DoD's $61.8M contract boosts glove production by 192.5M units monthly

Contract Overview

Contract Amount: $61,787,762 ($61.8M)

Contractor: US Medical Glove Company L.L.C.

Awarding Agency: Department of Defense

Start Date: 2021-05-27

End Date: 2023-07-31

Contract Duration: 795 days

Daily Burn Rate: $77.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Healthcare

Official Description: COVID-19 DHHS CAPACITY EXPANSION TO INCREASE CONUS PRODUCTION OF GLOVES WITH 24 NEW PRODUCTION LINES. CONTRACT WILL RESULT IN CAPACITY TO PRODUCE 192.48 MILLION GLOVES PER MONTH.

Place of Performance

Location: LEXINGTON, FAYETTE County, KENTUCKY, 40503

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $61.8 million to US MEDICAL GLOVE COMPANY L.L.C. for work described as: COVID-19 DHHS CAPACITY EXPANSION TO INCREASE CONUS PRODUCTION OF GLOVES WITH 24 NEW PRODUCTION LINES. CONTRACT WILL RESULT IN CAPACITY TO PRODUCE 192.48 MILLION GLOVES PER MONTH. Key points: 1. Contract aims to significantly increase domestic production of essential medical supplies. 2. Focus on expanding CONUS manufacturing capacity for gloves addresses supply chain vulnerabilities. 3. Firm-fixed-price structure provides cost certainty for the government. 4. Long-term contract duration suggests a sustained need for increased glove supply. 5. Potential for future expansion or follow-on contracts exists given the strategic nature of the investment.

Value Assessment

Rating: good

The contract's value of $61.8 million appears reasonable given the objective of establishing 24 new production lines and achieving a monthly output of 192.48 million gloves. Benchmarking this against the cost of importing similar quantities or the cost of establishing domestic capacity through other means would provide a clearer picture of value for money. The firm-fixed-price nature of the award helps control costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. This competitive process is expected to yield a fair market price and encourage innovation among bidders. The specific number of bidders is not provided, but the award type suggests a robust competitive environment.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down prices through market forces and ensuring the government receives the best value for its investment.

Public Impact

The primary beneficiaries are healthcare providers and patients who will have increased access to domestically produced gloves. The contract directly supports the expansion of critical medical supply manufacturing within the United States. Geographic impact is concentrated in Kentucky, where the production lines will be established, potentially creating local jobs. Workforce implications include the creation of new manufacturing jobs in the pharmaceutical preparation sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Reliance on a single contractor for this significant capacity expansion could pose a risk if unforeseen issues arise with US MEDICAL GLOVE COMPANY L.L.C.
The long contract duration (795 days) means potential for cost overruns if initial estimates are inaccurate, despite the firm-fixed-price structure.

Positive Signals

The contract directly addresses a critical national need for increased domestic production of medical supplies, enhancing supply chain resilience.
The firm-fixed-price award provides cost certainty and limits the government's financial exposure.
Awarding under full and open competition suggests a competitive process that likely secured a favorable price.
The clear objective of increasing production capacity by a specific volume provides a measurable outcome for success.

Sector Analysis

This contract falls within the Pharmaceutical Preparation Manufacturing sector, a critical component of the broader healthcare and defense industrial base. The market for medical gloves is substantial, driven by consistent demand from healthcare facilities, and has seen increased attention due to supply chain disruptions highlighted by the COVID-19 pandemic. This award represents a strategic investment to bolster domestic capabilities in a sector vital for national security and public health.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it explicitly mention subcontracting goals for small businesses. The primary contractor, US MEDICAL GLOVE COMPANY L.L.C., is likely a larger entity capable of undertaking such a significant manufacturing expansion. Further analysis would be needed to determine if small businesses are involved in the supply chain or as subcontractors.

Oversight & Accountability

The contract is a definitive contract awarded by the Department of Defense, suggesting it falls under standard federal procurement oversight. The firm-fixed-price structure simplifies financial oversight compared to cost-reimbursement contracts. Transparency would be enhanced by public reporting of performance metrics and any potential modifications or challenges encountered during the contract period. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

COVID-19 Relief Funding
Medical Supply Chain Resilience Initiatives
Domestic Manufacturing Expansion Programs
Strategic National Stockpile Augmentation

Risk Flags

Supply Chain Dependency
Single Source Risk (for capacity)
Production Target Attainment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $61.8 million to US MEDICAL GLOVE COMPANY L.L.C.. COVID-19 DHHS CAPACITY EXPANSION TO INCREASE CONUS PRODUCTION OF GLOVES WITH 24 NEW PRODUCTION LINES. CONTRACT WILL RESULT IN CAPACITY TO PRODUCE 192.48 MILLION GLOVES PER MONTH.

Who is the contractor on this award?

The obligated recipient is US MEDICAL GLOVE COMPANY L.L.C..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $61.8 million.

What is the period of performance?

Start: 2021-05-27. End: 2023-07-31.

What is the historical spending pattern for medical glove procurement by the Department of Defense?

Historical spending data for medical glove procurement by the Department of Defense is not directly available in the provided snippet. However, the context of the COVID-19 pandemic suggests a significant increase in demand and potentially spending on such supplies during that period. Typically, DoD procures medical supplies through various channels, including GSA schedules, direct contracts, and through agencies like the Defense Logistics Agency (DLA). Analyzing past contract awards for gloves, particularly in the years preceding and during the pandemic, would reveal trends in volume, pricing, and sourcing strategies. This contract's focus on capacity expansion indicates a shift towards securing long-term domestic supply rather than solely relying on existing market availability, suggesting a response to identified vulnerabilities in historical procurement patterns.

How does the per-unit cost of gloves under this contract compare to market rates or similar government contracts?

The provided data does not include the per-unit cost of gloves. The total contract value is $61.8 million for a capacity to produce 192.48 million gloves per month. To calculate a rough per-unit cost for the *capacity*, one would divide the total contract value by the total potential monthly production over the contract duration. However, this contract is for capacity expansion, not necessarily for the purchase of all produced gloves. Therefore, a direct per-unit cost comparison is not feasible with the given information. To assess value, one would need to know the price per glove if purchased, and compare that to prevailing market rates for similar quality gloves and to other government contracts for glove acquisition. Benchmarking would require access to detailed pricing information from comparable contracts or market analysis reports.

What are the specific risks associated with relying on US MEDICAL GLOVE COMPANY L.L.C. for this critical capacity expansion?

The primary risk associated with relying on a single contractor, US MEDICAL GLOVE COMPANY L.L.C., for this critical capacity expansion is the potential for supply chain disruption if the company faces operational issues. This could include manufacturing problems, labor disputes, financial instability, or failure to meet production targets. Given the strategic importance of glove production, any interruption could have significant national security and public health implications. Furthermore, the long-term nature of the contract (795 days) increases the exposure to potential performance degradation over time. Mitigation strategies might include robust performance monitoring, contingency planning, and potentially exploring options for diversifying production sources in the future.

What is the expected impact of this contract on the overall availability and price of medical gloves in the civilian market?

This contract aims to increase domestic production capacity for medical gloves, which could indirectly impact the civilian market by potentially stabilizing or increasing overall supply. If US MEDICAL GLOVE COMPANY L.L.C. successfully ramps up production and meets its targets, it could alleviate some pressure on global supply chains, potentially leading to more stable pricing over the long term. However, the direct output of this contract is likely prioritized for government needs, especially given its defense agency origin. The extent to which this increased capacity translates to greater availability and lower prices in the civilian market will depend on market dynamics, the contractor's sales strategy, and whether the increased production exceeds government demand, allowing surplus to enter the commercial sector.

How does this contract align with broader federal strategies for strengthening domestic manufacturing and supply chain resilience?

This contract strongly aligns with broader federal strategies aimed at strengthening domestic manufacturing and enhancing supply chain resilience, particularly in critical sectors like healthcare. The COVID-19 pandemic exposed significant vulnerabilities in reliance on foreign sources for essential medical supplies. By investing in expanding CONUS production capacity for gloves, the Department of Defense is directly addressing these vulnerabilities. This initiative supports goals of reducing dependence on overseas manufacturing, fostering domestic industrial capabilities, and ensuring a more secure and reliable supply of vital goods during national emergencies. It represents a proactive measure to build a more robust and self-sufficient industrial base for critical national security assets.

Industry Classification

NAICS: Manufacturing › Pharmaceutical and Medicine Manufacturing › Pharmaceutical Preparation Manufacturing

Product/Service Code: MEDICAL/DENTAL/VETERINARY EQPT/SUPP

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: FA857621R0003

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 841 CORPORATE DR STE 302, LEXINGTON, KY, 40503

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $61,787,762

Exercised Options: $61,787,762

Current Obligation: $61,787,762

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline