USDA awards $2.85M for frozen chicken, highlighting firm fixed-price contract for food donations

Contract Overview

Contract Amount: $2,853,365 ($2.9M)

Contractor: Tyson Foods Inc.

Awarding Agency: Department of Agriculture

Start Date: 2023-05-12

End Date: 2023-09-30

Contract Duration: 141 days

Daily Burn Rate: $20.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: COMMODITIES FOR USG FOOD DONATIONS: 2000009312/4100027553/CHICKEN WHOLE BAGGED FRZ CTN-36-43 LB

Place of Performance

Location: NEW HOLLAND, LANCASTER County, PENNSYLVANIA, 17557

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Agriculture obligated $2.9 million to TYSON FOODS INC. for work described as: COMMODITIES FOR USG FOOD DONATIONS: 2000009312/4100027553/CHICKEN WHOLE BAGGED FRZ CTN-36-43 LB Key points: 1. Contract value represents a significant investment in food security initiatives. 2. The firm fixed-price structure aims to control costs for the government. 3. Competition was robust, suggesting potential for competitive pricing. 4. Contract duration is relatively short, indicating a focused procurement need. 5. The awardee, Tyson Foods Inc., is a major player in the poultry industry. 6. Geographic focus on Pennsylvania for delivery is noted.

Value Assessment

Rating: good

The contract value of $2.85 million for frozen chicken aligns with typical government procurements for food commodities. While a direct per-unit cost comparison is not provided in the data, the firm fixed-price nature suggests an effort to lock in costs. Benchmarking against similar large-scale food donation contracts would provide further insight into value for money, but the scale of this award is substantial.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The presence of 6 bids suggests a healthy level of interest and competition for this requirement. This broad competition is generally favorable for price discovery and ensuring the government receives competitive offers.

Taxpayer Impact: Full and open competition typically leads to better pricing for taxpayers by fostering a competitive environment among suppliers.

Public Impact

Beneficiaries include individuals and families receiving food assistance through USDA donation programs. Services delivered include the provision of frozen whole chicken for distribution. Geographic impact is concentrated in Pennsylvania, where the chicken will be delivered. Workforce implications are primarily within Tyson Foods Inc.'s processing and logistics operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Positive Signals

Awarded under full and open competition, indicating a fair and accessible process.
Firm fixed-price contract type helps manage budget certainty.
Awardee is a well-established entity in the food industry.

Sector Analysis

The procurement of food commodities for donation falls within the broader agricultural and food services sector. This contract supports the USDA's mission to ensure food availability and affordability. The market for large-scale poultry processing and distribution is dominated by a few major players, making Tyson Foods Inc. a significant entity in this space. Comparable spending benchmarks would involve analyzing other large food commodity contracts awarded by federal agencies for similar purposes.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses, nor does it explicitly mention subcontracting requirements for small businesses. As a large commodity purchase, the primary awardee is a major corporation, suggesting limited direct opportunities for small businesses within this specific contract's prime award. However, Tyson Foods Inc. may engage small businesses in its broader supply chain.

Oversight & Accountability

The contract is a definitive contract awarded by the Agricultural Marketing Service, an agency within the USDA. Oversight would typically involve contract administration by the contracting officer and potentially reviews by the USDA's Office of Inspector General, especially concerning the delivery and distribution of the food commodities. Transparency is facilitated through contract award databases.

Related Government Programs

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

Risk Flags

Potential for price volatility impacting contractor profitability or government cost-effectiveness.
Supply chain risks inherent in perishable food commodities.

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $2.9 million to TYSON FOODS INC.. COMMODITIES FOR USG FOOD DONATIONS: 2000009312/4100027553/CHICKEN WHOLE BAGGED FRZ CTN-36-43 LB

Who is the contractor on this award?

The obligated recipient is TYSON 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 $2.9 million.

What is the period of performance?

Start: 2023-05-12. End: 2023-09-30.

What is the historical spending pattern for similar frozen chicken procurements by the USDA?

Analyzing historical spending for similar frozen chicken procurements by the USDA would involve examining contract databases for awards made over previous fiscal years. Key metrics to track would include the quantity of chicken procured, the average price per pound, the number of bidders, and the types of contracts used (e.g., firm fixed-price vs. cost-plus). This analysis would help determine if the current $2.85 million award is consistent with past spending levels, if prices have increased or decreased, and whether competition has remained stable or fluctuated. Understanding these patterns provides context for the current award's value and efficiency.

How does the price per pound for this contract compare to market rates for frozen chicken?

To compare the price per pound for this contract to market rates, we would need to calculate the price per pound from the total award amount and the quantity of chicken. The data provides the total award amount ($2,853,364.80) and the product description ('CHICKEN WHOLE BAGGED FRZ CTN-36-43 LB'). Assuming an average weight of 40 lbs per case, we can estimate the number of cases and then the price per pound. Market rates can be obtained from industry reports, agricultural market data services (like USDA's Agricultural Marketing Service price reports), and wholesale food distributors. A comparison would reveal if the government secured a favorable price relative to the prevailing market conditions at the time of award.

What is Tyson Foods Inc.'s track record with federal food commodity contracts?

Tyson Foods Inc. has a significant history of supplying food products, including poultry, to various U.S. government agencies. Their track record with federal food commodity contracts can be assessed by reviewing past awards for similar items, such as frozen chicken, beef, or pork, to agencies like the Department of Defense (for military rations), USDA (for domestic feeding programs), and others. Examining these past contracts would reveal their performance history, including on-time delivery rates, product quality compliance, and any history of contract disputes or penalties. A strong track record suggests reliability and capability in fulfilling large government orders.

What are the specific food donation programs this contract supports?

This contract for frozen chicken likely supports one or more of the USDA's food donation programs, which aim to alleviate hunger and improve nutrition. Examples include the Food Purchase and Distribution Program (FPDP), which buys food for donation to domestic and international emergency food assistance efforts, and potentially programs like the Commodity Supplemental Food Program (CSFP) or the Emergency Food Assistance Program (TEFAP), which distribute food to low-income individuals. The specific program would dictate the end recipients and distribution channels, impacting the overall public benefit derived from this procurement.

What are the potential risks associated with a firm fixed-price contract for perishable goods like frozen chicken?

While firm fixed-price (FFP) contracts offer cost certainty, they can present risks, particularly with perishable goods like frozen chicken. If market prices for chicken increase significantly after the contract is awarded, Tyson Foods Inc. might face reduced profit margins or potential challenges in fulfilling the contract at the agreed-upon price, potentially leading to delivery delays or quality issues if cost-cutting measures are implemented. Conversely, if market prices drop substantially, the government might be paying above market rates. Risks also include supply chain disruptions (e.g., avian flu outbreaks, transportation issues) that could impact Tyson's ability to deliver, even under an FFP agreement.

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: 123J1423B0389

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2200, WEST DON TYSON PARKWAY, SPRINGDALE, AR, 72762

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: $2,853,365

Exercised Options: $2,853,365

Current Obligation: $2,853,365

Actual Outlays: $2,853,365

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline