DoD Awards $43.7M Facility Conversion Fee to Airgas USA, LLC for Industrial Gas Manufacturing
Contract Overview
Contract Amount: $43,763,004 ($43.8M)
Contractor: Airgas USA, LLC
Awarding Agency: Department of Defense
Start Date: 2025-09-24
End Date: 2030-09-28
Contract Duration: 1,830 days
Daily Burn Rate: $23.9K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: 8511664969!FACILITY CONVERSION FEE
Place of Performance
Location: LONG BEACH, LOS ANGELES County, CALIFORNIA, 90808
Plain-Language Summary
Department of Defense obligated $43.8 million to AIRGAS USA, LLC for work described as: 8511664969!FACILITY CONVERSION FEE Key points: 1. Significant contract value of $43.7 million. 2. Sole-source award raises questions about competition and potential price inflation. 3. Long contract duration of 5 years could lock in potentially suboptimal pricing. 4. Industrial Gas Manufacturing sector is critical for defense operations.
Value Assessment
Rating: questionable
The contract value of $43.7 million for a facility conversion fee is substantial. Without competitive bidding, it's difficult to assess if this price is aligned with market rates for similar services or if it represents a fair value for the taxpayer.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, indicating a lack of competition. This method limits price discovery and may result in higher costs for the government compared to a fully competed procurement.
Taxpayer Impact: The absence of competition on this $43.7 million contract could lead to taxpayers paying a premium for the facility conversion services.
Public Impact
Taxpayers may be overpaying due to the lack of competitive bidding. The long-term nature of the contract could impact the government's ability to adapt to changing industrial gas needs or pricing. Dependence on a single supplier for critical industrial gases could pose a supply chain risk.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Long contract duration
- Lack of transparency in pricing
Positive Signals
- Critical service for defense operations
- Established supplier relationship
Sector Analysis
The Industrial Gas Manufacturing sector (NAICS 325120) is vital for various defense applications, including welding, medical, and propulsion systems. Spending benchmarks for facility conversion fees in this sector are not readily available, but competitive pricing is generally expected.
Small Business Impact
There is no indication that small businesses were involved in this sole-source procurement, which limits opportunities for small business participation.
Oversight & Accountability
The sole-source nature of this award warrants scrutiny from oversight bodies to ensure the government is receiving fair value and that competition was appropriately waived.
Related Government Programs
- Industrial Gas Manufacturing
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Sole-source award limits competition.
- Long contract duration may lead to price inflexibility.
- Lack of transparency in pricing justification.
- Potential for overpayment due to lack of competition.
- Limited small business participation.
Tags
industrial-gas-manufacturing, department-of-defense, ca, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $43.8 million to AIRGAS USA, LLC. 8511664969!FACILITY CONVERSION FEE
Who is the contractor on this award?
The obligated recipient is AIRGAS USA, LLC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $43.8 million.
What is the period of performance?
Start: 2025-09-24. End: 2030-09-28.
What is the justification for the sole-source award, and were alternative competitive strategies considered?
The justification for a sole-source award typically involves unique capabilities, urgent needs, or a lack of available sources. Without further details, it's unclear why competition was bypassed. A thorough review should confirm that all reasonable efforts were made to foster competition or that the sole-source justification is robust and documented.
How does the $43.7 million facility conversion fee compare to industry benchmarks for similar services?
Assessing the value requires comparing this fee against market rates for comparable facility conversion projects within the industrial gas sector. Benchmarking data is crucial to determine if the government is paying a fair price or if the sole-source nature has inflated costs. This information is essential for taxpayer accountability.
What are the potential risks associated with a 5-year sole-source contract for industrial gases?
A long-term sole-source contract carries risks such as price escalation, reduced innovation, and potential supply chain disruptions if the sole provider faces issues. The government may also be locked into outdated technology or service levels, limiting flexibility and potentially leading to higher overall costs over the contract's life.
Industry Classification
NAICS: Manufacturing › Basic Chemical Manufacturing › Industrial Gas Manufacturing
Product/Service Code: FUELS, LUBRICANTS, OILS, WAXES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
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: $43,763,004
Exercised Options: $43,763,004
Current Obligation: $43,763,004
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SPE60125D1519
IDV Type: IDC
Timeline
Start Date: 2025-09-24
Current End Date: 2030-09-28
Potential End Date: 2030-09-28 00:00:00
Last Modified: 2026-02-04
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