Name: Multimillion-dollar food bank delivery contracts go to firms with little experience
Brand: politico.com
SKU: politico-com-34
Availability: OnlineOnly

critic

Multimillion-dollar food bank delivery contracts go to firms with little experience

preview

The Agriculture Department awarded $1.2 billion to several little-known companies to send excess farm products to food banks.San Francisco-Marin Food Bank volunteers pack food into bags to be delivered to people during the coronavirus pandemic in San Francisco on April 18, 2020. | Jeff Chiu/AP PhotoThe Agriculture Department has awarded multimillion-dollar contracts to companies that appear to have little experience working with food banks or farmers, spurning several big produce companies with extensive expertise in food distribution.An event planning company in San Antonio, Texas, known for throwing lavish weddings and high-end conferences, was awarded more than $39 million — one of the largest contracts handed out by USDA under a new program aimed at matching up food banks with surplus produce, meat and dairy.Also on the list was a company that specializes in trade-related finance and one that sells health and wellness items for travelers.USDA late last week outlined some $1.2 billion in federal contracts for the program, which it fast-tracked to do more to respond to supply chain disruptions caused by the coronavirus crisis.The new initiative has been hailed as a creative approach to redirecting food in recent months as the closing of restaurants, cruise ships and schools has upended supply chains.The goal is to buy up a variety of excess perishable food items, pack them in easy-to-distribute boxes, and then provide the boxes to food banks and other nonprofits where people in need can pick them up.But there are concerns about whether some of the companies awarded contracts can pull it off. When the Agriculture Department late Friday released the names of the companies selected for the program, numerous industry leaders were not on the list.“It’s puzzling,” said Michael Muzyk, president of Baldor Specialty Foods, a distributor based in New York. Muzyk, who also serves as chairman of the United Fresh Produce Association, did not apply for a contract, saying he felt the program was ill-designed.Agriculture Secretary Sonny Perdue, however, has lauded the initiative as one that will be up and running “within days.”“This is a new, innovative approach to provide critical support to American farmers and families, and USDA moved as expeditiously as federal procurement rules allow to stand up the program and solicit offers,” Perdue said in a statement last week.The department did not respond to specific questions about the experience of some of the companies that received contracts but defended the overall structure.“Successful proposals included many small businesses and those that will support local and regional farmers, which was part of the evaluation criteria for contract award,” a USDA spokesperson said in an email. “Federal contracts require strict adherence to the Federal Acquisition Regulation (FAR) and other regulations.”There will also be a “robust audit program” as part of the initiative, the spokesperson added.The rollout of USDA’s fresh food buying initiative comes on the heels of over several large companies getting federal money through the Paycheck Protection Program run by the Small Business Administration.It’s possible the Agriculture Department wanted to avoid similar criticism by primarily awarding the contracts to small businesses or lesser-known companies. However, some meat giants like Cargill ($7.3 million) and Tyson ($862,000) are on the list. USDA also awarded a huge, $147 million contract to Borden Dairy, a large Dallas-based dairy company that filed for bankruptcy in January.The new USDA program — called the Farmers to Families Food Box Program — is slated to spend $300 million each month on U.S. produce, dairy and meat products that will be packed in variety boxes and then sent to food banks and other nonprofits.When produce industry leaders saw the issued Friday night, they were shocked to not recognize many of the names on the list.Most of the most well-known companies in the business, from large national names like FreshPoint, a division of Sysco, to more regional companies like Keany Produce, based in Maryland, were left off.Muzyk of Baldor Specialty Foods said it’s clear that some companies applied without understanding what’s really required to purchase, pack and distribute fresh food at the scale the program requires. It requires proper cold storage capacity and trucks as well as food safety practices, particularly for produce which is vulnerable to contamination.“Under Covid, it’s 10 times more important that you are handling product safely,” he said.Muzyk said some companies awarded contracts have already called him to ask if he can make the boxes for them. He said he declined.The most ire has been aimed at small firms whose qualifications to handle large contracts have been questioned.The $39.1 million contract to a Texas-based event marketing agency — the seventh-largest contract on the list of roughly 200 businesses — has drawn particular scrutiny.CRE8AD8 (pronounced “create a date”), a San Antonio firm with international offices, was chosen to supply hundreds of thousands of boxes packed with fresh fruits, vegetables, dairy, and meat products to food banks and nonprofits in the Southwest, stretching from Arizona to Arkansas.The company’s social media include posts touting its services such as planning weddings and for destination events.“We didn’t know the potential or even to what extent we could help, but we saw an opportunity to do some good during this challenging time and took a chance,” CEO Gregorio Palomino said . “We had no idea we’d be asked to help on this level. It’s truly awesome.”President Donald Trump and Melania Trump for Covid-19.The agency is hiring up to 125 workers to help get the boxes out starting by Friday, including chefs, project coordinators and safety specialists, Palomino told POLITICO in an email.Asked about the company’s qualifications for a food distribution program, he said that CRE8AD8 has “more than 20 years of experience in logistics, execution and fulfillment,” and is partnering with a culinary team with lengthy experience in food safety and procurement.“As they direct the food operations, we will lead with our expertise in coordinating and executing the logistics of fulfillment, labor management, regulatory and public communications and distribution,” Palomino said.Food distributors say they are puzzled why such a large contract didn’t go to a company with deeper contacts throughout the food supply chain.“The wedding planner is the ultimate comedy of errors,” said Brent Erenwert, CEO of Brothers Produce, a Houston-based produce distributor that applied but did not get awarded a contract. He said in an interview that his bigger concern is that the program might not meet its goal of helping both farmers and people in need.“This deal is destined to crash before it takes off,” he said.In recent days, Erenwert has posted numerous angry missives on LinkedIn, tagging USDA, media outlets, trade associations and industry leaders.“We need answers. I don’t care if I never get awarded another government bid again for all this,” Erenwert . “I will not sit back and watch and the charities and our industry struggle in all this.”Other industry members and nonprofit leaders have quietly groused about other companies on the list with unclear connections to the food supply, such as Yegg Inc., a California firm that offers “business finance solutions.” According to its it provides export credit insurance and helps companies obtain capital equipment including construction, mining and farm machinery.Yegg was awarded $16.6 million to supply fluid milk and dairy boxes. The company did not respond to multiple requests for comment.Other companies that are unfamiliar to those in the food industry have also raised eyebrows. Travel + Well Holdings LLC — a small company based 50 miles north of San Francisco that sells hand sanitizers, lotions and other wellness products in airports and — was awarded $12 million to distribute fresh fruit and vegetable boxes in the Western region.The company declined to comment.Questions have also been raised about companies on the list with virtually no public information available. For example, POLITICO was unable to identify B.E. Co Inc., which received an $800,000 contract to deliver fresh produce in the mid-Atlantic region. The USDA spokesperson did not provide any additional background on the business.But on Thursday, Puerto Rico produce distributor Hill Brothers, whose corporate name is B.E.C. Co. Inc., told POLITICO it was awarded the contract to provide food boxes for dozens of nonprofits on the island territory. The company has more than 150 employees and is one of the largest distributors in Puerto Rico, supplying food to schools, restaurants, supermarkets and other businesses, said Vice President Brenda Massanet.Earlier this week, the United Fresh Produce Association sent a letter to USDA with no fewer than 15 questions about how decisions were made on the contracts.“This is not ‘sour grapes’ from those that may not have been awarded; this is a genuine effort to ensure integrity and confidence in the program and that fresh produce actually gets to those in need in an efficient and cost-effective way,” Tom Stenzel, CEO of the United Fresh Produce Association, wrote in a letter to the department on Monday.One of the questions raised by United Fresh and others is whether the businesses selected have what’s known as a PACA license — something USDA likens to a driver’s license for operating a produce business. The requirement stems from a Depression-era law aimed at ensuring farmers and others get paid appropriately after they sell a perishable product.While unknown to the general public, PACA is a huge deal in the produce sector. A company without a PACA license could have a difficult time finding buyers willing to sell it large volumes of produce for the boxes that are supposed to start going out to food banks soon.The awardees will have to move quickly to fulfill the requirements of the contract. The food boxes are supposed to begin shipping out Friday. The contracts extend through the end of June.

The Agriculture Department awarded $1.2 billion to several little-known companies to send excess farm products to food banks.San Francisco-Marin Food Bank volunteers pack food into bags to be delivered to people during the coronavirus pandemic in San Francisco on April 18, 2020. | Jeff Chiu/AP PhotoThe Agriculture Department has awarded multimillion-dollar contracts to companies that appear to have little experience working with food banks or farmers, spurning several big produce companies with extensive expertise in food distribution.An event planning company in San Antonio, Texas, known...

public

HELENA BOTTEMILLER EVICH

Politico, known originally as The Politico, is an American political journalism company based in Arlington County, Virginia, that covers politics and policy in the United States and internationally. It distributes content through its website, television, printed newspapers, radio, and podcasts. Its coverage in Washington, D.C. includes the U.S. Congress, lobbying, the media, and the presidency.

Multimillion-dollar food bank delivery contracts go to firms with little experience

No article scores yet.

CRITIC REVIEWS

PUBLIC REVIEWS