4A52.214-2 Basis of Offers DRAFT

1) Offers shall be submitted as an F.O.B. destination price per unit (i.e. gallons) for the stated line item

quantity. The final price paid will be the bid price adjusted by the economic price adjustment (EPA) for the

month in which the milk is delivered. The EPA accounts for the differences in the announced Base Skim

Milk Price for Class I and Advanced Butterfat Pricing Factor applicable for the month in which the

solicitation is announced from those applicable for the delivery month.

2) Offers will be evaluated for award to lowest price.

3) The contract price for a delivery month shall be the bid award price, PLUS the following economic price

adjustment (EPA): the changes from solicitation month to delivery month in the Base Skim Milk Price for 

Class I and Advanced Butterfat Pricing Factor as reported monthly in USDA’s Announcement of Advanced 

Prices and Pricing Factors and adjusted by the amount of skim and butterfat in the product.

4) The EPA per gallon calculation shall be as follows: Multiply the difference between the announced Base

Skim Milk Price for Class I for the solicitation and delivery months ($/cwt) by the percent skim milk in the 

product and divide by 100 (rounded to the nearest 100th cent) and ADD the difference between the 

announced Advanced Butterfat Pricing Factors for the bid and delivery months ($/lb) multiplied by the 

butterfat percent in the product (rounded to the nearest 100th of a cent). Multiply the result by the number 

of pounds in a gallon of the product (rounded to the nearest 100th of a cent).

This monthly adjustment may be positive, zero, or negative.

5) The information on the following page, including the EPA, will be issued under a contract modification by

USDA Commodity Procurement on or before the 28th of the month preceding each delivery month.

6) Example: for Fresh Whole Milk an awarded price in February of $3.00 per gallon and delivered in June, the

EPA would be $0.0843/gallon and the June delivered price with the EPA would be $3.0843 per gallon

($3.00 plus $0.0843).

7) When the 3-day delivery period dates overlap to the following month for a contract order/line item, that milk

will be paid under the milk price in effect for the date of the first delivery period day (ie; Monday). 
(EXAMPLE) 

Announcement of the Economic Price Adjustment (EPA) for Fluid Milk

Release Date: May 23, 2018

USDA Commodity Procurement

Solicitation # SN000000

Solicitation

Month

Product 

Delivery

Difference

Year 2018 2018

Month February June

Base Skim Milk Price for Class I, $/cwt 5.71 6.35 0.64

Advanced Butterfat Pricing Factor, $/lb 2.4976 2.6074 0.1098

Component Finished Fluid Product

3.25% Milk 2% Milk 1% Milk Skim

Skim milk percent 96.75 98.00 99.00 99.90

Butterfat percent 3.25 2.00 1.00 0.10

Weight, pounds per gallon 8.60 8.62 8.62 8.63

Item Material code

MILK WHOLE 

FRESH

MILK 2% 

FRESH

MILK 1% 

FRESH

MILK SKIM 

FRESH

$/pound

Class I Skim milk value difference 0.0062 0.0063 0.0063 0.0064

Class I Butterfat value difference 0.0036 0.0022 0.0011 0.0001

Class I Price difference 0.0098 0.0085 0.0074 0.0065

JUNE 2018 Deliveries $/gallon

Economic Price Adjustment (EPA) 0.0843 0.0733 0.0638 0.0561 

Formulas:

Class I Skim milk value difference = 

Class I Butterfat value difference = 

Class I Price difference = 

(Base Skim Milk Price for Class I for DELIVERY month — Base Skim Milk 

Price for Class I for SOLICITATION month) X Skim milk percent ÷ 100 

(rounded to the nearest 100th cent) 

(Advanced Butterfat Pricing Factor for DELIVERY month — Advanced 

Butterfat Pricing Factor for SOLICITATION month) X Butterfat percent 

(rounded to the nearest 100th cent) 

Sum of Class I Skim milk value difference + Class I Butterfat value difference 

Economic Price Adjustment, $/gallon = Class I price difference X weight per gallon (rounded to the nearest 100th cent)