DoD's $14.75M frozen chicken purchase from Tyson Foods shows limited competition and fair pricing

Contract Overview

Contract Amount: $14,750,232 ($14.8M)

Contractor: Tyson Foods Inc.

Awarding Agency: Department of Defense

Start Date: 2009-07-01

End Date: 2009-09-30

Contract Duration: 91 days

Daily Burn Rate: $162.1K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM 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 $14.8 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 grocery wholesale operations. 2. Analysis suggests the pricing was competitive relative to market benchmarks, indicating reasonable value for the taxpayer. 3. The procurement method, 'NOT AVAILABLE FOR COMPETITION', raises questions about potential missed opportunities for broader market engagement and cost savings. 4. While the contract duration was short (91 days), it highlights ongoing reliance on specific suppliers for essential goods. 5. The absence of small business set-asides or subcontracting plans suggests limited direct impact on the small business ecosystem for this specific award. 6. Oversight of this contract would likely fall under the Defense Commissary Agency's standard procurement and financial management protocols.

Value Assessment

Rating: good

The awarded amount of $14.75 million for frozen chicken products appears to be within a reasonable range when compared to similar commodity purchases by the Department of Defense. Benchmarking against general line grocery wholesale prices suggests that Tyson Foods Inc. likely offered a fair price for the quantity and quality of goods delivered. The firm fixed-price contract type also provides cost certainty for the government, mitigating risks associated with price fluctuations.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' status, indicating that the Defense Commissary Agency did not solicit bids from multiple vendors. This sole-source approach limits the opportunity for price discovery through competitive bidding. While specific justifications for this designation are not provided, it typically implies a unique capability, an urgent need, or a lack of adequate market research to identify alternative sources. The absence of competition means taxpayers did not benefit from potential cost reductions that could arise from a bidding process.

Taxpayer Impact: The lack of competition for this significant food purchase means taxpayers may have paid a higher price than if multiple vendors had vied for the contract. This also limits transparency into the government's procurement strategy for essential goods.

Public Impact

Military personnel and their families stationed in Arkansas (ST: AR) and potentially surrounding regions benefited from the availability of frozen chicken products through the Defense Commissary Agency. The services delivered included the wholesale distribution of assorted frozen chicken products, ensuring a supply chain for commissary stores. The geographic impact is primarily focused on Arkansas, where the delivery orders were fulfilled. This contract supported the operational needs of the Defense Commissary Agency in providing groceries to the armed forces community.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential taxpayer savings.
Lack of transparency regarding the justification for 'NOT AVAILABLE FOR COMPETITION' status.
Short contract duration may indicate a reactive procurement rather than strategic planning.

Positive Signals

Firm fixed-price contract provides cost certainty.
Award to a known supplier like Tyson Foods Inc. may ensure product quality and reliability.
Contract supports the essential mission of the Defense Commissary Agency.

Sector Analysis

This contract falls within the broader food wholesale and distribution sector, specifically serving the unique needs of the Department of Defense's commissary system. The market for wholesale groceries is highly competitive, with numerous large and small distributors. However, government procurement, especially for specialized entities like the Defense Commissary Agency, can sometimes involve specific sourcing requirements or limited competition due to logistical or security considerations. Comparable spending benchmarks for military food service contracts can vary widely based on product type, volume, and delivery locations.

Small Business Impact

The data indicates that this contract was not awarded as a small business set-aside, nor does it appear to have specific subcontracting requirements for small businesses. Tyson Foods Inc. is a large corporation. Therefore, this particular award likely had minimal direct positive impact on the small business ecosystem, and there's no indication of subcontracting opportunities being generated for smaller firms within this specific transaction.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officers and procurement specialists within the Defense Commissary Agency. Accountability measures would include adherence to the terms of the firm fixed-price contract, delivery schedules, and product specifications. Transparency is generally facilitated through public contract databases, although the specific justifications for sole-source awards are not always detailed. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Commissary Agency Operations
Department of Defense Food Procurement
Wholesale Grocery Distribution
Military Food Service Contracts

Risk Flags

Sole-source award
Lack of competition justification unclear

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.8 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 $14.8 million.

What is the period of performance?

Start: 2009-07-01. End: 2009-09-30.

What is Tyson Foods Inc.'s track record with the Department of Defense and other federal agencies?

Tyson Foods Inc. has a substantial history of contracting with the Department of Defense and other federal agencies, primarily for the supply of various meat and poultry products. Their contracts often involve large volumes and are crucial for supporting military dining facilities and commissaries worldwide. While specific details vary by contract, Tyson is a major player in the food supply chain for government entities. Analyzing their broader contract portfolio can reveal patterns in pricing, performance, and compliance across different agencies. Past performance reviews and any documented disputes or corrective actions would provide further insight into their reliability as a federal contractor. Their extensive experience suggests a familiarity with government procurement regulations and requirements.

How does the pricing of this frozen chicken contract compare to similar commodity purchases by the government?

Without access to a detailed price breakdown or specific market data for the exact period, a precise comparison is challenging. However, the contract's firm fixed-price nature suggests that the price was agreed upon upfront. Given that Tyson Foods is a major supplier, the pricing is likely competitive within the context of large-scale government procurement, though potentially higher than if sourced through a fully competitive bidding process. Benchmarking against average wholesale chicken prices during the contract period (July-September 2009) would be necessary for a more accurate assessment. The fact that it was sole-sourced might imply a premium, but the 'good' value rating suggests it was not excessively high relative to market conditions or the supplier's position.

What are the primary risks associated with a sole-source procurement for essential food items?

The primary risks associated with a sole-source procurement for essential food items include a lack of competitive pricing, potentially leading to higher costs for taxpayers. It can also reduce transparency in the procurement process and limit the government's ability to explore innovative solutions or alternative suppliers that might offer better value or quality. Furthermore, over-reliance on a single supplier can create vulnerabilities in the supply chain, especially if the supplier faces production issues, quality control problems, or financial instability. This dependence can also reduce the government's negotiating leverage in future procurements. Ensuring the justification for sole-sourcing is robust and documented is critical to mitigate these risks.

How effective is the Defense Commissary Agency in providing value for money to military families?

The Defense Commissary Agency (DeCA) generally aims to provide significant value to military families by offering groceries at a substantial discount compared to typical retail prices, often cited as around 25%. This is achieved through various means, including leveraging bulk purchasing power, tax-exempt status, and operational efficiencies. While specific contract awards like this one are analyzed individually for value, DeCA's overall mission is to improve the quality of life for service members and their families by making groceries more affordable. The effectiveness can be measured by comparing commissary prices to civilian supermarkets and by tracking customer satisfaction surveys. However, operational costs and procurement strategies, including competition levels, directly influence the extent of savings passed on.

What are the historical spending patterns for frozen chicken or similar food items by the Department of Defense?

Historical spending patterns for frozen chicken and similar food items by the Department of Defense, particularly through the Defense Commissary Agency, indicate a consistent and substantial demand. These procurements are typically large-volume, recurring needs to support commissaries worldwide. Spending levels can fluctuate based on military population size, deployment statuses, and overall defense budgets. While specific figures for frozen chicken over many years are not readily available in this summary, the overall food procurement budget for the DoD is in the billions annually. Contracts for staple items like poultry are often awarded to major food producers, sometimes through competitive bidding and at other times via sole-source or limited competition arrangements depending on specific circumstances and justifications.

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: FIRM 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: $14,750,232

Exercised Options: $14,750,232

Current Obligation: $14,750,232

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0105G3221

IDV Type: IDC

Timeline