USDA awards $3.8M for cheese blend, highlighting fixed-price adjustments and full competition

Contract Overview

Contract Amount: $3,839,022 ($3.8M)

Contractor: Bongards Creameries

Awarding Agency: Department of Agriculture

Start Date: 2026-04-09

End Date: 2026-06-30

Contract Duration: 82 days

Daily Burn Rate: $46.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: COMMODITIES FOR USG FOOD DONATIONS: 2000011276/4400002544/4100033977/CHEESE BLEND AMER SKM LVS-12/2 LB

Place of Performance

Location: HUMBOLDT, GIBSON County, TENNESSEE, 38343

State: Tennessee Government Spending

Plain-Language Summary

Department of Agriculture obligated $3.8 million to BONGARDS CREAMERIES for work described as: COMMODITIES FOR USG FOOD DONATIONS: 2000011276/4400002544/4100033977/CHEESE BLEND AMER SKM LVS-12/2 LB Key points: 1. Contract value of $3.8M for cheese blend indicates significant demand for food donation commodities. 2. Fixed-price with economic price adjustment (EPA) terms suggest potential for cost fluctuations based on market conditions. 3. Full and open competition suggests a robust bidding process, potentially leading to competitive pricing. 4. Delivery order structure implies a need for timely fulfillment of specific commodity requirements. 5. Contract duration of 82 days points to a short-term, focused procurement. 6. The award to Bongards Creameries, a known supplier, suggests established relationships within the food manufacturing sector.

Value Assessment

Rating: good

The contract value of $3.8M for 20,000 lbs of cheese blend appears reasonable given the fixed-price with economic price adjustment structure. While specific per-unit cost comparisons are difficult without more granular data on cheese blend composition and market fluctuations, the fixed-price element provides a baseline. The economic price adjustment clause, however, introduces variability. Benchmarking against similar USDA food donation procurements would offer further insight into value for money.

Cost Per Unit: N/A

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. This suggests a competitive environment where multiple suppliers had the opportunity to offer their products. The number of bidders is not specified, but the 'full and open' designation implies that the government sought the best possible pricing and terms through a broad solicitation.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive marketplace, which tends to drive down prices and improve the quality of goods and services procured.

Public Impact

Beneficiaries include recipients of USG food donations, likely vulnerable populations domestically or internationally. Services delivered involve the supply of a specific commodity: 20,000 lbs of American-style, low-moisture, part-skim mozzarella cheese blend. Geographic impact is primarily related to the distribution of the donated food, supporting food security initiatives. Workforce implications are minimal for the government, but the contract supports jobs within the dairy and food manufacturing sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for increased costs due to the economic price adjustment clause, which could impact the final expenditure beyond the initial $3.8M.
Reliance on a single supplier for this specific commodity, even if competitively selected, could pose a risk if supply chain disruptions occur.

Positive Signals

Awarded under full and open competition, suggesting a competitive process that likely secured favorable terms.
The contract specifies a clear commodity and quantity, reducing ambiguity in delivery expectations.
The fixed-price component provides a degree of cost certainty for a portion of the contract value.

Sector Analysis

This contract falls within the broader food manufacturing and agricultural commodities sector, specifically related to dairy products. The USDA's Agricultural Marketing Service frequently procures commodities for domestic and international food assistance programs. Spending in this area is driven by legislative mandates and humanitarian goals. Comparable spending benchmarks would involve analyzing other large-scale commodity procurements for food banks, school lunch programs, and international aid.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). While the prime contractor, Bongards Creameries, is a large entity, there is no explicit information on subcontracting plans for small businesses. The impact on the small business ecosystem would depend on whether smaller suppliers are involved in Bongards' supply chain for raw materials or processing.

Oversight & Accountability

Oversight for this contract would primarily fall under the USDA's Agricultural Marketing Service (AMS). The contract's fixed-price with economic price adjustment terms requires careful monitoring of market indices to ensure fair adjustments. Transparency is facilitated by public contract databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the procurement or fulfillment of the contract.

Related Government Programs

USDA Food Purchase for Protection Program
National School Lunch Program
Food Bank Distribution Programs
Commodity Supplemental Food Program
Emergency Food Assistance Program

Risk Flags

Economic Price Adjustment Clause
Potential for Cost Overruns
Supply Chain Vulnerability

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $3.8 million to BONGARDS CREAMERIES. COMMODITIES FOR USG FOOD DONATIONS: 2000011276/4400002544/4100033977/CHEESE BLEND AMER SKM LVS-12/2 LB

Who is the contractor on this award?

The obligated recipient is BONGARDS CREAMERIES.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $3.8 million.

What is the period of performance?

Start: 2026-04-09. End: 2026-06-30.

What is the historical spending pattern for this specific cheese blend commodity by the USDA?

Analyzing historical spending for this specific 'CHEESE BLEND AMER SKM LVS-12/2 LB' commodity requires accessing detailed procurement data over multiple fiscal years. While this specific award is for $3.8M, understanding the typical volume and value procured annually, as well as the number of awards and contractors involved, would provide crucial context. Significant year-over-year fluctuations could indicate changes in program needs, commodity availability, or market pricing trends. Without historical data, it's difficult to assess if this $3.8M award represents a typical, increased, or decreased level of procurement for this item.

How does the per-unit cost of this cheese blend compare to market rates for similar products?

Determining the precise per-unit cost requires dividing the total award amount ($3,839,022.01) by the quantity (20,000 lbs). This yields a cost of approximately $191.95 per pound. This figure needs to be benchmarked against current market rates for bulk, American-style, low-moisture, part-skim mozzarella cheese blends. Factors such as the specific blend composition, fat content, moisture level, and packaging significantly influence market prices. Comparing this $191.95/lb to wholesale prices from other major dairy suppliers or industry reports would reveal if this contract represents a competitive price point or if the economic price adjustment clause might lead to costs exceeding market norms over time.

What is Bongards Creameries' track record with USDA commodity procurements?

Bongards Creameries has a history of supplying dairy products to government entities, including the USDA. Their track record with commodity procurements would involve reviewing past contracts for similar items, delivery performance, compliance with specifications, and any history of disputes or contract modifications. A review of their performance on previous USDA contracts, particularly those involving food donations or school lunch programs, would indicate their reliability and experience in meeting government requirements. Positive past performance suggests a lower risk for this current contract, while negative performance might warrant closer scrutiny.

What are the primary risks associated with a fixed-price contract with economic price adjustment for food commodities?

The primary risk with a fixed-price contract with economic price adjustment (EPA) for food commodities lies in cost volatility. While the fixed-price component offers some initial cost certainty, the EPA clause allows for price changes based on specified economic factors (e.g., raw material costs, labor, transportation). If these factors increase significantly, the final cost to the government could exceed initial projections, potentially straining budgets. Conversely, if factors decrease, the government might benefit from lower prices. The risk for the government is the uncertainty of the final expenditure and the potential for costs to escalate beyond what might be achieved in a purely fixed-price or cost-reimbursement scenario.

How does the 'full and open competition' designation impact the value for taxpayers in this specific procurement?

The 'full and open competition' designation is a strong positive signal for taxpayers in this procurement. It means that the USDA solicited bids from all responsible sources, creating a competitive environment. This process is designed to encourage multiple suppliers to offer their best pricing and terms to win the contract. Consequently, taxpayers benefit from the likelihood that the government secured the cheese blend at a competitive market price, minimizing the risk of overpayment. While the economic price adjustment adds a layer of uncertainty, the initial competitive bidding process aims to establish a fair baseline value.

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: 123J1426B0130

Offers Received: 4

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

Evaluated Preference: NONE

Contractor Details

Address: 13200 COUNTY ROAD 51, NORWOOD YOUNG AMERICA, MN, 55368

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

Financial Breakdown

Contract Ceiling: $3,839,022

Exercised Options: $3,839,022

Current Obligation: $3,839,022

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 123J1426D0004

IDV Type: IDC

Timeline