USDA's $125M Fluid Milk Contract Awarded to Prairie Farms Dairy Inc. Amidst Full and Open Competition

Contract Overview

Contract Amount: $125,115,922 ($125.1M)

Contractor: Prairie Farms Dairy Inc

Awarding Agency: Department of Agriculture

Start Date: 2020-05-14

End Date: 2020-09-19

Contract Duration: 128 days

Daily Burn Rate: $977.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 568

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: 2000006919/4100020247/FLUID MILK,DAIRY PRODUCTS BOX

Place of Performance

Location: CARLINVILLE, MACOUPIN County, ILLINOIS, 62626

State: Illinois Government Spending

Plain-Language Summary

Department of Agriculture obligated $125.1 million to PRAIRIE FARMS DAIRY INC for work described as: 2000006919/4100020247/FLUID MILK,DAIRY PRODUCTS BOX Key points: 1. The contract value of $125.1 million for fluid milk and dairy products represents a significant investment by the Department of Agriculture. 2. Prairie Farms Dairy Inc. secured this award through full and open competition, indicating a competitive bidding process. 3. The fixed-price contract type suggests a degree of price certainty for the government, though market fluctuations can still pose risks. 4. The sector is essential for food security and public health, with dairy products being a staple.

Value Assessment

Rating: good

The contract's firm fixed price structure provides a clear cost baseline. Benchmarking against similar large-scale dairy procurements would be necessary for a more precise value assessment, but the scale suggests competitive pricing was likely achieved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

Full and open competition was utilized, allowing multiple vendors to bid. This method is generally effective in driving competitive pricing and ensuring the government receives fair market value for its procurements.

Taxpayer Impact: The competitive nature of this award suggests taxpayers are likely benefiting from a price that reflects market conditions rather than being inflated due to limited vendor options.

Public Impact

Ensures a stable supply of essential dairy products for federal programs. Supports the agricultural economy by providing a large contract to a dairy producer. Potential impact on local dairy farmers supplying Prairie Farms Dairy Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price volatility in dairy markets impacting fixed-price contract.
Dependence on a single supplier for a large volume of a critical commodity.

Positive Signals

Awarded through full and open competition.
Firm fixed price contract provides cost certainty.
Significant contract value indicates potential for economies of scale.

Sector Analysis

This contract falls within the food and agriculture sector, specifically dairy product manufacturing and distribution. Spending benchmarks for similar large-scale dairy procurements would indicate if this $125 million award is within the typical range for federal needs.

Small Business Impact

While the award went to a large entity, the competitive process could have involved smaller suppliers or subcontractors within Prairie Farms Dairy Inc.'s network. Further analysis would be needed to determine the direct impact on small businesses.

Oversight & Accountability

The contract was awarded under full and open competition, suggesting adherence to standard procurement regulations. Oversight would focus on contract performance, delivery, and adherence to specifications to ensure accountability.

Related Government Programs

Cheese Manufacturing
Department of Agriculture Contracting
Agricultural Marketing Service Programs

Risk Flags

Potential for price escalation due to market volatility.
Supply chain disruption risk.
Dependence on a single large supplier.
Need for detailed unit cost benchmarking.

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $125.1 million to PRAIRIE FARMS DAIRY INC. 2000006919/4100020247/FLUID MILK,DAIRY PRODUCTS BOX

Who is the contractor on this award?

The obligated recipient is PRAIRIE FARMS DAIRY INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $125.1 million.

What is the period of performance?

Start: 2020-05-14. End: 2020-09-19.

What is the historical price trend for fluid milk and dairy products that could inform the risk associated with this fixed-price contract?

Analyzing historical price data for fluid milk and dairy products over the contract period and preceding years is crucial. Significant price volatility, driven by factors like feed costs, weather, and global demand, could expose the government to financial risk if prices rise substantially above the contracted rate. Conversely, stable or declining prices would represent a favorable outcome for the government under a fixed-price agreement.

How does the awarded price per unit compare to industry benchmarks for similar dairy products procured by government agencies?

Benchmarking the per-unit cost against similar contracts awarded by other federal agencies or large institutional buyers is essential for assessing value. If Prairie Farms Dairy Inc.'s pricing is significantly higher than comparable procurements, it could indicate a lack of optimal price discovery or potential inefficiencies. Conversely, pricing below benchmarks would suggest a favorable deal for the government.

What are the potential supply chain risks associated with awarding such a large volume of dairy products to a single entity?

Awarding a substantial volume of dairy products to a single entity like Prairie Farms Dairy Inc. introduces supply chain risks. Disruptions due to unforeseen events such as natural disasters affecting production facilities, labor issues, or transportation challenges could impact the consistent availability of these essential products. Contingency plans and robust supplier management by the Agricultural Marketing Service are critical to mitigate these risks.

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: 123J1420R0377/4100020247

Offers Received: 568

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 3744 STAUNTON RD, EDWARDSVILLE, IL, 62025

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: $125,115,922

Exercised Options: $125,115,922

Current Obligation: $125,115,922

Actual Outlays: $59,367,462

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline