DoD's $24M grocery contract with Kraft Foods Global, Inc. for resale items

Contract Overview

Contract Amount: $24,081,588 ($24.1M)

Contractor: Kraft Foods Global, Inc.

Awarding Agency: Department of Defense

Start Date: 2010-01-01

End Date: 2010-03-31

Contract Duration: 89 days

Daily Burn Rate: $270.6K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: RESALE - MISCELLANEOUS GROCERY

Place of Performance

Location: NORTHFIELD, COOK County, ILLINOIS, 60093

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $24.1 million to KRAFT FOODS GLOBAL, INC. for work described as: RESALE - MISCELLANEOUS GROCERY Key points: 1. Contract awarded for resale of miscellaneous grocery items, indicating a need for staple goods. 2. The contract's duration of 89 days suggests a short-term or interim supply need. 3. Awarded as a delivery order, implying it's part of a larger, potentially indefinite-delivery contract. 4. The firm fixed price contract type provides cost certainty for the government. 5. The absence of specific product details in the provided data limits a deeper value-for-money assessment. 6. The contract's focus on grocery items suggests a direct impact on commissary services for military personnel and their families.

Value Assessment

Rating: fair

Benchmarking the value of this specific $24 million contract is challenging without more detailed information on the specific grocery items procured and their quantities. However, the contract was awarded as a delivery order, which often implies a pre-negotiated pricing structure. Comparing it to similar large-scale grocery procurements by the Defense Commissary Agency (DeCA) would be necessary for a comprehensive value assessment. The firm fixed price structure offers predictability, but the overall value depends heavily on the unit prices and the efficiency of the supply chain.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' (NAF) status, indicating a sole-source or limited competition scenario. The specific reasons for this designation are not provided, but it could be due to factors like existing vendor relationships, specialized product availability, or urgent needs. The lack of open competition means that the government did not benefit from a broader range of bids, potentially impacting price discovery and the opportunity to secure the most cost-effective solution.

Taxpayer Impact: Sole-source awards can limit taxpayer savings by bypassing competitive bidding processes that typically drive down prices. This means taxpayers may not be getting the best possible price for these grocery items.

Public Impact

Military personnel and their families benefit from the availability of essential grocery items through commissary services. The contract ensures the supply of miscellaneous grocery items, contributing to the operational readiness and morale of the armed forces. The geographic impact is likely concentrated around military installations where DeCA commissaries operate, primarily in Illinois based on the 'IL' state code. The contract supports the wholesale grocery distribution sector, indirectly impacting jobs in logistics and retail.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of detailed product specifications makes it difficult to assess the quality and appropriateness of the procured grocery items.
The sole-source award raises concerns about potential overpricing and the absence of competitive pressure to optimize costs.
The short contract duration (89 days) might indicate a reactive procurement rather than strategic planning, potentially leading to less favorable terms.
Limited transparency regarding the justification for the 'NOT AVAILABLE FOR COMPETITION' status hinders accountability.

Positive Signals

The contract ensures the provision of essential grocery items, directly supporting the welfare of military families.
A firm fixed price contract provides budget certainty for the Defense Commissary Agency.
The award to a known entity like Kraft Foods Global, Inc. might suggest a reliable supply chain for established grocery products.

Sector Analysis

The procurement falls within the wholesale trade sector, specifically general line grocery merchant wholesalers. This contract represents a small portion of the overall federal spending on food and grocery supplies, which is substantial given the needs of military commissaries and other government feeding programs. The market for grocery wholesaling is typically characterized by established players and complex supply chains. This contract's value is modest in the context of the entire federal food procurement landscape.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses stemming from this specific award. The primary contractor, Kraft Foods Global, Inc., is a large corporation, and the contract does not appear to have provisions for small business participation.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Commissary Agency (DeCA), a component of the Department of Defense. As a delivery order under a potentially larger contract, oversight would focus on timely delivery, adherence to specifications (if detailed elsewhere), and payment processing. Transparency is limited by the 'NOT AVAILABLE FOR COMPETITION' status, making it harder to assess the full oversight process. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Commissary Agency Operations
Federal Food Procurement
Military Resale Operations
Wholesale Grocery Distribution Contracts

Risk Flags

Sole-source award may limit competitive pricing.
Lack of detailed product specifications hinders quality assessment.
Short contract duration could indicate reactive procurement.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.1 million to KRAFT FOODS GLOBAL, INC.. RESALE - MISCELLANEOUS GROCERY

Who is the contractor on this award?

The obligated recipient is KRAFT FOODS GLOBAL, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $24.1 million.

What is the period of performance?

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

What specific types of miscellaneous grocery items were included in this $24 million contract?

The provided data classifies the procurement as 'RESALE - MISCELLANEOUS GROCERY' and identifies the North American Industry Classification System (NAICS) code as 424410 for General Line Grocery Merchant Wholesalers. However, it does not list the specific SKUs, brands, or categories of grocery items procured. This level of detail is crucial for understanding the scope of the contract, assessing its value, and ensuring it meets the needs of the Defense Commissary Agency (DeCA) and its patrons. Without this information, it's impossible to determine if the contract covered staples, specialty items, or a broad mix.

What is the historical spending pattern for similar miscellaneous grocery contracts by the Defense Commissary Agency?

Analyzing historical spending patterns for similar miscellaneous grocery contracts by the Defense Commissary Agency (DeCA) is essential for contextualizing the $24 million award. Without access to DeCA's procurement history, it's difficult to ascertain if this amount represents an increase, decrease, or stable level of spending for this category. Factors such as changes in commissary patron demographics, shifts in consumer preferences, or adjustments in DeCA's operational strategy could influence historical spending. Understanding these trends would help determine if the current contract aligns with past procurement practices or signifies a deviation.

What are the specific justifications for awarding this contract on a 'NOT AVAILABLE FOR COMPETITION' basis?

The justification for awarding this contract on a 'NOT AVAILABLE FOR COMPETITION' (NAF) basis is not detailed in the provided data. Typically, NAF awards occur when only one responsible source can satisfy the agency's needs, such as in cases of urgent and compelling circumstances, unique capabilities, or when follow-on work is required from the original contract awardee. For taxpayers, understanding this justification is critical because competitive bidding processes usually result in lower prices. A sole-source award bypasses this mechanism, potentially leading to higher costs if not carefully managed and justified.

How does the firm fixed price (FFP) contract type impact the risk and cost for the government in this grocery procurement?

The Firm Fixed Price (FFP) contract type offers significant advantages for the government in this grocery procurement by shifting most of the cost risk to the contractor, Kraft Foods Global, Inc. Under an FFP agreement, the price is set and not subject to adjustment based on the contractor's cost experience. This provides budget certainty for the Defense Commissary Agency (DeCA), allowing for predictable financial planning. For taxpayers, this means the government knows the exact cost of the goods upfront. However, it also means that if Kraft Foods experiences lower-than-expected costs, the government does not benefit from those savings. Conversely, if Kraft's costs increase, they absorb the loss, which could incentivize them to be highly efficient.

What is the track record of Kraft Foods Global, Inc. in fulfilling federal grocery supply contracts?

Kraft Foods Global, Inc. is a major player in the food industry, suggesting a substantial capacity and experience in large-scale supply chain management. While specific details of their track record with federal grocery supply contracts are not provided here, their established presence implies a history of delivering goods to various markets, potentially including government entities. A thorough assessment would require examining past performance evaluations, any documented issues or successes in fulfilling similar contracts, and their overall reliability in meeting delivery schedules and quality standards for federal agencies like the Defense Commissary Agency (DeCA).

What is the estimated per-unit cost or value comparison for the grocery items procured under this contract?

The provided data does not include specific unit costs or detailed itemization necessary to perform a per-unit cost comparison or benchmark against market rates. The total contract value is $24,081,588.41, awarded as a delivery order with a duration of 89 days. To assess value, one would need to know the quantities of each grocery item procured and their respective prices. Without this granular data, it is impossible to determine if the per-unit costs were competitive or aligned with industry standards. Such analysis would typically involve comparing these unit prices to those from other federal contracts, commercial wholesale prices, or retail equivalents.

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

Parent Company: Kraft Foods Inc. (UEI: 877147228)

Address: THREE LAKE DR, NORTHFIELD, IL, 60093

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $24,081,588

Exercised Options: $24,081,588

Current Obligation: $24,081,588

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0109G3750

IDV Type: IDC

Timeline