Tyson Foods Inc. awarded $18.7M for chilled meats, raising questions about competition and value

Contract Overview

Contract Amount: $18,734,218 ($18.7M)

Contractor: Tyson Foods Inc.

Awarding Agency: Department of Defense

Start Date: 2010-07-01

End Date: 2010-09-30

Contract Duration: 91 days

Daily Burn Rate: $205.9K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: RESALE-SEC B CHILLED MEATS

Place of Performance

Location: SPRINGDALE, WASHINGTON County, ARKANSAS, 72762

State: Arkansas Government Spending

Plain-Language Summary

Department of Defense obligated $18.7 million to TYSON FOODS INC. for work described as: RESALE-SEC B CHILLED MEATS Key points: 1. The contract's value of $18.7 million for chilled meats warrants scrutiny regarding pricing and market alternatives. 2. Limited competition for this contract may have impacted price discovery and potentially inflated costs. 3. The short duration of 91 days suggests a specific, potentially urgent, need for these meat products. 4. The firm fixed-price contract type offers some cost certainty but relies heavily on initial pricing accuracy. 5. The absence of small business involvement raises questions about broader economic participation. 6. The contract's focus on poultry processing indicates a specialized segment within the broader food supply chain.

Value Assessment

Rating: fair

The $18.7 million award for chilled meats, specifically poultry processing, appears to be a significant expenditure. Without comparable contract data for similar quantities and types of meat from the Defense Commissary Agency (DECA), a precise value-for-money assessment is challenging. However, the firm fixed-price nature suggests an agreed-upon rate, but the lack of competitive bidding raises concerns about whether this rate represents the best possible market price. Further analysis would require benchmarking against commercial meat prices or other government contracts for similar goods.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in urgent situations. The lack of competition means that taxpayers did not benefit from the potential cost savings that can arise from a competitive bidding process, where multiple companies vie for the contract by offering their best prices.

Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers as there is no competitive pressure to drive down costs. This limits the government's ability to secure the most economical option.

Public Impact

Military personnel and their families stationed in Arkansas and potentially surrounding areas benefit from access to chilled meats. The contract ensures the supply of essential food items for commissary stores, supporting the morale and well-being of service members. The geographic impact is primarily focused on Arkansas, where the delivery orders are fulfilled. The contract supports jobs within Tyson Foods Inc., a major employer in the food processing industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have resulted in a higher price than a competed contract.
Limited contract duration might indicate a reactive procurement rather than strategic planning.
Sole-source awards can create a perception of favoritism or lack of due diligence in procurement.

Positive Signals

Firm fixed-price contract provides cost certainty for the government once awarded.
Tyson Foods Inc. is a large, established food producer, suggesting reliability in supply.
The contract addresses a specific need for chilled meats within the defense commissary system.

Sector Analysis

The food processing industry, particularly poultry, is a significant sector within the broader agricultural economy. Government contracts for food supplies are crucial for supporting military readiness and the well-being of service members and their families. This contract for chilled meats falls under the broader category of food and beverage procurement, which is a consistent area of federal spending. Benchmarking this contract would involve comparing its unit prices and overall value against other large-scale food service contracts awarded by agencies like the Department of Defense or the Department of Agriculture.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, there is no information provided regarding subcontracting plans with small businesses. This suggests that the primary award went to a large corporation, Tyson Foods Inc., and opportunities for small businesses to participate in fulfilling this specific contract may be limited. The absence of small business participation in sole-source contracts is common, but it does mean that the economic benefits are concentrated among larger entities.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Commissary Agency (DECA), which is responsible for managing commissary operations. As a delivery order under a larger contract, the specific oversight mechanisms would depend on the terms of the base contract. Transparency is limited due to the sole-source nature and the lack of publicly available detailed performance metrics. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Commissary Agency Food Procurement
Department of Defense Food Services
Federal Meat and Poultry Supply Contracts
Agricultural Commodity Procurement

Risk Flags

Sole-source award raises concerns about potential lack of competition and inflated pricing.
Lack of transparency regarding specific performance metrics and unit costs hinders full value assessment.
Absence of small business participation limits broader economic impact.
Short contract duration may indicate a reactive procurement rather than strategic planning.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.7 million to TYSON FOODS INC.. RESALE-SEC B CHILLED MEATS

Who is the contractor on this award?

The obligated recipient is TYSON FOODS INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Commissary Agency).

What is the total obligated amount?

The obligated amount is $18.7 million.

What is the period of performance?

Start: 2010-07-01. End: 2010-09-30.

What is the historical spending pattern for chilled meats by the Defense Commissary Agency?

Analyzing historical spending patterns for chilled meats by the Defense Commissary Agency (DECA) is crucial for understanding the context of the $18.7 million award to Tyson Foods Inc. Without access to DECA's specific procurement databases or historical contract awards, a precise analysis is difficult. However, federal agencies like DECA consistently procure food items to support military personnel and their families. Spending on meat products, including chilled varieties, is a recurring expenditure. Factors influencing historical spending include the number of military personnel, base locations, and fluctuating market prices for commodities. A trend of increasing or decreasing spending over time could indicate changes in demand, supply chain efficiencies, or shifts in procurement strategies. Comparing the current award to previous awards for similar quantities and types of meat would reveal whether this contract represents a significant increase or decrease in expenditure, and whether it aligns with historical budget allocations for such goods.

How does the unit price of the chilled meats in this contract compare to commercial market rates?

Comparing the unit price of the chilled meats in this $18.7 million contract to commercial market rates is essential for assessing value for money. However, the provided data does not include specific unit pricing details, only the total award amount and contract duration. To perform this comparison, one would need to know the exact quantity (e.g., pounds or kilograms) of chilled meats procured. Assuming a quantity, one could then divide the total award by that quantity to derive an average unit price. This derived price could then be benchmarked against current wholesale or retail prices for similar types of meat (e.g., chicken, beef) in the relevant geographic region (Arkansas, in this case). Given that this was a sole-source award, it is plausible that the unit price might be higher than what could be achieved through a competitive bidding process. A significant deviation from market rates, especially if higher, would indicate a potential issue with the contract's value.

What are the specific risks associated with a sole-source award for essential food supplies?

Sole-source awards for essential food supplies, such as the $18.7 million contract for chilled meats, carry several specific risks. Firstly, the primary risk is a lack of price competition, which can lead to inflated costs for taxpayers. Without competing bids, the government may not secure the most economical pricing available in the market. Secondly, there's a risk of reduced quality or service if the sole provider faces no pressure to maintain high standards. While Tyson Foods Inc. is a reputable company, the absence of competitive alternatives removes a key incentive for continuous improvement. Thirdly, sole-source awards can limit supply chain resilience. Relying on a single supplier can be problematic if that supplier experiences disruptions due to unforeseen events (e.g., natural disasters, labor issues, disease outbreaks), potentially impacting the availability of essential food items for military personnel. Finally, sole-source procurements can sometimes raise concerns about fairness and transparency in the contracting process.

What is Tyson Foods Inc.'s track record with government contracts, particularly with the Department of Defense?

Tyson Foods Inc. is a major player in the food industry and has a significant history of securing government contracts, including those with the Department of Defense (DoD). As a large-scale producer of meat and poultry products, Tyson regularly supplies food services to various government entities. Their track record typically involves fulfilling large volume orders for commissaries, military bases, and other federal institutions. While specific details of past performance on individual contracts are not provided here, large corporations like Tyson generally have established processes for meeting government procurement requirements, including quality control and delivery logistics. However, like any large contractor, they may have also faced scrutiny or performance issues on certain contracts over time. A comprehensive review would involve examining past contract awards, performance evaluations, and any reported disputes or compliance issues related to their government business.

What is the strategic importance of this contract within the broader context of military food supply chains?

This $18.7 million contract for chilled meats, awarded to Tyson Foods Inc. by the Defense Commissary Agency (DECA), holds strategic importance within the broader context of military food supply chains. Ensuring a consistent and reliable supply of quality food is fundamental to maintaining the morale, health, and operational readiness of military personnel and their families. Commissaries play a vital role in providing affordable groceries, and meat products are a staple in most diets. This contract, though specific to chilled meats and potentially limited in duration (91 days), contributes to the overall availability of essential food items at military installations. The strategic aspect lies in securing a supply of a critical commodity from a major domestic producer, which can be important for both cost management and supply chain security, especially in times of fluctuating market conditions or potential disruptions. The sole-source nature, however, introduces strategic considerations regarding long-term cost-effectiveness and supplier diversification.

Industry Classification

NAICS: Manufacturing › Animal Slaughtering and Processing › Poultry Processing

Product/Service Code: SUBSISTENCE

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2200 DON TYSON PKWY, SPRINGDALE, AR, 72762

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $18,734,218

Exercised Options: $18,734,218

Current Obligation: $18,734,218

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0110G4001

IDV Type: BOA

Timeline