DoD's $67.8M MRE contract to BAXTERS NORTH AMERICA, INC. awarded under full and open competition

Contract Overview

Contract Amount: $67,808,343 ($67.8M)

Contractor: Baxters North America, Inc.

Awarding Agency: Department of Defense

Start Date: 2011-11-17

End Date: 2020-07-31

Contract Duration: 3,179 days

Daily Burn Rate: $21.3K/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: 4519667250!MEAL, READY-TO-EAT, IND,

Place of Performance

Location: CINCINNATI, HAMILTON County, OHIO, 45242

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $67.8 million to BAXTERS NORTH AMERICA, INC. for work described as: 4519667250!MEAL, READY-TO-EAT, IND, Key points: 1. Value for money appears fair given the firm-fixed-price structure and duration. 2. Competition dynamics indicate a robust bidding process, potentially driving competitive pricing. 3. Risk indicators are moderate, with a long performance period but a clear contract type. 4. Performance context is within the Defense Logistics Agency's mission to supply essential rations. 5. Sector positioning is within the food and beverage manufacturing segment supporting defense needs.

Value Assessment

Rating: fair

The contract's total value of $67.8 million over nearly nine years suggests a consistent, albeit not exceptionally high, annual spend. Benchmarking against similar large-scale food service contracts is challenging without more specific product details, but the firm-fixed-price nature implies that the contractor bears the risk of cost overruns. The price per unit, if calculable, would be a key metric for assessing value, but is not provided here. Overall, the value seems aligned with long-term sustainment needs for military rations.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while the competition was open, specific sources were initially excluded, but then the competition was fully opened. The presence of 3 bids suggests a reasonable level of competition for this type of specialized defense contract. A higher number of bidders would typically lead to more aggressive pricing, but three bids can still result in competitive outcomes, especially for long-term supply agreements.

Taxpayer Impact: The full and open competition, even with initial exclusions, is positive for taxpayers as it allows for a wider pool of potential suppliers to bid, theoretically leading to better pricing and value. The fact that multiple companies submitted bids suggests that the market is responsive to this type of government procurement.

Public Impact

Service members deployed domestically and internationally benefit from consistent access to MREs. The contract ensures the supply of essential food services for military personnel. Geographic impact is broad, supporting operations across various theaters. Workforce implications include jobs in food manufacturing, logistics, and distribution for the contractor and its suppliers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (nearly 9 years) increases the risk of price escalation or performance degradation over time.
Potential for supply chain disruptions impacting timely delivery of critical rations.
Dependence on a single contractor for a significant portion of MRE supply could pose a risk if the contractor faces financial or operational difficulties.

Positive Signals

Firm-fixed-price contract type shifts cost risk to the contractor.
Awarded under full and open competition, suggesting a competitive bidding process.
Long-term nature of the contract provides stability and predictability for supply chain planning.

Sector Analysis

This contract falls within the broader food manufacturing and defense logistics sectors. The market for military rations is specialized, often involving companies with the capacity to meet stringent quality, safety, and logistical requirements. While specific market size data for MREs is not readily available, the defense sector's consistent demand for such supplies represents a significant, stable market segment. Comparable spending benchmarks would involve looking at other large-scale food procurement contracts for government agencies or large institutional buyers.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications specifically mandated for small businesses through a set-aside program. However, the prime contractor, BAXTERS NORTH AMERICA, INC., may engage small businesses as subcontractors for various components or services, which would contribute to the small business ecosystem indirectly.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Logistics Agency (DLA), which is responsible for ensuring contract compliance, quality control, and timely delivery. Accountability measures are inherent in the firm-fixed-price contract type, which penalizes the contractor for cost overruns. Transparency is facilitated through contract award databases, though detailed performance metrics are typically not publicly disclosed. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Military Rations Procurement
Defense Logistics Agency Contracts
Food Supply Chain Management
Ready-to-Eat Meal Contracts

Risk Flags

Long contract duration may lead to price volatility or obsolescence.
Potential for supply chain disruptions impacting critical ration delivery.
Dependence on a single contractor for a significant supply volume.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $67.8 million to BAXTERS NORTH AMERICA, INC.. 4519667250!MEAL, READY-TO-EAT, IND,

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 $67.8 million.

What is the period of performance?

Start: 2011-11-17. End: 2020-07-31.

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

Analyzing historical spending on Meals, Ready-to-Eat (MREs) by the Department of Defense (DoD) over the last decade reveals a consistent and substantial investment. While specific figures fluctuate year-to-year based on operational tempo, troop levels, and procurement strategies, the overall trend indicates a sustained commitment to providing these essential rations. For instance, annual spending has often ranged in the hundreds of millions of dollars, with peaks during periods of heightened global military engagement. The contract awarded to BAXTERS NORTH AMERICA, INC. for approximately $67.8 million over its duration represents a significant, but not the entirety, of the DoD's MRE procurement. Understanding these broader spending patterns helps contextualize the value and necessity of individual contracts within the larger defense budget and logistical framework.

How does the price per unit of these MREs compare to commercially available similar products or other government contracts?

Directly comparing the price per unit for these specific MREs to commercially available products or other government contracts is challenging without the exact unit price data for this contract. Commercial products vary widely in price based on brand, ingredients, and packaging, and are not subject to the same stringent military specifications or bulk purchasing agreements. Government contracts, even for similar items, can differ significantly in price due to variations in competition levels, contract duration, delivery requirements, and specific technical specifications. However, the firm-fixed-price nature of this contract suggests that the price was determined through negotiation and competition, aiming for a balance between cost and quality. A thorough analysis would require access to the bid data and potentially unit pricing from comparable DLA or other military service contracts for MREs.

What are the key performance indicators (KPIs) used to evaluate the contractor's performance on this MRE contract?

Key Performance Indicators (KPIs) for a contract of this nature, supplying Meals, Ready-to-Eat (MREs), typically focus on ensuring the timely delivery of high-quality, safe, and compliant rations. Essential KPIs would likely include on-time delivery rates, adherence to production schedules, quality control metrics (e.g., defect rates, spoilage), compliance with nutritional and safety standards (e.g., FDA regulations, military specifications), and responsiveness to DLA's logistical requirements. The contractor's ability to maintain adequate inventory levels and manage their supply chain effectively to prevent shortages would also be critical. Performance is often monitored through regular reporting, inspections, and potentially user feedback from military units. Failure to meet these KPIs could result in penalties, contract modifications, or even termination.

What is the track record of BAXTERS NORTH AMERICA, INC. in fulfilling large government food supply contracts?

BAXTERS NORTH AMERICA, INC. has a history of fulfilling government food supply contracts, including those with the Department of Defense. As a significant player in the food manufacturing industry, the company possesses the infrastructure and experience necessary for large-scale production and distribution. While specific details on past performance metrics for all contracts are not publicly itemized in this summary, their continued engagement in securing and executing substantial government contracts suggests a generally positive track record. This includes navigating complex procurement processes, meeting stringent quality and safety standards, and managing logistical challenges inherent in supplying military forces. Their ability to win and perform on contracts like this $67.8 million MRE award indicates a capacity to meet the demanding requirements of defense logistics.

What are the potential risks associated with the long duration (nearly 9 years) of this contract?

The extended duration of this contract, spanning nearly nine years, introduces several potential risks. Firstly, there is an increased likelihood of price escalation due to inflation, fluctuations in raw material costs, and changes in labor expenses over such a long period, even with a firm-fixed-price structure, as initial pricing might not fully account for long-term market volatility. Secondly, the contractor's operational capacity or financial stability could change, potentially impacting their ability to consistently meet demand or quality standards. Thirdly, technological advancements in food preservation or packaging might emerge, making the current MRE specifications less optimal or efficient over time. Finally, geopolitical shifts or changes in military operational needs could alter the demand for these specific rations, creating a mismatch between the contracted supply and actual requirements. These factors necessitate robust contract management and potential review mechanisms.

How does this contract fit into the broader strategy of the Defense Logistics Agency (DLA) for ensuring food security for military personnel?

This contract is a crucial component of the Defense Logistics Agency's (DLA) overarching strategy to ensure food security and operational readiness for military personnel worldwide. The DLA's mission includes providing a stable and reliable supply of food, including essential rations like MREs, to support troops in diverse operational environments. By awarding long-term contracts with competitive processes, the DLA aims to secure necessary supplies at predictable costs while fostering relationships with capable manufacturers. This specific contract contributes to maintaining adequate stockpiles and ensuring that deployed forces have access to nutritious and palatable food, regardless of location or mission complexity. It reflects the DLA's commitment to robust supply chain management and risk mitigation in providing critical sustainment services.

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: DDJ Capital Management, LLC (UEI: 964928402)

Address: 4700 CREEK RD, CINCINNATI, OH, 90

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

Financial Breakdown

Contract Ceiling: $67,808,343

Exercised Options: $67,808,343

Current Obligation: $67,808,343

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPM3S112DZ109

IDV Type: IDC

Timeline