Department of Defense awards $16.3M soup contract to Campbell Soup Company, raising questions about competition

Contract Overview

Contract Amount: $16,336,218 ($16.3M)

Contractor: Campbell Soup Company

Awarding Agency: Department of Defense

Start Date: 2010-01-01

End Date: 2010-03-31

Contract Duration: 89 days

Daily Burn Rate: $183.6K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: RESALE - SOUPS (SECTION A)

Place of Performance

Location: CAMDEN, CAMDEN County, NEW JERSEY, 08103

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $16.3 million to CAMPBELL SOUP COMPANY for work described as: RESALE - SOUPS (SECTION A) Key points: 1. The contract value represents a significant portion of wholesale grocery procurement for the Defense Commissary Agency. 2. Sole-source awards can limit opportunities for competitive pricing and innovation. 3. The short duration of the delivery order suggests a specific, immediate need rather than a long-term strategic procurement. 4. The fixed-price contract type shifts risk to the contractor but requires careful initial pricing. 5. The award to a single, well-established supplier may indicate a reliance on existing relationships or specialized product availability.

Value Assessment

Rating: fair

Benchmarking the value of this specific soup resale contract is challenging without comparable sole-source awards for similar product volumes and delivery windows. The fixed-price nature suggests the government agreed to a set price, but the absence of competition makes it difficult to assess if this price represents optimal value for money. Further analysis would require understanding the market price for bulk soup procurement and the specific circumstances necessitating a sole-source award.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Campbell Soup Company, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. The lack of competition means there was no opportunity for price discovery through market forces, potentially leading to higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Sole-source awards limit the government's ability to leverage market competition to secure the best possible prices and terms.

Public Impact

Military personnel and their families stationed at facilities served by the Defense Commissary Agency will benefit from the availability of Campbell's soup products. The contract ensures a supply of essential food items for commissary stores. The geographic impact is primarily within the operational reach of the Defense Commissary Agency, likely serving bases and installations. The contract supports the operations of Campbell Soup Company, a large food manufacturer, potentially impacting its workforce and supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices.
Sole-source awards can indicate potential single points of failure in supply chains.
Limited transparency in pricing due to non-competitive nature.

Positive Signals

Ensures availability of a specific, potentially preferred brand for commissary patrons.
Fixed-price contract provides cost certainty once awarded.
Award to a known entity like Campbell Soup Company may reduce execution risk.

Sector Analysis

The food wholesale and distribution sector is characterized by large players and complex supply chains. This contract falls under the broader category of food and beverage procurement for government entities. While specific benchmarks for sole-source soup contracts are not readily available, the Defense Commissary Agency procures a wide range of grocery items, with competition typically driving value in this market. The value of this award is modest within the context of overall federal food spending.

Small Business Impact

This contract was awarded directly to Campbell Soup Company, a large prime contractor, and there is no indication of small business set-asides or subcontracting requirements within the provided data. Therefore, this specific award does not appear to directly benefit small businesses through set-aside provisions. The focus is on a direct procurement from a major manufacturer.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Commissary Agency's contracting and financial management departments. Accountability measures are inherent in the firm fixed-price structure, which obligates the contractor to deliver goods at the agreed-upon price. Transparency is limited due to the sole-source nature of the award, as the justification for not competing is not publicly detailed here.

Related Government Programs

Defense Commissary Agency Food Procurement
Federal Food and Beverage Contracts
Sole-Source Procurement Analysis

Risk Flags

Sole-source award without clear justification
Potential for non-competitive pricing
Short contract duration may indicate reactive procurement

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.3 million to CAMPBELL SOUP COMPANY. RESALE - SOUPS (SECTION A)

Who is the contractor on this award?

The obligated recipient is CAMPBELL SOUP COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Commissary Agency).

What is the total obligated amount?

The obligated amount is $16.3 million.

What is the period of performance?

Start: 2010-01-01. End: 2010-03-31.

What is the typical procurement process for food items like soup within the Defense Commissary Agency?

The Defense Commissary Agency (DECA) typically procures food items through a competitive bidding process to ensure best value for taxpayers and military families. This usually involves issuing solicitations on platforms like SAM.gov, where multiple vendors can submit proposals. Contracts are often awarded based on a combination of price, quality, delivery capabilities, and other factors. However, DECA, like other federal agencies, can utilize sole-source or limited competition awards under specific circumstances, such as when only one vendor can meet the requirement due to unique capabilities, urgent needs, or when competition is deemed not practicable. The provided data indicates this specific soup contract was awarded sole-source, deviating from the standard competitive approach.

How does the firm fixed-price contract type impact the value proposition for this soup contract?

A firm fixed-price (FFP) contract establishes a price that is not subject to adjustment based on the contractor's cost experience in performing the work. For this soup contract, the FFP structure provides the government with cost certainty, meaning the price paid for the soup will not increase due to Campbell Soup Company's production costs. This shifts the risk of cost overruns entirely to the contractor. While beneficial for budget predictability, the value proposition hinges on the initial price being competitive. Since this was a sole-source award, the absence of competition raises concerns about whether the FFP was set at a truly optimal market rate, as there was no market pressure to drive the price down.

What are the potential risks associated with awarding a food contract on a sole-source basis?

Awarding a food contract on a sole-source basis carries several potential risks. Primarily, it eliminates the benefit of price competition, which is a key mechanism for achieving cost savings in government procurement. This can lead to the government paying a higher price than if multiple vendors had competed. Secondly, it can stifle innovation, as contractors may have less incentive to offer new products or more efficient delivery methods when they are the only option. Thirdly, it can create a dependency on a single supplier, making the supply chain vulnerable to disruptions if that supplier faces issues. For essential items like food, ensuring a robust and competitive supply chain is crucial for operational readiness and cost-effectiveness.

Can the Defense Commissary Agency justify a sole-source award for a common item like soup?

Justifying a sole-source award for a common item like soup typically requires specific circumstances outlined in federal acquisition regulations (FAR). Agencies must demonstrate that competition is not feasible or not in the government's best interest. For food items, this might occur if there's an urgent, unforeseen need that only one supplier can meet immediately, or if the specific product required is uniquely manufactured or branded by a single entity and is essential for a particular program or demographic (e.g., specific dietary needs or brand preference among a military population). Without further details on the justification provided by the Defense Commissary Agency, it is difficult to assess the validity of awarding this soup contract sole-source. Standard practice favors competition for such goods.

How does this contract's duration (89 days) influence its overall significance?

The short duration of this contract, approximately three months, suggests it was likely intended to fulfill an immediate or short-term need rather than a long-term strategic requirement. This could be for seasonal demand, a gap-filling measure until a larger competitive contract is in place, or a specific event. The brevity of the contract term limits the potential for long-term price fluctuations or the realization of economies of scale that might be achieved with a longer-term agreement. It also means that the Defense Commissary Agency would need to re-evaluate its procurement strategy for soup relatively quickly, potentially leading to recurring administrative costs associated with contract management and solicitation.

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: 1 CAMPBELL PLACE SW4, CAMDEN, NJ, 08103

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $16,336,218

Exercised Options: $16,336,218

Current Obligation: $16,336,218

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0105G3271

IDV Type: IDC

Timeline