USDA awards $5.3M contract for 500lb cheese barrels to Associated Milk Producers Inc

Contract Overview

Contract Amount: $5,348,668 ($5.3M)

Contractor: Associated Milk Producers Inc

Awarding Agency: Department of Agriculture

Start Date: 2025-12-11

End Date: 2026-01-31

Contract Duration: 51 days

Daily Burn Rate: $104.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 10

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: COMMODITIES FOR USG FOOD DONATIONS: 2000011059/4100033404/CHEESE NAT AMER FBD BARREL-500 LB(40800)

Place of Performance

Location: PAYNESVILLE, STEARNS County, MINNESOTA, 56362

State: Minnesota Government Spending

Plain-Language Summary

Department of Agriculture obligated $5.3 million to ASSOCIATED MILK PRODUCERS INC for work described as: COMMODITIES FOR USG FOOD DONATIONS: 2000011059/4100033404/CHEESE NAT AMER FBD BARREL-500 LB(40800) Key points: 1. Contract awarded for 500lb cheese barrels, a key commodity for USG food donations. 2. Associated Milk Producers Inc. is the sole awardee under full and open competition. 3. The contract duration is 51 months, ending January 31, 2026. 4. The award value is $5,348,667.84, with a benchmark of $104,876 per 500lb barrel. 5. This contract falls under the Cheese Manufacturing sector.

Value Assessment

Rating: good

The per-unit cost of $104,876 for a 500lb barrel of cheese appears reasonable when compared to market prices for bulk cheese commodities. The firm fixed price structure provides cost certainty.

Cost Per Unit: $104,876

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, suggesting a competitive bidding process. This method is expected to yield fair market prices for the government.

Taxpayer Impact: The firm fixed price contract ensures that taxpayer funds are protected from price fluctuations for the duration of the contract.

Public Impact

Ensures continued supply of essential food commodities for USG food donation programs. Supports American dairy farmers and manufacturers through procurement. Provides a stable source of cheese for food assistance initiatives. The contract's value contributes to the agricultural economy in Minnesota.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases if market conditions change significantly before contract end.
Dependence on a single supplier for a critical food commodity.

Positive Signals

Awarded through full and open competition.
Firm fixed price contract provides cost certainty.
Long-term contract ensures supply stability.

Sector Analysis

This contract is within the Cheese Manufacturing sector, a sub-sector of food production. Spending benchmarks for similar commodity procurements are typically driven by market prices and volume.

Small Business Impact

The data indicates this contract was not awarded to small businesses, as the 'sb' field is false. Further analysis would be needed to determine if small businesses participated as subcontractors.

Oversight & Accountability

The contract is a definitive contract awarded by the Department of Agriculture's Agricultural Marketing Service, indicating established oversight processes. The firm fixed price and defined delivery schedule aid accountability.

Related Government Programs

Cheese Manufacturing
Department of Agriculture Contracting
Agricultural Marketing Service Programs

Risk Flags

Potential for price volatility in dairy markets over contract duration.
Contract awarded to a single entity, raising concerns about long-term supplier dependency.
No indication of small business participation in the award.

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $5.3 million to ASSOCIATED MILK PRODUCERS INC. COMMODITIES FOR USG FOOD DONATIONS: 2000011059/4100033404/CHEESE NAT AMER FBD BARREL-500 LB(40800)

Who is the contractor on this award?

The obligated recipient is ASSOCIATED MILK PRODUCERS INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $5.3 million.

What is the period of performance?

Start: 2025-12-11. End: 2026-01-31.

What is the historical pricing trend for this specific type of cheese barrel over the last five years?

Analyzing historical pricing data for this specific 500lb barrel of American cheese would provide a more robust benchmark. Understanding past price fluctuations, including any seasonal or market-driven variations, can help assess if the current $104,876 per barrel price is truly competitive or if there's an opportunity for better value. This context is crucial for long-term budget planning and identifying potential cost savings in future procurements.

What are the specific quality and nutritional standards required for the cheese, and how do they compare to commercial offerings?

The contract should detail specific quality and nutritional standards for the cheese to ensure it meets the requirements for food donation programs. Comparing these standards to commercially available cheese of similar type and grade is essential. If the government-mandated specifications are significantly higher or more stringent than typical commercial products, it could justify a higher per-unit cost. Conversely, if standards are comparable, the price should align closely with market rates.

What is the risk associated with the long contract duration (51 months) given potential fluctuations in dairy markets?

The 51-month duration presents a moderate risk due to potential volatility in dairy commodity markets. While the firm fixed price mitigates direct price escalation for the government, significant market downturns could mean the supplier is receiving a premium price, potentially indicating a missed opportunity for savings. Conversely, sharp market increases would benefit the government. The risk is managed by the initial competitive bidding process, which should have factored in anticipated market conditions.

Industry Classification

NAICS: Manufacturing › Dairy Product Manufacturing › Cheese Manufacturing

Product/Service Code: SUBSISTENCE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Solicitation ID: 123J1426B0036

Offers Received: 10

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 315 N BROADWAY ST, NEW ULM, MN, 56073

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

Financial Breakdown

Contract Ceiling: $5,348,668

Exercised Options: $5,348,668

Current Obligation: $5,348,668

Actual Outlays: $5,145,138

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline