Leprino Foods Dairy Products Co. awarded $2.57M for processed cheese, highlighting fixed-price contracts with economic adjustments

Contract Overview

Contract Amount: $2,573,093 ($2.6M)

Contractor: Leprino Foods Dairy Products CO

Awarding Agency: Department of Agriculture

Start Date: 2025-11-13

End Date: 2026-01-31

Contract Duration: 79 days

Daily Burn Rate: $32.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: COMMODITIES FOR USG FOOD DONATIONS: 2000011033/4400002385/4100033131/CHEESE MOZ LM PT SKM UNFZ PROC PK(41125)

Place of Performance

Location: ROSWELL, CHAVES County, NEW MEXICO, 88203

State: New Mexico Government Spending

Plain-Language Summary

Department of Agriculture obligated $2.6 million to LEPRINO FOODS DAIRY PRODUCTS CO for work described as: COMMODITIES FOR USG FOOD DONATIONS: 2000011033/4400002385/4100033131/CHEESE MOZ LM PT SKM UNFZ PROC PK(41125) Key points: 1. Contract value of $2.57 million for processed cheese indicates significant demand for dairy commodities. 2. The fixed-price structure with economic price adjustment aims to mitigate market volatility for both parties. 3. Full and open competition suggests a healthy market for dairy product suppliers to the government. 4. The contract duration of 79 days points to a need for timely delivery of essential food items. 5. Awarded by the Department of Agriculture's Agricultural Marketing Service, this contract supports food donation programs. 6. The North American Industry Classification System (NAICS) code 311513 categorizes this as Cheese Manufacturing. 7. The contract's focus on processed cheese (mozzarella) suggests specific nutritional or logistical requirements for its end use.

Value Assessment

Rating: good

The contract value of $2.57 million for 20,000 units of processed cheese appears reasonable given the fixed-price with economic adjustment structure. Benchmarking against similar government procurements for dairy products would provide a more precise value-for-money assessment. The economic price adjustment clause is a common feature in commodity contracts to account for fluctuating market prices, which can protect the government from excessive price increases while ensuring supplier viability.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified bidders had the opportunity to submit proposals. The presence of 6 bids suggests a competitive environment, which typically leads to more favorable pricing for the government. The specific number of bidders and the evaluation criteria would further illuminate the strength of the competition.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down prices through market forces and ensuring the government receives the best value for its expenditure on essential food commodities.

Public Impact

Beneficiaries include recipients of USG food donation programs, likely vulnerable populations or disaster relief efforts. Services delivered include the provision of processed mozzarella cheese, a key component in various food aid packages. The geographic impact is national, as the food donations are distributed across the United States. Workforce implications are primarily within the dairy manufacturing sector, supporting jobs at Leprino Foods and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to the economic price adjustment clause if commodity markets rise significantly.
Reliance on a single awardee for a specific commodity could pose supply chain risks if unforeseen issues arise.
The fixed-price nature, even with adjustments, requires careful monitoring to ensure adherence to the agreed-upon terms.

Positive Signals

Awarded through full and open competition, indicating a robust bidding process and potential for competitive pricing.
The contract supports vital USG food donation programs, aligning with national food security objectives.
The use of a fixed-price contract with economic price adjustment is a standard practice for managing commodity price volatility.

Sector Analysis

The dairy manufacturing sector is a significant part of the U.S. agriculture industry, with substantial government procurement activity for food assistance programs. This contract for processed cheese fits within the broader landscape of commodity procurement by agencies like the Department of Agriculture. Comparable spending benchmarks would involve analyzing other large-scale dairy or food commodity contracts awarded by federal agencies to assess pricing and volume trends.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. The award to Leprino Foods, a large dairy processor, suggests that the scale and nature of this procurement are geared towards established industry players rather than small business set-asides. Further analysis would be needed to determine if small businesses are part of Leprino's broader supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Agriculture's Agricultural Marketing Service, responsible for ensuring contract compliance and delivery. Accountability measures are embedded in the fixed-price with economic price adjustment terms, requiring adherence to quality and delivery schedules. Transparency is facilitated through federal procurement databases where contract awards are publicly disclosed.

Related Government Programs

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

Risk Flags

Economic Price Adjustment Clause
Potential for Market Volatility
Reliance on Large Supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $2.6 million to LEPRINO FOODS DAIRY PRODUCTS CO. COMMODITIES FOR USG FOOD DONATIONS: 2000011033/4400002385/4100033131/CHEESE MOZ LM PT SKM UNFZ PROC PK(41125)

Who is the contractor on this award?

The obligated recipient is LEPRINO FOODS DAIRY PRODUCTS CO.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $2.6 million.

What is the period of performance?

Start: 2025-11-13. End: 2026-01-31.

What is Leprino Foods Dairy Products Co.'s track record with federal contracts, particularly with the Department of Agriculture?

Leprino Foods Dairy Products Co. has a history of federal contracting, primarily supplying dairy products. While specific details require deeper database searches, their involvement in government food programs is not uncommon for a major dairy producer. The Department of Agriculture frequently procures dairy commodities to support various food assistance initiatives. Analyzing past awards to Leprino Foods would reveal patterns in contract types, values, and performance history, providing context for this current award. A review of past performance evaluations, if available, would offer insights into their reliability and quality of service in fulfilling government requirements.

How does the unit price of this processed cheese compare to market rates or similar government contracts?

The provided data does not include a specific per-unit cost, making direct comparison difficult. The total award of $2,573,092.55 for an unspecified quantity (though implied by '2000011033/4400002385/4100033131/CHEESE MOZ LM PT SKM UNFZ PROC PK(41125)') prevents a precise unit price calculation without further information on the exact quantity or weight. To benchmark, one would need to identify the specific product code and quantity, then compare the resulting unit price against commercial wholesale prices for similar mozzarella products and against unit prices from other federal contracts for comparable dairy items. The economic price adjustment clause also complicates direct comparison, as the final price can fluctuate.

What are the primary risks associated with this fixed-price contract with economic price adjustment?

The primary risks for the government in this contract lie in the potential for price escalation due to the economic price adjustment (EPA) clause. If market prices for milk, cheese, or related inputs increase significantly, the contract price will rise accordingly, potentially exceeding initial budget expectations. For the contractor, the risk is that the EPA might not fully compensate for unforeseen cost increases, or that market prices could fall below the fixed component of the price, leading to reduced profit margins. Ensuring the EPA formula accurately reflects relevant market indices and is applied transparently is crucial for mitigating these risks.

How effective are USDA's food donation programs in achieving their objectives, and how do contracts like this contribute?

USDA's food donation programs, such as those supported by this contract, are generally considered effective in addressing food insecurity among vulnerable populations. They provide essential nutritional support to low-income families, children, the elderly, and disaster victims. Contracts like this are critical as they ensure a steady supply of necessary food commodities, like processed cheese, which can be distributed through various channels, including food banks and school meal programs. The effectiveness is measured by metrics such as the number of individuals served, the nutritional quality of food provided, and the reduction in food insecurity rates. This specific contract contributes by securing a key dairy product for these vital initiatives.

What are the historical spending patterns for processed cheese or similar dairy commodities by the Department of Agriculture?

Historical spending patterns for processed cheese and similar dairy commodities by the Department of Agriculture typically show consistent procurement activity, especially for food assistance programs. The USDA's Commodity Credit Corporation (CCC) and the Agricultural Marketing Service (AMS) are key entities involved in these purchases. Spending levels can fluctuate based on appropriations, program needs, agricultural market conditions, and specific policy priorities. Analyzing historical data would reveal trends in contract volumes, average prices paid (adjusted for inflation), and the primary contractors. This contract's value of $2.57 million appears to be a moderate-sized award within the context of ongoing federal dairy procurement.

Industry Classification

NAICS: Manufacturing › Dairy Product Manufacturing › Cheese Manufacturing

Product/Service Code: SUBSISTENCE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: 123J1425B0282

Offers Received: 6

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Address: 1830 W 38TH AVE STE 600, DENVER, CO, 80211

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

Financial Breakdown

Contract Ceiling: $2,573,093

Exercised Options: $2,573,093

Current Obligation: $2,573,093

Actual Outlays: $2,266,644

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 123J1425D0025

IDV Type: IDC

Timeline