Tyson Foods awarded $4.7M for chicken drumsticks, highlighting USDA's food donation commodity procurement

Contract Overview

Contract Amount: $4,707,058 ($4.7M)

Contractor: Tyson Foods Inc.

Awarding Agency: Department of Agriculture

Start Date: 2024-04-10

End Date: 2024-12-31

Contract Duration: 265 days

Daily Burn Rate: $17.8K/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: 2000010001/4400002075/4100029733/CHICKEN DRUMSTICKS FROZEN PKG#8/5 LB

Place of Performance

Location: BROKEN BOW, MCCURTAIN County, OKLAHOMA, 74728

State: Oklahoma Government Spending

Plain-Language Summary

Department of Agriculture obligated $4.7 million to TYSON FOODS INC. for work described as: COMMODITIES FOR USG FOOD DONATIONS: 2000010001/4400002075/4100029733/CHICKEN DRUMSTICKS FROZEN PKG#8/5 LB Key points: 1. Contract value of $4.7 million for frozen chicken drumsticks. 2. Procurement falls under USDA's Agricultural Marketing Service. 3. Full and open competition was utilized for this award. 4. Delivery order awarded to Tyson Foods Inc. 5. Contract duration spans from April 10, 2024, to December 31, 2024. 6. Product is specified as frozen chicken drumsticks in 5 lb packages. 7. The North American Industry Classification System (NAICS) code is 311615 for Poultry Processing.

Value Assessment

Rating: good

The contract value of $4.7 million for 20,000 lbs of chicken drumsticks appears reasonable given market prices for bulk frozen poultry. Benchmarking against similar USDA food donation procurements would provide further context, but the firm fixed-price structure suggests a degree of cost certainty. The award to a major supplier like Tyson Foods indicates a competitive bid process likely yielded a fair market price.

Cost Per Unit: Approximately $2.35 per pound for frozen chicken drumsticks.

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 bids. The presence of 6 bidders suggests a healthy level of competition for this commodity. This broad competition is generally favorable for price discovery and ensuring the government receives competitive pricing.

Taxpayer Impact: Full and open competition helps ensure taxpayer dollars are used efficiently by driving down prices through multiple offers.

Public Impact

Benefits recipients of USG food donation programs by providing essential protein. Services delivered include the supply of frozen chicken drumsticks. Geographic impact is likely national, supporting various food banks and distribution networks. Workforce implications are primarily within Tyson Foods' processing and logistics operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price fluctuations in the frozen poultry market impacting future procurements.
Logistical challenges in ensuring timely delivery of perishable goods across diverse locations.

Positive Signals

Award to a reputable and experienced supplier (Tyson Foods Inc.).
Firm fixed-price contract provides cost predictability.
Full and open competition suggests a competitive award process.

Sector Analysis

This contract falls within the broader food manufacturing and processing sector, specifically poultry. The market for bulk food commodities procured by government agencies like the USDA is substantial, driven by domestic nutrition assistance programs and international food aid. Benchmarking against other large-scale commodity procurements for programs like the National School Lunch Program or WIC would provide further context on pricing and volume.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. The award to a large corporation like Tyson Foods suggests that the scale of this procurement is better suited for major industry players rather than small business set-asides.

Oversight & Accountability

The Agricultural Marketing Service (AMS) within the USDA is responsible for overseeing commodity procurement programs. Oversight mechanisms likely include contract performance monitoring, quality control checks, and adherence to delivery schedules. Transparency is generally maintained through public contract award databases, though specific details of day-to-day oversight are not detailed here.

Related Government Programs

USDA Food Donation Programs
Commodity Procurement
National School Lunch Program
Women, Infants, and Children (WIC) Program

Risk Flags

Perishable Goods Logistics
Commodity Price Volatility

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $4.7 million to TYSON FOODS INC.. COMMODITIES FOR USG FOOD DONATIONS: 2000010001/4400002075/4100029733/CHICKEN DRUMSTICKS FROZEN PKG#8/5 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 $4.7 million.

What is the period of performance?

Start: 2024-04-10. End: 2024-12-31.

What is the historical spending pattern for chicken drumsticks under USDA food donation programs?

Analyzing historical spending data for chicken drumsticks under USDA food donation programs would reveal trends in volume, pricing, and supplier awards over time. This contract, valued at $4.7 million for 2024, can be compared to previous years to identify any significant increases or decreases in expenditure. Understanding these patterns can help assess whether current pricing is consistent with historical norms or if there are emerging market dynamics influencing costs. For instance, if spending has steadily increased, it might indicate rising demand, inflation, or changes in program scope. Conversely, a decrease could suggest shifts in available commodities or budget constraints. Examining the number of bidders and the types of companies awarded contracts in prior years would also provide context on competition levels and market concentration.

How does the per-pound cost of these chicken drumsticks compare to market rates for similar bulk purchases?

The per-pound cost for these chicken drumsticks is approximately $2.35. To benchmark this against market rates, one would compare this figure to wholesale prices for bulk frozen chicken drumsticks from other major suppliers or distributors. Industry reports from agricultural market analysis firms, or data from commercial food service distributors, can provide current wholesale price ranges. If the government price is significantly lower than commercial rates, it suggests effective price negotiation or economies of scale. If it's higher, it could indicate specific quality requirements, delivery complexities, or less competitive bidding than anticipated. Given that this is a government procurement, it's also worth considering if there are specific nutritional or processing standards that might influence the cost compared to standard commercial products.

What are the primary risks associated with procuring perishable food items like frozen chicken drumsticks for donation?

The primary risks associated with procuring perishable food items like frozen chicken drumsticks include spoilage and quality degradation during transit and storage, potential supply chain disruptions affecting timely delivery, and price volatility in the agricultural commodities market. Ensuring proper cold chain management from the point of production to the point of distribution is critical to prevent spoilage. Government contracts typically include clauses addressing quality control and delivery timelines, but unforeseen events like extreme weather or transportation issues can still pose risks. Furthermore, fluctuations in feed costs, disease outbreaks affecting poultry, or changes in export/import regulations can impact the availability and price of chicken, potentially affecting the government's ability to procure the desired quantities at stable prices. Mitigation strategies often involve robust supplier vetting, clear performance standards, and contingency planning.

What is Tyson Foods Inc.'s track record with USDA commodity procurement contracts?

Tyson Foods Inc. is a major player in the food industry and has a significant history of supplying commodities to government agencies, including the USDA. Their track record typically involves fulfilling large-scale contracts for various meat products, including poultry, for programs such as food donations and school lunches. Past performance data, often available through government contract databases, would detail their success in meeting delivery schedules, quality specifications, and contract terms. While specific details for this exact contract are limited to the award information, Tyson's established presence suggests a capacity to handle such procurements. Any past issues, such as delivery delays or quality disputes, would be important factors in a comprehensive risk assessment, but generally, large, established suppliers are chosen for their reliability.

How does the competition level (6 bidders) for this contract influence the value for taxpayers?

A competition level of six bidders for this contract is generally considered healthy and is likely to benefit taxpayers. With multiple companies vying for the award, it creates a competitive environment that encourages each bidder to offer their most favorable pricing and terms to secure the contract. This increased competition typically drives down the final price, ensuring that taxpayer funds are used more efficiently. It also provides the government with a better opportunity to discover the true market value of the goods. A higher number of bidders reduces the risk of price gouging and increases the likelihood that the contract is awarded to a responsible source offering the best overall value, rather than simply the lowest price without regard to quality or reliability.

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: 123J1424B0250

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: $4,707,058

Exercised Options: $4,707,058

Current Obligation: $4,707,058

Actual Outlays: $4,705,205

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 123J1424D0057

IDV Type: IDC

Timeline