Obama bails out Big Pharma – in Kenya

By Steve Peacock


After the Kenyan government failed to meet a planned deadline, the Obama administration found a way to give one of its favorite corporate recipients $224 million and a 15-month extension to finish the job.

The administration excused Kenya from completing a nationwide pharmaceutical network for which the U.S. had already devoted more than a half-billion dollars to create. Kenya proved unprepared to assume control of this drug supply-chain system by July 5, a transition date the two nations agreed upon five years ago.

The U.S. Agency for International Development, or USAID, therefore, awarded Chemonics International, the project’s contractor, a no-bid, sole-source $224-million contract for another 15 months of work.

USAID’s $224-million figure equals the savings gleaned from the “drastically reduced cost” of generic antiretroviral drugs that became available during project implementation. The price drop enabled Chemonics to bill the government for far less than the project’s $550-million total estimated cost, or TEC.

But rather than pass along the TEC savings to U.S. taxpayers, USAID instead awarded Chemonics a contract equal to that amount, according to official procurement documents obtained by WND.

The agency acknowledged that it revised some contract line-items governing the details of the Kenya Pharma Project’s original TEC. This enabled Chemonics to stay on the payroll, according to a USAID Justification & Approval, or J&A, document.

This discovery coincides with Obama’s “African Leaders’ Summit,” a Washington, D.C., gathering Aug. 4-6 for which leaders and officials from most African nations were invited to attend.

But as WND recently reported, the summit follows a separate two-city event in which the administration is offering guidance to those nations – including Kenya – on how to more effectively obtain U.S. governmental funding for major infrastructure projects.

Reports on these and other initiatives are only the latest in WND’s exhaustive coverage of the “exponential growth” of U.S. assistance to Kenya in recent years, including an exposé of a sophisticated, advertising scheme – which the administration subsequently covered up – to sway journalistic opinion in its favor.

Most recently, another of the reports sheds light on the U.S. Navy’s vacillating plan to build latrines at a Kenyan girl’s school.

Agency contracting officials lauded Chemonics, which has been tasked with procuring, warehousing and distributing antiretroviral drugs to about 400,000 Kenyans living with HIV as well as “opportunistic infection medicines for over 800,000 people,” according to the J&A document.

USAID further argued opening the project to competitive bidding could have disrupted the flow of drugs to HIV/AIDS treatment programs and other health facilities. Such disruptions would have led “resistant virus and premature mortality of patients,” the J&A declared.

The company now will continue assisting the Kenya Medical Supplies Authority, or KEMSA, a Ministry of Health corporation, until the new transition date of Sept. 30, 2015.

“It was envisioned that this transition would be completed in the early part of 2014,” wrote Barbara Hughes, USAID/Kenya Office of Population and Health director, in the J&A document, dated April 11, sent to Camille Garcia, Regional Acquisition & Assistance Office contracting officer.

“Currently, Kenya government institutions, including KEMSA, are going through a transition in order to align themselves to the new Kenyan Constitution,” Hughes continued. “This may affect their operations in the short run, but is expected that the system will stabilize in the medium term. … This contract extension will provide additional time required for a seamless transition of Kenya Pharma Project activities to KEMSA.”

Garcia on April 22 signed the J&A in approval of the extension request. The document already received clearance from Donald Keene, USAID regional legal advisor, and Deborah Broderick, agency competition advocate.

Chemonics, USAID’s big business buddy

Chemonics has received many billions in USAID contracts since the company’s 1975 founding, when it first conducted agribusiness studies in Kenya and Cameroon for the agency.

Indeed, USAID’s FY 2012 Top 40 vendor list places Chemonics in the No. 3 spot with $682 million in agency contracts, right behind the U.N. World Food Program ($909 million) and the World Bank in the top spot ($2.26 billion).

The for-profit Chemonics, however, has come under fire in recent years – in the media as well as from the USAID Office of Inspector General – for allegedly bungling a post-earthquake Haitian relief project and an Afghanistan agriculture initiative.

As WND reported, USAID earlier this year similarly revised a separate project-contract to assist Kenya’s constitutional transformation. In that particular case, another mega-USAID contractor, Development Alternatives, Inc., also was given a no-bid sole-source contract extension, enabling it to continue working on a project to decentralize Kenyan federal power and strengthen county governmental authority.

The agency candidly admitted in those project documents that if the U.S. did not step in to offer additional help, then Kenyan taxpayers would be unnecessarily burdened.

Although the Obama administration supports the strengthening of Kenya’s county governments, it has acknowledged the difficulty in redistributing political power across the African republic, whose national government is viewed as one of the most notoriously corrupt in the world.

Indeed, as WND reported, USAID has raised concerns that such decentralization may inadvertently create not just one, notoriously corrupt federal government, but 47 equally corrupt county systems.

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