Airgas USA awarded $166M for consumable gases, highlighting a competitive market for industrial gas manufacturing

Contract Overview

Contract Amount: $165,980 ($166.0K)

Contractor: Airgas USA, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2024-09-25

End Date: 2027-09-24

Contract Duration: 1,094 days

Daily Burn Rate: $152/day

Competition Type: COMPETED UNDER SAP

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: CONSUMABLE GASES AND RELATED PRODUCTS

Place of Performance

Location: BOTHELL, SNOHOMISH County, WASHINGTON, 98021

State: Washington Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $165,979.68 to AIRGAS USA, LLC for work described as: CONSUMABLE GASES AND RELATED PRODUCTS Key points: 1. The contract value suggests significant demand for essential industrial gases within the federal sector. 2. Competition dynamics for this award will be analyzed to understand pricing pressures and market efficiency. 3. Risk indicators will be assessed based on contractor performance history and the nature of consumable goods. 4. Performance context will be established by comparing this award to similar federal procurements for gases. 5. The contract positions Airgas USA as a key supplier within the industrial gas manufacturing sector for federal agencies.

Value Assessment

Rating: good

The $165.98 million award to Airgas USA for consumable gases appears reasonable given the duration and scope. Benchmarking against similar federal contracts for industrial gases will provide a clearer picture of value for money. The firm fixed-price structure offers cost certainty, but ongoing market analysis is crucial to ensure continued competitiveness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was competed under the Simplified Acquisition Procedures (SAP), indicating a competitive process likely involving multiple bids. The presence of two bids suggests a healthy level of competition for this requirement, which generally leads to better pricing for the government. Further analysis of the bidding process would confirm the extent of market engagement.

Taxpayer Impact: A competitive award under SAP helps ensure taxpayer dollars are used efficiently by driving down costs through market forces.

Public Impact

Federal agencies, particularly those within the Department of Health and Human Services (FDA), will benefit from a reliable supply of essential consumable gases. The contract ensures the availability of industrial gases critical for laboratory operations, research, and manufacturing processes. The primary geographic impact is within Washington (WA), where the contract is managed, but the gases supplied likely support broader federal operations. The contract supports the industrial gas manufacturing sector, potentially impacting employment within that industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases over the contract term if not adequately managed.
Dependence on a single supplier for critical consumable gases could pose a risk if supply chains are disrupted.

Positive Signals

Firm fixed-price contract provides cost predictability.
Competitive award suggests a favorable pricing environment at the time of award.
Long-term contract provides supply chain stability for essential materials.

Sector Analysis

The industrial gas manufacturing sector is a mature industry vital to numerous federal operations, including research, healthcare, and defense. This $166 million contract for consumable gases falls within this sector, serving agencies like the FDA. Comparable spending benchmarks for industrial gases within the federal government are typically in the tens to hundreds of millions annually, depending on agency needs and scope.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses, nor does it explicitly mention subcontracting goals for small businesses. Further investigation into the contract details and any associated subcontracting plans would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the contracting officer and the relevant program officials within the Food and Drug Administration. Transparency is facilitated through federal procurement databases. Accountability measures are inherent in the firm fixed-price contract type, requiring delivery of specified goods. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Federal Supply Schedule (FSS) contracts for industrial gases
Consumables procurement for research laboratories
Medical gases procurement
Chemicals and related products procurement

Risk Flags

Potential for supply chain disruption
Price volatility of raw materials
Quality control of critical gases

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $165,979.68 to AIRGAS USA, LLC. CONSUMABLE GASES AND RELATED PRODUCTS

Who is the contractor on this award?

The obligated recipient is AIRGAS USA, LLC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Food and Drug Administration).

What is the total obligated amount?

The obligated amount is $165,979.68.

What is the period of performance?

Start: 2024-09-25. End: 2027-09-24.

What is the historical spending pattern for consumable gases by the Food and Drug Administration?

Analyzing historical spending data for consumable gases by the FDA is crucial for understanding long-term trends and identifying potential anomalies. While specific historical figures for this exact contract line item are not provided, general federal spending on industrial and medical gases is substantial. Agencies like the FDA rely heavily on these consumables for research, testing, and manufacturing. Examining past contract awards, their values, and durations can reveal patterns of demand, supplier concentration, and average price points. This context helps in evaluating whether the current $166 million award represents an increase, decrease, or stable level of investment in these critical materials. Understanding historical spending also aids in forecasting future needs and budgeting more effectively.

How does the awarded price compare to market rates for similar consumable gases?

To assess the value for money, the awarded price of $165.98 million for consumable gases needs to be benchmarked against prevailing market rates. This involves comparing the unit prices for specific gases (e.g., nitrogen, oxygen, helium) and related products against commercial price lists, industry reports, and prices paid by other government agencies or large private sector entities. Factors such as volume discounts, delivery terms, purity levels, and contract duration significantly influence pricing. A firm fixed-price contract provides a baseline, but if the unit costs embedded within this total award are higher than market benchmarks, it could indicate a suboptimal price. Conversely, prices at or below market rates suggest effective price negotiation and competitive sourcing.

What are the primary risks associated with this contract, and how are they mitigated?

The primary risks associated with this contract for consumable gases include supply chain disruptions, price volatility, and potential quality issues. Given the critical nature of these gases for FDA operations, any interruption in supply could have significant operational consequences. Price volatility in raw materials or transportation could impact the long-term cost-effectiveness, even with a fixed-price contract, if escalation clauses are present or if future renewals are significantly higher. Quality control is paramount to ensure the purity and efficacy of the gases used in sensitive research and manufacturing. Mitigation strategies likely include robust supplier vetting, clear quality specifications in the contract, contingency planning for alternative suppliers or stock-piling, and regular performance monitoring by the contracting officer.

What is the track record of Airgas USA, LLC in fulfilling federal contracts for similar products?

Evaluating the track record of Airgas USA, LLC is essential for assessing the reliability and performance risk of this contract. A review of past federal contract performance, including on-time delivery, quality compliance, and responsiveness to issues, provides valuable insights. Data from contract databases and performance evaluation reports (e.g., Contractor Performance Assessment Reporting System - CPARS) can highlight any history of disputes, contract modifications, or performance deficiencies. A strong track record suggests a lower risk of disruption and better overall contract execution. Conversely, a history of performance issues might warrant closer scrutiny and more proactive oversight from the agency.

How does the competition level (2 bidders) impact the government's ability to secure favorable pricing?

A competition involving two bidders, as indicated for this contract, generally provides a degree of price discovery and encourages more competitive offers than a sole-source situation. However, the optimal level of competition for securing the best pricing is often considered to be three or more bidders. With only two bidders, there is a risk that the market may not be fully explored, potentially leading to prices that are not as low as they could be in a more robustly contested environment. The government's ability to secure favorable pricing is influenced by the specific nature of the market, the clarity of the solicitation requirements, and the perceived value of the contract to the bidders. Further analysis would be needed to determine if these two bidders represented the full extent of capable suppliers.

Industry Classification

NAICS: Manufacturing › Basic Chemical Manufacturing › Industrial Gas Manufacturing

Product/Service Code: CHEMICALS AND CHEMICAL PRODUCTS

Competition & Pricing

Extent Competed: COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: L'air Liquide Societe Anonyme Pour L'etude ET L'exploitation DES Procedes Georges Claude

Address: 3737 WORSHAM AVE, LONG BEACH, CA, 90808

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $287,265

Exercised Options: $165,980

Current Obligation: $165,980

Actual Outlays: $57,074

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Timeline