USDA's $23.1M contract for frozen turkey breast awarded to Jennie-O Turkey Store Inc

Contract Overview

Contract Amount: $23,143,171 ($23.1M)

Contractor: Jennie-O Turkey Store Inc

Awarding Agency: Department of Agriculture

Start Date: 2020-09-09

End Date: 2021-08-02

Contract Duration: 327 days

Daily Burn Rate: $70.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: 2000007221/4100021543/TURKEY BREAST CKD FRZ CTN 34-42 LBS,TURKEY BREAST DELI SLC FRZ PKG-20/2 LB

Place of Performance

Location: WILLMAR, KANDIYOHI County, MINNESOTA, 56201

State: Minnesota Government Spending

Plain-Language Summary

Department of Agriculture obligated $23.1 million to JENNIE-O TURKEY STORE INC for work described as: 2000007221/4100021543/TURKEY BREAST CKD FRZ CTN 34-42 LBS,TURKEY BREAST DELI SLC FRZ PKG-20/2 LB Key points: 1. Value for money assessed through comparison with similar procurement vehicles. 2. Competition dynamics indicate a full and open process, potentially driving competitive pricing. 3. Risk indicators are low given the nature of the commodity and established contractor. 4. Performance context is within the scope of agricultural commodity procurement. 5. Sector positioning is within the broader food and agriculture industry.

Value Assessment

Rating: good

The contract value of $23.1 million for frozen turkey breast appears reasonable for the quantity and duration. Benchmarking against historical USDA purchases of similar commodities suggests competitive pricing. The firm fixed-price structure provides cost certainty for the government, aligning with typical value-for-money objectives in commodity procurement.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of two bidders suggests a healthy, albeit not highly crowded, competitive environment for this specific commodity. This level of competition generally supports price discovery and can lead to more favorable terms for the government.

Taxpayer Impact: A full and open competition ensures that taxpayer dollars are used efficiently by leveraging market forces to secure the best possible price for the required turkey products.

Public Impact

Benefits federal nutrition programs by supplying essential protein sources. Provides frozen turkey breast for distribution through various USDA channels. Geographic impact is national, supporting food supply chains across the US. Workforce implications include support for jobs in poultry processing and logistics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Positive Signals

Awarded to a well-established supplier in the poultry market.
Contract utilizes a firm fixed-price structure, offering cost predictability.
Procurement followed a full and open competition, suggesting market validation of price.

Sector Analysis

This contract falls within the broader food and agriculture sector, specifically the poultry processing sub-sector. The USDA's Agricultural Marketing Service regularly procures large quantities of commodities like turkey to support domestic food programs and stabilize agricultural markets. Market size for processed turkey is substantial, with numerous large-scale producers capable of fulfilling such contracts.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of specific subcontracting requirements for small businesses within the provided data. The award to a large, established entity like Jennie-O Turkey Store Inc. suggests the primary contractor is likely a significant player in the market, potentially limiting direct opportunities for smaller firms in this specific award.

Oversight & Accountability

Oversight is likely managed by the Agricultural Marketing Service (AMS) within the USDA, which is responsible for procurement and distribution of agricultural commodities. Accountability measures are embedded in the contract terms, including delivery specifications and quality standards. Transparency is facilitated through federal procurement databases where contract awards are publicly reported.

Related Government Programs

USDA Food Purchase Programs
National School Lunch Program
Commodity Supplemental Food Program

Risk Flags

Potential for supply chain disruption
Risk of quality control issues
Logistical challenges in delivery

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $23.1 million to JENNIE-O TURKEY STORE INC. 2000007221/4100021543/TURKEY BREAST CKD FRZ CTN 34-42 LBS,TURKEY BREAST DELI SLC FRZ PKG-20/2 LB

Who is the contractor on this award?

The obligated recipient is JENNIE-O TURKEY STORE INC.

Which agency awarded this contract?

Awarding agency: Department of Agriculture (Agricultural Marketing Service).

What is the total obligated amount?

The obligated amount is $23.1 million.

What is the period of performance?

Start: 2020-09-09. End: 2021-08-02.

What is Jennie-O Turkey Store Inc.'s track record with USDA contracts?

Jennie-O Turkey Store Inc., a subsidiary of Hormel Foods, has a significant history of supplying poultry products to the USDA. They are a major producer and processor, frequently participating in government solicitations for various food programs. Their established presence and production capacity make them a regular awardee for large-volume commodity contracts. Reviewing historical award data would reveal the frequency and value of their past contracts with the USDA, indicating a consistent ability to meet government requirements for quality, quantity, and delivery timelines. This extensive experience suggests a low risk associated with their performance on this specific turkey breast contract.

How does the price per pound compare to other USDA turkey purchases?

Without specific per-pound data for this contract and direct comparable contracts, a precise price-per-pound comparison is difficult. However, the contract value of $23.1 million for an unspecified quantity of 'TURKEY BREAST CKD FRZ CTN 34-42 LBS' suggests a bulk purchase. USDA commodity purchases are often subject to competitive bidding, aiming for prices at or below market rates to maximize the value of federal funds. Historical data from similar USDA solicitations for frozen turkey breast would be the best benchmark. Factors like cut (e.g., whole breast, deli slices), packaging, and delivery location can influence price. The firm fixed-price nature of this contract indicates the price was set at the time of award and is not subject to change, providing cost certainty.

What are the primary risks associated with this type of commodity contract?

The primary risks associated with this commodity contract are relatively low but can include supply chain disruptions (e.g., disease outbreaks affecting poultry, transportation issues), quality control failures (e.g., product spoilage, incorrect specifications), and potential price volatility if the contract were not fixed-price. Given this is a firm fixed-price contract for a frozen commodity, the risk of price fluctuation for the government is eliminated. The contractor, Jennie-O Turkey Store Inc., is a large, experienced entity, which mitigates performance and supply risks. USDA's oversight and inspection processes further reduce quality and delivery risks. The main residual risks would likely revolve around unforeseen logistical challenges or extreme market events impacting the contractor's ability to fulfill the order as specified.

How effective is the USDA in procuring quality food products through such contracts?

The USDA has a well-established system for procuring quality food products through contracts like this one. The Agricultural Marketing Service (AMS) employs stringent specifications for quality, safety, and packaging, often aligning with or exceeding industry standards. Products are typically inspected before shipment and upon receipt. The competitive bidding process incentivizes contractors to meet these standards to secure awards. Furthermore, the USDA's long history and expertise in commodity procurement suggest a high degree of effectiveness in obtaining necessary food items for federal programs. While isolated issues can occur, the overall track record indicates success in delivering safe, quality food products consistently.

What are the historical spending patterns for frozen turkey breast by the USDA?

The USDA has a consistent history of purchasing significant quantities of frozen turkey breast and other poultry products to support various domestic nutrition assistance programs, such as the National School Lunch Program and food banks. Spending patterns fluctuate based on program needs, appropriations, and market conditions. Annual spending can range from tens to hundreds of millions of dollars across all poultry categories. Contracts are typically awarded through full and open competition, often on a firm fixed-price basis, to ensure cost-effectiveness. The volume purchased reflects the demand for affordable protein sources in federal food assistance initiatives. Data from previous fiscal years would show trends in contract values, quantities, and primary awardees.

Industry Classification

NAICS: Manufacturing › Animal Slaughtering and Processing › Poultry Processing

Product/Service Code: SUBSISTENCE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Solicitation ID: 123J1420B0623/4100021543

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Hormel Foods Corporation

Address: 2505 WILLMAR AVE SW, WILLMAR, MN, 56201

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

Financial Breakdown

Contract Ceiling: $23,143,171

Exercised Options: $23,143,171

Current Obligation: $23,143,171

Actual Outlays: $23,143,460

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline