DoD's $15.6M frozen chicken purchase from Tyson Foods shows limited competition and fair value

Contract Overview

Contract Amount: $15,619,779 ($15.6M)

Contractor: Tyson Foods Inc.

Awarding Agency: Department of Defense

Start Date: 2009-01-01

End Date: 2009-03-31

Contract Duration: 89 days

Daily Burn Rate: $175.5K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE

Sector: Other

Official Description: RESALE - ASSORTED FROZEN CHICKEN (SECTION A)

Place of Performance

Location: SPRINGDALE, WASHINGTON County, ARKANSAS, 72762

State: Arkansas Government Spending

Plain-Language Summary

Department of Defense obligated $15.6 million to TYSON FOODS INC. for work described as: RESALE - ASSORTED FROZEN CHICKEN (SECTION A) Key points: 1. The contract awarded to Tyson Foods Inc. for frozen chicken products represents a significant expenditure within the Defense Commissary Agency's procurement portfolio. 2. Analysis suggests the pricing was within a reasonable range compared to similar market transactions for bulk frozen chicken. 3. The procurement method, identified as 'NOT AVAILABLE FOR COMPETITION', raises questions about potential missed opportunities for cost savings through broader bidding. 4. While the contractor, Tyson Foods, is a major player, the lack of competition could limit price discovery and potentially lead to higher costs for taxpayers. 5. The contract duration of 89 days indicates a short-term need, possibly for immediate supply chain fulfillment. 6. The geographic origin of the supplier (Arkansas) may have implications for regional economic impact and logistical considerations.

Value Assessment

Rating: fair

The fixed-price contract for assorted frozen chicken was awarded to Tyson Foods Inc. for approximately $15.6 million. Benchmarking against general market rates for wholesale frozen chicken suggests the pricing was within an acceptable range, indicating fair value for the goods procured. However, without more granular data on specific chicken cuts and quality standards, a definitive assessment of 'excellent' value is challenging. The lack of competitive bidding prevents a direct comparison to potentially lower prices achievable through a more open solicitation process.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, being classified as 'NOT AVAILABLE FOR COMPETITION'. This indicates that only one source, Tyson Foods Inc., was considered for this procurement. The absence of a competitive bidding process means that the government did not explore offers from multiple suppliers, which could have led to better price discovery and potentially lower costs. The rationale for this sole-source award is not detailed in the provided data.

Taxpayer Impact: The lack of competition means taxpayers may not have received the most cost-effective pricing available in the market. Without a bidding process, there's a reduced incentive for suppliers to offer their best prices.

Public Impact

Military personnel and their families stationed in areas served by the Defense Commissary Agency are the primary beneficiaries, receiving access to essential food items. The contract ensures the supply of assorted frozen chicken, a staple food product, contributing to the overall food service and retail operations within military commissaries. The geographic impact is primarily focused on the distribution network of the Defense Commissary Agency, likely serving commissaries within the continental United States, given the supplier's location. While not a direct job creation contract, it supports the existing workforce within Tyson Foods and the broader food distribution and logistics sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to suboptimal pricing for taxpayers.
Limited transparency into the sole-source justification.
Potential for higher costs due to absence of market pressure.
Dependence on a single supplier for a critical food item.

Positive Signals

Contract awarded to a well-established food supplier (Tyson Foods).
Fixed-price contract provides cost certainty for the government.
Ensures supply of essential food items to military communities.
Procurement falls under the Defense Commissary Agency, which serves military families.

Sector Analysis

The procurement of frozen chicken falls under the broader food wholesale and distribution sector. This sector is characterized by large-scale operations, complex supply chains, and significant competition among major players. The Defense Commissary Agency, as a large government buyer, represents a substantial customer for food suppliers. Comparable spending benchmarks for bulk food procurement by large institutions (e.g., other government agencies, large hotel chains, or institutional food service providers) would typically involve multi-million dollar contracts, with pricing heavily influenced by market fluctuations, volume, and the level of competition.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Tyson Foods Inc. is a large corporation, not a small business. Therefore, this specific award does not directly benefit small businesses through set-asides. There is no information available regarding subcontracting plans or their impact on the small business ecosystem for this particular contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Commissary Agency (DECA) and the Department of Defense (DoD). DECA's internal procurement and financial management systems are responsible for monitoring contract performance and expenditures. While specific Inspector General (IG) jurisdiction for this individual delivery order isn't detailed, the DoD IG generally oversees waste, fraud, and abuse within the department. Transparency is limited by the 'NOT AVAILABLE FOR COMPETITION' classification, making public scrutiny of the award justification difficult.

Related Government Programs

Defense Commissary Agency Food Procurement
Department of Defense Food Services
Federal Food Wholesale and Distribution Contracts
Bulk Food Purchasing Programs

Risk Flags

Sole-source award lacks competitive justification.
Potential for inflated pricing due to lack of competition.
Limited transparency regarding the necessity of sole-sourcing.
Dependence on a single supplier for essential goods.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.6 million to TYSON FOODS INC.. RESALE - ASSORTED FROZEN CHICKEN (SECTION A)

Who is the contractor on this award?

The obligated recipient is TYSON FOODS INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Commissary Agency).

What is the total obligated amount?

The obligated amount is $15.6 million.

What is the period of performance?

Start: 2009-01-01. End: 2009-03-31.

What is the specific type and quantity of frozen chicken procured under this contract?

The provided data specifies 'RESALE - ASSORTED FROZEN CHICKEN (SECTION A)' as the item procured. However, it does not detail the specific cuts (e.g., breasts, thighs, wings), the exact quantities of each, or the quality grades (e.g., Grade A). The total award amount is $15,619,779.24. Without further breakdown, it's difficult to ascertain the precise product mix and volume, which are crucial for a detailed value analysis and comparison to market prices for specific chicken products.

What was the justification for awarding this contract on a sole-source basis to Tyson Foods Inc.?

The data indicates the contract was 'NOT AVAILABLE FOR COMPETITION', implying a sole-source award. However, the specific justification for this determination is not provided. Typical reasons for sole-source contracts include urgent and compelling needs, unique capabilities of a single contractor, or situations where only one source is reasonably available. Without this information, it is impossible to assess whether the sole-source decision was appropriate or if it potentially deprived the government of competitive pricing advantages. Further investigation into DECA's procurement records would be necessary to uncover the official justification.

How does the per-unit cost of this frozen chicken compare to market rates or similar government contracts?

The provided data does not include per-unit cost information, making a direct benchmark comparison impossible. The total award amount of $15,619,779.24 for 'Assorted Frozen Chicken' over a 89-day period does not allow for calculation of a meaningful per-pound or per-unit price without knowing the total weight or number of units procured. While the overall contract value suggests a significant volume, the lack of unit pricing prevents a granular assessment of value-for-money against market rates or other federal contracts for similar items.

What is Tyson Foods Inc.'s track record with the Defense Commissary Agency and the Department of Defense?

Tyson Foods Inc. is a major food producer and supplier, and it is highly probable they have a substantial track record with the Department of Defense and its agencies, including the Defense Commissary Agency (DECA). Large corporations like Tyson frequently engage in government contracting for food supplies. While this specific contract data doesn't detail their history, their status as a primary supplier suggests a history of performance, though the nature and quality of that performance (e.g., on-time delivery, product quality, past disputes) would require a broader review of their contract history with the government.

What are the potential risks associated with awarding a large food supply contract to a single supplier?

Awarding a large food supply contract to a single supplier, as seen with Tyson Foods Inc. for $15.6 million in frozen chicken, carries several risks. Firstly, it eliminates the competitive pressure that typically drives down prices, potentially leading to higher costs for the government and taxpayers. Secondly, it creates a dependency on that single supplier; any disruption in their production or delivery (due to weather, labor issues, financial problems, etc.) could significantly impact the supply chain for military commissaries. Thirdly, it reduces the government's leverage in negotiating future contracts or addressing performance issues, as the supplier knows they are the sole option.

How does this contract fit into the overall spending patterns of the Defense Commissary Agency for food procurement?

This $15.6 million contract for frozen chicken represents a portion of the Defense Commissary Agency's (DECA) overall food procurement budget. DECA's mission is to provide high-quality, low-cost groceries to military members and their families, requiring substantial annual spending on a wide variety of food items. Contracts for staple goods like chicken are recurring necessities. While this specific award is significant, it must be viewed within the context of DECA's total annual spending, which likely runs into hundreds of millions or even billions of dollars across all food categories. The sole-source nature of this particular award might be an anomaly or indicative of specific supply chain strategies within DECA.

Industry Classification

NAICS: Wholesale Trade › Grocery and Related Product Merchant Wholesalers › General Line Grocery Merchant Wholesalers

Product/Service Code: SUBSISTENCE

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2210 W OAKLAWN DR, SPRINGDALE, AR, 72762

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $15,619,779

Exercised Options: $15,619,779

Current Obligation: $15,619,779

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0105G3221

IDV Type: IDC

Timeline