USDA awards $19M for canned salmon, exceeding benchmark by 92% for food donation commodities

Contract Overview

Contract Amount: $19,002,128 ($19.0M)

Contractor: Peter PAN Seafood Company, LLC

Awarding Agency: Department of Agriculture

Start Date: 2022-06-09

End Date: 2022-12-31

Contract Duration: 205 days

Daily Burn Rate: $92.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: COMMODITIES FOR USG FOOD DONATIONS: 2000008576/4100025682/SALMON RED CAN-24/14.75 OZ

Place of Performance

Location: KING COVE, ALEUTIANS EAST County, ALASKA, 99612

State: Alaska Government Spending

Plain-Language Summary

Department of Agriculture obligated $19.0 million to PETER PAN SEAFOOD COMPANY, LLC for work described as: COMMODITIES FOR USG FOOD DONATIONS: 2000008576/4100025682/SALMON RED CAN-24/14.75 OZ Key points: 1. The contract's price appears significantly above market benchmarks, raising concerns about value for money. 2. Full and open competition was utilized, but the high price suggests potential market inefficiencies or unique product requirements. 3. The contract duration of 205 days is relatively short, indicating a focus on immediate supply needs. 4. The fixed-price contract type shifts risk to the contractor, but the elevated price may negate this benefit. 5. This award falls within the 'Seafood Product Preparation and Packaging' NAICS code, a niche within the broader food industry. 6. The sole awardee, Peter Pan Seafood Company, LLC, suggests a concentrated market for this specific commodity.

Value Assessment

Rating: concerning

The award price of $19,002,128 for canned salmon is 92% above the provided benchmark of $926,930. This substantial deviation warrants further investigation into the pricing justification. While the contract is firm fixed price, the significant overage suggests that the government may not have achieved optimal value. Comparisons to similar commodity contracts for food donations would be beneficial to understand if this price is an outlier or indicative of broader market trends for this specific product.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were theoretically able to participate. However, the fact that only one award was made, and at a price significantly above benchmark, raises questions about the effectiveness of the competition in driving down costs. It is possible that the specific requirements of the canned salmon commodity, such as sourcing or processing standards, limited the number of qualified bidders despite the open solicitation.

Taxpayer Impact: Taxpayers may have overpaid due to the high price achieved despite open competition. The lack of competitive pressure resulting in a significantly higher-than-benchmark price suggests a potential loss of taxpayer funds.

Public Impact

Beneficiaries of this contract are likely recipients of U.S. government food donation programs, potentially including domestic food banks or international aid organizations. The services delivered include the supply of 14.75 oz cans of red salmon. The geographic impact is primarily related to the distribution of donated food, with the supplier based in Alaska (AK). Workforce implications are likely within the seafood processing and packaging industry, supporting jobs in the supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant price deviation from benchmark suggests potential overpayment.
Limited number of awards despite full and open competition could indicate market concentration or specialized requirements.
Lack of detailed justification for the high price in the provided data.

Positive Signals

Contract awarded through full and open competition, adhering to standard procurement practices.
Firm fixed price contract type provides cost certainty for the government.
Supplier is a known entity in the seafood industry.

Sector Analysis

This contract falls within the broader food manufacturing sector, specifically the 'Seafood Product Preparation and Packaging' industry. The market for government food procurement can be substantial, driven by domestic nutrition programs and international food aid. While specific market size data for canned salmon for government donations is not readily available, the USDA's Commodity Food Purchases and Purchases by Commodity data indicate significant annual spending on various food items. This contract represents a specific instance of that spending, highlighting the government's role as a major buyer in certain food commodity markets.

Small Business Impact

The provided data indicates that small business set-aside was not utilized (ss: false) and there is no information regarding subcontracting (sb: false). This suggests the contract was not specifically targeted towards small businesses, and there is no explicit indication of small business participation through subcontracting in this award. Therefore, the direct impact on the small business ecosystem from this specific contract appears minimal based on the available information.

Oversight & Accountability

The contract is a definitive contract awarded by the Department of Agriculture's Agricultural Marketing Service. Oversight would typically involve contract administration by the agency to ensure delivery of goods according to specifications and terms. Accountability measures are inherent in the firm fixed-price structure, requiring the contractor to deliver as agreed. Transparency is facilitated by the public nature of federal contract awards, though detailed justifications for pricing are not always publicly accessible.

Related Government Programs

USDA Food Donation Programs
Commodity Food Purchases
Federal Food Aid Programs
Seafood Procurement

Risk Flags

Price significantly exceeds benchmark
Potential for insufficient competition despite full and open solicitation
Lack of detailed justification for high price in award data

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $19.0 million to PETER PAN SEAFOOD COMPANY, LLC. COMMODITIES FOR USG FOOD DONATIONS: 2000008576/4100025682/SALMON RED CAN-24/14.75 OZ

Who is the contractor on this award?

The obligated recipient is PETER PAN SEAFOOD COMPANY, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $19.0 million.

What is the period of performance?

Start: 2022-06-09. End: 2022-12-31.

What specific factors contributed to the canned salmon price being 92% above the benchmark?

The provided data does not contain specific details explaining the 92% price deviation above the benchmark. Potential factors could include unique quality specifications for the salmon (e.g., specific species, origin, processing standards), unexpected fluctuations in raw material costs (e.g., fishing quotas, market prices for raw salmon), specialized packaging requirements for donation purposes, or logistical challenges in sourcing and delivery. It is also possible that the benchmark itself was outdated or not representative of the current market conditions for this highly specific commodity. Further investigation into the solicitation documents and award justification would be necessary to pinpoint the exact reasons for the elevated price.

How does Peter Pan Seafood Company, LLC's track record compare for similar government contracts?

Information regarding Peter Pan Seafood Company, LLC's specific track record on similar government contracts is not available in the provided data. To assess their performance, one would need to review historical contract awards to this company, examining factors such as on-time delivery, quality compliance, and pricing trends across various contracts. Databases like the Federal Procurement Data System (FPDS) or specialized contract analysis tools could provide this historical context. Without this comparative data, it is difficult to determine if this award represents a typical pricing strategy for the company or an anomaly.

What are the risks associated with a firm fixed-price contract when the price is significantly above benchmark?

While a firm fixed-price (FFP) contract is designed to provide cost certainty for the government by shifting cost overrun risks to the contractor, a price significantly above benchmark introduces a different risk: the risk of overpayment. Even though the government knows the final cost, that cost may be substantially higher than necessary. This can occur if the initial price was poorly estimated, if competition was insufficient to drive down bids, or if market conditions unexpectedly favored the seller. The primary risk here is that taxpayer funds are not being used as efficiently as possible, potentially diverting resources from other critical government functions or programs.

How effective is full and open competition in ensuring competitive pricing for specialized food commodities like canned salmon?

Full and open competition is generally the most effective method for ensuring competitive pricing. However, its effectiveness can be diminished for highly specialized commodities. If the requirements for the canned salmon (e.g., specific type, processing, packaging for food donations) are so unique that only a limited number of suppliers can meet them, the pool of potential bidders shrinks. This can lead to fewer bids, even in an open solicitation, and potentially higher prices if the few qualified bidders face limited competitive pressure. In such cases, the government might need to explore alternative strategies, such as refining requirements to broaden appeal or conducting more in-depth market research beforehand.

What is the historical spending pattern for canned salmon or similar commodities by the USDA for food donations?

The provided data does not include historical spending patterns for canned salmon or similar commodities by the USDA for food donations. To analyze this, one would need to access historical USDA procurement data, looking at contract awards over several fiscal years for relevant food items. This analysis would reveal trends in volume, pricing, number of awards, and types of contractors. Understanding these patterns is crucial for establishing realistic benchmarks and identifying potential anomalies, such as the significant price deviation observed in this specific award.

Industry Classification

NAICS: Manufacturing › Seafood Product Preparation and Packaging › Seafood Product Preparation and Packaging

Product/Service Code: SUBSISTENCE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Solicitation ID: 123J1422B0379

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 3015 112TH AVE NE STE 150, BELLEVUE, WA, 98004

Business Categories: Category Business, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $19,002,128

Exercised Options: $19,002,128

Current Obligation: $19,002,128

Actual Outlays: $19,002,128

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline