A look at a different kind of government contractor: the formula manufacturers who compete to feed America's babies
The USDA has just analyzed the effect of WIC (the Special Supplemental Program for Women, Infants, and Children) purchases of infant formulas on the companies that produce them.
WIC provides coupons or vouchers for infant formula for women who are not breastfeeding. Many people believe that WIC support of infant formulas discourages breastfeeding, but that's not what this post is about.
WIC buys about half (57 to 68 percent) of all of the infant formula sold in the United States. WIC is not an entitlement program. It has only so much money; once that money is spent, the program has to turn away eligible clients.
The USDA delegates WIC management to states. As the USDA report explains,
To reduce cost to the WIC program, each State awards a sole-source contract to a formula manufacturer to provide its product to WIC participants in the State. As part of the contract, the WIC State agency receives rebates from the manufacturers.
Translation: States grant WIC contracts to the manufacturer who sells infant formula to it at the lowest price. The winning prices may be as low as 10 percent of retail cost.