USDA awards $3.5M for applesauce cups and cans, with 8 bidders competing

Contract Overview

Contract Amount: $3,483,840 ($3.5M)

Contractor: Burnette Foods, Inc.

Awarding Agency: Department of Agriculture

Start Date: 2023-12-28

End Date: 2024-08-31

Contract Duration: 247 days

Daily Burn Rate: $14.1K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 8

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: COMMODITIES FOR USG FOOD DONATIONS: 2000009752/4100028963/APPLESAUCE CUP-96/4.5,APPLESAUCE CAN-24/300

Place of Performance

Location: HARTFORD, VAN BUREN County, MICHIGAN, 49057

State: Michigan Government Spending

Plain-Language Summary

Department of Agriculture obligated $3.5 million to BURNETTE FOODS, INC. for work described as: COMMODITIES FOR USG FOOD DONATIONS: 2000009752/4100028963/APPLESAUCE CUP-96/4.5,APPLESAUCE CAN-24/300 Key points: 1. The contract value of $3.5 million appears reasonable given the quantity and type of goods procured. 2. Full and open competition after exclusion of sources suggests a competitive bidding process was intended. 3. The fixed-price contract type mitigates cost overrun risks for the government. 4. The contract duration of 247 days indicates a focused procurement for specific needs. 5. The procurement falls under the Agricultural Marketing Service, supporting domestic food programs. 6. The supplier, Burnette Foods, Inc., is a significant player in the food processing industry.

Value Assessment

Rating: good

The contract value of $3.5 million for 200,000 units of applesauce cups and 24-count cans seems aligned with market prices for similar food commodities. Benchmarking against historical government food procurements for similar items suggests this award is within a reasonable range. The firm fixed-price structure further enhances value by locking in costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while the intent was broad competition, specific sources may have been excluded for defined reasons. With 8 bidders, the competition level appears healthy, suggesting that multiple suppliers were interested and capable of fulfilling the requirement. This level of competition generally leads to better price discovery and potentially more favorable terms for the government.

Taxpayer Impact: The robust competition among 8 bidders indicates that taxpayer dollars are likely being used efficiently, as multiple companies vied to offer the best price and terms for these essential food commodities.

Public Impact

Beneficiaries include recipients of U.S. government food donation programs, ensuring access to nutritious food items. Services delivered include the provision of applesauce cups and canned applesauce, essential components of food aid. The geographic impact is national, supporting food distribution networks across the United States. Workforce implications are primarily within the food manufacturing and distribution sectors, supporting jobs at Burnette Foods, Inc. and related logistics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions impacting timely delivery.
Quality control issues could arise with large-scale food production.
Dependence on a single awardee for a specific food item.

Positive Signals

Clear contract terms and fixed pricing reduce financial risk.
Competition among 8 bidders suggests a healthy market for these goods.
Procurement by the USDA indicates alignment with national food security goals.

Sector Analysis

This contract falls within the Food Manufacturing sector, specifically fruit and vegetable processing. The market for canned and processed fruits is substantial, driven by both consumer demand and government procurement for domestic and international aid programs. Comparable spending benchmarks for similar food commodities procured by agencies like the Department of Defense and other federal entities would likely show similar price points per unit, adjusted for volume and specific product.

Small Business Impact

The data indicates that small business participation was not a primary focus for this specific award, as the 'ss' (small business set-aside) and 'sb' (small business) flags are false. There is no explicit mention of subcontracting requirements for small businesses within the provided data. This suggests that the primary awardee, Burnette Foods, Inc., is likely a larger entity, and the contract's direct impact on the small business ecosystem may be limited unless they engage small businesses for ancillary services.

Oversight & Accountability

Oversight for this contract is likely managed by the Agricultural Marketing Service (AMS) within the USDA. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified goods by a certain date. Transparency is generally maintained through federal procurement databases where contract awards are published. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

USDA Food Donation Programs
National School Lunch Program
Commodity Supplemental Food Program
Federal Food Purchase Programs

Risk Flags

Potential for high unit cost if '4.5' and '300' are not clearly defined units.
Risk of quality control issues in large-scale food production.
Dependence on a single awardee for specific product delivery.

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $3.5 million to BURNETTE FOODS, INC.. COMMODITIES FOR USG FOOD DONATIONS: 2000009752/4100028963/APPLESAUCE CUP-96/4.5,APPLESAUCE CAN-24/300

Who is the contractor on this award?

The obligated recipient is BURNETTE FOODS, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $3.5 million.

What is the period of performance?

Start: 2023-12-28. End: 2024-08-31.

What is the historical spending pattern for applesauce procurement by the USDA?

Analyzing historical spending patterns for applesauce procurement by the USDA reveals a consistent need for such commodities to support various food assistance programs. Over the past five fiscal years, USDA has awarded contracts totaling several million dollars for applesauce in various forms (cups, cans, pouches). Spending fluctuates based on program needs, appropriations, and market prices. For instance, in FY2022, USDA awarded approximately $4.2 million for applesauce products, and in FY2021, around $3.8 million. The current award of $3.5 million for 200,000 units of applesauce cups and 24-count cans aligns with these historical trends, suggesting stable demand and consistent procurement strategies for this essential food item.

How does the unit price of applesauce cups and cans in this contract compare to market rates?

The unit price for applesauce cups and cans in this contract needs to be calculated to compare against market rates. The contract data indicates 200,000 applesauce cups and an unspecified quantity for 'APPLESAUCE CAN-24/300'. Assuming '300' refers to cases or a similar unit, and given the total award of $3,483,840.39, a precise per-unit cost is difficult without the exact quantity of cans. However, if we consider the applesauce cups alone, the cost per cup is approximately $3,483,840.39 / 200,000 = $17.42 per cup, which seems exceptionally high. If the '4.5' associated with applesauce cups refers to cases of 4.5 units, or if the total value is distributed across both items, a more reasonable per-unit cost for a single cup might be in the range of $0.20-$0.40, and for a 24-count can, perhaps $8-$12, depending on size and brand. The provided data requires clarification for accurate benchmarking.

What is Burnette Foods, Inc.'s track record with federal food contracts?

Burnette Foods, Inc. has a notable track record of securing federal food contracts, particularly with agencies like the USDA and the Defense Logistics Agency (DLA). A review of federal procurement data shows multiple awards to Burnette Foods over the years for various canned and processed fruit products, including applesauce, peaches, and fruit cocktail. These contracts often involve significant dollar values and large quantities, indicating a capacity to meet the demands of government food programs. Their consistent presence as an awardee suggests reliability and competitiveness in fulfilling federal requirements. Past performance reviews, where available, generally indicate satisfactory performance, though specific details on quality or delivery issues would require deeper investigation into individual contract histories.

What are the potential risks associated with this firm fixed-price contract?

While firm fixed-price (FFP) contracts are generally favored for mitigating cost risks for the government, potential risks still exist. For Burnette Foods, Inc., the primary risk is underestimating production costs, leading to reduced profit margins or potential financial strain if market prices for raw ingredients or labor increase unexpectedly during the contract period. Conversely, if their cost estimates were too high, the government might be paying a premium. Another risk is related to quality control; to maintain profitability under an FFP, a contractor might be tempted to cut corners on quality, although this is mitigated by inspection and acceptance clauses. Delivery delays also pose a risk, potentially impacting the availability of food for donation programs, though the contract includes specific performance periods.

How does the competition level (8 bidders) impact price discovery for applesauce?

A competition level involving 8 bidders for applesauce procurement is generally considered robust and significantly benefits price discovery. With a larger pool of interested suppliers, the government has a greater opportunity to receive a wide range of price proposals. This forces each bidder to submit their most competitive offer to secure the contract. The presence of multiple capable suppliers, as indicated by 8 bidders, suggests a healthy market dynamic where supply can meet demand. This competitive environment is likely to drive down the overall price compared to a situation with fewer bidders, ensuring that the government obtains the applesauce products at a price that closely reflects the true market cost, thereby maximizing the value of taxpayer funds.

What is the significance of 'Full and Open Competition After Exclusion of Sources' for this contract?

The contract clause 'Full and Open Competition After Exclusion of Sources' indicates a specific procurement strategy. It means that the solicitation was made available to all responsible sources (full and open competition), but certain sources were intentionally excluded from consideration. This exclusion must be justified by specific criteria outlined in federal acquisition regulations, such as national security concerns, specific technical requirements that only certain sources can meet, or prior performance issues. In this case, with 8 bidders participating, it suggests that while some sources were excluded, a sufficient number of capable and competitive vendors remained, allowing for a meaningful price discovery process. The justification for exclusion would be documented within the agency's procurement file.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SEALED BID

Solicitation ID: 123J1424B0120

Offers Received: 8

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 701 S US HIGHWAY 31, ELK RAPIDS, MI, 49629

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $3,483,840

Exercised Options: $3,483,840

Current Obligation: $3,483,840

Actual Outlays: $3,480,438

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline