DoD's $17.7M Grocery Contract with Quaker Oats Raises Questions on Competition and Value

Contract Overview

Contract Amount: $17,755,474 ($17.8M)

Contractor: Quaker Oats Company, the

Awarding Agency: Department of Defense

Start Date: 2010-04-01

End Date: 2010-06-30

Contract Duration: 90 days

Daily Burn Rate: $197.3K/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: CHICAGO, COOK County, ILLINOIS, 60661

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $17.8 million to QUAKER OATS COMPANY, THE for work described as: RESALE - MISCELLANEOUS GROCERY Key points: 1. Significant spending on miscellaneous groceries highlights reliance on established suppliers. 2. Lack of competition suggests potential for inflated prices and limited market exploration. 3. The contract's duration and fixed-price nature may not fully account for market fluctuations. 4. Analysis needed to determine if alternative sourcing could yield better value for taxpayers.

Value Assessment

Rating: fair

The contract value of $17.7M for a 90-day period is substantial. Without comparable contract data or detailed cost breakdowns, it's difficult to definitively assess if the pricing is competitive. The 'NOT AVAILABLE FOR COMPETITION' status raises concerns about whether fair market prices were secured.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was not available for competition, indicating a limited source selection. This approach bypasses the competitive bidding process, which typically drives down prices and encourages innovation. The impact on price discovery is likely negative, as the government may not have explored the full range of market options.

Taxpayer Impact: The lack of competition for a significant grocery contract suggests taxpayers may be paying a premium, as competitive pressures that normally ensure value for money were absent.

Public Impact

Military families and personnel rely on commissary services for essential goods. Spending on basic necessities like groceries is a consistent government expenditure. The sourcing of food items impacts supply chain resilience and availability.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Limited price discovery
Potential for overpayment

Positive Signals

Essential goods provision
Established supplier relationship

Sector Analysis

The Defense Commissary Agency (DeCA) procures a wide range of goods, including groceries, to support military personnel and their families. Spending benchmarks for miscellaneous grocery wholesale are highly variable based on product mix and volume, but significant sole-source awards warrant scrutiny.

Small Business Impact

The data does not indicate any specific provisions or set-asides for small businesses in this contract. The award to a large, established company like Quaker Oats suggests that small business participation was likely minimal or non-existent.

Oversight & Accountability

Oversight of commissary contracts is crucial to ensure fair pricing and efficient use of funds. The 'limited' competition status necessitates robust internal review and justification to confirm the necessity of the approach and the reasonableness of the price.

Related Government Programs

General Line Grocery Merchant Wholesalers
Department of Defense Contracting
Defense Commissary Agency Programs

Risk Flags

Lack of competitive bidding
Potential for above-market pricing
Limited transparency in price determination
No clear benefit to small businesses
Short contract duration may not reflect long-term needs

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.8 million to QUAKER OATS COMPANY, THE. RESALE - MISCELLANEOUS GROCERY

Who is the contractor on this award?

The obligated recipient is QUAKER OATS COMPANY, THE.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $17.8 million.

What is the period of performance?

Start: 2010-04-01. End: 2010-06-30.

What was the justification for limiting competition on this significant grocery contract, and how was the price determined to be fair and reasonable without competitive bids?

The justification for limiting competition is not provided in the data. Typically, such limitations require a strong rationale, such as unique capabilities or urgent needs. Without competitive bids, price reasonableness is often assessed through historical pricing, commercial item pricing, or independent government cost estimates, but the data here lacks that detail.

What are the potential risks associated with awarding a large grocery contract without competition, particularly concerning price and product availability?

The primary risk is paying a higher price than could be achieved through competition, leading to inefficient use of taxpayer funds. Additionally, a lack of competition can reduce the incentive for the supplier to maintain optimal product availability or quality, potentially impacting the service provided to military personnel.

How does this contract's structure and pricing compare to similar grocery procurements by other government agencies or large organizations, and what does this reveal about its effectiveness?

Without comparative data, it's impossible to definitively assess effectiveness. However, awarding a $17.7M contract for a 90-day period on a limited competition basis is unusual for standard grocery items. This suggests potential inefficiencies or a lack of proactive market analysis to secure better value through competitive means.

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: Pepsico, Inc. (UEI: 001287762)

Address: 555 W MONROE ST, CHICAGO, IL, 60661

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

Financial Breakdown

Contract Ceiling: $17,755,474

Exercised Options: $17,755,474

Current Obligation: $17,755,474

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0109G3799

IDV Type: IDC

Timeline