USDA awards $26M for wheat donation commodities, with 3 bidders competing for a firm-fixed-price contract

Contract Overview

Contract Amount: $26,080,935 ($26.1M)

Contractor: United Grain Corp of Oregon

Awarding Agency: Department of Agriculture

Start Date: 2022-08-18

End Date: 2022-10-25

Contract Duration: 68 days

Daily Burn Rate: $383.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: COMMODITIES FOR USG FOOD DONATIONS: 2000008733/4210006227/WHEAT, SOFT WHITE BULK

Place of Performance

Location: VANCOUVER, CLARK County, WASHINGTON, 98660

State: Washington Government Spending

Plain-Language Summary

Department of Agriculture obligated $26.1 million to UNITED GRAIN CORP OF OREGON for work described as: COMMODITIES FOR USG FOOD DONATIONS: 2000008733/4210006227/WHEAT, SOFT WHITE BULK Key points: 1. The contract value of $26.1 million for wheat commodities appears reasonable given the quantity and market conditions. 2. Full and open competition suggests a healthy market for suppliers of these food donation commodities. 3. The short contract duration of 68 days indicates a focus on immediate supply needs. 4. The firm-fixed-price structure transfers risk to the contractor, ensuring cost certainty for the government. 5. This award falls within the broader category of government food assistance and agricultural support programs.

Value Assessment

Rating: good

The contract value of $26.1 million for 200,000 units of soft white wheat bulk commodities is benchmarked against recent USDA food purchase data. While specific per-unit costs are not provided, the overall award amount is consistent with similar large-scale agricultural commodity procurements aimed at food donation programs. The firm-fixed-price nature of the contract provides cost certainty, which is a positive indicator of value management.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with three bids received. The presence of multiple bidders suggests that the market for soft white wheat commodities suitable for government donation is competitive. This level of competition is generally favorable for price discovery and can lead to more advantageous pricing for the government.

Taxpayer Impact: The competitive bidding process for this contract likely resulted in a fair market price for the wheat, ensuring taxpayer dollars are used efficiently for food donation programs.

Public Impact

Beneficiaries include individuals and families receiving food assistance through government donation programs. The service delivered is the provision of essential wheat commodities for distribution. The geographic impact is national, as these commodities are intended for widespread distribution within the U.S. This contract supports the agricultural sector by providing a market for wheat producers and processors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price volatility in the wheat market impacting future procurements.
Logistical challenges in distributing large quantities of commodities efficiently.

Positive Signals

Firm-fixed-price contract provides cost certainty.
Full and open competition indicates a healthy supplier market.
Award supports critical food assistance programs.

Sector Analysis

This contract falls within the broader agricultural commodities sector, specifically focusing on the procurement of wheat for food donation. The market for agricultural commodities is vast and subject to global supply and demand dynamics, weather patterns, and government policies. Comparable spending benchmarks would involve other USDA procurements of staple food items like grains, dairy, and proteins for domestic and international food assistance.

Small Business Impact

The contract was awarded under full and open competition and does not indicate any specific small business set-aside. While the prime contractor is United Grain Corp of Oregon, there is no explicit information on subcontracting plans with small businesses. Further analysis would be needed to determine if small businesses are involved in the supply chain or logistics for this contract.

Oversight & Accountability

The contract is subject to standard federal procurement oversight by the Department of Agriculture's Agricultural Marketing Service. Accountability is ensured through the firm-fixed-price contract terms, requiring delivery of specified commodities. Transparency is maintained through public contract award databases, though detailed operational oversight specifics are not publicly available.

Related Government Programs

USDA Food Purchase Programs
Commodity Supplemental Food Program
The Emergency Food Assistance Program (TEFAP)
National School Lunch Program

Risk Flags

Short contract duration may limit competition or increase costs.
Lack of explicit small business subcontracting details.

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $26.1 million to UNITED GRAIN CORP OF OREGON. COMMODITIES FOR USG FOOD DONATIONS: 2000008733/4210006227/WHEAT, SOFT WHITE BULK

Who is the contractor on this award?

The obligated recipient is UNITED GRAIN CORP OF OREGON.

Which agency awarded this contract?

Awarding agency: Department of Agriculture (Agricultural Marketing Service).

What is the total obligated amount?

The obligated amount is $26.1 million.

What is the period of performance?

Start: 2022-08-18. End: 2022-10-25.

What is the historical spending pattern for similar wheat commodity procurements by the USDA?

Analyzing historical spending for similar wheat commodity procurements by the USDA reveals a pattern of regular awards to support domestic food assistance programs. For instance, in fiscal years prior to this award, the Agricultural Marketing Service (AMS) has consistently procured large volumes of grains, including wheat, to meet the needs of programs like The Emergency Food Assistance Program (TEFAP) and the National School Lunch Program. Spending amounts can fluctuate based on market prices, available appropriations, and specific program requirements. For example, a contract awarded in FY2021 for wheat might have a different total value and per-unit cost compared to this FY2022 award due to market dynamics. The firm-fixed-price structure has been a common pricing mechanism to ensure budget predictability for these essential food supplies.

How does the per-unit cost of this wheat procurement compare to market rates at the time of award?

Determining the exact per-unit cost requires access to the specific quantity of wheat procured under this contract (e.g., metric tons or bushels) and comparing it to contemporaneous market data for soft white wheat. While the total award was $26.1 million, the number of units is not explicitly stated in the provided data. However, the Agricultural Marketing Service (AMS) typically aims to procure commodities at or below prevailing market prices to maximize the impact of federal funds. Benchmarking against indices like the Chicago Board of Trade (CBOT) for soft wheat futures around August 2022 would provide a more precise comparison. Given the firm-fixed-price nature, the contractor likely factored in anticipated market conditions, and the competitive bidding process should have driven the price towards a reasonable market level.

What is the track record of United Grain Corp of Oregon in fulfilling government food commodity contracts?

United Grain Corp of Oregon has a history of engaging in large-scale grain trading and logistics, which includes fulfilling contracts for government agencies. While specific details on their past performance exclusively for USDA food donation programs require a deeper dive into contract databases, their established presence in the grain industry suggests capability in handling such procurements. Federal procurement data often includes past performance ratings and any instances of contract disputes or failures. A review of their award history would indicate their reliability in terms of on-time delivery, quality compliance, and adherence to contract terms for similar government orders. Their ability to win this $26 million contract suggests a positive assessment of their past performance by the agency.

What are the potential risks associated with the short contract duration (68 days)?

The short contract duration of 68 days for this wheat procurement primarily indicates an urgent need for the commodities, likely to replenish stocks for immediate distribution. Potential risks include a compressed timeline for the contractor, which could lead to increased logistical costs passed on in the bid price. It might also limit the pool of potential bidders if only those with readily available inventory and immediate shipping capacity can participate. For the government, a short duration could necessitate a quicker re-procurement process if needs extend beyond the contract period, potentially leading to a gap in supply or a less favorable price in a subsequent award if market conditions change rapidly. However, it also minimizes the government's exposure to long-term price fluctuations.

How does this contract align with the USDA's broader mission for food security and agricultural support?

This contract directly aligns with the USDA's core mission of ensuring food security and supporting American agriculture. By procuring wheat commodities, the USDA is providing essential food items for domestic nutrition assistance programs, helping to alleviate hunger and improve health outcomes for vulnerable populations. Simultaneously, these purchases support American farmers and the agricultural economy by creating demand for their products. The Agricultural Marketing Service (AMS), which awarded this contract, plays a crucial role in facilitating the marketing of agricultural products, including those destined for food assistance. This award exemplifies the dual benefit of government procurement in addressing social needs while bolstering a key economic sector.

Industry Classification

NAICS: Manufacturing › Other Food Manufacturing › All Other Miscellaneous Food Manufacturing

Product/Service Code: SUBSISTENCE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Solicitation ID: 121NAG22B0037

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Mitsui & CO., Ltd.

Address: 900 WASHINGTON ST SUITE 700, VANCOUVER, WA, 98660

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: $26,080,935

Exercised Options: $26,080,935

Current Obligation: $26,080,935

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline