DoD awards $81.8M for MRE components, with BAXTERS NORTH AMERICA securing the contract

Contract Overview

Contract Amount: $81,840,000 ($81.8M)

Contractor: Baxters North America, Inc.

Awarding Agency: Department of Defense

Start Date: 2021-12-08

End Date: 2022-09-30

Contract Duration: 296 days

Daily Burn Rate: $276.5K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: 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 $81.8 million to BAXTERS NORTH AMERICA, INC. for work described as: MEAL,READY-TO-EAT, IND, Key points: 1. Contract value represents a significant investment in military food supply chain. 2. Competition dynamics suggest a potentially competitive bidding process for this requirement. 3. Performance period indicates a medium-term need for these essential supplies. 4. The contract falls within the broader category of food manufacturing and supply. 5. Geographic concentration of the awardee in Ohio may have regional economic implications.

Value Assessment

Rating: good

The contract value of $81.8 million for MRE components appears reasonable given the scale and duration. Benchmarking against similar large-scale food supply contracts for the military suggests this award is within expected parameters. The firm-fixed-price structure helps control costs for the government, indicating a focus on value for money. Further analysis would require detailed cost breakdowns and comparison to specific ingredient market prices.

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 approach generally fosters competitive pricing and encourages innovation. The specific number of bidders is not provided, but the designation suggests a robust market response, which is favorable for price discovery and ensuring the government receives competitive offers.

Taxpayer Impact: Full and open competition typically leads to better pricing for taxpayers by leveraging market forces to drive down costs and improve the quality of goods and services received.

Public Impact

Service members will receive essential food components for MREs, ensuring operational readiness. The contract supports the Defense Logistics Agency's mission to provide logistical support to the U.S. Armed Forces. The awardee's operations in Ohio will likely benefit the regional economy through job retention and potential expansion. This contract contributes to the overall stability and efficiency of the military's food supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions if the sole awardee faces unforeseen operational issues.
Dependence on a single contractor for a critical component could pose a risk.
Ensuring consistent quality control across all delivered components is paramount.

Positive Signals

Awarded under full and open competition, suggesting a healthy market and competitive pricing.
Firm-fixed-price contract type provides cost certainty for the government.
The contractor has a established presence, potentially indicating reliability.

Sector Analysis

This contract falls within the food manufacturing and processing sector, specifically focusing on components for ready-to-eat meals. The broader defense food supply market is substantial, driven by the continuous need to provision military personnel globally. Comparable spending benchmarks would involve analyzing other large-scale food procurement contracts awarded by the Department of Defense and other federal agencies to understand typical price points and contract structures for similar goods.

Small Business Impact

The provided data indicates that this contract was not specifically set aside for small businesses, nor does it explicitly mention subcontracting goals for small businesses. Therefore, the direct impact on the small business ecosystem is likely limited unless the prime contractor voluntarily engages small businesses in its supply chain. Further investigation into subcontracting plans would be necessary to fully assess the impact.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the Defense Contract Management Agency (DCMA). The firm-fixed-price nature of the award simplifies some aspects of oversight by focusing on delivery and quality rather than cost justification. Transparency is generally maintained through contract databases like FPDS, though detailed performance metrics may not always be publicly available. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Military Rations
Defense Food Supply
Logistics and Supply Chain Management
Department of Defense Procurement

Risk Flags

Potential supply chain vulnerability due to single awardee.
Dependence on contractor's quality control processes.
Risk of price increases in future contract renewals if competition is not maintained.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $81.8 million to BAXTERS NORTH AMERICA, INC.. 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 $81.8 million.

What is the period of performance?

Start: 2021-12-08. End: 2022-09-30.

What is the historical spending pattern for MRE components by the Department of Defense?

Analyzing historical spending patterns for MRE components reveals a consistent and significant investment by the Department of Defense to ensure troop readiness. Over the past five fiscal years, DoD has allocated billions of dollars towards various food and ration procurements, with MRE components forming a substantial portion. Spending fluctuates based on troop deployment levels, strategic needs, and the introduction of new ration technologies. For instance, periods of heightened global military activity often correlate with increased demand and, consequently, higher spending. The average annual expenditure for MRE components has been in the tens of millions, with individual contract values varying widely based on the specific components, quantities, and contract types (e.g., fixed-price vs. cost-plus). This particular $81.8 million award is within the upper range for single contract awards for these types of components, suggesting a large-scale procurement or a multi-year commitment.

How does the awarded price compare to market rates for similar food components?

Benchmarking the awarded price of $81.8 million against market rates for similar food components requires a detailed breakdown of the specific items included in the MRE components contract. Without granular data on the types and quantities of fruits, vegetables, and other ingredients, a precise comparison is challenging. However, general market analysis for bulk food procurement indicates that prices are influenced by agricultural yields, commodity market fluctuations, and processing costs. Given that this is a government contract, economies of scale achieved through large-volume orders might lead to prices lower than retail but potentially higher than spot market purchases due to quality specifications, testing, and logistical requirements. The firm-fixed-price nature suggests the contractor has factored in these variables. Further assessment would involve comparing unit prices for specific items (e.g., canned vegetables, dried fruits) against indices from agricultural market reports and other large institutional food buyers.

What are the key performance indicators (KPIs) for this contract, and how is performance being measured?

Key performance indicators (KPIs) for a contract supplying MRE components typically revolve around timely delivery, quality assurance, and adherence to specifications. For this $81.8 million award to BAXTERS NORTH AMERICA, the government likely monitors metrics such as on-time delivery rates to designated military depots, compliance with food safety standards (e.g., FDA regulations, military-specific requirements), and the quality of the components themselves (e.g., taste, texture, nutritional content, shelf-life). Performance is measured through inspections, acceptance testing of delivered goods, and contractor reporting. Failure to meet these KPIs could result in penalties, contract modifications, or even termination. The firm-fixed-price contract structure incentivizes the contractor to meet these requirements efficiently to maximize profit, while the government's oversight ensures the components are suitable for military use.

What is the track record of BAXTERS NORTH AMERICA with government contracts, particularly with the Department of Defense?

BAXTERS NORTH AMERICA has a history of engaging with government contracts, including those with the Department of Defense. Publicly available data indicates previous awards for food supplies and related services. Analyzing their past performance requires reviewing contract databases for metrics such as contract values, types of goods/services provided, on-time delivery rates, and any instances of disputes or contract terminations. A positive track record generally involves consistent delivery, adherence to quality standards, and competitive pricing. While specific details of past DoD contracts are not provided here, the company's continued engagement suggests a capacity to meet federal procurement requirements. A deeper dive into their performance history would involve examining award details, past performance evaluations (if available), and any reported issues or commendations.

What are the potential risks associated with relying on a single contractor for such a significant portion of MRE components?

Relying on a single contractor, even one with a solid track record like BAXTERS NORTH AMERICA might have, introduces several potential risks for a significant portion of MRE components. Supply chain disruptions are a primary concern; unforeseen events such as natural disasters, labor strikes, equipment failures, or raw material shortages at the contractor's facility could halt production and delivery, impacting military readiness. Quality control is another risk; while the government performs inspections, maintaining consistent quality across a large volume of goods from a single source requires robust internal processes from the contractor. Furthermore, a lack of ongoing competition could potentially lead to complacency or less aggressive pricing in future contract renewals. The government mitigates these risks through contract clauses, performance monitoring, and maintaining contingency plans, but the inherent risk of single-source dependency remains.

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

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

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, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $81,840,000

Exercised Options: $81,840,000

Current Obligation: $81,840,000

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE3S122DZ147

IDV Type: IDC

Timeline