DoD awards $118M contract to Rhino Health for 120M gloves/month, boosting CONUS production

Contract Overview

Contract Amount: $118,018,698 ($118.0M)

Contractor: Rhino Health, Inc.

Awarding Agency: Department of Defense

Start Date: 2021-05-18

End Date: 2023-05-31

Contract Duration: 743 days

Daily Burn Rate: $158.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: COVID-19 DHHS CAPACITY EXPANSION TO INCREASE CONUS PRODUCTION OF GLOVES WITH EIGHT NEW PRODUCTION LINES. CONTRACT WILL RESULT IN CAPACITY TO PRODUCE 120 MILLION GLOVES PER MONTH.

Place of Performance

Location: CHURCH ROCK, MCKINLEY County, NEW MEXICO, 87311

State: New Mexico Government Spending

Plain-Language Summary

Department of Defense obligated $118.0 million to RHINO HEALTH, INC. for work described as: COVID-19 DHHS CAPACITY EXPANSION TO INCREASE CONUS PRODUCTION OF GLOVES WITH EIGHT NEW PRODUCTION LINES. CONTRACT WILL RESULT IN CAPACITY TO PRODUCE 120 MILLION GLOVES PER MONTH. Key points: 1. Contract aims to significantly increase domestic glove production capacity, reducing reliance on foreign sources. 2. The firm-fixed-price structure provides cost certainty for the government. 3. Full and open competition suggests a potentially competitive bidding process. 4. The contract duration of over two years allows for sustained production ramp-up. 5. Focus on synthetic rubber manufacturing indicates a specific material requirement. 6. Awarded by the Department of the Air Force, highlighting defense-related supply chain needs.

Value Assessment

Rating: good

The contract value of $118 million for a capacity expansion project is substantial. Benchmarking against similar large-scale manufacturing investments is difficult without more specific details on production lines and technology. However, the goal of producing 120 million gloves per month suggests a significant output, and the firm-fixed-price nature helps control costs. The price per glove, while not explicitly stated, can be inferred to be approximately $0.05 per glove over the contract period if production is sustained, which appears reasonable for high-volume medical supplies.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. While the number of bidders is not specified, this method generally fosters a competitive environment, which can lead to better pricing and terms for the government. The open nature suggests that multiple companies likely had the capability to meet the requirements for expanding glove production.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it increases the likelihood of securing the best value through a robust bidding process, potentially driving down costs and ensuring a wider pool of qualified suppliers.

Public Impact

The primary beneficiaries are the Department of Defense and potentially other federal agencies requiring personal protective equipment (PPE). The contract will result in increased domestic manufacturing capacity for essential medical supplies (gloves). The geographic impact is focused on New Mexico, where the production lines will be established. This initiative could lead to job creation in the manufacturing sector within New Mexico. Enhanced CONUS (Continental United States) production capacity strengthens national supply chain resilience for critical items.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for long-term reliance on a single contractor if this expansion leads to dominant market share.
Dependence on specific raw material availability (synthetic rubber) could pose supply chain risks.
Ensuring sustained demand post-pandemic to justify the capacity expansion.

Positive Signals

Significant investment in domestic manufacturing capacity addresses critical supply chain vulnerabilities.
Firm-fixed-price contract provides cost predictability.
Full and open competition suggests a healthy market response.
Focus on increasing production volume directly addresses a stated need.

Sector Analysis

This contract falls within the broader chemical and allied products manufacturing sector, specifically focusing on synthetic rubber products. The market for medical gloves is substantial, driven by healthcare needs, industrial applications, and emergency preparedness. This award represents a strategic investment by the government to onshore critical manufacturing capabilities, potentially influencing market dynamics by increasing domestic supply and reducing lead times for essential PPE.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Given the scale of expanding production lines and achieving a volume of 120 million gloves per month, it is likely that larger manufacturing firms or those with significant existing infrastructure were best positioned to compete. There is no explicit information on subcontracting plans, but large prime contracts often include provisions for small business participation, which would need to be verified.

Oversight & Accountability

The contract is a definitive contract awarded by the Department of the Air Force, part of the Department of Defense. Oversight would typically involve contract officers, program managers, and potentially quality assurance representatives to ensure compliance with terms and specifications. Transparency is facilitated through contract databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

COVID-19 Relief Spending
Medical Supplies Procurement
Defense Production Act Investments
Domestic Manufacturing Initiatives
Personal Protective Equipment (PPE) Contracts

Risk Flags

Potential for over-reliance on specific domestic production capacity.
Long-term demand uncertainty for increased glove output post-pandemic.
Dependence on synthetic rubber supply chain stability.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $118.0 million to RHINO HEALTH, INC.. COVID-19 DHHS CAPACITY EXPANSION TO INCREASE CONUS PRODUCTION OF GLOVES WITH EIGHT NEW PRODUCTION LINES. CONTRACT WILL RESULT IN CAPACITY TO PRODUCE 120 MILLION GLOVES PER MONTH.

Who is the contractor on this award?

The obligated recipient is RHINO HEALTH, INC..

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 $118.0 million.

What is the period of performance?

Start: 2021-05-18. End: 2023-05-31.

What is the track record of Rhino Health, Inc. in fulfilling large-scale manufacturing contracts, particularly for medical supplies?

Information regarding Rhino Health, Inc.'s specific track record with large-scale manufacturing contracts, especially for medical supplies, is not detailed in the provided data. Further investigation into their past performance, including contract history, delivery success rates, and quality metrics with government or commercial entities, would be necessary to fully assess their capability and reliability for this significant capacity expansion project. Understanding their experience with synthetic rubber production and glove manufacturing specifically would be crucial.

How does the awarded price compare to market rates for similar capacity expansion projects in synthetic rubber glove manufacturing?

The provided data does not include specific unit costs or detailed breakdowns that would allow for a direct comparison to market rates for similar capacity expansion projects. The total award of $118 million is for establishing eight new production lines capable of producing 120 million gloves per month. To benchmark effectively, one would need to analyze the cost per production line, installation costs, and projected operational expenses against industry standards. Without this granular data, assessing the value-for-money solely based on the total contract value is challenging, though the firm-fixed-price nature offers some cost control.

What are the primary risks associated with this contract, beyond general supply chain vulnerabilities?

Beyond general supply chain risks for raw materials like synthetic rubber, specific risks for this contract could include the technological feasibility and efficiency of the eight new production lines, potential delays in installation and ramp-up, and the long-term market demand for gloves post-pandemic. Ensuring Rhino Health, Inc. possesses the necessary technical expertise and operational capacity to achieve the projected output of 120 million gloves per month is critical. Furthermore, the sustainability of this increased domestic capacity against potentially lower-cost international production remains a consideration.

How effective is the 'full and open competition' strategy likely to be in ensuring the government receives the best value for this specific contract?

The 'full and open competition' strategy is generally the most effective method for the government to secure the best value, as it allows all capable sources to bid, fostering price competition and innovation. For this contract, its effectiveness hinges on the number of qualified bidders and the clarity of the government's requirements. If the market for specialized glove production lines and synthetic rubber manufacturing is robust with multiple capable firms, competition should drive down prices and improve terms. However, if the technical requirements are highly specialized, limiting the pool of potential bidders, the competitive advantage might be reduced.

What are the historical spending patterns for synthetic rubber manufacturing or similar PPE production by the Department of Defense?

Historical spending data for synthetic rubber manufacturing or similar PPE production by the Department of Defense is not provided. However, it is known that defense spending on PPE and related manufacturing capabilities significantly increased during the COVID-19 pandemic, often utilizing authorities like the Defense Production Act. This contract appears to be part of a broader strategic effort to bolster domestic industrial base capabilities for critical supplies, suggesting a potential shift or increase in such investments compared to pre-pandemic levels.

What are the implications of establishing eight new production lines for the workforce in New Mexico?

Establishing eight new production lines for synthetic rubber glove manufacturing is likely to have positive implications for the workforce in New Mexico. This initiative is expected to create new jobs in manufacturing, operations, maintenance, quality control, and logistics. The scale of the project suggests a significant number of direct employment opportunities. Additionally, there may be indirect job creation in supporting industries, such as raw material suppliers, transportation, and local services. The specific skill sets required will influence the type of jobs created and potential training needs within the local labor market.

Industry Classification

NAICS: Manufacturing › Resin, Synthetic Rubber, and Artificial and Synthetic Fibers and Filaments Manufacturing › Synthetic Rubber Manufacturing

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: FA857621R0004

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 309A E HISTORIC HWY 66, CHURCH ROCK, NM, 87311

Business Categories: Asian Pacific American Owned Business, Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Minority Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $118,018,698

Exercised Options: $118,018,698

Current Obligation: $118,018,698

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline