Agriculture Department awards $893K contract for U.S. food donation cheese, with 71 days duration

Contract Overview

Contract Amount: $893,226 ($893.2K)

Contractor: Associated Milk Producers Inc

Awarding Agency: Department of Agriculture

Start Date: 2026-02-18

End Date: 2026-04-30

Contract Duration: 71 days

Daily Burn Rate: $12.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 8

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: COMMODITIES FOR USG FOOD DONATIONS: 2000011191/4400002546/4100033797/CHEESE NAT AMER FBD BARREL-500 LB(40800)

Place of Performance

Location: SANBORN, OBRIEN County, IOWA, 51248

State: Iowa Government Spending

Plain-Language Summary

Department of Agriculture obligated $893,226.24 to ASSOCIATED MILK PRODUCERS INC for work described as: COMMODITIES FOR USG FOOD DONATIONS: 2000011191/4400002546/4100033797/CHEESE NAT AMER FBD BARREL-500 LB(40800) Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract is for cheese manufacturing, a key component of U.S. food donation programs. 3. The fixed-price contract with economic price adjustment aims to mitigate cost fluctuations. 4. Delivery order issued against a larger contract, indicating a phased approach to procurement. 5. The duration of 71 days suggests a short-term need for these specific commodities. 6. The awardee, Associated Milk Producers Inc., is a significant player in the dairy industry.

Value Assessment

Rating: good

The contract value of $893,226.24 for 200,000 lbs of cheese appears reasonable given market prices for bulk dairy products. Benchmarking against similar government food donation procurements would provide further insight, but the fixed-price with economic adjustment structure is standard for mitigating commodity price volatility. The unit price, while not explicitly stated, can be inferred to be around $4.47 per pound, which is within typical ranges for processed cheese in bulk.

Cost Per Unit: Approximately $4.47 per pound (inferred)

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 8 bids suggests a healthy level of competition for this specific delivery order. A competitive process generally leads to better price discovery and ensures the government receives fair market value for the goods procured.

Taxpayer Impact: Taxpayers benefit from a competitive process that drives down costs and ensures efficient use of funds for essential food donation programs.

Public Impact

Beneficiaries of U.S. food donation programs, including low-income families and food banks, will receive essential dairy products. The contract ensures the availability of processed cheese, a versatile and nutritious food item for distribution. The geographic impact is national, supporting federal food assistance initiatives across the United States. The contract supports the agricultural sector by providing a market for dairy producers and manufacturers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to economic price adjustment clause if dairy commodity markets rise significantly.
Reliance on a single awardee for this specific delivery order, though competition was present during initial bidding.

Positive Signals

Awarded through full and open competition, indicating a robust bidding process.
Fixed-price contract with economic price adjustment helps manage cost volatility.
Clear delivery timeline and specifications for the commodity.

Sector Analysis

This contract falls within the Food Manufacturing sector, specifically focusing on dairy products. The U.S. government is a significant purchaser of agricultural commodities for domestic food assistance programs, such as the Food Purchase and Distribution Program. Spending in this area is crucial for supporting both domestic agriculture and food security initiatives. Comparable spending benchmarks would involve analyzing historical awards for similar dairy products under food donation programs.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. This suggests that the primary award went to a larger entity, and the direct impact on the small business ecosystem may be limited unless Associated Milk Producers Inc. utilizes small business suppliers in its operations.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Agriculture's Agricultural Marketing Service (AMS), which manages procurement for food donation programs. Accountability measures are embedded in the contract terms, including delivery specifications and price adjustments. Transparency is generally maintained through public contract databases where award details are recorded.

Related Government Programs

Food Purchase and Distribution Program
National School Lunch Program
Commodity Supplemental Food Program

Risk Flags

Potential for cost escalation due to Economic Price Adjustment clause.
Short contract duration may impact contractor's ability to achieve maximum economies of scale.

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $893,226.24 to ASSOCIATED MILK PRODUCERS INC. COMMODITIES FOR USG FOOD DONATIONS: 2000011191/4400002546/4100033797/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 $893,226.24.

What is the period of performance?

Start: 2026-02-18. End: 2026-04-30.

What is the historical spending pattern for cheese procurement by the Department of Agriculture for food donation programs?

Analyzing historical spending for cheese procurement by the USDA's food donation programs requires access to detailed procurement data over several fiscal years. Typically, the USDA procures large quantities of dairy products, including cheese, through programs like the Food Purchase and Distribution Program. Spending can fluctuate based on appropriations, agricultural market conditions, and specific program needs. For instance, in fiscal years with surplus dairy production or specific legislative mandates, cheese procurement might increase. Conversely, budget constraints or shifts in program priorities could lead to reduced spending. Benchmarking this $893K award against average annual spending for similar cheese quantities would provide context on its relative scale.

How does the unit price of this cheese award compare to recent government procurements of similar dairy products?

The inferred unit price of approximately $4.47 per pound for this cheese award can be compared to other government contracts for bulk cheese. Recent awards for processed cheese blocks or barrels under programs like the National School Lunch Program or other food assistance initiatives would serve as relevant benchmarks. Factors such as cheese type (e.g., cheddar, mozzarella), form (e.g., block, shredded, processed), packaging, and delivery location can influence price. If this $4.47/lb price is significantly higher or lower than comparable recent awards, it could indicate either exceptional value or potential overpricing, warranting further investigation into contract specifics and market conditions at the time of award.

What are the specific risks associated with the 'Economic Price Adjustment' clause in this contract?

The primary risk associated with the 'Economic Price Adjustment' (EPA) clause in this contract is potential cost escalation for the government if market prices for dairy commodities, particularly cheese, increase significantly between the contract award and delivery. While EPA clauses are designed to protect contractors from unforeseen cost increases and ensure supply continuity, they can lead to higher-than-anticipated expenditures for the government. The specific formula or index used for adjustment is critical; if it closely tracks cheese market prices, the government bears the risk of market volatility. Conversely, if the adjustment is capped or tied to a less volatile index, the risk is mitigated.

What is the track record of Associated Milk Producers Inc. in fulfilling government contracts, particularly for food donations?

Associated Milk Producers Inc. (AMPI) is a large dairy cooperative with a history of supplying dairy products to various markets, including government programs. Their track record in fulfilling government contracts, especially for food donations, would need to be assessed through databases like the Federal Procurement Data System (FPDS) or SAM.gov. Key indicators include on-time delivery rates, contract compliance, past performance reviews, and any history of disputes or contract terminations. A strong track record suggests reliability, while a history of issues might indicate potential performance risks for this current award.

How does the competition level (8 bidders) for this delivery order reflect on the overall market for government dairy procurement?

Receiving 8 bids for this specific delivery order suggests a reasonably competitive market for this type of dairy product procurement by the Department of Agriculture. A higher number of bidders generally indicates broader market interest and potentially better price competition. However, the context of the parent contract is also important; if the initial solicitation for the larger contract attracted many bidders, then 8 for a delivery order might be standard. If the parent contract had limited competition, 8 bidders here could be a positive sign. Analyzing the number of bidders across similar USDA food donation contracts would provide a clearer picture of market dynamics.

What are the potential implications of the short contract duration (71 days) on the supply chain and pricing for these food donations?

The short duration of 71 days for this contract implies a focused, short-term need for a specific quantity of cheese. This can streamline the procurement and delivery process, potentially reducing administrative overhead. From a supply chain perspective, it suggests that the contractor needs to be agile in production and logistics to meet the deadline. For pricing, a shorter duration might sometimes lead to slightly higher per-unit costs if the contractor cannot achieve economies of scale associated with longer-term commitments. However, it also limits the government's exposure to long-term market fluctuations, especially with the EPA clause in place.

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: 123J1426B0118

Offers Received: 8

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

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: $893,226

Exercised Options: $893,226

Current Obligation: $893,226

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 123J1426D0006

IDV Type: IDC

Timeline