Tyson Foods awarded $17M contract for chilled meats, raising questions about competition and value

Contract Overview

Contract Amount: $17,036,079 ($17.0M)

Contractor: Tyson Foods Inc.

Awarding Agency: Department of Defense

Start Date: 2010-10-01

End Date: 2010-12-31

Contract Duration: 91 days

Daily Burn Rate: $187.2K/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 $17.0 million to TYSON FOODS INC. for work described as: RESALE-SEC B CHILLED MEATS Key points: 1. Contract awarded on a non-competitive basis, limiting price discovery. 2. Significant contract value for a single delivery order. 3. Focus on poultry processing suggests a specialized niche within food services. 4. Limited duration of 91 days for this delivery order. 5. Geographic focus on Arkansas for delivery. 6. Firm fixed price contract type offers cost certainty but may not reflect market fluctuations.

Value Assessment

Rating: fair

The contract value of $17 million for a 91-day delivery order for chilled meats appears substantial. Without comparable contract data or detailed cost breakdowns, it is difficult to definitively assess value for money. The firm fixed price suggests cost certainty for the government, but the lack of competition raises concerns about whether the price reflects the best possible market rate. Benchmarking against similar large-scale meat supply contracts would be necessary for a more robust evaluation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' (NAF) basis, indicating that the Defense Commissary Agency did not solicit bids from multiple vendors. This sole-source approach bypasses the standard competitive bidding process, which typically drives down prices and encourages innovation. The lack of competition means there is no direct comparison of offers to determine the most advantageous price or terms for the government.

Taxpayer Impact: The absence of competition means taxpayers may not have received the most cost-effective pricing for these chilled meat products. Without a competitive environment, there's a risk of paying a premium compared to what could have been achieved through open bidding.

Public Impact

Serves military personnel and their families through the Defense Commissary Agency. Provides essential food supplies, specifically chilled meats, to commissaries. Geographic impact primarily focused on delivery within Arkansas. Supports the workforce involved in poultry processing and meat distribution.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Non-competitive award limits transparency and potential cost savings.
High dollar value for a short-term delivery order warrants scrutiny.
Lack of detailed justification for sole-source award.

Positive Signals

Firm fixed price contract provides budget certainty.
Tyson Foods is a large, established supplier, potentially ensuring reliability.
Contract addresses a specific need for chilled meats.

Sector Analysis

The food processing and distribution sector is a critical component of the broader supply chain, including for government agencies. This contract falls within the food manufacturing and wholesale trade industries. The Defense Commissary Agency relies on numerous contracts to supply a wide range of food products to military communities. Benchmarking this specific contract's value against other large-scale food service contracts, particularly those for meat products, would provide further context on its scale within the federal procurement landscape.

Small Business Impact

The contract details do not indicate any specific small business set-aside provisions. Given the sole-source nature of the award to a large corporation like Tyson Foods, it is unlikely that small businesses were directly involved as prime contractors. There is no information provided on subcontracting plans, which could potentially offer opportunities for small businesses in areas like logistics or specialized processing, but this is not evident from the data.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Commissary Agency's contracting officers and potentially the Department of Defense's Inspector General. The firm fixed price contract type provides a degree of financial oversight by establishing a set cost. However, the lack of competition limits the effectiveness of price-based oversight mechanisms. Transparency regarding the justification for the sole-source award and performance metrics would be key areas for accountability.

Related Government Programs

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

Risk Flags

Sole-source award raises concerns about price fairness and competition.
High value for a short-term delivery order requires justification.
Lack of transparency regarding the rationale for non-competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.0 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 $17.0 million.

What is the period of performance?

Start: 2010-10-01. End: 2010-12-31.

What is the specific justification for awarding this contract on a sole-source basis to Tyson Foods?

The provided data indicates the contract was awarded under 'NOT AVAILABLE FOR COMPETITION' (NAF). This classification typically implies that only one responsible source is capable of providing the required goods or services, or that an exception to full and open competition applies (e.g., urgent need, unique capabilities, or specific statutory authority). Without further documentation or agency açıklama, the precise reason for this sole-source determination remains unclear. A thorough review of the Justification and Approval (J&A) document, if available, would be necessary to understand the rationale behind bypassing competitive procedures and to assess its validity.

How does the $17 million value for a 91-day delivery order compare to typical federal spending on chilled meats?

The $17 million expenditure for a 91-day delivery order of chilled meats is substantial, averaging approximately $186,813 per day. To benchmark this, one would need to compare it against historical spending patterns for similar products by the Defense Commissary Agency (DECA) or other federal food procurement entities. Factors such as the quantity, type of meats, and specific delivery locations would influence comparability. Given the sole-source nature, it's difficult to ascertain if this daily rate is competitive. Analyzing DECA's overall food budget and the proportion allocated to meat products, as well as the average cost per pound or per unit for similar contracts, would provide a clearer picture of whether this represents typical or outlier spending.

What are the potential risks associated with a sole-source award for essential food supplies like chilled meats?

Sole-source awards for essential supplies like chilled meats carry several risks. Primarily, the lack of competition can lead to inflated prices, meaning taxpayers may overpay for the goods. It also reduces the incentive for the contractor to maintain high quality or efficiency, as there is no immediate threat of losing business to competitors. Furthermore, it limits the government's ability to explore innovative solutions or alternative suppliers that might offer better value or specialized products. Dependence on a single supplier can also create supply chain vulnerabilities, especially if the contractor faces production issues, labor disputes, or logistical challenges.

What is Tyson Foods' track record with federal contracts, particularly with the Defense Commissary Agency?

Tyson Foods is a major food producer and likely holds numerous federal contracts across various agencies, including potentially the Department of Defense and its sub-agencies like the Defense Commissary Agency (DECA). While this specific contract data doesn't detail their overall federal performance, large corporations typically have extensive experience navigating government procurement. Assessing their track record would involve examining past contract performance ratings, any history of contract disputes, timely delivery records, and compliance with federal regulations. Information from sources like the Federal Procurement Data System (FPDS) or agency-specific performance evaluations would be crucial for a comprehensive understanding of their history with government entities.

What are the implications of the 'Poultry Processing' North American Industry Classification System (NAICS) code for this contract?

The NAICS code 311615, 'Poultry Processing,' indicates that the primary focus of this contract is on the processing of poultry products. This suggests that the chilled meats being procured are predominantly chicken, turkey, or other fowl, rather than red meats like beef or pork. For the Defense Commissary Agency, this specialization likely ensures a consistent supply of specific poultry items required by military commissaries. It also implies that Tyson Foods is leveraging its established capabilities in poultry processing for this contract. Understanding this NAICS code helps define the scope of the goods and services expected and allows for more targeted comparisons with other contracts within the same industry segment.

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: $17,036,079

Exercised Options: $17,036,079

Current Obligation: $17,036,079

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0110G4001

IDV Type: BOA

Timeline