Department of Agriculture awards $64M contract for food manufacturing, highlighting a competitive procurement process

Contract Overview

Contract Amount: $63,951,591 ($64.0M)

Contractor: Derstines Inc

Awarding Agency: Department of Agriculture

Start Date: 2021-01-19

End Date: 2021-05-31

Contract Duration: 132 days

Daily Burn Rate: $484.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 171

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: 2000007490/4100022284/COMBINATION BOX

Place of Performance

Location: SELLERSVILLE, BUCKS County, PENNSYLVANIA, 18960

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Agriculture obligated $64.0 million to DERSTINES INC for work described as: 2000007490/4100022284/COMBINATION BOX Key points: 1. The contract value of $64 million represents a significant investment in the food manufacturing sector. 2. Full and open competition suggests a robust market with multiple capable vendors. 3. The firm fixed-price contract type indicates a clear understanding of scope and cost expectations. 4. The relatively short duration of 132 days suggests a specific, time-bound project or supply need. 5. The contract was awarded to DERSTINES INC, a single entity, for the delivery order. 6. The North American Industry Classification System (NAICS) code 311999 points to 'All Other Miscellaneous Food Manufacturing'.

Value Assessment

Rating: good

The contract value of $64 million for 'All Other Miscellaneous Food Manufacturing' is substantial. Without specific details on the goods or services procured, a direct value-for-money assessment is challenging. However, the firm fixed-price nature of the contract suggests that the contractor bears the risk of cost overruns, which can be favorable for the government. Benchmarking against similar contracts would require more granular data on the specific food products or manufacturing processes involved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under a 'full and open competition' solicitation, indicating that all responsible sources were permitted to submit bids. The presence of 171 bids suggests a highly competitive environment. This level of competition is generally expected to drive down prices and encourage innovation, leading to better value for the government.

Taxpayer Impact: A competitive bidding process for this contract likely resulted in a more favorable price for taxpayers compared to a sole-source or limited competition award.

Public Impact

The primary beneficiaries are likely the Department of Agriculture's programs that rely on the specific food manufacturing outputs. The contract facilitates the delivery of essential food products or manufacturing services. The geographic impact is centered in Pennsylvania, where the contract was awarded. Workforce implications may include employment opportunities within DERSTINES INC and its supply chain in Pennsylvania.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions if DERSTINES INC faces unforeseen operational issues.
Dependence on a single contractor for a significant volume of food manufacturing could pose a risk if performance falters.

Positive Signals

The firm fixed-price contract structure shifts cost overrun risk to the contractor.
The high number of bids received indicates a healthy and competitive market for these services.
Awarding to a single entity for a delivery order suggests successful evaluation and selection based on defined criteria.

Sector Analysis

The food manufacturing sector is a critical component of the U.S. economy, encompassing a wide range of products from processed foods to specialized ingredients. This contract, falling under NAICS 311999 (All Other Miscellaneous Food Manufacturing), likely pertains to niche or specialized food production. The total federal spending in this sector can fluctuate based on agricultural output, national security needs, and public health initiatives. This $64 million award represents a significant, albeit specific, investment within this broad industry.

Small Business Impact

The data indicates that this contract was not specifically set aside for small businesses (ss: false, sb: false). While DERSTINES INC is the prime contractor, there is no explicit information regarding subcontracting plans for small businesses. Further investigation into subcontracting goals and actual performance would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

The contract is subject to standard federal procurement oversight. As a delivery order under a larger contract vehicle, oversight would likely involve the Agricultural Marketing Service (AMS) and potentially the Department of Agriculture's Office of Inspector General (OIG) if performance issues or irregularities arise. Transparency is generally maintained through contract award databases like FPDS.

Related Government Programs

Department of Agriculture Food Procurement
Agricultural Marketing Service Contracts
Miscellaneous Food Manufacturing Support
Federal Food Supply Chain Contracts

Risk Flags

Potential for cost overruns if scope is not tightly managed.
Dependence on a single contractor for a significant requirement.
Need for robust quality assurance given the nature of food products.

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $64.0 million to DERSTINES INC. 2000007490/4100022284/COMBINATION BOX

Who is the contractor on this award?

The obligated recipient is DERSTINES INC.

Which agency awarded this contract?

Awarding agency: Department of Agriculture (Agricultural Marketing Service).

What is the total obligated amount?

The obligated amount is $64.0 million.

What is the period of performance?

Start: 2021-01-19. End: 2021-05-31.

What specific food products or manufacturing services does this contract entail?

The provided data identifies the contract under NAICS code 311999, 'All Other Miscellaneous Food Manufacturing,' and the awarding agency as the Department of Agriculture's Agricultural Marketing Service (AMS). However, the specific nature of the food products or manufacturing services is not detailed. This code encompasses a broad range of activities not covered by more specific food manufacturing categories, such as processing grains, nuts, seeds, spices, or producing other miscellaneous food items. To understand the exact deliverables, one would need to consult the contract's statement of work or associated documentation, which would specify the exact items or processes required by the AMS.

How does the $64 million contract value compare to historical spending for similar food manufacturing needs by the USDA?

Assessing the $64 million contract value against historical spending requires a detailed analysis of prior USDA contracts within the 'All Other Miscellaneous Food Manufacturing' (NAICS 311999) category or closely related food manufacturing subsectors. Without access to historical procurement data filtered by specific product types or service requirements, a direct comparison is difficult. However, the value suggests a substantial requirement, potentially for large-scale production, specialized ingredients, or a significant duration of service. Benchmarking would involve identifying comparable contracts awarded over the past several fiscal years to understand if this represents an increase, decrease, or consistent level of investment in this area.

What are the key performance indicators (KPIs) and quality assurance measures for this contract?

The provided data does not specify the key performance indicators (KPIs) or quality assurance (QA) measures for this contract. Typically, for a firm fixed-price contract involving manufacturing, KPIs would relate to product quality (e.g., adherence to specifications, defect rates), delivery timeliness, and potentially production volume. QA measures would involve inspection protocols, testing procedures, and acceptance criteria defined in the contract's statement of work. The Agricultural Marketing Service (AMS) would be responsible for monitoring contractor performance against these established metrics and ensuring compliance with all contractual obligations.

What is the track record of DERSTINES INC in fulfilling federal contracts, particularly within the food manufacturing sector?

Information regarding the specific track record of DERSTINES INC in fulfilling federal contracts is not included in the provided data snippet. To assess their performance history, one would need to access federal procurement databases (like FPDS or SAM.gov) to review past awards, contract performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), and any history of disputes or corrective actions. A thorough review would determine their experience with similar contract types, values, and the specific requirements of food manufacturing for government agencies.

What are the potential risks associated with the firm fixed-price contract type for this specific food manufacturing requirement?

The firm fixed-price (FFP) contract type shifts the majority of cost risk to the contractor, DERSTINES INC. For this food manufacturing contract, potential risks include the contractor underestimating material costs, labor, or production complexities, leading to reduced profit margins or financial strain. If the scope of work is not precisely defined, the contractor might face unexpected costs trying to meet ambiguous requirements. Conversely, if the government requires changes, negotiating equitable adjustments under an FFP contract can sometimes be more complex than under cost-reimbursement types. However, FFP generally provides cost certainty for the government if the scope is well-defined.

How does the geographic location of the award (Pennsylvania) influence the logistics and cost of this food manufacturing contract?

The award to a contractor located in Pennsylvania (sn: PENNSYLVANIA) has direct implications for logistics and costs. Proximity to the point of delivery or distribution centers managed by the Department of Agriculture can reduce transportation expenses and lead times. If the raw materials are sourced locally, it could further optimize costs. However, if the final destination for the manufactured food products is distant from Pennsylvania, transportation costs could increase. The state's labor market and regulatory environment may also influence operational costs for DERSTINES INC. The contract's duration (132 days) suggests that the geographic impact might be more localized to the production and initial distribution phases.

Industry Classification

NAICS: Manufacturing › Other Food Manufacturing › All Other Miscellaneous Food Manufacturing

Product/Service Code: SUBSISTENCE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: 123J1421B0110/4100022284

Offers Received: 171

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 3245 STATE RD, SELLERSVILLE, PA, 18960

Business Categories: Category Business, Corporate Entity Tax Exempt, Not Designated a Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $63,951,591

Exercised Options: $63,951,591

Current Obligation: $63,951,591

Actual Outlays: $63,951,591

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: 123J1420G0051

IDV Type: BOA

Timeline