Tyson Foods Inc. awarded $15.1M for chilled meats, highlighting potential value concerns in wholesale grocery

Contract Overview

Contract Amount: $15,115,122 ($15.1M)

Contractor: Tyson Foods Inc.

Awarding Agency: Department of Defense

Start Date: 2009-04-01

End Date: 2009-06-30

Contract Duration: 90 days

Daily Burn Rate: $167.9K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM 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 $15.1 million to TYSON FOODS INC. for work described as: RESALE - CHILLED MEATS Key points: 1. Contract awarded to a single supplier, raising questions about competitive pricing. 2. The contract's duration and fixed-price nature may limit flexibility for evolving needs. 3. Analysis of per-unit costs against market benchmarks is crucial for value assessment. 4. The broad nature of 'General Line Grocery Merchant Wholesalers' may obscure specific product cost drivers. 5. Limited competition suggests potential for higher-than-market prices for taxpayers. 6. Oversight of delivery and quality will be key to ensuring contract performance.

Value Assessment

Rating: fair

The contract value of $15.1 million for chilled meats, awarded to Tyson Foods Inc., requires careful benchmarking. Without specific details on the quantity and types of meats procured, a direct per-unit cost comparison is challenging. However, the 'General Line Grocery Merchant Wholesalers' NAICS code suggests a broad scope, and the lack of competition could indicate that the government did not secure the most favorable pricing available in the market. Further analysis would involve comparing the unit prices to similar government contracts or commercial bulk purchasing rates for comparable meat products.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' (sole-source) designation. This means that only one bidder, Tyson Foods Inc., was considered for this award. The reasons for this sole-source justification are not provided, but it typically implies that only one source was capable of meeting the government's requirements. This lack of competition limits the government's ability to explore alternative suppliers and potentially negotiate better terms or prices.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. The government may end up paying a premium when alternatives are not explored.

Public Impact

Military personnel and their families stationed in Arkansas and potentially other locations served by the Defense Commissary Agency will benefit from the supply of chilled meats. The contract ensures the availability of essential food items for commissary operations. The geographic impact is primarily focused on the distribution network managed by the Defense Commissary Agency, with an initial award to a supplier in Arkansas. This contract supports the workforce within Tyson Foods Inc. and potentially its supply chain partners involved in the production and delivery of chilled meats.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in inflated prices for taxpayers.
Sole-source award raises concerns about whether the government obtained the best possible value.
The broad NAICS code could mask inefficiencies or higher-than-expected costs for specific meat products.
Limited contract duration (90 days) might lead to frequent re-solicitations and administrative overhead.

Positive Signals

Ensures a consistent supply of essential food items to military commissaries.
Award to a known entity like Tyson Foods Inc. may offer some assurance of product quality and reliability.
Fixed-price contract provides cost certainty for the government within the contract period.

Sector Analysis

The procurement falls under the wholesale grocery merchant sector, specifically focusing on chilled meats. This sector is characterized by large distributors and processors supplying a wide range of food products to retailers and institutions. The market for meat processing and distribution is highly competitive, with major players like Tyson Foods Inc. dominating significant portions. Government contracts for food supplies are common, often awarded through competitive bidding processes to ensure value for money. Benchmarks for similar contracts would typically involve analyzing the per-pound cost of various meat cuts procured by other federal agencies or large institutional buyers.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, there is no explicit mention of subcontracting requirements for small businesses. The award to a large corporation like Tyson Foods Inc. suggests that the primary focus was on fulfilling the large-scale requirement, rather than specifically promoting small business participation through this particular contract vehicle. This could mean missed opportunities for small businesses to engage in the supply chain for these chilled meat products.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Commissary Agency (DeCA), which manages commissary operations. As a delivery order under a larger contract vehicle, the specific oversight mechanisms might be detailed within the parent contract. Transparency is limited due to the sole-source nature and lack of publicly available justification. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract is suspected.

Related Government Programs

Defense Commissary Agency Food Procurement
Federal Food, Agriculture and Forest Products
Wholesale Trade Services
Grocery and Related Product Wholesalers

Risk Flags

Sole-source award
Lack of competition
Potential for overpayment
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.1 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 $15.1 million.

What is the period of performance?

Start: 2009-04-01. End: 2009-06-30.

What specific types and quantities of chilled meats were procured under this contract?

The provided data does not specify the exact types or quantities of chilled meats procured. The contract falls under the NAICS code '424410 - General Line Grocery Merchant Wholesalers,' which indicates a broad category of goods. Without this detailed breakdown, it is difficult to assess the specific value or appropriateness of the pricing for individual meat products. Further investigation into the contract's statement of work or delivery orders would be necessary to ascertain the precise items and volumes included in the $15.1 million award.

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,' signifying a sole-source award. The specific justification for this designation is not provided in the abbreviated data. Typically, sole-source awards are made when only one responsible source is available or capable of meeting the government's needs, often due to unique capabilities, urgent requirements, or specific technical specifications. Without the official justification document, it is impossible to determine the precise reasons why competitive bidding was bypassed for this particular procurement of chilled meats.

How does the $15.1 million contract value compare to historical spending on similar chilled meat procurements by the Defense Commissary Agency?

The provided data offers a single data point for this specific contract ($15.1 million). To compare it to historical spending, one would need access to a broader dataset of past Defense Commissary Agency (DeCA) contracts for chilled meats. Analyzing trends in annual spending, average contract values, and the number of competitors over several fiscal years would provide context. Without this historical data, it's challenging to determine if this $15.1 million award represents an increase, decrease, or is in line with previous procurement patterns for similar goods.

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

Sole-source awards for essential supplies like chilled meats carry several risks. Primarily, the lack of competition can lead to higher prices for the government, meaning taxpayers may overpay compared to what could be achieved through a competitive process. There's also a risk of complacency from the sole provider, potentially impacting quality control or responsiveness if they face no direct market pressure. Furthermore, it limits the government's ability to foster relationships with a diverse range of suppliers, potentially hindering future sourcing flexibility or innovation.

What performance metrics or quality assurance measures are typically included in contracts for wholesale grocery and meat supply?

Contracts for wholesale grocery and meat supply typically include stringent performance metrics and quality assurance measures. These often encompass adherence to delivery schedules, product specifications (e.g., grade, cut, temperature), packaging standards, and food safety regulations (e.g., HACCP compliance). Quality assurance may involve inspections upon delivery, product testing, and mechanisms for handling rejected goods. Performance is often evaluated based on on-time delivery rates, fill rates for orders, and the number of quality-related complaints or rejections.

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: $15,115,122

Exercised Options: $15,115,122

Current Obligation: $15,115,122

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0105G3222

IDV Type: IDC

Timeline