Filter Contract Award

Avon is pleased to announce that it has received a 5 year contract from the Department of Defense (DoD) for the supply of spare filters for its M50 respirator. Like previous contracts for spare filters, the contract is an Indefinite Delivery Indefinite Quantity (“IDIQ”) contract and has a maximum order quantity of 2.4m filter pairs per year and 12m filter pairs over the contract term. The contract also allows the DoD to extend the term by 2 further option years, potentially extending the duration to 7 years. An initial order has been placed by the DoD with a value of $2.5m for immediate delivery. 

This new contract is in addition to the existing sole source $38m, 3 year IDIQ contract announced in August.  Avon has also received a further delivery order against this contact with a value of $6.1m for delivery by 1 April 2012.

As expected, the DoD has chosen to dual source the procurement of spare filters and another source has also been selected for a 5 year contract award. The Directors believe that it will take up to 2 years for a comparable product to be developed and approved, after which orders for filters for the M50 mask will be competitively bid. The supply of filters with M50 mask systems will remain sole sourced to Avon.

Commenting on the news, Peter Slabbert, Chief Executive said: “We are delighted to have been awarded this new contract which confirms Avon’s position as a supplier of consumable filters to the DoD for a further 5 to 7 years. The procurement of the filter for the M50 mask from another supplier was expected and we believe that our state of the art manufacturing capability, our existing technology advantage and the continuation of the sole source window for up to another 2 years will allow Avon to retain its competitive advantage. We are also committed to widening our capability and product range in the area of filtration to enable us to continue to grow this repeat revenue stream.”

[20 December 2011]