USDA's $78M Fluid Milk Contract Awarded to Borden Dairy Company Amidst Firm Fixed Price Terms

Contract Overview

Contract Amount: $78,098,398 ($78.1M)

Contractor: Borden Dairy Company

Awarding Agency: Department of Agriculture

Start Date: 2020-05-20

End Date: 2020-09-19

Contract Duration: 122 days

Daily Burn Rate: $640.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 568

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: 2000006919/4100020229/FLUID MILK

Place of Performance

Location: DALLAS, DALLAS County, TEXAS, 75215

State: Texas Government Spending

Plain-Language Summary

Department of Agriculture obligated $78.1 million to BORDEN DAIRY COMPANY for work described as: 2000006919/4100020229/FLUID MILK Key points: 1. Contract value of $78.1 million for fluid milk. 2. Awarded to Borden Dairy Company under full and open competition. 3. Potential risk associated with firm fixed price in a volatile market. 4. Spending falls within the broader agricultural sector.

Value Assessment

Rating: good

The contract value of $78.1 million for fluid milk appears reasonable given the duration and scope. Benchmarking against similar large-scale dairy procurement contracts would provide further validation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

Full and open competition was utilized, suggesting a robust price discovery process. This method typically leads to competitive pricing as multiple vendors vied for the contract.

Taxpayer Impact: The competitive nature of the award is beneficial for taxpayers, likely resulting in a fair market price for the fluid milk procured.

Public Impact

Ensures a steady supply of fluid milk for federal programs or operations. Supports a major dairy producer, potentially impacting regional economies. Price stability is maintained through the firm fixed price structure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Firm fixed price may not account for unforeseen market fluctuations.
Lack of small business participation noted.

Positive Signals

Full and open competition ensures market-driven pricing.
Clear contract award with defined start and end dates.

Sector Analysis

This contract falls under the agricultural sector, specifically dairy procurement. Spending benchmarks for similar federal fluid milk contracts would indicate if this award is within the typical range.

Small Business Impact

The data indicates that small businesses were not directly involved in this contract award, as the 'ss' (small business set-aside) and 'sb' (small business) flags are false. Further analysis could explore subcontracting opportunities.

Oversight & Accountability

The contract was awarded by the Department of Agriculture's Agricultural Marketing Service, suggesting established oversight mechanisms. The definitive contract type implies a clear agreement with defined terms and conditions.

Related Government Programs

Cheese Manufacturing
Department of Agriculture Contracting
Agricultural Marketing Service Programs

Risk Flags

Potential for overpayment due to firm fixed price in a volatile commodity market.
No indication of small business participation.
Contract duration is relatively short (122 days), potentially limiting long-term supplier relationships.
Specific use case for the fluid milk is not detailed, making full value assessment difficult.

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $78.1 million to BORDEN DAIRY COMPANY. 2000006919/4100020229/FLUID MILK

Who is the contractor on this award?

The obligated recipient is BORDEN DAIRY COMPANY.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $78.1 million.

What is the period of performance?

Start: 2020-05-20. End: 2020-09-19.

What is the potential impact of the firm fixed price on the government if milk prices significantly decrease during the contract period?

A firm fixed price contract means the government pays the agreed-upon price regardless of market fluctuations. If milk prices decrease significantly, the government would still pay the higher, pre-determined price, potentially leading to overpayment compared to current market rates. This structure benefits the contractor by shielding them from price drops but can be disadvantageous to the government if market conditions shift unfavorably.

How does the lack of small business participation affect overall market competition and economic impact?

The absence of small business participation in this specific contract means that opportunities for smaller, potentially more agile companies to compete and secure a portion of this federal spending are missed. This can limit the diversity of suppliers and potentially reduce the overall economic benefit distributed to smaller enterprises within the dairy sector. Future solicitations could consider strategies to encourage small business involvement.

What are the key performance indicators (KPIs) used to measure the success of this fluid milk contract?

Key performance indicators for this fluid milk contract would likely include on-time delivery rates, adherence to quality and freshness standards, proper storage and handling compliance, and accurate invoicing. The Agricultural Marketing Service would monitor these metrics to ensure the contractor, Borden Dairy Company, meets all contractual obligations and provides the specified quantity and quality of fluid milk effectively.

Industry Classification

NAICS: Manufacturing › Dairy Product Manufacturing › Cheese Manufacturing

Product/Service Code: SUBSISTENCE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: 123J1420R0377/4100020229

Offers Received: 568

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Borden Dairy Holdings, LLC (UEI: 117374719)

Address: 8750 N CENTRAL EXPY STE 400, DALLAS, TX, 75231

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

Financial Breakdown

Contract Ceiling: $78,098,398

Exercised Options: $78,098,398

Current Obligation: $78,098,398

Actual Outlays: $43,973,322

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline