USDA's $17.6M Fruit Contract with Pacific Coast Producers Faces Scrutiny Over Pricing and Competition

Contract Overview

Contract Amount: $17,602,271 ($17.6M)

Contractor: Pacific Coast Producers

Awarding Agency: Department of Agriculture

Start Date: 2021-11-15

End Date: 2022-04-03

Contract Duration: 139 days

Daily Burn Rate: $126.6K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: 2000008186/4100024335/PEACHES CLING SLICES EX LT CAN-6/10,PEACHES CLING DICED EX LT CAN-6/10,PEARS SLICES EX LT CAN-6/10,PEARS DICED EX LT CAN-6/10,MIXED FRUIT CAN-24/300,MIXED FRUIT EX LT CAN-6/10,PEACHES CLING SLICES CAN-24/300

Place of Performance

Location: LODI, SAN JOAQUIN County, CALIFORNIA, 95240

State: California Government Spending

Plain-Language Summary

Department of Agriculture obligated $17.6 million to PACIFIC COAST PRODUCERS for work described as: 2000008186/4100024335/PEACHES CLING SLICES EX LT CAN-6/10,PEACHES CLING DICED EX LT CAN-6/10,PEARS SLICES EX LT CAN-6/10,PEARS DICED EX LT CAN-6/10,MIXED FRUIT CAN-24/300,MIXED FRUIT EX LT CAN-6/10,PEACHES CLING SLICES CAN-24/300 Key points: 1. The contract awarded to Pacific Coast Producers for canned fruits highlights a significant expenditure in the food supply sector. 2. Competition was full and open, suggesting a potentially competitive bidding process, but the fixed price with economic adjustment warrants closer examination. 3. Potential risks include price volatility due to economic adjustments and the concentration of awards with a single large supplier. 4. The sector is essential for food security and strategic reserves, making efficient procurement critical.

Value Assessment

Rating: fair

The fixed price with economic price adjustment introduces uncertainty. While the initial price might seem competitive, the final cost could fluctuate significantly based on market conditions, making direct comparison difficult without analyzing the adjustment formula and historical data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is positive for price discovery. However, the fixed-price structure with economic adjustments may limit the long-term price certainty and could lead to higher-than-expected costs if market prices rise substantially.

Taxpayer Impact: Taxpayer funds are utilized for procuring essential food items. While competition aims for efficiency, the economic price adjustment mechanism requires careful monitoring to ensure value for money and prevent excessive spending.

Public Impact

Ensures availability of essential canned fruits for government programs, potentially including food assistance or strategic reserves. Supports the agricultural sector, specifically fruit processors in California. The contract's structure impacts the final cost to taxpayers through price adjustments based on economic factors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic Price Adjustment
Potential for Cost Overruns
Limited Transparency on Final Cost

Positive Signals

Full and Open Competition
Supports Agricultural Sector
Essential Food Procurement

Sector Analysis

This contract falls within the broader food and agriculture sector, specifically focusing on processed fruits. Government procurement in this area often supports food security initiatives and agricultural markets. Benchmarks for similar large-scale fruit procurement contracts would typically consider volume, type of fruit, processing method, and packaging.

Small Business Impact

The data indicates the award went to Pacific Coast Producers, a large entity. There is no explicit information provided on whether small businesses were involved as subcontractors or if specific set-asides were utilized for this particular contract, suggesting a potential gap in small business participation.

Oversight & Accountability

Oversight is primarily managed by the Department of Agriculture's Agricultural Marketing Service. The contract's fixed-price nature with economic adjustments necessitates robust monitoring to ensure costs remain reasonable and that the government receives fair value throughout the contract period.

Related Government Programs

Fruit and Vegetable Canning
Department of Agriculture Contracting
Agricultural Marketing Service Programs

Risk Flags

Economic Price Adjustment Clause
Potential for Cost Escalation
Lack of Small Business Participation Data
Limited Transparency on Final Contract Value

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $17.6 million to PACIFIC COAST PRODUCERS. 2000008186/4100024335/PEACHES CLING SLICES EX LT CAN-6/10,PEACHES CLING DICED EX LT CAN-6/10,PEARS SLICES EX LT CAN-6/10,PEARS DICED EX LT CAN-6/10,MIXED FRUIT CAN-24/300,MIXED FRUIT EX LT CAN-6/10,PEACHES CLING SLICES CAN-24/300

Who is the contractor on this award?

The obligated recipient is PACIFIC COAST PRODUCERS.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $17.6 million.

What is the period of performance?

Start: 2021-11-15. End: 2022-04-03.

What is the typical range for the economic price adjustment clause in similar fruit procurement contracts, and how does it compare to the potential impact on this contract's final cost?

Economic price adjustment clauses in food procurement can vary widely depending on the commodity and market volatility. For canned fruits, adjustments might be tied to indices for labor, energy, packaging materials, and raw fruit costs. Without specific historical data or the exact formula used in this contract, it's difficult to benchmark. However, significant fluctuations in these input costs could potentially increase the contract's final value by 5-15% or more, impacting the overall taxpayer expenditure.

Given the full and open competition, why was a fixed-price contract with economic adjustments chosen over a firm fixed-price contract, and what are the associated risks to the government?

A fixed-price contract with economic price adjustments is often chosen when there's a high degree of uncertainty in input costs, such as labor, energy, or raw materials, over the contract's duration. This structure aims to protect the contractor from unforeseen cost increases, potentially encouraging more bids. However, it shifts the risk of cost overruns to the government, as the final price is not fixed and could exceed initial projections if market conditions deteriorate.

How does the procurement of canned fruits through this contract align with the Department of Agriculture's broader goals for food security, agricultural support, and efficient government spending?

This contract directly supports food security by ensuring the availability of essential food items. It also provides economic support to fruit producers and processors within the agricultural sector. However, the efficiency of government spending is contingent on the effectiveness of the economic price adjustment clause; if it leads to significantly higher costs than anticipated, it could undermine the goal of efficient procurement, necessitating careful oversight.

Industry Classification

NAICS: Manufacturing › Fruit and Vegetable Preserving and Specialty Food Manufacturing › Fruit and Vegetable Canning

Product/Service Code: SUBSISTENCE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: 123J1422B0070/4100024335

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Address: 631 N CLUFF AVE, LODI, CA, 95240

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

Financial Breakdown

Contract Ceiling: $17,602,271

Exercised Options: $17,602,271

Current Obligation: $17,602,271

Actual Outlays: $17,598,282

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 123J1421D0028

IDV Type: IDC

Timeline