USDA awards $39.9M contract for roasted pistachios, highlighting agricultural marketing and food manufacturing sectors

Contract Overview

Contract Amount: $39,892,164 ($39.9M)

Contractor: Stutz Packing Company

Awarding Agency: Department of Agriculture

Start Date: 2021-07-21

End Date: 2022-02-28

Contract Duration: 222 days

Daily Burn Rate: $179.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: 2000007876/4100023634/PISTACHIO ROASTED IN SHELL PKG-12/2 LB

Place of Performance

Location: INDIO, RIVERSIDE County, CALIFORNIA, 92201

State: California Government Spending

Plain-Language Summary

Department of Agriculture obligated $39.9 million to STUTZ PACKING COMPANY for work described as: 2000007876/4100023634/PISTACHIO ROASTED IN SHELL PKG-12/2 LB Key points: 1. Contract supports the Agricultural Marketing Service's role in promoting U.S. agricultural products. 2. The award falls within the 'Roasted Nuts and Peanut Butter Manufacturing' industry, indicating a focus on processed food items. 3. A firm fixed-price contract type suggests predictable costs for the government. 4. The duration of 222 days indicates a relatively short-term need for the specified product. 5. The contract was awarded through full and open competition, implying a robust bidding process. 6. The contractor, Stutz Packing Company, is positioned to deliver essential food products to federal programs.

Value Assessment

Rating: good

The contract value of approximately $39.9 million for roasted pistachios appears reasonable given the quantity and nature of the product. Benchmarking against similar large-scale agricultural procurements for processed goods suggests this price is within expected ranges. The firm fixed-price structure helps control costs, and the competition process should have driven a competitive price. Further analysis would require detailed cost breakdowns and comparison to commercial market prices for bulk roasted pistachios.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through full and open competition, indicating that all responsible sources were permitted to submit a bid. The presence of four bids suggests a healthy level of interest and competition for this requirement. This competitive environment is generally favorable for price discovery and ensuring the government receives a fair market price for the goods procured.

Taxpayer Impact: Taxpayers benefit from the competitive bidding process, which is expected to yield a more cost-effective outcome compared to sole-source or limited competition awards. The multiple bids likely drove down the final price, maximizing the value of taxpayer dollars.

Public Impact

The primary beneficiaries are likely federal food programs, such as school lunch programs or military commissaries, which utilize bulk food items. The contract delivers roasted pistachios in 2-pound packages, a specific food product for consumption. The geographic impact is primarily within California, where the contractor is located, but the distribution of the product could be nationwide. This contract supports jobs within the food manufacturing sector, specifically in nut processing and packaging.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price fluctuations in the pistachio market impacting long-term value if not managed.
Dependence on a single contractor for a specific food item could pose supply chain risks if not diversified.
Ensuring consistent quality and adherence to food safety standards throughout the contract period is crucial.

Positive Signals

Awarded through full and open competition, indicating a competitive market for this product.
Firm fixed-price contract provides cost certainty for the government.
Contractor is established in the 'Roasted Nuts and Peanut Butter Manufacturing' sector.

Sector Analysis

This contract falls within the broader agricultural and food manufacturing sector, specifically focusing on processed nuts. The U.S. agricultural sector is a significant contributor to the economy, with food manufacturing being a key component. Procurements like this support the demand for domestically produced agricultural goods and processed food products, contributing to market stability and growth within this industry. Comparable spending benchmarks would involve analyzing other large-scale federal contracts for processed agricultural commodities.

Small Business Impact

The contract data indicates that small business set-asides were not utilized for this procurement (ss: false, sb: false). This suggests the contract was awarded based on the best value to the government without specific small business participation goals. While this contract may not directly benefit small businesses through a set-aside, the prime contractor, Stutz Packing Company, may engage small businesses as subcontractors. The overall impact on the small business ecosystem would depend on the subcontracting opportunities created.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Agriculture's Agricultural Marketing Service (AMS). AMS is responsible for ensuring the contractor fulfills the terms and conditions of the contract, including product quality, delivery schedules, and pricing. Accountability measures are embedded in the contract's performance clauses and payment terms. Transparency is facilitated through federal contract databases where award details are published. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Agriculture Food Purchases
Agricultural Commodity Procurement
Federal Food Service Contracts
National School Lunch Program Food Procurement
Defense Logistics Agency Food Contracts

Risk Flags

Potential for price volatility in agricultural commodities.
Ensuring consistent quality and freshness of food products.
Supply chain disruptions affecting delivery timelines.

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $39.9 million to STUTZ PACKING COMPANY. 2000007876/4100023634/PISTACHIO ROASTED IN SHELL PKG-12/2 LB

Who is the contractor on this award?

The obligated recipient is STUTZ PACKING COMPANY.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $39.9 million.

What is the period of performance?

Start: 2021-07-21. End: 2022-02-28.

What is the historical spending pattern of the Department of Agriculture for roasted nuts and similar food products?

Analyzing historical spending patterns for the Department of Agriculture (USDA) in the category of roasted nuts and similar food products reveals a consistent need for these items to support various federal programs, including school nutrition programs and military feeding. While specific dollar amounts fluctuate annually based on program needs, commodity prices, and available funding, the USDA regularly procures significant quantities of processed agricultural goods. For instance, contracts for nuts, dried fruits, and other snack items are common. The average contract value for such items can range from hundreds of thousands to tens of millions of dollars, depending on the volume and specific product. This particular $39.9 million award for pistachios is substantial, suggesting a large-scale requirement or a period of increased demand or favorable pricing. Understanding these historical trends helps in assessing whether the current award represents a typical procurement or an outlier, providing context for value and necessity.

How does the price per pound for these pistachios compare to commercial market rates?

To compare the price per pound for these pistachios to commercial market rates, we first need to calculate the total quantity procured. The contract data indicates a total award amount of $39,892,163.60. However, the data does not explicitly state the total weight or quantity of pistachios purchased. Assuming the contract is for a specific volume that resulted in this cost, we would divide the total award by the total pounds. For example, if the contract was for 10 million pounds, the price per pound would be approximately $3.99. Commercial market rates for roasted pistachios can vary significantly based on origin, quality (e.g., grade, size), packaging, and time of year. Wholesale prices for bulk roasted pistachios can range from $3.00 to $6.00 per pound or more. If the calculated price per pound falls within or below this range, it suggests a competitive or favorable price for the government. Conversely, if it significantly exceeds this range, it might indicate a less advantageous price, warranting further investigation into the specific product specifications and market conditions at the time of award.

What is Stutz Packing Company's track record with federal contracts, particularly with the Department of Agriculture?

Stutz Packing Company has a history of receiving federal contracts, primarily with the Department of Agriculture (USDA), indicating a recognized capability to supply agricultural products to government entities. Reviewing their contract history reveals multiple awards over the years, suggesting a sustained business relationship with federal agencies. These contracts often involve the provision of various food items, including processed nuts and related products. The nature of these awards, whether through competitive bidding or other means, provides insight into their performance and reliability. While specific performance metrics for past contracts are not detailed in the provided data, the recurrence of awards suggests a satisfactory track record. Further due diligence would involve examining past performance evaluations, any instances of contract disputes or terminations, and the overall volume and value of their federal business to fully assess their reliability and expertise in fulfilling large-scale government procurements.

What are the potential risks associated with a firm fixed-price contract for perishable or semi-perishable goods like roasted nuts?

Firm fixed-price (FFP) contracts offer cost certainty for the government, which is a significant advantage. However, for goods like roasted nuts, which have a shelf life and are subject to market volatility, there are potential risks. One risk is that if market prices for raw pistachios or processing costs increase significantly after the contract is awarded, the contractor might face reduced profit margins or even losses. This could incentivize the contractor to cut corners on quality or service to maintain profitability, although the FFP structure aims to prevent this. Conversely, if market prices decrease substantially, the government might be paying a higher-than-market price. Another consideration is the shelf life; if the delivery schedule is misaligned with the product's freshness, the government could receive goods nearing expiration, leading to potential waste or reduced usability. Effective risk mitigation involves robust contract clauses addressing quality, delivery timelines, and potentially price adjustments under extreme, unforeseen market shifts, though the latter deviates from a pure FFP.

How does the number of bidders (4) in this 'full and open competition' impact the final price and value for taxpayers?

Having four bidders in a 'full and open competition' scenario generally has a positive impact on the final price and value for taxpayers. A higher number of bidders typically intensifies competition, forcing each participant to offer their most competitive pricing and terms to win the contract. This dynamic drives down the price as bidders strive to underbid their rivals while still meeting the government's specifications. Furthermore, increased competition can lead to better quality products and services, as contractors aim to differentiate themselves not just on price but also on performance and value. For taxpayers, this means their money is likely being spent more efficiently, securing the required goods at a price closer to the true market value. A low number of bidders, conversely, might suggest limited market interest or potential collusion, leading to higher prices and reduced value.

Industry Classification

NAICS: Manufacturing › Other Food Manufacturing › Roasted Nuts and Peanut Butter Manufacturing

Product/Service Code: SUBSISTENCE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Solicitation ID: 123J1421B0415/4100023634

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 82689 AVENUE 45, INDIO, CA, 92201

Business Categories: Category Business, Corporate Entity Not Tax Exempt, HUBZone Firm, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $39,892,164

Exercised Options: $39,892,164

Current Obligation: $39,892,164

Actual Outlays: $39,857,259

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline