Department of Defense awards $51.5M for MREs, with BAXTERS NORTH AMERICA securing a significant portion

Contract Overview

Contract Amount: $51,460,992 ($51.5M)

Contractor: Baxters North America, Inc.

Awarding Agency: Department of Defense

Start Date: 2016-10-24

End Date: 2017-12-29

Contract Duration: 431 days

Daily Burn Rate: $119.4K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: 8503771445!MEAL,READY TO EAT

Place of Performance

Location: CINCINNATI, HAMILTON County, OHIO, 45242

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $51.5 million to BAXTERS NORTH AMERICA, INC. for work described as: 8503771445!MEAL,READY TO EAT Key points: 1. Value for money appears reasonable given the firm fixed-price contract type, which shifts risk to the contractor. 2. Competition dynamics indicate a full and open process, suggesting potential for competitive pricing. 3. Risk indicators are moderate, with contract duration and fixed-price terms being key factors. 4. Performance context is within the Defense Logistics Agency's mission to provide essential supplies. 5. Sector positioning is within the food services and support category for military operations.

Value Assessment

Rating: good

The total award amount of $51.5 million for MREs (Meals, Ready-to-Eat) appears within a reasonable range for large-scale food procurement. The firm fixed-price contract type is a positive indicator for cost control, as it incentivizes the contractor to manage expenses efficiently. Benchmarking against similar large-volume food service contracts would provide further insight, but the scale suggests a competitive bid process likely yielded a fair market price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a 'full and open competition after exclusion of sources' basis, indicating that multiple bidders were solicited and considered. The presence of 3 bidders suggests a healthy level of competition for this significant food supply contract. This competitive environment is crucial for ensuring that the government receives the best possible pricing and quality for essential supplies.

Taxpayer Impact: A competitive bidding process for essential military rations helps ensure taxpayer dollars are used efficiently, preventing overpayment and encouraging cost-effective solutions.

Public Impact

Service members deployed domestically and internationally benefit from consistent access to nutritious MREs. The contract supports the logistical readiness of the U.S. Armed Forces. The primary geographic impact is on military installations and operational theaters worldwide. Workforce implications include jobs at BAXTERS NORTH AMERICA and its supply chain partners.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions impacting delivery timelines.
Quality control issues could affect troop morale and readiness.
Price fluctuations in raw ingredients could impact contractor profitability and future bids.

Positive Signals

Firm fixed-price contract limits cost overruns for the government.
Multiple bidders suggest a competitive market for MREs.
Long-term contract provides supply chain stability for the DoD.

Sector Analysis

The defense logistics and food services sector is critical for maintaining military operational readiness. This contract falls within the broader category of food manufacturing and distribution, with a specific focus on specialized, shelf-stable rations for military use. The market for military food procurement is often characterized by large, infrequent contracts awarded through competitive bidding processes, aiming for economies of scale.

Small Business Impact

There is no explicit indication of small business set-asides for this specific contract, nor is there information on subcontracting plans. The primary contractor, BAXTERS NORTH AMERICA, is a large entity. Further analysis would be needed to determine if small businesses are involved in the supply chain or as subcontractors.

Oversight & Accountability

The Defense Logistics Agency (DLA) is responsible for the oversight of this contract. As a firm fixed-price contract, performance monitoring and adherence to delivery schedules are key oversight areas. Transparency is generally maintained through contract award databases, and the Inspector General's office would have jurisdiction over any potential fraud or mismanagement.

Related Government Programs

Military Food Service Contracts
Defense Logistics Agency Procurement
Ready-to-Eat Meal Contracts
Department of Defense Food Supply

Risk Flags

Potential for supply chain vulnerabilities
Ensuring long-term shelf-life integrity
Logistical challenges in global distribution

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $51.5 million to BAXTERS NORTH AMERICA, INC.. 8503771445!MEAL,READY TO EAT

Who is the contractor on this award?

The obligated recipient is BAXTERS NORTH AMERICA, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $51.5 million.

What is the period of performance?

Start: 2016-10-24. End: 2017-12-29.

What is the historical spending trend for MREs by the Department of Defense over the last five years?

Historical spending on MREs by the Department of Defense has shown a relatively consistent demand, driven by the ongoing needs of military personnel globally. While specific figures fluctuate year-to-year based on operational tempo, troop levels, and contract awards, the overall budget allocation for such rations remains a significant component of the DLA's food service procurement. For instance, in fiscal years preceding this award, similar large-scale contracts for MREs were also issued, indicating a sustained requirement. Analyzing trends would involve aggregating data from various contract awards across different fiscal years to identify any significant increases or decreases in overall spending, which could be influenced by geopolitical events or changes in military strategy.

How does the per-unit cost of these MREs compare to commercially available meal kits?

Directly comparing the per-unit cost of military MREs to commercially available meal kits is challenging due to fundamental differences in product specifications, production scale, and intended use. Military MREs are designed for extreme shelf stability (up to 3 years or more), durability in harsh conditions, and specific nutritional profiles to sustain soldiers in austere environments. Commercial meal kits are typically fresh, have shorter shelf lives, and cater to consumer convenience and taste preferences. While a per-unit cost for an MRE might appear higher than a single commercial meal, the military's bulk purchasing power and the specialized requirements of MREs justify the cost. Benchmarking would be more appropriate against other large-scale, long-shelf-life food procurement contracts.

What are the primary risks associated with the long-term storage and distribution of MREs?

The primary risks associated with the long-term storage and distribution of MREs revolve around maintaining their integrity and usability. These include potential degradation of food quality due to improper storage temperatures (extremes of heat or cold can shorten shelf life), damage to packaging compromising shelf stability and hygiene, and logistical challenges in ensuring timely rotation of stock to prevent expiration. Furthermore, supply chain disruptions, whether from natural disasters, geopolitical instability, or transportation issues, can impact the availability of MREs where and when they are needed. Ensuring consistent quality control throughout the supply chain, from manufacturing to final delivery, is paramount to mitigating these risks.

What is the track record of BAXTERS NORTH AMERICA in fulfilling large government contracts, particularly for food products?

BAXTERS NORTH AMERICA, as part of the larger Baxter's Food Group, has a significant history of supplying food products, including to government entities. Their experience often encompasses large-scale food manufacturing and distribution, which is directly relevant to fulfilling contracts for items like MREs. While specific details of past government contract performance would require a deeper dive into contract databases and performance reviews, the company's longevity and scale suggest a capacity to manage complex supply chains and meet stringent quality requirements. Their involvement in this substantial DoD contract indicates a level of trust and proven capability in handling significant food procurement orders.

How does the 'full and open competition after exclusion of sources' procurement method impact pricing compared to a standard full and open competition?

The 'full and open competition after exclusion of sources' method is a nuanced approach. It begins with a broad solicitation (full and open) but then excludes certain sources based on specific criteria, often related to national security, specialized capabilities, or previous performance issues. While it still aims for competition, the exclusion of some potential bidders might slightly limit the breadth of competition compared to a standard full and open process where all eligible sources are considered without prior exclusion. This could potentially lead to slightly less aggressive pricing if the excluded sources were significant competitors. However, if the exclusions are justified and the remaining pool of bidders is still robust, the impact on pricing may be minimal, and it can ensure that only qualified and appropriate vendors are considered.

Industry Classification

NAICS: Manufacturing › Fruit and Vegetable Preserving and Specialty Food Manufacturing › Fruit and Vegetable Canning

Product/Service Code: SUBSISTENCE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Wornick Company the (UEI: 424821846)

Address: 4700 CREEK RD, CINCINNATI, OH, 45242

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $51,460,992

Exercised Options: $51,460,992

Current Obligation: $51,460,992

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE3S117DZ114

IDV Type: IDC

Timeline