Tyson Foods Inc. awarded $14.6M for frozen chicken, highlighting potential for better price discovery in grocery wholesale

Contract Overview

Contract Amount: $14,616,937 ($14.6M)

Contractor: Tyson Foods Inc.

Awarding Agency: Department of Defense

Start Date: 2008-10-01

End Date: 2008-12-31

Contract Duration: 91 days

Daily Burn Rate: $160.6K/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 $14.6 million to TYSON FOODS INC. for work described as: RESALE - ASSORTED FROZEN CHICKEN (SECTION A) Key points: 1. The contract value of $14.6 million for frozen chicken suggests a significant procurement, but lacks detailed performance metrics for a full value-for-money assessment. 2. The 'NOT AVAILABLE FOR COMPETITION' status raises questions about market dynamics and whether alternative suppliers were considered, potentially impacting price competitiveness. 3. The fixed-price contract type provides cost certainty for the government, but the absence of competition may have limited opportunities for cost savings. 4. The short duration of 91 days for this delivery order indicates a tactical procurement rather than a long-term strategic sourcing effort. 5. The procurement falls under the General Line Grocery Merchant Wholesalers category, suggesting a focus on essential food supplies for military personnel and their families. 6. The contract's geographic scope is limited to Arkansas, indicating a localized distribution or fulfillment strategy.

Value Assessment

Rating: fair

Benchmarking the value of this $14.6 million contract for frozen chicken is challenging without specific product details or quality standards. However, given the lack of competition, it's plausible that the pricing may not reflect the most advantageous rates achievable in a more competitive market. Comparing this to similar large-scale frozen food procurements by the Defense Commissary Agency (DECA) would be necessary for a more robust assessment of value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as 'NOT AVAILABLE FOR COMPETITION,' indicating that it was not openly competed. This suggests that either only one source was capable of fulfilling the requirement, or there were specific circumstances (e.g., urgent need, unique specifications) that precluded a competitive process. The lack of multiple bidders means there was no direct price comparison, potentially leading to a less favorable price for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without a competitive process, there is less assurance that the government secured the best possible price for the frozen chicken.

Public Impact

Military personnel and their families stationed in or near Arkansas benefit from the availability of frozen chicken through the Defense Commissary Agency. The contract ensures a supply of essential food items, contributing to the morale and well-being of the armed forces community. The procurement supports the operational readiness of the Defense Commissary Agency by providing necessary inventory for commissary stores. The contract's impact on the broader workforce is likely minimal, as it focuses on the wholesale distribution of a specific food product.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher prices for taxpayers.
Limited transparency into the justification for sole-source award.
Potential for missed opportunities to engage with a wider range of suppliers.
Short contract duration might indicate reactive rather than proactive procurement planning.

Positive Signals

Ensures supply of essential food items for military families.
Fixed-price contract provides cost certainty for the government.
Procurement falls within the established wholesale grocery distribution channel.

Sector Analysis

This contract falls within the broader food wholesale and distribution sector, specifically serving the needs of the Defense Commissary Agency (DECA). DECA operates a global chain of commissaries providing groceries to military personnel and their families. The market for wholesale food distribution is highly competitive, with numerous players ranging from large national distributors to regional specialists. However, specific government procurements, especially those with unique requirements or limited distribution areas, can sometimes face limited competition.

Small Business Impact

The provided data does not indicate any small business set-aside provisions for this contract, nor does it suggest any subcontracting requirements specifically aimed at small businesses. As a sole-source award to a large corporation like Tyson Foods, the direct impact on the small business ecosystem is likely negligible unless Tyson has existing relationships with small business suppliers for this specific product line. Further investigation into subcontracting plans would be needed for a definitive assessment.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Commissary Agency (DECA) and potentially the Department of Defense's Inspector General. DECA is responsible for managing and overseeing its contracts to ensure compliance with terms and conditions. The 'NOT AVAILABLE FOR COMPETITION' status suggests a specific justification was likely required and documented, which would be subject to review. Transparency regarding the justification for the sole-source award and performance monitoring would be key aspects of oversight.

Related Government Programs

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

Risk Flags

Sole-source award justification unclear
Potential for inflated pricing due to lack of competition
Limited data on performance metrics
Short contract duration may indicate reactive procurement

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.6 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 $14.6 million.

What is the period of performance?

Start: 2008-10-01. End: 2008-12-31.

What was the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was awarded as 'NOT AVAILABLE FOR COMPETITION,' which is a sole-source designation. The specific justification for this designation is not detailed in the provided data. Typically, sole-source awards are made when only one responsible source is available to satisfy the agency's needs, or in cases of urgent and compelling need where competition is not feasible. For this particular contract, potential justifications could include unique product specifications, exclusive distribution rights, or a critical, time-sensitive requirement that precluded a full and open competition. Without access to the contract file or award justification documentation, the precise reason remains speculative.

How does the unit price of this frozen chicken compare to market rates for similar products?

The provided data does not include unit pricing details, only the total contract value of $14,616,936.64. Therefore, a direct comparison of unit prices to market rates is not possible with the given information. To perform such a comparison, one would need the quantity of chicken procured under this contract to calculate a per-pound or per-unit cost. Subsequently, this calculated unit cost would need to be benchmarked against prevailing market prices for comparable frozen chicken products, considering factors like grade, cut, and origin. The absence of competition further complicates this analysis, as market rates in a competitive environment might differ significantly from a sole-source award.

What is Tyson Foods Inc.'s track record with the Defense Commissary Agency and similar government contracts?

Tyson Foods Inc. is a major food producer with a history of supplying various food products to government entities, including the Department of Defense and its agencies like the Defense Commissary Agency (DECA). While this specific contract was a sole-source award for frozen chicken, Tyson likely holds numerous other contracts for a wide range of poultry and other food items. Assessing their overall track record would involve reviewing past performance evaluations, any instances of contract disputes or non-compliance, and their ability to consistently meet delivery schedules and quality standards across their government engagements. A comprehensive review would require access to historical contract data and performance reports.

What were the performance expectations and metrics for this contract?

The provided data does not specify the performance expectations or metrics for this contract. As a fixed-price delivery order, the primary expectation is the delivery of the specified frozen chicken (Section A) according to the terms and conditions outlined in the contract. Key performance indicators (KPIs) would typically include on-time delivery, adherence to quality specifications (e.g., grade, temperature, packaging), and accuracy of quantities. However, without the full contract details, it's impossible to ascertain the specific metrics used to evaluate Tyson Foods' performance or any associated penalties or incentives.

How does this $14.6 million contract fit into the overall spending patterns of the Defense Commissary Agency for poultry products?

This $14.6 million contract represents a significant, albeit specific, portion of the Defense Commissary Agency's (DECA) spending on poultry. DECA's overall budget for food procurement is substantial, aiming to provide a wide variety of groceries to military communities worldwide. Annual spending on poultry products, including chicken, can fluctuate based on demand, market prices, and strategic sourcing initiatives. To understand how this contract fits into broader patterns, one would need to analyze DECA's historical spending data for poultry over several fiscal years, identifying trends in contract values, types of poultry procured, and the distribution of awards among different suppliers. This single contract, while large, is likely one of many contributing to DECA's total poultry expenditure.

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: $14,616,937

Exercised Options: $14,616,937

Current Obligation: $14,616,937

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0105G3221

IDV Type: IDC

Timeline