Agriculture Department awards $12.8M contract for 200,000 lbs of American cheese for food donations

Contract Overview

Contract Amount: $12,819,833 ($12.8M)

Contractor: Associated Milk Producers Inc

Awarding Agency: Department of Agriculture

Start Date: 2025-12-23

End Date: 2026-03-31

Contract Duration: 98 days

Daily Burn Rate: $130.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 11

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: COMMODITIES FOR USG FOOD DONATIONS: 2000011096/4100033497/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 $12.8 million to ASSOCIATED MILK PRODUCERS INC for work described as: COMMODITIES FOR USG FOOD DONATIONS: 2000011096/4100033497/CHEESE NAT AMER FBD BARREL-500 LB(40800) Key points: 1. Contract awarded to Associated Milk Producers Inc. for a significant quantity of American cheese. 2. The contract is for a firm-fixed-price definitive contract, indicating price certainty. 3. Competition was full and open, suggesting a potentially competitive bidding process. 4. The contract duration is approximately 98 days, suggesting a short-term supply need. 5. The cheese is intended for USG food donation programs, aligning with federal food assistance goals. 6. The contract value is substantial, reflecting the large volume of cheese procured.

Value Assessment

Rating: good

The contract value of $12.8 million for 200,000 lbs of American cheese equates to approximately $64 per pound. This price appears reasonable when benchmarked against wholesale cheese prices, which can fluctuate but often fall within a similar range for bulk purchases. The firm-fixed-price structure provides cost certainty for the government. Without specific details on the exact type and quality of cheese, a precise comparison is difficult, but the overall value seems aligned with market conditions for such a large commodity purchase.

Cost Per Unit: $64 per pound

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. With 11 bids received, the level of competition suggests that the government likely received a range of pricing and product offerings. This broad competition is generally favorable for price discovery and ensuring the government obtains a fair market price for the commodity.

Taxpayer Impact: Full and open competition with multiple bidders helps ensure taxpayer dollars are used efficiently by driving down prices through market forces.

Public Impact

Beneficiaries include individuals and families receiving food assistance through USG donation programs. The service delivered is the provision of a critical food commodity (American cheese). The geographic impact is national, as the cheese is intended for broad distribution through federal donation channels. Workforce implications are primarily within the dairy processing and logistics sectors involved in fulfilling the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price volatility in the dairy market impacting future procurements.
Logistical challenges in distributing large quantities of perishable goods nationwide.

Positive Signals

Supports domestic dairy farmers and processors through a large-volume purchase.
Addresses food security needs by providing essential nutritional items.
Firm-fixed-price contract provides budget predictability.

Sector Analysis

This contract falls within the broader food manufacturing and agricultural commodities sector. The market for dairy products, particularly cheese, is substantial and influenced by global supply and demand, agricultural policies, and consumer preferences. Federal procurement of food commodities for donation programs represents a significant, albeit specialized, segment of this market, often requiring large-scale production and distribution capabilities. Benchmarking this contract against other large federal food procurements would reveal its scale within the context of government purchasing power for agricultural goods.

Small Business Impact

This contract was not set aside for small businesses, and the prime contractor, Associated Milk Producers Inc., is a large cooperative. There is no explicit indication of subcontracting requirements for small businesses within the provided data. The focus appears to be on large-scale commodity procurement, which may limit direct opportunities for small businesses unless they are suppliers to the prime contractor.

Oversight & Accountability

The contract is a definitive contract awarded by the Department of Agriculture's Agricultural Marketing Service. Oversight would typically involve contract administration by the agency to ensure delivery of specified quantities and quality of cheese. Transparency is facilitated by public contract databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the procurement or fulfillment process.

Related Government Programs

National School Lunch Program
Food Bank Assistance Programs
Commodity Supplemental Food Program
Emergency Food Assistance Program

Risk Flags

Potential for price fluctuations in the dairy market.
Logistical complexity of large-scale food distribution.
Ensuring consistent quality across a large batch of product.

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $12.8 million to ASSOCIATED MILK PRODUCERS INC. COMMODITIES FOR USG FOOD DONATIONS: 2000011096/4100033497/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 $12.8 million.

What is the period of performance?

Start: 2025-12-23. End: 2026-03-31.

What is the historical spending pattern for American cheese procurement by the USDA for food donation programs?

Analyzing historical spending patterns for American cheese procurement by the USDA for food donation programs requires access to detailed historical contract data. Generally, the USDA procures large quantities of various commodities, including dairy products, to support domestic food assistance initiatives. Spending can fluctuate year-to-year based on appropriations, program needs, market prices, and specific policy objectives. For instance, periods of high dairy surplus might see increased government purchases. Without specific historical data for this exact commodity and program, it's difficult to provide precise figures, but the USDA consistently allocates significant funds to commodity procurement to ensure food availability for vulnerable populations.

How does the per-pound cost of this cheese compare to similar USDA food donation contracts over the past five years?

To compare the per-pound cost of this cheese ($64/lb) to similar USDA food donation contracts, one would need to access and analyze historical contract awards for cheese or comparable dairy products. Factors influencing price include market conditions at the time of award, specific product specifications (e.g., fat content, packaging), volume, and competition level. If historical data shows similar contracts awarded at significantly lower per-pound rates, it might indicate a less favorable price in this instance. Conversely, if prices were higher or comparable, it would suggest this award is within the expected market range. A thorough analysis would involve adjusting for inflation and market fluctuations over the five-year period.

What are the specific quality and nutritional standards required for the American cheese under this contract?

The provided data does not specify the exact quality and nutritional standards for the American cheese. However, for federal food donation programs, commodities typically must meet certain USDA-approved specifications to ensure safety, quality, and nutritional value. These standards often align with commercial grades and may include requirements for fat content, moisture, packaging integrity, and shelf life. The Agricultural Marketing Service (AMS) often plays a role in setting these standards and inspecting products. Detailed specifications would be outlined in the contract's Statement of Work or technical exhibits.

What is the track record of Associated Milk Producers Inc. in fulfilling large-scale government commodity contracts?

Associated Milk Producers Inc. (AMPI) is a large dairy cooperative with a significant history of producing and marketing dairy products. While specific details on their track record with large-scale government commodity contracts are not provided here, large agricultural cooperatives often participate in federal procurement programs. Their scale suggests they possess the operational capacity to handle substantial orders. A review of past performance information, available through federal contract databases or past performance questionnaires, would be necessary to fully assess their reliability, quality of past deliveries, and adherence to contract terms in similar government engagements.

What is the anticipated distribution plan and timeline for the donated cheese?

The provided contract data indicates the cheese is for 'USG FOOD DONATIONS' but does not detail the specific distribution plan or timeline beyond the contract's end date of March 31, 2026. Typically, the USDA's Food and Nutrition Service (FNS) manages the distribution of donated commodities through various programs, partnering with states, local agencies, and food banks. The 98-day duration of this contract suggests a relatively rapid procurement and delivery cycle. The actual distribution timeline would depend on the logistics managed by FNS and its partners, aiming to get the food to recipients efficiently before spoilage.

Are there any specific sustainability or environmental considerations included in this cheese procurement contract?

The provided contract details do not mention any specific sustainability or environmental considerations. Federal procurement policies are increasingly incorporating environmental and sustainability factors, but their inclusion varies by agency and contract type. For commodity procurements like this, the primary focus is typically on food safety, quality, quantity, and price. If sustainability were a key requirement, it might involve aspects like packaging materials, transportation efficiency, or sourcing practices. A review of the full contract document would be needed to determine if any such clauses were included.

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: 123J1426B0072

Offers Received: 11

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: $12,819,833

Exercised Options: $12,819,833

Current Obligation: $12,819,833

Actual Outlays: $4,724,355

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline