Cargill awarded $31M contract for wheat and sorghum to support USG food donations

Contract Overview

Contract Amount: $31,055,087 ($31.1M)

Contractor: Cargill, Incorporated

Awarding Agency: Department of Agriculture

Start Date: 2022-08-30

End Date: 2022-12-15

Contract Duration: 107 days

Daily Burn Rate: $290.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: COMMODITIES FOR USG FOOD DONATIONS: 2000008753/4210006239/WHEAT, HARD RED WINTER BULK,SORGHUM BULK

Place of Performance

Location: HOUSTON, HARRIS County, TEXAS, 77015

State: Texas Government Spending

Plain-Language Summary

Department of Agriculture obligated $31.1 million to CARGILL, INCORPORATED for work described as: COMMODITIES FOR USG FOOD DONATIONS: 2000008753/4210006239/WHEAT, HARD RED WINTER BULK,SORGHUM BULK Key points: 1. Contract value appears reasonable given the commodity market fluctuations during the period. 2. Full and open competition suggests a competitive bidding process. 3. Short contract duration may indicate a need for timely delivery of essential food supplies. 4. The contract supports a critical government function of food aid. 5. Performance risk is moderate, given the nature of commodity procurement and delivery.

Value Assessment

Rating: good

The contract value of $31.1 million for wheat and sorghum is within a reasonable range for bulk commodity procurement. While specific market benchmarks for this exact period are complex due to global supply chain issues, the price reflects the acquisition of significant quantities of essential food staples. The firm fixed-price structure helps mitigate cost overruns for the government, ensuring predictable expenditure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. With four bids received, the level of competition suggests that the government received a fair market price. This process is designed to ensure the government obtains the best value by leveraging market forces.

Taxpayer Impact: A competitive bidding process for essential food commodities helps ensure taxpayer dollars are used efficiently, preventing overpayment and maximizing the quantity of food that can be procured for donation programs.

Public Impact

Beneficiaries include individuals and communities receiving USG-supported food donations, both domestically and internationally. Services delivered include the procurement and bulk delivery of hard red winter wheat and sorghum. Geographic impact is broad, potentially reaching diverse populations through established food aid channels. Workforce implications are indirect, supporting agricultural producers and logistics providers within the supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price volatility in global commodity markets impacting final cost if not managed effectively.
Logistical challenges in bulk commodity transportation and delivery could affect timeliness.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Full and open competition suggests a robust market response and potential for competitive pricing.
Contract supports a vital government mission for food security and humanitarian aid.

Sector Analysis

This contract falls within the broader agricultural commodities sector, specifically focusing on bulk grain procurement for food assistance programs. The market for these commodities is global and subject to significant price fluctuations based on weather, geopolitical events, and demand. Comparable spending benchmarks would involve other large-scale government procurements of grains for domestic or international aid, often managed by agencies like the USDA or USAID.

Small Business Impact

The contract data indicates that small business participation was not a specific set-aside requirement for this procurement. Given the nature of bulk commodity trading, large corporations like Cargill are typically primary participants. There is no explicit information on subcontracting plans with small businesses, but the scale of this contract suggests that the primary supplier would likely be a large entity.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Agriculture's Agricultural Marketing Service. As a definitive contract awarded through full and open competition, standard procurement regulations and oversight mechanisms apply. Transparency is generally maintained through contract award databases, though specific delivery and performance details may be less public.

Related Government Programs

USDA McGovern-Dole International Food for Education and Child Nutrition Program
World Food Programme Procurement
Commodity Credit Corporation (CCC) Programs

Risk Flags

Commodity price volatility
Supply chain disruptions
Timeliness of delivery

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $31.1 million to CARGILL, INCORPORATED. COMMODITIES FOR USG FOOD DONATIONS: 2000008753/4210006239/WHEAT, HARD RED WINTER BULK,SORGHUM BULK

Who is the contractor on this award?

The obligated recipient is CARGILL, INCORPORATED.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $31.1 million.

What is the period of performance?

Start: 2022-08-30. End: 2022-12-15.

What is the historical spending pattern for similar commodity procurements by the Agricultural Marketing Service?

Analyzing historical spending for similar commodity procurements by the Agricultural Marketing Service (AMS) reveals a pattern of significant investment in food aid and agricultural support programs. AMS frequently procures bulk commodities like grains, dairy, and other staples to fulfill domestic nutrition assistance and international food aid commitments. Spending levels can fluctuate annually based on congressional appropriations, global food security needs, and prevailing market prices. For instance, during periods of high global demand or supply disruptions, contract values for similar commodities may increase. The agency often utilizes various contract types, including firm fixed-price agreements, to manage costs effectively for these large-volume purchases. Historical data indicates a consistent need for these procurements, underscoring their importance in the agency's mission.

How does the awarded price compare to market rates for Hard Red Winter Wheat and Sorghum during the contract period?

Benchmarking the awarded price of $31.1 million for Hard Red Winter Wheat and Sorghum against market rates during the contract period (August 30, 2022, to December 15, 2022) requires careful consideration of commodity market volatility. This period saw fluctuating global prices influenced by factors such as the war in Ukraine, global supply chain issues, and weather patterns affecting harvests. While a precise per-unit comparison is not readily available without detailed market data for the specific delivery windows, the firm fixed-price nature of the contract suggests that Cargill agreed to deliver at a price that was competitive at the time of award. Government procurement specialists would have evaluated bids against available market intelligence and futures prices to ensure value. Generally, large-scale government procurements aim to secure prices at or below prevailing market averages, especially when awarded through full and open competition.

What are the specific performance metrics and delivery requirements outlined in the contract?

The provided data does not detail the specific performance metrics or delivery requirements for this contract. However, for bulk commodity procurements of this nature, typical requirements would include adherence to quality standards (e.g., grade, moisture content, purity for wheat and sorghum), precise delivery schedules to designated ports or facilities, and compliance with packaging and handling regulations. Performance would likely be assessed based on the timeliness and completeness of deliveries, the quality of the commodities provided, and adherence to all contractual terms. Failure to meet these requirements could result in penalties or contract termination. The Agricultural Marketing Service would have established clear specifications to ensure the commodities were suitable for their intended use in food donation programs.

What is Cargill, Incorporated's track record with federal food commodity contracts?

Cargill, Incorporated has a substantial and long-standing track record of engaging in federal food commodity contracts, particularly with agencies like the Department of Agriculture (USDA) and the Department of Defense (DoD). As one of the world's largest privately held corporations with extensive operations in food, agriculture, financial, and industrial products, Cargill is a frequent supplier of bulk commodities. Their experience spans various government programs, including domestic food assistance, international food aid, and military rations. They have consistently demonstrated the capacity to manage large-scale procurements, complex logistics, and global supply chains necessary to fulfill federal requirements. While specific contract performance details are not always publicly detailed, Cargill's continued participation in competitive federal bidding processes suggests a history of meeting contractual obligations and providing competitive pricing.

What is the potential impact of this contract on the broader food donation ecosystem?

This contract plays a crucial role in the broader food donation ecosystem by ensuring the availability of essential grain commodities for U.S. government-supported food aid programs. By procuring large volumes of wheat and sorghum, the government, through this contract with Cargill, directly contributes to the supply chain that feeds millions of individuals facing food insecurity, both domestically and internationally. The timely delivery of these staples supports humanitarian efforts and can help stabilize food markets in recipient regions. Furthermore, such contracts can indirectly support American farmers by creating consistent demand for their products. The effectiveness of the food donation ecosystem relies heavily on the reliable and cost-efficient procurement of these fundamental food items, making contracts like this foundational to the overall mission.

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: 121NAG22B0040

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 15407 MCGINTY RD W, WAYZATA, MN, 55391

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $31,055,087

Exercised Options: $31,055,087

Current Obligation: $31,055,087

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline