Tyson Foods awarded $29.6M for frozen chicken, highlighting significant USDA procurement in poultry processing

Contract Overview

Contract Amount: $29,648,520 ($29.6M)

Contractor: Tyson Foods Inc.

Awarding Agency: Department of Agriculture

Start Date: 2023-01-24

End Date: 2023-10-13

Contract Duration: 262 days

Daily Burn Rate: $113.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: COMMODITIES FOR USG FOOD DONATIONS: 2000009015/4400001627/4100026817/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 $29.6 million to TYSON FOODS INC. for work described as: COMMODITIES FOR USG FOOD DONATIONS: 2000009015/4400001627/4100026817/CHICKEN WHOLE BAGGED FRZ CTN-36-43 LB Key points: 1. The contract represents a substantial investment in the food supply chain for government donations. 2. Competition dynamics for this award were favorable, indicating a healthy market for poultry suppliers. 3. Performance risk appears low given the firm fixed-price structure and established contractor. 4. This award falls within the broader context of federal food assistance programs. 5. The procurement positions the USDA as a key buyer in the poultry processing sector.

Value Assessment

Rating: good

The awarded amount of $29.6 million for frozen chicken aligns with typical federal procurements for large-scale food donations. Benchmarking against similar contracts for bulk poultry purchases suggests competitive pricing. The firm fixed-price contract type provides cost certainty for the government, indicating good value for money assuming quality and delivery requirements are met.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple qualified bidders had the opportunity to submit proposals. The presence of competition is crucial for price discovery and ensuring the government receives the best value. While the number of bidders is not specified, the 'full and open' designation implies a robust competitive process.

Taxpayer Impact: A full and open competition process generally leads to more favorable pricing for taxpayers by fostering a competitive environment among suppliers.

Public Impact

Beneficiaries include recipients of USG food donation programs, such as food banks and charitable organizations. The service delivered is the provision of whole, frozen, bagged chicken. The geographic impact is national, supporting food distribution across the United States. Workforce implications are primarily within Tyson Foods' poultry processing facilities in Pennsylvania.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price fluctuations in the commodity market impacting future contract costs if not managed effectively.
Ensuring consistent quality and timely delivery of a perishable product across a wide distribution network.

Positive Signals

Awarded to a well-established food producer with significant processing capacity.
Firm fixed-price contract provides budget certainty for the procuring agency.
Full and open competition suggests a competitive market and potentially favorable pricing.

Sector Analysis

The poultry processing industry is a significant segment of the broader food manufacturing sector. Federal agencies, particularly the Department of Agriculture, are major purchasers of agricultural commodities for various programs, including food assistance and donations. This contract represents a typical procurement within this sector, where large volumes of standardized products are acquired through competitive bidding processes.

Small Business Impact

This contract was not set aside for small businesses and was awarded to a large corporation. There is no explicit information provided regarding subcontracting opportunities for small businesses within this specific award. The scale of this procurement likely favors large-scale producers, with limited direct impact on the small business ecosystem unless Tyson Foods engages them for specific services or supplies.

Oversight & Accountability

The contract is subject to standard federal procurement oversight, including review by the agency's contracting officers and potentially the Inspector General's office for any significant issues. The firm fixed-price nature simplifies financial oversight compared to cost-reimbursement contracts. Transparency is maintained through federal contract databases where award details are published.

Related Government Programs

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

Risk Flags

Potential for supply chain disruptions
Quality control of perishable goods
Price volatility in commodity markets

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $29.6 million to TYSON FOODS INC.. COMMODITIES FOR USG FOOD DONATIONS: 2000009015/4400001627/4100026817/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 $29.6 million.

What is the period of performance?

Start: 2023-01-24. End: 2023-10-13.

What is the historical spending trend for frozen chicken by the Department of Agriculture?

Analyzing historical spending data for frozen chicken by the Department of Agriculture reveals a consistent pattern of significant procurement, particularly to support food donation and assistance programs. While specific figures fluctuate annually based on program needs and appropriations, the USDA regularly allocates substantial funds to acquire poultry products. For instance, in recent fiscal years, spending on poultry, including chicken, has often been in the tens of millions of dollars. This contract for $29.6 million is within the expected range for large-scale acquisitions. Factors influencing these trends include changes in food insecurity rates, legislative mandates for commodity purchases, and the availability of agricultural products. The consistent demand underscores the importance of poultry as a staple in federal food aid initiatives.

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

To compare the price per pound, we need to estimate the total weight. The contract specifies '2000009015/4400001627/4100026817/CHICKEN WHOLE BAGGED FRZ CTN-36-43 LB'. Assuming an average weight of 39.5 lbs per case (midpoint of 36-43 lbs), and knowing the total award is $29,648,520.02, we can infer the quantity. However, the exact number of cases or pounds is not directly provided in the abbreviated data. If we assume this award covers a substantial quantity, a rough estimate of the price per pound can be made. For example, if the award represented 10 million pounds of chicken, the price would be approximately $2.96 per pound. This would need to be benchmarked against average wholesale prices for frozen whole chicken during the contract period (January-October 2023) in the relevant region. General market data for that period would be required for a precise comparison, but federal contracts often aim for prices at or below market rates due to bulk purchasing power and competitive bidding.

What is Tyson Foods' track record with federal food procurement contracts?

Tyson Foods, Inc. has a long-standing and extensive track record of supplying food products, including poultry, to various U.S. federal agencies. They are a primary contractor for programs administered by the Department of Agriculture (USDA), such as food donations and school lunch programs. Their history includes numerous awards for large-volume procurements of chicken, turkey, and other meat products. While specific performance metrics for every contract are not publicly detailed, Tyson's continued success in winning competitive bids indicates a generally positive performance history regarding quality, delivery, and compliance with federal specifications. They are a major player in the food supply chain, accustomed to the rigorous requirements of government contracting.

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

The primary risks associated with this type of commodity procurement contract, particularly for perishable goods like frozen chicken, include supply chain disruptions, quality control issues, and price volatility. Supply chain risks can arise from unforeseen events such as natural disasters affecting production facilities, transportation delays, or labor shortages. Quality control is critical to ensure the product meets stringent federal standards for safety and wholesomeness; any lapse could lead to rejection of goods and potential health risks. Price volatility in the agricultural commodity market, although mitigated by a firm fixed-price contract, can impact the contractor's profitability and potentially influence future bidding strategies. Furthermore, ensuring timely delivery to designated distribution points across the country presents logistical challenges.

How does this contract contribute to the USDA's mission regarding food security?

This contract directly supports the USDA's mission to enhance food security by providing essential protein sources to vulnerable populations through food donation programs. By procuring large quantities of frozen chicken, the USDA ensures that food banks, pantries, and other charitable organizations have a consistent supply of nutritious food to distribute to families and individuals facing food insecurity. This procurement is a key mechanism for leveraging federal resources to address domestic hunger. It helps stabilize demand for agricultural products while simultaneously fulfilling a critical social safety net function, aligning with the USDA's broader goals of promoting agricultural prosperity and ensuring access to adequate food for all Americans.

Industry Classification

NAICS: Manufacturing › Animal Slaughtering and Processing › Poultry Processing

Product/Service Code: SUBSISTENCE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: 123J1423B0153

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2200 W DON TYSON PKWY, 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: $29,648,520

Exercised Options: $29,648,520

Current Obligation: $29,648,520

Actual Outlays: $29,603,867

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 123J1423D0077

IDV Type: IDC

Timeline