For decades the U.S. Forest Service has had long term contracts with the company now known as Perimeter Solutions to supply, mix, store, and load long-term fire retardant in air tankers at dozens of air tanker bases around the United States.
Disruptions in international logistics and shipping due to COVID-19 have complicated the acquisition of raw materials required to produce wildland firefighting retardant products, such as Phos-Chek. Typically Perimeter Solutions has ordered the materials on an as needed basis depending on the demand at the time and the rate at which it is used. This is sometimes called Just In Time Inventory.
The contract the FS has with Perimeter specifies payment by the gallon as it is used. But in an unusual move, the agency recently purchased 3.8 million gallons of retardant worth $15.6 million — an average cost of $4.12 per gallon, which includes mixing, storing, and loading onto aircraft. Between 2013 and 2017 the FS used an average of 12.2 million gallons of fire retardant each year.
Here is how the current situation was described in an April 29, 2020 internal email by Caleb Berry, a FS Washington Office Aviation Management Specialist:
Perimeter Solutions requires raw materials from international sources to produce wildland firefighting retardant products. Typically, Perimeter Solutions orders raw materials over a period of time as fire demand increases and warehoused retardant is used / purchased. COVID-19 disrupted international logistics by threatening supply chain continuity and overseas shipping. In order to create a reliable stock pile of retardant for the 2020 fire season, raw materials had to be purchased immediately and moved to the United States. The immediate, large raw materials purchase required a significant funds out lay prior to seasonal fire retardant purchase and commensurate risk assumed by Perimeter Solutions. As a primary consumer of fire retardant, it is in Forest Service best interest to insure availability of retardant products and vendor stability. This dual purpose was achieved by an advance purchase of first tier retardant at all Forest Service full service retardant contract line items.
Airtanker bases will continue to order retardant services and products on an “as required” basis. The contractor will warehouse product and materials until delivery is requested.
We asked Edward Goldberg, CEO of Perimeter Solutions, about this new purchasing arrangement. He responded in an email:
Perimeter Solutions has been making preparations for the upcoming season for several months. That includes purchasing raw materials, producing finished retardant, and stocking distribution and using locations. Perimeter Solutions is fully capable and willing to do what is needed to ensure a reliable supply of retardant for the full year. The USFS decided that purchasing additional safety stock was prudent as part of their overall COVID response.
Mr. Goldberg said the quantity that the FS purchased, “represents a small fraction of what is typically used.”
Perimeter Solutions may not be familiar to firefighters as a supplier of Phos-Chek. That is because the product has been marketed under the names of five companies since the 1960s, some of which are difficult to remember:
2018-present: Perimeter Solutions
While the ownership of the company has changed hands many times, Mr. Goldberg said, “[T]he people in Perimeter have been part of the Phos-Chek business for many years. Decades in many cases. Same great people, same great products, same great service.”