USDA's $7M Contract for UHT Milk to Diversified Foods Inc. Amidst Dairy Sector Volatility

Contract Overview

Contract Amount: $7,065,517 ($7.1M)

Contractor: Diversified Foods Inc

Awarding Agency: Department of Agriculture

Start Date: 2026-04-10

End Date: 2026-12-31

Contract Duration: 265 days

Daily Burn Rate: $26.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: COMMODITIES FOR USG FOOD DONATIONS: 2000011228/4100033988/MILK 2% MILKFAT UHT 2640 BOX-27/8 FL OZ,MILK 1% MILKFAT UHT 2640 BOX-27/8 FL OZ

Place of Performance

Location: EAST SYRACUSE, ONONDAGA County, NEW YORK, 13057

State: New York Government Spending

Plain-Language Summary

Department of Agriculture obligated $7.1 million to DIVERSIFIED FOODS INC for work described as: COMMODITIES FOR USG FOOD DONATIONS: 2000011228/4100033988/MILK 2% MILKFAT UHT 2640 BOX-27/8 FL OZ,MILK 1% MILKFAT UHT 2640 BOX-27/8 FL OZ Key points: 1. The contract is for a significant quantity of UHT milk, a shelf-stable product suitable for food donations. 2. Diversified Foods Inc. secured this contract, indicating their capacity to meet large-scale dairy product manufacturing demands. 3. The firm fixed price contract type offers cost certainty for the government, but may not fully capture market fluctuations. 4. The dairy product manufacturing sector is subject to commodity price volatility, impacting long-term cost projections.

Value Assessment

Rating: good

The contract price of $7,065,517.49 for UHT milk appears reasonable given the large volume and the firm fixed price structure. Benchmarking against similar large-scale commodity procurements for food aid programs would provide a more precise assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a competitive bidding process that likely drove a fair market price. The existence of multiple bids (no: 3) further supports this, indicating active market interest and price discovery.

Taxpayer Impact: The use of full and open competition aims to ensure taxpayer funds are used efficiently by securing the best possible price for essential commodities like milk for donation programs.

Public Impact

Ensures a supply of shelf-stable milk for federal food donation programs, supporting food security initiatives. The contract supports the dairy manufacturing industry, contributing to economic activity within the sector. Provides a predictable supply chain for a critical food commodity, aiding in program planning and execution. The use of UHT milk ensures longer shelf life, reducing waste and increasing the utility of donated products.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases in the dairy market impacting the fixed price contract.
Dependence on a single supplier for a large quantity of a critical commodity.
Logistical challenges in distributing large volumes of milk to various donation points.

Positive Signals

Awarded through full and open competition, suggesting competitive pricing.
Firm fixed price contract provides budget certainty.
Long contract duration (265 days) allows for consistent supply.
Product is UHT milk, offering extended shelf life and reduced spoilage.

Sector Analysis

The procurement falls within the Dry, Condensed, and Evaporated Dairy Product Manufacturing sector. Spending in this area is often influenced by agricultural subsidies, global commodity prices, and demand for food assistance programs. Benchmarks vary widely based on product type and volume.

Small Business Impact

While this contract was awarded to Diversified Foods Inc., analysis does not indicate specific provisions or set-asides for small businesses. Further review would be needed to determine if small businesses participated as subcontractors or if opportunities were missed.

Oversight & Accountability

The contract is managed by the Department of Agriculture's Agricultural Marketing Service. Oversight would focus on delivery schedules, product quality, and adherence to contract terms to ensure effective utilization of funds and program goals.

Related Government Programs

Dry, Condensed, and Evaporated Dairy Product Manufacturing
Department of Agriculture Contracting
Agricultural Marketing Service Programs

Risk Flags

Potential for price escalation beyond contract terms if market prices surge.
Supply chain vulnerability due to single-source award for a large quantity.
Limited visibility into subcontractor performance or small business participation.
Contract duration may not align perfectly with fluctuating demand for donations.
Geographic concentration of supplier (NY) could pose logistical risks for nationwide distribution.

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $7.1 million to DIVERSIFIED FOODS INC. COMMODITIES FOR USG FOOD DONATIONS: 2000011228/4100033988/MILK 2% MILKFAT UHT 2640 BOX-27/8 FL OZ,MILK 1% MILKFAT UHT 2640 BOX-27/8 FL OZ

Who is the contractor on this award?

The obligated recipient is DIVERSIFIED 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 $7.1 million.

What is the period of performance?

Start: 2026-04-10. End: 2026-12-31.

What is the potential impact of dairy market volatility on the long-term cost-effectiveness of this fixed-price contract?

The firm fixed price contract insulates the government from immediate price increases in the dairy market. However, if market prices rise significantly above the contracted rate, the government may be overpaying relative to current market conditions. Conversely, if prices fall, the contractor benefits. Long-term cost-effectiveness depends on the accuracy of the initial price prediction and the duration of market fluctuations relative to the contract period.

How does the reliance on a single supplier for such a large volume of UHT milk affect supply chain resilience?

Reliance on a single supplier for a large volume introduces supply chain risk. Disruptions at the supplier's facility due to unforeseen events (e.g., natural disasters, labor issues, equipment failure) could halt deliveries. While Diversified Foods Inc. is a large entity, contingency planning and robust communication channels are crucial to mitigate potential impacts on food donation programs.

To what extent does the 'full and open competition' ensure optimal value for taxpayer money in this specific UHT milk procurement?

Full and open competition generally promotes optimal value by allowing multiple vendors to bid, fostering price reductions and encouraging efficiency. The fact that three bids were received suggests a competitive environment. However, 'optimal value' also depends on the specific needs of the program, the quality of the product offered, and the long-term reliability of the supplier, not just the lowest price.

Industry Classification

NAICS: Manufacturing › Dairy Product Manufacturing › Dry, Condensed, and Evaporated Dairy Product Manufacturing

Product/Service Code: SUBSISTENCE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Solicitation ID: 123J1426B0186

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 3115 6TH ST, METAIRIE, LA, 70002

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

Financial Breakdown

Contract Ceiling: $7,065,517

Exercised Options: $7,065,517

Current Obligation: $7,065,517

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline