DoD awards $88.5M for MREs to Baxter's North America, highlighting a significant investment in combat rations

Contract Overview

Contract Amount: $88,450,000 ($88.5M)

Contractor: Baxters North America, Inc.

Awarding Agency: Department of Defense

Start Date: 2024-10-15

End Date: 2025-04-30

Contract Duration: 197 days

Daily Burn Rate: $449.0K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 8510952474!MEAL, READY-TO-EAT, IND,

Place of Performance

Location: BLUE ASH, HAMILTON County, OHIO, 45242

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $88.5 million to BAXTERS NORTH AMERICA, INC. for work described as: 8510952474!MEAL, READY-TO-EAT, IND, Key points: 1. The contract value represents a substantial portion of the annual budget for ready-to-eat meals. 2. Competition dynamics for this contract are crucial for ensuring cost-effectiveness in military food supply. 3. Performance risk appears moderate given the established nature of the product and supplier. 4. This award situates within the broader context of defense logistics and sustainment operations. 5. The sector positioning is within the food manufacturing and defense support industries.

Value Assessment

Rating: good

The awarded amount of $88.5 million for MREs appears reasonable when benchmarked against historical procurement data for similar ration contracts. While specific per-unit cost comparisons are not readily available without more granular data, the firm-fixed-price structure suggests a degree of cost certainty for the government. The duration of the contract and the quantity of meals procured will be key factors in a more detailed value-for-money assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The specific number of bidders is not provided, but the 'full and open' designation suggests a competitive environment that should theoretically drive better pricing and terms for the government. This approach is generally preferred for maximizing taxpayer value.

Taxpayer Impact: Full and open competition helps ensure that the government is obtaining the best possible price for these essential combat rations, preventing potential overspending and promoting a fair market.

Public Impact

Service members across various branches of the U.S. military will receive these ready-to-eat meals. The contract ensures the continued supply of essential nutritional support for deployed personnel. The primary geographic impact is on military installations and operational theaters where U.S. forces are stationed. This contract supports jobs within the food manufacturing sector, specifically at Baxter's North America facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions impacting delivery timelines.
Ensuring consistent quality and nutritional value across all delivered meal batches.
Managing the logistical complexities of distributing rations to diverse operational environments.

Positive Signals

Award to an established supplier with a track record in food production.
Firm-fixed-price contract structure provides cost predictability.
Full and open competition suggests a robust bidding process.

Sector Analysis

The defense logistics sector relies heavily on consistent and reliable food supply chains to support military operations globally. This contract for MREs falls within the broader food manufacturing and defense support services market, which is characterized by stringent quality requirements and often involves large-scale production. Benchmarking against similar contracts for subsistence items reveals that procurements of this magnitude are typical for sustaining deployed forces.

Small Business Impact

The provided data indicates that this contract was not specifically set aside for small businesses, nor does it explicitly mention subcontracting requirements for small businesses. Therefore, the direct impact on the small business ecosystem appears limited unless Baxter's North America engages small businesses as subcontractors. Further analysis would be needed to determine any indirect benefits or requirements.

Oversight & Accountability

Oversight for this contract will likely be managed by the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA), ensuring compliance with contract terms and financial accountability. Transparency is facilitated through contract award databases, and any significant issues would fall under the purview of the Department of Defense's Inspector General.

Related Government Programs

Military Rations Procurement
Defense Logistics Support
Combat Sustainment Contracts
Food Service Contracts
Department of Defense Subsistence

Risk Flags

Potential for supply chain disruptions
Ensuring consistent product quality
Logistical complexity of distribution

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $88.5 million to BAXTERS NORTH AMERICA, INC.. 8510952474!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 $88.5 million.

What is the period of performance?

Start: 2024-10-15. End: 2025-04-30.

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

Historical spending on Meals, Ready-to-Eat (MREs) by the Department of Defense (DoD) has shown a relatively stable, yet significant, trend over the past five fiscal years. While exact figures fluctuate based on operational tempo, troop levels, and specific contract awards, annual spending typically ranges in the hundreds of millions of dollars. For instance, procurements often involve multi-year contracts that are incrementally funded. The Defense Logistics Agency (DLA) is the primary entity responsible for these procurements, ensuring a consistent supply chain for deployed personnel. Factors such as geopolitical events, changes in military doctrine regarding rations, and the introduction of new ration types (like the First Strike Ration) can influence year-over-year spending. Without access to specific line-item data for all MRE procurements, a precise trend analysis is challenging, but the consistent need for these rations in various operational environments suggests sustained budgetary allocation.

How does the per-unit cost of these MREs compare to similar contracts awarded to other suppliers?

A direct per-unit cost comparison for these specific MREs is challenging without access to the detailed pricing structure of this $88.5 million award and comparable contracts. However, the fact that this contract was awarded under 'full and open competition' suggests that the pricing was vetted against market rates and potentially other bidders' offers. Generally, MRE pricing can vary based on the specific menu options, nutritional content, shelf-life requirements, and packaging innovations. Larger volume contracts often achieve lower per-unit costs due to economies of scale. If Baxter's North America is a new or less frequent supplier for this specific type of MRE, their pricing might differ from long-standing prime contractors. A thorough analysis would require comparing the awarded price per meal against the average price paid by the DoD for similar MRE types over the same period, considering factors like contract duration and quantity.

What are the key performance indicators (KPIs) and quality assurance measures associated with this MRE contract?

Key performance indicators (KPIs) for MRE contracts typically revolve around timely delivery, adherence to nutritional specifications, and product quality. For this contract, the Defense Logistics Agency (DLA) would likely establish specific metrics. Timeliness would be measured by the contractor's ability to meet delivery schedules outlined in the contract, ensuring that rations are available when and where needed. Nutritional compliance ensures that each meal meets the caloric, vitamin, and mineral requirements specified by military standards. Quality assurance measures would include inspections for defects in packaging, food spoilage, and overall product integrity. The firm-fixed-price nature of the contract incentivizes the contractor to meet these KPIs to avoid penalties or deductions. Compliance with food safety regulations and military-specific standards for shelf-life and durability in various environmental conditions are paramount.

What is the potential risk associated with the contractor's past performance on similar defense contracts?

Assessing the potential risk associated with Baxter's North America's past performance requires access to their specific contract history with the Department of Defense (DoD) and other federal agencies. Without this detailed performance data, it's difficult to provide a definitive risk assessment. However, federal agencies typically evaluate a contractor's past performance as a significant factor in the source selection process. This evaluation often includes reviewing past contract awards, delivery records, quality of goods or services provided, and any history of disputes or contract terminations. If Baxter's North America has a strong record of timely deliveries, high-quality products, and successful contract completion, the risk associated with this award would be considered low. Conversely, a history of performance issues could indicate a higher risk, potentially leading to delivery delays or quality concerns. The 'good' rating in the 'va' section suggests a generally positive outlook based on available information.

How does this contract align with the DoD's broader strategy for food security and operational readiness?

This contract for $88.5 million in MREs directly aligns with the DoD's fundamental strategy for ensuring food security and operational readiness. Ready-to-eat meals are a critical component of sustaining military forces during deployments, training exercises, and contingency operations where traditional food services may not be available. By securing a substantial supply of MREs through a competitive process, the DoD aims to guarantee that service members have access to adequate nutrition, which is essential for maintaining physical and cognitive performance. This procurement supports the broader objective of logistical self-sufficiency and resilience, ensuring that operational tempo is not hindered by supply chain vulnerabilities. The consistent availability of these rations contributes directly to the military's ability to project power and respond effectively to global challenges.

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: W.A. Baxter & Sons (holdings) Limited

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: $88,450,000

Exercised Options: $88,450,000

Current Obligation: $88,450,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE3S122DZ147

IDV Type: IDC

Timeline