. • The FBC was approved by FEC on • This was followed by the signing of the contract on the 14th of May 2019 between the FMoH and the preferred PPP Project Proponent (Investor). • ICRC will thereafter take custody of the contract as required under the Section 20 of the ICRC Act. USAID GLOBAL HEALTH SUPPLY CHAIN PROGRAM-Procurement and Supply Management 12
PPP approach in Warehousing Request for Proposal Financial Evaluation of Submission of shortlisted Bidders Full Business Jul 4 Case to ICRC and FEC for approval Jul 13 Bidders Conference Outline Business Approval of Outline Execution of for clarifications in Case Development Business Case and Management response to the bid and Compliance Development of a contract with documents Certification Full Business Case preferred Bidder Jun 4 May 16 Jun 7 Oct 20 2017 2019 Jun Aug Oct Dec Feb Apr Jun Aug Jan 25 Sep 30 Request for Jun 26 Project Handover and Qualification Request for Proposal Commencement of Evaluations to Technical Evaluation Operations with shortlist qualified of shortlisted Private Warehouse Bidders Bidders proposals Operator Dec 20 Jul 5 Requested Qualification Negotiations of Advert Published for Bid Management submission of interested Contract with Bidders preferred Bidder USAID GLOBAL HEALTH SUPPLY CHAIN PROGRAM-Procurement and Supply Management 13
Results • The Abuja Premier Medical • A commercial pharmaceutical Warehouse (APMW) and the warehouse operator engaged Lagos Federal Medical with a five-year contract to warehouse (LFMW) have been manage operations with the fully commissioned by the government in the lead. Honorable Minister of Health • This intervention is the first and operationalized. infrastructural management PPP • The two warehouses were initiative the Federal Ministry of managed by an interim Health successfully executed warehouse operator pending through the ICRC guidelines . the engagement of a Long-term private sector pharmaceutical warehouse manager. USAID GLOBAL HEALTH SUPPLY CHAIN PROGRAM-Procurement and Supply Management 14
Outcome / Benefit • This PPP initiative serves as a replicable and sustainable model for State-level governments in Nigeria to leverage private sector resources and expertise to address warehouse management challenges and • Improved access to quality medicines within the public healthcare system. Blood testing of patient Photo credit: GHSC-PSM USAID GLOBAL HEALTH SUPPLY CHAIN PROGRAM-Procurement and Supply Management 15
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