MSBSD sticks with milk distributor

PALMER — Despite a protest from an owner of the previous contract holder, the Mat-Su Borough School Board has decided to stick with the company currently providing milk to local school children.

“My protest is not so much on the bid award, but on the fact that there was an addendum thrown in at the last minute which biased it against any kind of local company bidding in any kind of meaningful way,” Karen Olson said at the Wednesday board meeting.

Olson was there representing Northern Foods, a company state databases indicate was incorporated May 9. Prior to that venture, she ran Matanuska Creamery, which held the Mat-Su Borough School District contract at the time the company folded after the state called in its loans at the start of the year.

The bid in question is to provide 50 cartons of low-fat cottage cheese, 24,000 cases containing 50 half-pint cartons of milk, 800 cases of shelf-stable milk, 450 cartons of sour cream and 25,000 cartons of low-fat yogurt in various flavors.

The contract was awarded to Peterkin Distributors, a company that ships milk from Outside and that also provides milk for the Anchorage School District. The company agreed to provide the dairy products at the same rate Anchorage pays.

As for the addendum Olson mentioned, that was the reason her bid was thrown out. Bidders were required to acknowledge they’d reviewed the addendum and her company did not.

The addendum was added May 3 and bids were due May 10. The addendum just noted that the contractor could ask for an increase after the first 90 days of the contract if it could show costs of milk or of shipping had risen or fallen significantly.

“They could not increase their profit margins and pass that along to the Mat-Su Borough School District, but they could reference hard costs,” said the school district’s chief business officer, Luke Fulp.

Olson said that Alaska contractors can’t reference milk market prices — Alaska doesn’t have a milk market and milk here isn’t referenced in national market prices — and have little to no freight costs to speak of.

Therefore, she wrote in a letter to the school district saying the addendum “effectively blocks any local milk processor from bidding in any meaningful way.”

When Matanuska Creamery folded at the start of the year, the district was left scrambling to find a milk contractor to finish out the school year. Peterkin is the company that stepped in.

Peterkin also is the company that suggested the May 3 addendum to the bid packet, saying it was something that was written into its contract in Anchorage.

“Peterkin Distributors came to the district and asked if we could use similar language,” Fulp said. “We made a determination at the purchasing department to move forward with similar language.”

He said those kind of addendums are something that the district does regularly.

Bids don’t often make it to the school board, but bid protests like the one Olson filed do.

“We as a school board do not sign contracts and we do not go out for bid. We are here to say if our contract language was followed and if our purchasing department followed the rules,” board president Susan Pougher said. “Our job here today is to discuss if the rules were followed.”

It was a sentiment that, by and large, her colleagues shared.

“I want to see us use local whenever possible,” said board member Sarah Welton. “There’s a couple of steps that were missed by the local business and I believe it’s a learning process and it’s painful, but we will know more in the future and maybe other people can learn from that.”

“I would only add that the process was followed and the opportunity existed to get any answers in the process,” said board member David Cheezem.

“The school district followed all state and federal district procurement laws and the bid was awarded in a proper manner,” added board member Ole Larson.

Contact Andrew Wellner at 352-2270 or

andrew.wellner@frontiersman.com.