Competition Exemption Request - Milk.docx

This is a Competition Exemption Request submitted by the Idaho Division of Purchasing (DOP) for a mandatory statewide contract covering milk products, packaged and delivered to state agencies and public entities. The procurement encompasses multiple milk types and packaging options with statewide delivery capabilities. The current contract is held by Meadow Gold Dairy, a subsidiary of Dairy Brands Fluid, LLC (DFA), with pricing directly indexed to the Federal Milk Marketing Pacific Northwest & Arizona Marketing Area index managed by the USDA Dairy Program. Monthly pricing updates are communicated to state agencies by DOP. The solicitation requests that suppliers provide information supporting or contradicting the claim that competition would be impractical, unreasonable, or disadvantageous to the state, with submissions due prior to the closing date specified in IPRO. The exemption decision remains discretionary and is subject to DOP Administrator approval.

The DOP proposes transitioning from the current mandatory statewide contract structure to a Price Agreement model to address operational challenges created by Idaho's large geographical and rural delivery areas, which significantly impact inventory replenishment timelines and transportation costs. DOP identifies only one vendor capable of handling the required volume and statewide delivery, resulting in multiple contract pricing adjustments beyond monthly index changes due to logistics constraints. The proposed Price Agreement structure would establish one delivered price for state agencies while allowing the vendor to market and price the optional public entities portion separately, creating greater pricing flexibility and managerial efficiency for all parties. The current contract requires identical all-encumbered pricing for both state agencies and public entities, a requirement DOP characterizes as problematic under existing market conditions. No specific contract term, renewal options, set-asides, funding amounts, or award dates are identified in the exemption request documentation.