USDA awards $11.9M contract for wheat donations to Cargill, Inc., with a firm fixed price

Contract Overview

Contract Amount: $11,954,450 ($12.0M)

Contractor: Cargill, Incorporated

Awarding Agency: Department of Agriculture

Start Date: 2026-01-16

End Date: 2026-03-15

Contract Duration: 58 days

Daily Burn Rate: $206.1K/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: 2000011135/4210007477/WHEAT, HARD RED WINTER BULK

Place of Performance

Location: HOUSTON, HARRIS County, TEXAS, 77015

State: Texas Government Spending

Plain-Language Summary

Department of Agriculture obligated $12.0 million to CARGILL, INCORPORATED for work described as: COMMODITIES FOR USG FOOD DONATIONS: 2000011135/4210007477/WHEAT, HARD RED WINTER BULK Key points: 1. Contract value represents a significant investment in food commodity procurement for donation programs. 2. The award to a single, large contractor suggests potential economies of scale but warrants scrutiny for competitive pricing. 3. A short performance period of 58 days indicates a focused delivery requirement. 4. The contract's fixed-price nature shifts performance risk to the contractor. 5. Geographic focus on Texas for delivery implies specific logistical considerations. 6. The absence of small business set-asides means opportunities for smaller firms are not explicitly prioritized in this award.

Value Assessment

Rating: good

The contract value of $11.9 million for wheat is substantial, but without specific unit cost data or comparable contracts for similar commodity types and quantities, a precise value-for-money assessment is challenging. The firm fixed-price structure is generally favorable for the government as it caps costs. However, benchmarking against market prices for hard red winter wheat in bulk during the contract period would be necessary for a more definitive evaluation of pricing efficiency. The contract's duration is relatively short, suggesting a specific, time-bound need.

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 offers. The presence of 3 bidders suggests a moderate level of competition for this specific commodity procurement. While competition exists, the number of bidders could be higher for a contract of this value, potentially impacting price discovery. Further analysis would require knowing the specific requirements and market dynamics that influenced bidder participation.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it encourages multiple vendors to bid, driving down prices and ensuring the government receives competitive offers. A moderate number of bidders, like the three in this case, suggests that while competition was present, there may be room for further market engagement to ensure the most cost-effective outcome.

Public Impact

Beneficiaries include individuals and communities receiving food assistance through USDA donation programs. The service delivered is the procurement and likely delivery of a large quantity of hard red winter wheat. The geographic impact is primarily focused on Texas, where the wheat is scheduled for delivery. Workforce implications are likely within Cargill's logistics and supply chain operations, as well as potentially impacting agricultural producers supplying the wheat.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price volatility in the wheat market impacting the fixed price if market conditions change significantly.
Logistical challenges in ensuring timely delivery within the short performance window.
Dependence on a single large contractor for a critical commodity.

Positive Signals

Firm fixed-price contract shifts cost overrun risk to the contractor.
Full and open competition process aims to ensure fair pricing.
Award to an established entity like Cargill suggests a degree of reliability in supply chain management.

Sector Analysis

This contract falls within the broader agricultural commodities sector, specifically focusing on the procurement of wheat for federal food donation programs managed by the USDA's Agricultural Marketing Service. The market for bulk agricultural commodities is global and subject to significant price fluctuations based on weather, global demand, and trade policies. Comparable spending benchmarks would involve analyzing other large-scale commodity procurements by government agencies for food aid or strategic reserves, considering factors like commodity type, volume, and delivery terms.

Small Business Impact

This contract does not appear to have a small business set-aside. The award to Cargill, Inc., a large corporation, indicates that the primary focus was on fulfilling the commodity requirement through established supply chains. There is no explicit indication of subcontracting requirements for small businesses within the provided data, suggesting that opportunities for small businesses may be limited unless they are direct suppliers to Cargill for this specific contract.

Oversight & Accountability

Oversight for this contract would primarily reside with the USDA's Agricultural Marketing Service (AMS). As a definitive contract with a firm fixed price, oversight would focus on ensuring delivery of the specified quantity and quality of wheat within the contracted timeframe and location. The contract's fixed-price nature simplifies financial oversight by capping the government's expenditure. Transparency is facilitated by the contract award notice, and any specific Inspector General jurisdiction would depend on the nature of any potential issues arising during performance.

Related Government Programs

USDA Food Purchase Programs
Commodity Supplemental Food Program
National School Lunch Program
Federal Food Assistance Programs
Agricultural Commodity Procurement

Risk Flags

Short performance period may limit competition and increase delivery risk.
Potential for market price fluctuations impacting fixed-price contract.
Broad NAICS code may obscure specific nature of services provided.

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $12.0 million to CARGILL, INCORPORATED. COMMODITIES FOR USG FOOD DONATIONS: 2000011135/4210007477/WHEAT, HARD RED WINTER BULK

Who is the contractor on this award?

The obligated recipient is CARGILL, INCORPORATED.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $12.0 million.

What is the period of performance?

Start: 2026-01-16. End: 2026-03-15.

What is the historical spending pattern for similar wheat procurement contracts by the USDA?

Analyzing historical spending for similar USDA wheat procurement contracts requires access to detailed federal procurement databases. Generally, the USDA procures large quantities of agricultural commodities for various programs, including food donations, school lunches, and international food aid. Spending patterns can vary significantly year-to-year based on appropriations, program needs, and global market prices for wheat. Contracts for bulk commodities like wheat are often awarded through competitive bidding processes, with prices fluctuating based on market conditions. Historical data would reveal trends in contract values, awarded quantities, and the primary contractors involved. For instance, examining contracts from previous years for 'Hard Red Winter Wheat Bulk' would provide context on typical price ranges and volumes procured by the Agricultural Marketing Service or other relevant USDA agencies.

How does the awarded price per unit compare to market benchmarks for Hard Red Winter Wheat?

To compare the awarded price per unit to market benchmarks, we first need to calculate the approximate unit price from the total award and quantity. The total award is $11,954,450. Assuming the contract is for a standard bulk quantity, such as metric tons, we would need the contracted quantity. If we assume a typical bulk shipment size or estimate based on past contracts, we could derive a per-ton or per-bushel price. Market benchmarks for Hard Red Winter (HRW) wheat can be obtained from sources like the Chicago Board of Trade (CBOT) futures prices, USDA's Agricultural Marketing Service (AMS) price reports, or international commodity market data. Comparing the contract's implied unit price against these real-time or historical market averages, adjusted for delivery location and terms, would reveal whether the government secured a favorable price. A significant deviation from market rates, either higher or lower, would warrant further investigation into the contract's specifics and competitive landscape.

What is Cargill, Incorporated's track record with USDA commodity procurement contracts?

Cargill, Incorporated is a major global food and agriculture company with a long history of supplying commodities, including grains like wheat, to various entities, including government agencies. Their track record with USDA commodity procurement contracts is likely extensive, given their scale and market position. Historically, large corporations like Cargill often participate in and win significant government contracts due to their established supply chains, logistical capabilities, and ability to meet large-volume requirements. Performance on such contracts typically involves delivering specified commodities on time and to quality standards. While specific details of past performance on USDA contracts would require a deep dive into federal procurement records and performance evaluations, Cargill's general reputation in the agricultural sector suggests a capacity to handle complex supply chain operations necessary for government procurements.

What are the potential risks associated with a short performance period (58 days) for commodity delivery?

A short performance period of 58 days for commodity delivery, such as wheat, introduces several potential risks. Firstly, it can limit the pool of potential bidders, as only those with immediate capacity and readily available inventory may be able to respond effectively. This reduced competition could potentially lead to higher prices. Secondly, it increases the risk of delivery delays if unforeseen logistical issues arise, such as transportation disruptions, weather events impacting transit, or port congestion. The contractor faces pressure to procure and deliver quickly, which might necessitate premium costs for expedited services or sourcing. For the government, a delay could disrupt the intended distribution or use of the donated food, impacting program beneficiaries. Ensuring robust contingency planning and clear communication protocols becomes critical within such a tight timeframe.

How does the 'All Other Miscellaneous Food Manufacturing' NAICS code impact the understanding of this contract?

The NAICS code '311999 - All Other Miscellaneous Food Manufacturing' is a broad classification that encompasses establishments primarily engaged in manufacturing food products not elsewhere classified. For this specific contract involving bulk wheat, this NAICS code might seem unusual if one expects a primary code related to grain trading or wholesaling. However, it could apply if Cargill, Inc. is processing the wheat in some manner (e.g., milling into flour, packaging into specific formats for donation) as part of fulfilling the contract, or if the code is used broadly by the agency to categorize the overall nature of the transaction. It suggests the contract might involve more than just simple commodity trading and could include some level of value-added processing or specialized packaging relevant to the donation program's requirements, deviating from a pure bulk commodity sale.

Industry Classification

NAICS: Manufacturing › Other Food Manufacturing › All Other Miscellaneous Food Manufacturing

Product/Service Code: SUBSISTENCE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Solicitation ID: 121NFG26B0001

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 15407 MCGINTY RD W, WAYZATA, MN, 55391

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: $11,954,450

Exercised Options: $11,954,450

Current Obligation: $11,954,450

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline