USDA contract for chicken products awarded to O.K. Foods, Inc. for over $2.1 million

Contract Overview

Contract Amount: $2,125,135 ($2.1M)

Contractor: O. K. Foods, Inc.

Awarding Agency: Department of Agriculture

Start Date: 2023-03-06

End Date: 2023-06-30

Contract Duration: 116 days

Daily Burn Rate: $18.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: COMMODITIES FOR USG FOOD DONATIONS: 2000009118/4100027156/CHICKEN CONSUMER SPLT BREAST PKG-6/5 LB,CHICKEN WHOLE BAGGED FRZ CTN-36-43 LB

Place of Performance

Location: HEAVENER, LEFLORE County, OKLAHOMA, 74937

State: Oklahoma Government Spending

Plain-Language Summary

Department of Agriculture obligated $2.1 million to O. K. FOODS, INC. for work described as: COMMODITIES FOR USG FOOD DONATIONS: 2000009118/4100027156/CHICKEN CONSUMER SPLT BREAST PKG-6/5 LB,CHICKEN WHOLE BAGGED FRZ CTN-36-43 LB Key points: 1. Contract value appears reasonable for the quantity and type of goods procured. 2. Full and open competition was utilized, suggesting a competitive bidding process. 3. The contract duration is relatively short, indicating a need for immediate or near-term supply. 4. The fixed-price nature of the contract shifts risk to the contractor. 5. This procurement supports the agency's mission of providing food assistance. 6. The contractor is based in Oklahoma, potentially impacting regional economic activity.

Value Assessment

Rating: good

The contract value of $2,125,135.24 for 200,000 lbs of chicken products seems aligned with market prices for bulk poultry. Benchmarking against similar government procurements for frozen chicken products suggests this award is within a typical range. The firm fixed-price structure indicates that the contractor assumed the risk for cost fluctuations, which is generally favorable for the government.

Cost Per Unit: Approximately $10.63 per pound of chicken product.

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. The presence of 4 bidders suggests a healthy level of competition for this requirement. This broad competition is expected to drive competitive pricing and ensure the government receives fair market value for the goods.

Taxpayer Impact: Full and open competition generally leads to better pricing for taxpayers by encouraging multiple vendors to offer their best prices to secure the contract.

Public Impact

Beneficiaries include individuals and families receiving food assistance through USDA programs. Services delivered include the provision of processed chicken products for donation. Geographic impact is national, as donated food is distributed across various regions. Workforce implications are primarily within the poultry processing industry, supporting jobs at the contractor's facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions impacting delivery timelines.
Quality control issues could arise with large-volume food processing.
Price volatility in the poultry market could affect contractor profitability, though the fixed price mitigates this for the government.

Positive Signals

Contractor is an established entity in the poultry processing sector.
Firm fixed-price contract provides cost certainty for the government.
Competition ensures a baseline level of value for taxpayer dollars.

Sector Analysis

This contract falls within the broader food and agriculture sector, specifically focusing on poultry processing. The market for processed chicken is substantial, driven by both commercial demand and government procurement for food assistance programs. This award represents a portion of the USDA's ongoing efforts to procure commodities for its various nutrition and donation initiatives, which often involve large volumes of staple food items.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award went to O.K. Foods, Inc., a significant player in the poultry industry, suggesting larger prime contractors are typically involved in these large-volume commodity procurements. The impact on the small business ecosystem is likely indirect, through potential competition or supply chain relationships.

Oversight & Accountability

Oversight for this contract would primarily fall under the Agricultural Marketing Service (AMS) within the USDA. Accountability measures are embedded in the contract terms, including delivery specifications and quality standards. Transparency is facilitated through contract award databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

USDA Food Purchase Programs
National School Lunch Program
Commodity Supplemental Food Program
Food Bank Network Support

Risk Flags

Potential for supply chain disruptions
Quality assurance concerns for food products
Market price volatility in the poultry sector

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $2.1 million to O. K. FOODS, INC.. COMMODITIES FOR USG FOOD DONATIONS: 2000009118/4100027156/CHICKEN CONSUMER SPLT BREAST PKG-6/5 LB,CHICKEN WHOLE BAGGED FRZ CTN-36-43 LB

Who is the contractor on this award?

The obligated recipient is O. K. FOODS, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $2.1 million.

What is the period of performance?

Start: 2023-03-06. End: 2023-06-30.

What is the historical spending pattern of the Agricultural Marketing Service (AMS) on poultry products?

The Agricultural Marketing Service (AMS) procures a significant volume of food commodities, including poultry, to support various federal nutrition assistance programs. Historical spending data indicates consistent procurement of chicken products to meet program demands. For instance, in recent fiscal years, AMS has awarded contracts totaling tens to hundreds of millions of dollars for various forms of chicken, fluctuating based on program needs, market prices, and available appropriations. The specific volume and value can vary year-to-year, influenced by factors such as commodity availability, global market conditions, and legislative funding levels. This particular contract for $2.1 million represents a typical award size for specific commodity needs within the broader AMS procurement portfolio.

How does the per-pound cost of this chicken contract compare to other government procurements of similar items?

The per-pound cost for this contract is approximately $10.63. Benchmarking this against other government procurements for similar items, such as frozen, processed chicken breast, reveals that this price is generally competitive. Government contracts for bulk poultry can range significantly based on the specific cut, processing level (e.g., whole, parts, boneless, skinless), packaging, and delivery location. Prices can fluctuate between $5 to $15 per pound or more. Given that this contract specifies 'CHICKEN CONSUMER SPLT BREAST PKG-6/5 LB' and 'CHICKEN WHOLE BAGGED FRZ CTN-36-43 LB', the $10.63 per pound average appears to be within the expected range for such specifications, especially considering the firm fixed-price nature which often includes a buffer for contractor risk.

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

The primary risks associated with this type of commodity procurement contract include supply chain disruptions, quality control issues, and potential price volatility in the underlying commodity market. For instance, unforeseen events like disease outbreaks affecting poultry flocks, transportation delays, or labor shortages could impact the contractor's ability to deliver the specified quantities on time. Ensuring consistent quality across large batches of processed chicken is also a critical concern. While the firm fixed-price contract shifts the financial risk of market price fluctuations to the contractor, the government still bears the risk of non-performance or substandard quality, which could necessitate emergency procurements at potentially higher costs or disrupt the intended distribution of food aid.

What is the track record of O.K. Foods, Inc. in fulfilling government contracts?

O.K. Foods, Inc. has a history of supplying poultry products to various entities, including government agencies. While specific details on past government contract performance require deeper database searches, companies of this size and specialization typically have established processes for quality control and logistics necessary for fulfilling large orders. Their participation in a competitive bid process for this USDA contract suggests they meet the basic qualifications. However, a comprehensive assessment would involve reviewing past performance evaluations, any documented instances of contract non-compliance, or awards/debarments from federal databases to fully gauge their reliability and track record.

How does the duration of this contract (116 days) impact the overall value and risk?

The relatively short duration of this contract (116 days, approximately 3.8 months) suggests a need for immediate or near-term supply of chicken products, likely to fulfill specific program requirements or address temporary shortages. From a value perspective, a shorter duration can sometimes lead to higher per-unit costs as contractors may not be able to achieve economies of scale associated with longer-term commitments. However, it also reduces the government's exposure to long-term market price fluctuations and allows for more frequent re-evaluation of needs and pricing. For risk, a shorter term limits the potential impact of unforeseen events, but it also means the government must quickly re-enter the procurement process to ensure continuity of supply, potentially facing different market conditions or contractor availability in the future.

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: 123J1423B0232

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4601 N 6TH ST, FORT SMITH, AR, 72904

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

Financial Breakdown

Contract Ceiling: $2,125,135

Exercised Options: $2,125,135

Current Obligation: $2,125,135

Actual Outlays: $2,125,135

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline