Department of Defense awards $15.5M for chilled meats, with Tyson Foods Inc. as the sole provider

Contract Overview

Contract Amount: $15,473,370 ($15.5M)

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: $173.9K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE

Sector: Other

Official Description: RESALE - CHILLED MEATS

Place of Performance

Location: SPRINGDALE, WASHINGTON County, ARKANSAS, 72762

State: Arkansas Government Spending

Plain-Language Summary

Department of Defense obligated $15.5 million to TYSON FOODS INC. for work described as: RESALE - CHILLED MEATS Key points: 1. The contract's value of $15.5 million for chilled meats suggests a significant demand for these goods within the Defense Commissary Agency. 2. The sole-source nature of this award raises questions about potential price inflation and the absence of competitive pressure. 3. A fixed-price contract type indicates that the price was set at the outset, with risks of cost overruns borne by the contractor. 4. The short duration of 89 days for this delivery order suggests it may be a short-term or interim solution. 5. The contract falls under the 'General Line Grocery Merchant Wholesalers' North American Industry Classification System (NAICS) code, indicating a focus on distribution. 6. The geographic location of Arkansas (ST: AR, SN: ARKANSAS) for the contractor may influence logistical considerations for delivery.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable sole-source awards for similar quantities and types of chilled meats. However, a $15.5 million award for an 89-day period suggests a high per-diem cost. The lack of competition inherently limits the government's ability to secure the best possible price, making it difficult to assess true value for money. Further analysis would require understanding the specific quantities and quality standards of the chilled meats procured.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This indicates that only one vendor, Tyson Foods Inc., was considered capable of fulfilling the requirement. The absence of competition means there was no opportunity for multiple bidders to offer their pricing and services, potentially leading to a higher price than if the contract had been open to a wider pool of suppliers.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive bidding. Without competing the award, the Defense Commissary Agency could not leverage market forces to drive down costs.

Public Impact

Military personnel and their families stationed in areas served by the Defense Commissary Agency are the primary beneficiaries, receiving access to chilled meat products. The contract ensures the supply of essential food items, contributing to the morale and well-being of the armed forces. The geographic impact is primarily within the United States, specifically where the Defense Commissary Agency operates and receives deliveries from Tyson Foods Inc. While not explicitly stated, the contract likely supports jobs within Tyson Foods Inc.'s supply chain, including production, processing, and logistics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Lack of competition raises concerns about whether the government received the best value.
Short contract duration might indicate a stop-gap measure, potentially leading to future contract inefficiencies.
No small business set-aside or subcontracting information provided, potentially limiting opportunities for smaller businesses.

Positive Signals

Ensures a consistent supply of essential food items for military families.
Fixed-price contract provides cost certainty for the government, shifting cost overrun risk to the contractor.
Tyson Foods Inc. is a large, established company, suggesting reliability in supply.
Contract falls under a standard wholesale distribution category, indicating a routine procurement need.

Sector Analysis

The procurement of chilled meats falls within the broader food wholesale and distribution sector. This sector is characterized by large players like Tyson Foods Inc., who manage complex supply chains from production to retail. Government agencies, particularly those serving large populations like the military, are significant customers for food distributors. Comparable spending benchmarks would typically involve analyzing other large-scale food supply contracts awarded by government entities or major private sector retailers to understand typical per-unit costs and contract values.

Small Business Impact

This contract does not appear to have a small business set-aside, as indicated by 'sb': false. There is also no information provided regarding subcontracting opportunities for small businesses. This suggests that the primary award went to a large corporation, and there may be limited direct benefit or opportunity for the small business ecosystem through this specific contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Commissary Agency (DECA) and the Department of Defense's contracting and financial oversight mechanisms. As a delivery order under a larger framework (though not explicitly detailed here), its execution would be monitored for timely delivery and adherence to specifications. Transparency is limited due to the sole-source nature, but contract awards are generally reported. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Commissary Agency Food Procurement
Department of Defense Food Services
Military Food Supply Contracts
Wholesale Food Distribution Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for inflated pricing
Limited transparency in pricing
No small business subcontracting noted

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.5 million to TYSON FOODS INC.. RESALE - CHILLED MEATS

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 $15.5 million.

What is the period of performance?

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

What is the typical profit margin for Tyson Foods Inc. on government contracts for chilled meats?

Determining the precise profit margin for Tyson Foods Inc. on this specific government contract for chilled meats is not possible with the provided data. Profit margins are proprietary information and vary based on numerous factors including production costs, logistical expenses, market conditions, and the specific terms negotiated in the contract. While Tyson Foods Inc. is a publicly traded company and its overall financial performance is reported, breaking down profit margins for individual government contracts is not feasible. Government contracts, especially sole-source ones, can sometimes include higher margins due to reduced competitive pressure, but this is not a universal rule and depends heavily on the negotiation process and the government's ability to benchmark prices.

How does the per-unit cost of chilled meats under this contract compare to commercial market rates?

A direct comparison of the per-unit cost of chilled meats under this contract to commercial market rates is difficult without specific details on the quantity, type, and quality of meats procured. The contract value of $15.5 million over 89 days, coupled with its sole-source nature, suggests that the government may not be achieving the most competitive pricing available in the open market. Commercial market rates are influenced by bulk purchasing power, seasonal availability, and direct consumer demand, which differ from government procurement processes. To perform a robust comparison, one would need to identify comparable products and quantities purchased by large commercial entities and analyze their pricing structures, factoring in any differences in delivery, specifications, and payment terms.

What are the risks associated with a sole-source award for essential food supplies like chilled meats?

Sole-source awards for essential food supplies like chilled meats carry several risks. Primarily, the lack of competition can lead to inflated prices, as the government does not benefit from the cost-saving pressures that multiple bidders would typically create. This can result in taxpayers paying more than necessary. Secondly, it can reduce the incentive for the sole provider to maintain high service levels or product quality, as there are no immediate alternatives for the contracting agency. Furthermore, it creates a dependency on a single supplier, which can be problematic if that supplier experiences disruptions in production, delivery, or financial stability. This dependency can jeopardize the consistent availability of essential food items for military personnel and their families.

What is the historical spending pattern for chilled meats by the Defense Commissary Agency?

Analyzing the historical spending patterns for chilled meats by the Defense Commissary Agency (DECA) would require access to DECA's procurement data over multiple fiscal years. This specific contract, valued at $15.5 million over approximately three months, suggests a significant ongoing need for these products. Without historical data, it's impossible to determine if this award represents an increase, decrease, or stable level of spending compared to previous periods. Understanding historical spending would involve looking at the total amount spent on chilled meats annually, the number of contracts awarded, the types of suppliers used (e.g., sole-source vs. competitive), and the average contract values. Such analysis would help identify trends, potential cost efficiencies, or areas of concern regarding DECA's procurement strategy for food items.

What is the track record of Tyson Foods Inc. in fulfilling government contracts, particularly for food supplies?

Tyson Foods Inc. is a major player in the food industry and has a history of supplying products to various government entities, including the Department of Defense. Their track record generally involves large-scale production and distribution capabilities, which are essential for meeting the demands of government contracts. However, like any large corporation, they may have faced scrutiny or performance issues on specific contracts in the past. A comprehensive assessment of their track record would involve reviewing contract performance databases for any past performance issues, disputes, or contract terminations. Given their size and market position, they are typically considered a reliable supplier, but specific contract performance should always be evaluated on a case-by-case basis.

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: $15,473,370

Exercised Options: $15,473,370

Current Obligation: $15,473,370

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0105G3222

IDV Type: IDC

Timeline