USDA contract for frozen eggs awarded to Sonstegard Foods Co. for $3.6M, with 130 days duration

Contract Overview

Contract Amount: $3,622,633 ($3.6M)

Contractor: Sonstegard Foods CO

Awarding Agency: Department of Agriculture

Start Date: 2024-08-23

End Date: 2024-12-31

Contract Duration: 130 days

Daily Burn Rate: $27.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: COMMODITIES FOR USG FOOD DONATIONS: 2000010273/4100030836/EGGS WHOLE FRZ CTN-6/5 LB,EGGS WHOLE LIQ BULK -TANK

Place of Performance

Location: ESTHERVILLE, EMMET County, IOWA, 51334

State: Iowa Government Spending

Plain-Language Summary

Department of Agriculture obligated $3.6 million to SONSTEGARD FOODS CO for work described as: COMMODITIES FOR USG FOOD DONATIONS: 2000010273/4100030836/EGGS WHOLE FRZ CTN-6/5 LB,EGGS WHOLE LIQ BULK -TANK Key points: 1. Value for money appears fair given the fixed-price nature and short performance period. 2. Competition dynamics indicate a full and open process, suggesting potential for competitive pricing. 3. Risk indicators are low due to the firm fixed-price contract and defined scope. 4. Performance context is a short-term supply need for food donations. 5. Sector positioning is within the broader food manufacturing and agricultural support services.

Value Assessment

Rating: fair

The contract value of $3.62 million for frozen eggs over approximately four months suggests a moderate per-unit cost. Benchmarking against similar government food donation contracts is difficult without more granular data on egg types and quantities. However, the firm fixed-price structure provides cost certainty for the government. The duration of 130 days implies a focused procurement for immediate needs rather than a long-term supply agreement.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' which implies that while the competition was open, specific sources may have been excluded for reasons not detailed in this summary. The number of bidders is not specified, but the 'full and open' designation suggests a competitive process was intended. This level of competition generally aids in price discovery and can lead to more favorable pricing for the government.

Taxpayer Impact: A full and open competition, even with exclusions, generally benefits taxpayers by encouraging multiple vendors to bid, which can drive down costs and ensure fair market pricing.

Public Impact

Beneficiaries include individuals and families receiving food assistance through USDA donation programs. Services delivered involve the supply of whole frozen eggs, a key commodity for nutritional support. Geographic impact is likely national, supporting the distribution of food aid across the United States. Workforce implications are primarily within the food manufacturing and logistics sectors involved in production and delivery.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions impacting delivery timelines.
Quality control of frozen eggs to meet nutritional and safety standards.
Fluctuations in commodity prices could affect future contract costs if not adequately hedged.

Positive Signals

Firm fixed-price contract limits cost overrun risks for the government.
Defined performance period reduces long-term commitment and associated uncertainties.
Award to an established food supplier suggests operational capacity and experience.

Sector Analysis

This contract falls within the broader food manufacturing and distribution sector, specifically supporting government food assistance programs. The market for bulk food commodities like frozen eggs is competitive, with several large producers capable of fulfilling government orders. Government procurement in this area is crucial for maintaining food security initiatives and supporting agricultural producers. Comparable spending benchmarks would involve analyzing other USDA food purchase contracts for similar commodities.

Small Business Impact

The contract details do not indicate any specific small business set-aside provisions. Given the nature of bulk commodity procurement, it is likely that larger food manufacturers are the primary participants. There is no explicit information on subcontracting plans, but it is possible that smaller businesses could be involved in logistics or specialized processing if not directly manufacturing the eggs.

Oversight & Accountability

Oversight for this contract would typically fall under 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 contract award databases, though specific performance monitoring details are not provided here. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

USDA Food Purchase Programs
National School Lunch Program
Commodity Supplemental Food Program
Food Bank Network Support

Risk Flags

Potential for supply chain disruptions
Quality assurance requirements for food products
Ambiguity in 'Exclusion of Sources' clause impact

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $3.6 million to SONSTEGARD FOODS CO. COMMODITIES FOR USG FOOD DONATIONS: 2000010273/4100030836/EGGS WHOLE FRZ CTN-6/5 LB,EGGS WHOLE LIQ BULK -TANK

Who is the contractor on this award?

The obligated recipient is SONSTEGARD FOODS CO.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $3.6 million.

What is the period of performance?

Start: 2024-08-23. End: 2024-12-31.

What is the historical spending pattern for frozen eggs by the USDA?

Analyzing historical spending patterns for frozen eggs by the USDA requires access to detailed procurement data over multiple fiscal years. Generally, government agencies like the USDA procure food commodities based on program needs and available funding. Spending can fluctuate based on factors such as agricultural yields, market prices, and the specific requirements of food assistance programs like the Food Purchase Program or emergency food aid initiatives. Without specific historical data, it's difficult to establish a precise trend, but consistent procurement of essential commodities like eggs is typical to support nutritional guidelines and food security objectives. The current contract value of $3.62 million provides a snapshot for the specified period, but a broader trend analysis would necessitate a review of past solicitations and awards for similar items.

How does the unit price of these frozen eggs compare to market rates?

Determining the precise unit price and comparing it to market rates is challenging without knowing the exact quantity (in pounds or cases) associated with the $3.62 million contract value. The description mentions 'EGGS WHOLE FRZ CTN-6/5 LB' and 'EGGS WHOLE LIQ BULK -TANK,' indicating different forms and packaging. To perform a valid comparison, we would need to know the total weight or number of units procured. Market rates for bulk frozen eggs can vary significantly based on seasonality, feed costs, and overall supply and demand. Government contracts often aim for competitive pricing, but factors like specific quality standards, delivery requirements, and the scale of the order can influence the final price. A detailed analysis would involve calculating the implied price per pound or per case and benchmarking it against current wholesale egg prices from industry reports or other government solicitations.

What is Sonstegard Foods Co.'s track record with USDA contracts?

Sonstegard Foods Co. has a history of receiving contracts from the USDA, as indicated by this award. To assess their track record thoroughly, one would need to examine past contract performance, including on-time delivery, quality compliance, and any instances of contract disputes or terminations. A review of federal procurement databases (like FPDS or SAM.gov) would reveal the number and value of previous awards to Sonstegard Foods Co., the agencies involved, and the types of goods or services provided. A positive history of fulfilling similar food commodity contracts would suggest reliability and capability, while a history of issues might raise concerns. Without specific data on past performance beyond this current award, it's presumed they meet the necessary qualifications for this contract.

What are the potential risks associated with this specific contract?

The primary risks associated with this contract are related to supply chain and quality assurance. Given that it involves frozen eggs, there's a risk of spoilage if refrigeration is compromised during transport or storage, although the 'frozen' nature mitigates some immediate spoilage concerns compared to fresh eggs. Delivery delays could also pose a risk, potentially impacting the distribution schedules for food donation programs. Quality control is another factor; ensuring the eggs meet USDA standards for safety and nutritional content is crucial. The firm fixed-price nature of the contract shifts the financial risk of cost overruns to the contractor, Sonstegard Foods Co., which is a positive for the government. However, if unforeseen issues arise that impact the contractor's ability to deliver, it could lead to contract modifications or termination, causing program disruptions.

How does the competition level ('Full and Open Competition After Exclusion of Sources') impact pricing and value?

The designation 'Full and Open Competition After Exclusion of Sources' suggests that while the solicitation was broadly advertised, certain potential offerors were not considered. This could be due to various reasons, such as specific technical requirements, past performance issues, or national security concerns, though these are less likely for a food commodity contract. Ideally, 'full and open' competition maximizes the number of potential bidders, driving down prices through robust market forces. However, the 'exclusion of sources' clause introduces a slight ambiguity. If the exclusion significantly limits the pool of qualified bidders, it could potentially reduce the competitive pressure and lead to less favorable pricing than a truly unrestricted full and open competition. Nonetheless, it generally implies a greater degree of competition than sole-source or limited-source procurements, likely resulting in a reasonable value for the government.

Industry Classification

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

Product/Service Code: SUBSISTENCE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SEALED BID

Solicitation ID: 123J1424B0566

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Sonstegard Foods Company

Address: 5005 S BUR OAK PL, SIOUX FALLS, SD, 57108

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

Financial Breakdown

Contract Ceiling: $3,622,633

Exercised Options: $3,622,633

Current Obligation: $3,622,633

Actual Outlays: $3,620,443

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline