Used as cover from gunfire.
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Sandbags can be placed to cover your colonists from gunfire. Raiders, colonists, squirrels, and every other unit can use these as cover, so place them in a way so enemy units cannot take advantage of your sandbags. Sandbags can take damage from bullets or explosions.
It has a 65% cover rating, meaning that bullets aimed at targets behind sandbags have a 65% chance to hit the bags, and a 35% chance to cross over it. The sandbags also reduces movement speed for all units.