October 13, 2005

Sleeping with the Devil in the Struggle Against AIDS

In his 2003 State of the Union address, President George W. Bush unexpectedly announced a vast increase in support for the struggle against HIV/AIDS in the developing world: “I ask the Congress to commit $15 billion over the next five years, to turn the tide against AIDS in the most afflicted nations of Africa and the Caribbean.” By May, the United States Leadership Against HIV/AIDS, Ttuberculosis and Malaria Act of 2003 was signed into law. The President’s Emergency Plan for AIDS Relief, or PEPFAR, was born.

The next step was implementation: how can antiretroviral treatment for AIDS, drugs for opportunistic infections (such as tuberculosis), testing kits, gloves, injection supplies, sterilization equipment and other medical resources be delivered in a sustainable and reliable way in countries marked by varying levels of poverty, poor transport infrastructure, weak communication systems and corruption? What is needed is a supply chain management system, or SCMS as it is called in the business.

And it is a business. In October 2004, the US government started soliciting proposals for probably the largest contract for international health service delivery in the history of humanity. Two weeks ago, the contract was awarded to a consortium of fifteen institutions, referred to somewhat ominously as ‘the Partnership’. The consortium is a mix of private sector, non-profit and faith-based organizations. But the eye is naturally drawn to one particular member of ‘the Partnership’: Northrop Grumman.

Northrop Grumman is the third largest military contractor in the United States. This is the company that brought us the B-2 stealth bomber (at a cool $2 billion per unit), the unmanned Global Hawk ($10 million each), and a $10 billion contract with the Pentagon to build a missile defense system. The company is also exceedingly well connected, with at least seven former Northrop Grumman officials, consultants or shareholders now holding posts in the Bush administration, including Deputy Secretary of Defense Paul Wolfowitz, Vice Presidential Chief of Staff I. Lewis Libby, Pentagon Comptroller Dov Zakheim, and Sean O’Keefe, director of NASA. Even the President himself finds himself visiting Northop Grumman facilities from time to time.

Perhaps it is unusual that a multinational corporation that makes much of its money from instruments of death would now be involved in the struggle against HIV/AIDS in developing countries. On the other hand, Northrop Grumman has some prior experience with supply chain management issues, considering its support of the US State Department’s ‘war against drugs’ in Columbia, though this is another sort of drugs, and another sort of management.

Relatively speaking, the other 14 members of ‘the Partnership’ are small fry compared to Northrop Grumman. The company will probably be playing a central role. So what are the arguments in support of this defense contractor, with its ethical baggage, being crucially involved in PEPFAR? The main one is baldly pragmatic: the logistics of setting up, administering and monitoring a supply chain on this scale is simply beyond the means of any non-governmental or non-profit organization, and certainly beyond the present capacities of the governments of PEPFAR countries. In short, Northrop Grumman may be ugly, but they are big, and powerful, and they arguably could get the job done where the alternative agencies cannot.

On the other hand, the fiscal mismanagement of US defense contractors is legendary. In 2003, Northrop Grumman itself paid $112 million out of court to settle a suit that its subsidiary, TRW, overcharged the US government’s space program. The question of efficiency is also open: Grumman’s $48 million contract to train the Iraqi National Army produced such dismal results that the Jordanian army has taken over the job. And already ‘the Partnership’ has taken on one regrettable feature of defense contractors: secrecy and lack of transparency. The consortium members are not to divulge the amount of the contract (rumored to be $7 billion), and have been given strict instructions on what they can say to the media. - Stuart Rennie

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