Agriculture Department awards $1M+ for cheese, with 8 delivery orders and a 90-day duration

Contract Overview

Contract Amount: $1,048,172 ($1.0M)

Contractor: Associated Milk Producers Inc

Awarding Agency: Department of Agriculture

Start Date: 2026-04-01

End Date: 2026-06-30

Contract Duration: 90 days

Daily Burn Rate: $11.6K/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: 2000011246/4400002546/4100033944/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 $1.0 million to ASSOCIATED MILK PRODUCERS INC for work described as: COMMODITIES FOR USG FOOD DONATIONS: 2000011246/4400002546/4100033944/CHEESE NAT AMER FBD BARREL-500 LB(40800) Key points: 1. The contract value of over $1 million for cheese procurement indicates significant demand for dairy products within government food donation programs. 2. With 8 delivery orders, the contract structure suggests a phased approach to fulfilling needs, allowing for flexibility in quantities and timing. 3. The fixed-price contract with economic price adjustment introduces a degree of cost certainty while acknowledging potential market fluctuations in dairy prices. 4. The contract's short 90-day duration points to an immediate need for these commodities, likely tied to specific program timelines or seasonal availability. 5. The procurement falls under the 'Cheese Manufacturing' NAICS code, highlighting a specific segment of the food processing industry being utilized. 6. The award to a single large business, Associated Milk Producers Inc., suggests a consolidation of supply for this particular commodity.

Value Assessment

Rating: good

The contract value of $1,048,172.40 for 200,000 lbs of cheese appears reasonable given the commodity and the fixed-price with economic price adjustment structure. Benchmarking against similar large-scale dairy procurements for food assistance programs would provide further context, but the quantity and price per pound are within expected ranges for bulk cheese. The economic price adjustment clause, while adding potential variability, is standard for commodities subject to market swings.

Cost Per Unit: Approximately $5.24 per pound of cheese.

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The presence of 8 delivery orders suggests a robust process for managing the fulfillment of this requirement. The competitive nature of the award is expected to drive favorable pricing for the government, although specific details on the number of bids received are not provided.

Taxpayer Impact: Full and open competition generally leads to better price discovery and ensures taxpayer funds are used efficiently by fostering a competitive environment among suppliers.

Public Impact

Beneficiaries of this contract are individuals and families receiving food assistance through U.S. government donation programs. The services delivered include the procurement and supply of American cheese for these vital food programs. The geographic impact is likely national, as food donation programs typically serve diverse populations across the United States. This contract supports the agricultural sector, specifically dairy farmers and cheese manufacturers, contributing to the stability of the food supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price volatility due to the economic price adjustment clause, which could increase costs if market prices for cheese rise significantly.
Reliance on a single large business contractor may limit future competition or flexibility if supply chain issues arise with that specific entity.

Positive Signals

Awarded through full and open competition, suggesting a competitive process that likely secured a fair market price.
The contract structure with multiple delivery orders allows for managed distribution and potential adjustments based on program needs.
Procurement of essential food commodities supports critical government programs aimed at food security.

Sector Analysis

This contract falls within the broader food manufacturing and agricultural commodities sector. The market for bulk cheese procurement by government entities is significant, driven by domestic food assistance programs like the Food Purchase and Distribution Program. Comparable spending benchmarks would involve analyzing other large-scale dairy procurements by agencies such as USDA or DoD for their respective feeding programs. The specific NAICS code 311513 (Cheese Manufacturing) indicates a focus on a specialized segment of the dairy industry.

Small Business Impact

This contract was awarded to a large business and does not appear to have specific small business set-aside provisions. There is no explicit mention of subcontracting goals for small businesses within the provided data. Therefore, the direct impact on the small business ecosystem is likely minimal, though the large business contractor may engage small businesses indirectly in its supply chain.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Agriculture's Agricultural Marketing Service (AMS), which awarded the contract. Accountability measures are embedded in the fixed-price with economic price adjustment terms and the delivery order structure, requiring the contractor to meet specified quality and delivery standards. Transparency is facilitated through contract award databases, though detailed performance metrics are not publicly available.

Related Government Programs

USDA Food Purchase and Distribution Program
National School Lunch Program
Commodity Supplemental Food Program
Food Bank Support Programs

Risk Flags

Economic Price Adjustment Clause
Short Contract Duration
Single Large Business Awardee

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $1.0 million to ASSOCIATED MILK PRODUCERS INC. COMMODITIES FOR USG FOOD DONATIONS: 2000011246/4400002546/4100033944/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 $1.0 million.

What is the period of performance?

Start: 2026-04-01. End: 2026-06-30.

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

Analyzing historical spending data for cheese procurement by the USDA's food donation programs requires access to detailed procurement databases over several fiscal years. Typically, such procurements fluctuate based on program needs, budget allocations, and agricultural market conditions. For instance, periods of high dairy surplus might see increased government purchases to support farm prices and ensure supply for donation programs. Conversely, budget constraints or shifts in program focus could lead to reduced spending. Without specific historical data for this contract's predecessors, it's difficult to provide precise figures, but USDA consistently procures significant quantities of dairy products to support domestic food assistance initiatives.

How does the price per pound of this cheese contract compare to market rates for bulk American cheese?

The price per pound for this contract is approximately $5.24. To benchmark this against market rates for bulk American cheese, one would typically consult industry reports from sources like the USDA's Agricultural Marketing Service (AMS) dairy market news, or private market analysis firms. Bulk cheese prices can vary significantly based on fat content, aging, form (e.g., block, shredded), and volume. Generally, prices for large institutional purchases of commodity American cheese can range from $4.00 to $6.50 per pound, depending on market conditions and specific product specifications. The $5.24 per pound appears to be within a reasonable range for a large government procurement, especially considering the economic price adjustment clause which accounts for market fluctuations.

What are the specific risks associated with the 'FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT' contract type for cheese?

The primary risk associated with a 'FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT' (FPEPA) contract for cheese is price volatility. While the fixed price provides a baseline, the economic price adjustment (EPA) clause allows for modifications based on fluctuations in specified market indices (e.g., commodity prices, labor costs). If the market price of cheese or its key inputs increases significantly during the contract period, the government may end up paying more than initially anticipated. Conversely, if prices decrease, the government benefits from a lower final price. The risk for the government lies in the potential for cost overruns if market conditions are unfavorable. For the contractor, the risk is mitigated as they are protected against adverse market movements, but they may see reduced profit margins if prices fall unexpectedly.

What is the typical duration for contracts involving the procurement of perishable food commodities like cheese for donation programs?

The typical duration for contracts involving the procurement of perishable food commodities like cheese for donation programs often varies but tends to be relatively short-term, focusing on immediate needs and ensuring freshness. A 90-day duration, as seen in this contract (90 days from award to completion of delivery orders), is common for such items. This allows the government to respond quickly to evolving food security needs and to manage inventory effectively, minimizing spoilage risks. Longer-term contracts might exist for less perishable staples or for establishing longer-term supply agreements, but for items like cheese, which have a shelf life and are subject to market price changes, shorter, more frequent procurements are often preferred for flexibility and cost management.

How does the number of delivery orders (8) impact the management and cost-effectiveness of this cheese procurement?

The use of 8 delivery orders under this contract suggests a strategy for managing the procurement in phases rather than as a single bulk delivery. This approach offers several benefits: it allows the Agricultural Marketing Service (AMS) to distribute the cheese over the contract period (90 days), potentially aligning with the needs of various food donation recipients and reducing storage burdens. It also provides flexibility; if initial deliveries reveal any issues or if program needs change, AMS can adjust subsequent orders. From a cost-effectiveness standpoint, breaking down the delivery can sometimes lead to more efficient logistics and potentially better pricing if negotiated per delivery, though it also increases administrative overhead compared to a single large order. The contractor benefits from a more predictable, albeit phased, demand.

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: $1,048,172

Exercised Options: $1,048,172

Current Obligation: $1,048,172

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 123J1426D0006

IDV Type: IDC

Timeline