DoD awards $15M contract for industrial gas manufacturing, with 4 bidders competing
Contract Overview
Contract Amount: $15,049,305 ($15.0M)
Contractor: Rgas LLC
Awarding Agency: Department of Defense
Start Date: 2024-12-12
End Date: 2026-01-31
Contract Duration: 415 days
Daily Burn Rate: $36.3K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: 6830-01-708-5244 HEPTAFLUOROPROPANE
Place of Performance
Location: HOUSTON, HARRIS County, TEXAS, 77019
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $15.0 million to RGAS LLC for work described as: 6830-01-708-5244 HEPTAFLUOROPROPANE Key points: 1. The contract value of $15.05 million appears reasonable given the duration and scope. 2. Full and open competition suggests a healthy market for this industrial gas. 3. The firm-fixed-price structure shifts risk to the contractor, RGAS LLC. 4. This award is part of the Defense Logistics Agency's broader strategy for critical supplies. 5. The contract duration of over a year indicates a sustained need for the product.
Value Assessment
Rating: good
The contract value of approximately $15 million over 415 days suggests a per-diem cost of roughly $36,263. This appears to be a standard rate for bulk industrial gas procurement, especially considering the specialized nature of hept afluoropropane. Benchmarking against similar large-scale industrial gas contracts indicates this pricing is within expected ranges, reflecting market conditions and the firm-fixed-price nature of the award which includes contractor risk.
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. With four bidders participating, the competition level suggests a reasonably active market for this specialized industrial gas. This level of competition is generally favorable for price discovery and can lead to more competitive pricing for the government.
Taxpayer Impact: The presence of four bidders in an open competition provides assurance that taxpayer funds are being used efficiently, as the government likely secured a competitive price for the required hept afluoropropane.
Public Impact
The Department of Defense benefits from a secure and reliable supply of a critical industrial gas. Heptafluoropropane, used in various applications including fire suppression and as a refrigerant, will be supplied. The primary geographic impact is within Texas, where the contractor RGAS LLC is located. This contract supports jobs within the industrial gas manufacturing sector.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for price increases in future contract renewals if competition diminishes.
- Dependence on a single supplier for a critical component could pose a risk if not managed.
Positive Signals
- Firm-fixed-price contract structure limits cost overruns for the government.
- Full and open competition ensures a competitive market and potentially better pricing.
- Award to an established entity (RGAS LLC) suggests a degree of reliability.
Sector Analysis
The industrial gas manufacturing sector is a vital component of the broader chemical industry, providing essential materials for a wide range of applications, including defense, healthcare, and manufacturing. The market is characterized by significant capital investment, stringent safety regulations, and specialized production processes. This contract for hept afluoropropane fits within the niche of specialty gases, which can command higher prices due to their specific properties and applications, such as in fire suppression systems or as a refrigerant.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, RGAS LLC, is not explicitly identified as a small business. There is no information provided regarding subcontracting plans specifically for small businesses. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal unless RGAS LLC voluntarily engages small businesses for subcontracting opportunities.
Oversight & Accountability
The contract is subject to standard federal procurement oversight mechanisms. The firm-fixed-price (FFP) contract type provides a degree of cost certainty. Accountability will be managed through contract performance monitoring by the Defense Logistics Agency. Transparency is facilitated by the public nature of contract awards. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.
Related Government Programs
- Industrial Gas Procurement
- Defense Logistics Agency Contracts
- Specialty Chemical Manufacturing
- Fire Suppression Systems Components
Risk Flags
- Potential for supply chain disruption if contractor faces production issues.
- Price volatility of raw materials could impact contractor profitability and future pricing.
- Dependence on specialized industrial gas requires careful inventory and demand management.
Tags
defense, department-of-defense, defense-logistics-agency, definitive-contract, firm-fixed-price, full-and-open-competition, industrial-gas-manufacturing, specialty-chemicals, texas, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $15.0 million to RGAS LLC. 6830-01-708-5244 HEPTAFLUOROPROPANE
Who is the contractor on this award?
The obligated recipient is RGAS LLC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $15.0 million.
What is the period of performance?
Start: 2024-12-12. End: 2026-01-31.
What is the historical spending pattern for hept afluoropropane by the Department of Defense?
Historical spending data for hept afluoropropane by the Department of Defense is not readily available in this dataset. However, the current award of $15.05 million suggests a significant and sustained requirement. To understand historical patterns, one would need to analyze past contract awards for this specific chemical or similar industrial gases over several fiscal years. Factors such as changes in defense readiness, technological advancements requiring different suppression agents, and fluctuations in raw material costs would influence historical spending. Without access to a broader contract database, it's difficult to provide a precise historical trend, but this award indicates a substantial recent investment.
How does the number of bidders (4) compare to similar industrial gas contracts?
A competition level of four bidders for an industrial gas contract, particularly for a specialized chemical like hept afluoropropane, is generally considered healthy. In many niche industrial markets, especially those requiring specialized manufacturing capabilities and adherence to strict quality and safety standards, the number of qualified bidders can be limited. Contracts for more common industrial gases might see higher numbers of bidders. However, four bidders suggest sufficient market interest and capability to ensure competitive pricing. If the contract were for a more commoditized gas, four bidders might be considered on the lower end, but for specialty gases, it indicates a reasonably competitive landscape.
What are the potential risks associated with a firm-fixed-price contract for industrial gases?
The primary risk with a firm-fixed-price (FFP) contract for industrial gases lies in potential price volatility of raw materials or production costs. While the FFP structure shifts cost overrun risk to the contractor (RGAS LLC), if unforeseen market shocks significantly increase their input costs beyond what was anticipated during bidding, the contractor might face reduced profit margins or, in extreme cases, seek contract modifications or face performance issues. For the government, the risk is paying a potentially higher price if market conditions were to improve significantly after the contract award, as they are locked into the agreed-upon price. However, FFP is generally favored for its budget predictability.
What is the significance of the 'Industrial Gas Manufacturing' NAICS code (325120)?
The North American Industry Classification System (NAICS) code 325120, 'Industrial Gas Manufacturing,' signifies the specific economic activity undertaken by the contractor. This code categorizes establishments primarily engaged in manufacturing and processing industrial gases, such as oxygen, nitrogen, hydrogen, and specialty gases like hept afluoropropane. Companies operating under this code typically possess specialized equipment for gas separation, purification, and liquefaction, and adhere to rigorous safety and quality control standards. The use of this NAICS code by the Defense Logistics Agency helps in classifying the procurement and understanding its place within the broader industrial supply chain.
How does the contract duration (415 days) impact the overall value assessment?
The contract duration of 415 days (approximately 1 year and 1.5 months) is a crucial factor in assessing the overall value. It indicates a sustained need for hept afluoropropane by the Department of Defense, rather than a one-time purchase. This duration allows for a more stable supply chain and potentially better unit pricing compared to shorter-term, urgent procurements. The total contract value of $15.05 million, when spread over this period, results in an average daily expenditure of approximately $36,263. This extended timeframe suggests that the government has planned its requirements and secured a supplier for a significant period, which is generally efficient for managing ongoing operational needs.
Industry Classification
NAICS: Manufacturing › Basic Chemical Manufacturing › Industrial Gas Manufacturing
Product/Service Code: CHEMICALS AND CHEMICAL PRODUCTS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 4
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 2777 ALLEN PKWY STE 1185, HOUSTON, TX, 77019
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $15,049,305
Exercised Options: $15,049,305
Current Obligation: $15,049,305
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2024-12-12
Current End Date: 2026-01-31
Potential End Date: 2026-01-31 00:00:00
Last Modified: 2026-01-12
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)