Despite cost, academy dairy is sacred cow Private supplier has bid $340,000 less on milk products

November 12, 1993|By Tom Bowman | Tom Bowman,Staff Writer

The U.S. Naval Academy dairy farm, termed "cost-effective" by the academy, has been milking taxpayers for several decades. Recent documents show the academy could save as much as $340,000 annually by using a private dairy.

But academy foot dragging, congressional interference and neighborhood pressures have prevented repeated attempts to close the 862-acre Gambrills farm, dispose of the land and switch to a less costly provider of milk, cream and fruit drinks for the 4,200 midshipmen.

In 1966, Congress balked at a recommendation from the General Accounting Office to close the farm. Nearly 20 years later, top Navy brass overruled recommendations from their own auditors to close the dairy. Yet another committee made the same recommendation in 1991, but it was stymied by local residents fearful of development who enlisted the help of their congressman, a member of the academy's Board of Visitors.

Meanwhile, the Naval Academy is considering turning the 82-year-old farm into two semi-private 18-hole golf courses, but officials said that is only one possibility and that the academy is reviewing its options.

According to academy documents obtained by The Sun, local dairies two years ago offered to provide milk for between $1.66 and $1.98 per gallon, compared with the academy dairy charge of $2.30 per gallon for its 2 percent fat milk.

Currently, local dairies could offer prices between $1.75 and $1.99 per gallon, while the academy dairy's milk still is listed at $2.30 per gallon.

"That's very expensive," said Al Shewbridge, general manager of Cloverland Dairy Farms Inc. in Baltimore, adding that the academy could do better buying milk at a local convenience store.

Among the documents revealing how much the academy could save by switching to a private dairy is a Dec. 19, 1991, memo from Lt. Cmdrs. Stephen D. Taylor and Daryl A. Lengel, who were in charge of the dairy farm and food services division. The memo shows that three dairies could easily beat the price of $1,005,000 the academy dairy charged to provide milk, cream and juices to the brigade of 4,200 midshipmen that year.

Dairy Maid Dairy of Frederick, which serves Andrews Air Force Base and Fort Belvoir, Va., among other local military facilities, said it could provide those products for $664,000 -- a $341,000 savings.

The price from Cloverland Farms Dairy of Baltimore would have saved the academy $239,000, while Mason-Dixon Farms of Gettysburg, Pa., offered a price that was $152,000 below the academy price, according to the documents.

Mr. Shewbridge said Cloverland officials recall the academy making a similar request for bids years earlier. "They would put out a bid, but it never materialized," he said.

High costs acknowledged

The academy acknowledged in a statement this week that an "informal survey" showed it could save as much $340,000 but that other estimates "are high enough that we wouldn't save money."

"We accept that the dairy is becoming less cost efficient than it has been in the past," the statement said, noting that the academy must decide where it can get less costly products and what should be done with the land. "We are on the threshold of those studies now," it said.

James M. Cannon, chairman of the academy's Board of Visitors, said the dairy's profitability is an "open question" that is reviewed continually.

"I have never seen persuasive figures, based on fact, showing that the dairy is either losing money or breaking even," said Mr. Cannon. He said he was unaware of the private dairy estimates requested by the academy.

Still, he said, "We believe it is probable that the milk can be purchased cheaper than it can be produced by the dairy farm."

It costs about $1.2 million each year to operate the facility, which has 347 registered Holstein cows, several dozen farm buildings and dwellings, and 16 employees.

The financial summary for the dairy farm this fiscal year reveals that its operating income showed a $21,000 loss. That's better than in fiscal 1989, when the operating income was $94,000 in the red.

After a local typhoid outbreak early in the century, Congress created the academy dairy in 1911 to provide a safe, clean source of milk for the midshipmen. It is the only one of the service academies with its own dairy.

Efforts to close dairy

Since then, the dairy has survived several attempts to close it.

In March 1966, the General Accounting Office recommended closing the dairy, saying the government would save $84,000 each year.

Those savings were disputed by former Rep. Mendel Rivers, D-S.C., the noted head of the House Armed Services Committee, sparking a furious turf battle. Mr. Rivers pushed through a bill saying the dairy farm could only close with congressional approval, telling academy officials it was now "beyond the reach of the idiotic fingers" of Defense Department bureaucrats.

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