DoD's $24.9M Grocery Resale Contract with Kraft Foods Raises Questions on Competition and Value
Contract Overview
Contract Amount: $24,934,493 ($24.9M)
Contractor: Kraft Foods Global, Inc.
Awarding Agency: Department of Defense
Start Date: 2010-07-01
End Date: 2010-09-30
Contract Duration: 91 days
Daily Burn Rate: $274.0K/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 $24.9 million to KRAFT FOODS GLOBAL, INC. for work described as: RESALE - MISCELLANEOUS GROCERY Key points: 1. Significant spending on miscellaneous groceries highlights reliance on established suppliers. 2. Lack of competition for this contract warrants scrutiny of pricing and potential alternatives. 3. The contract's short duration may indicate a need for more strategic, long-term sourcing. 4. Analysis of per-unit costs is crucial to determine fair market value for these goods.
Value Assessment
Rating: questionable
The contract value of $24.9M for a 91-day period is substantial. Without a competitive bidding process, it's difficult to assess if this represents fair market value compared to similar wholesale grocery contracts.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was not available for competition, suggesting a limited source or a specific requirement that restricted bidding. This lack of competition can lead to higher prices and reduced innovation.
Taxpayer Impact: Taxpayer funds may be at risk of being overspent due to the absence of competitive pressure to secure the best possible pricing for these grocery items.
Public Impact
Commissary shoppers may face higher prices if the lack of competition inflates costs. Defense agencies rely on consistent supply chains; disruptions could impact service members. Potential for better deals exists if the contract were opened to a wider range of suppliers.
Waste & Efficiency Indicators
Waste Risk Score: 30 / 10
Warning Flags
- Limited competition
- Lack of price benchmark
- Short contract duration
Positive Signals
- Essential goods provided
- Established supplier relationship
Sector Analysis
The Defense Commissary Agency procures a wide range of goods, including groceries, to support military personnel and their families. Spending benchmarks for wholesale grocery distribution vary significantly based on volume, product mix, and geographic location.
Small Business Impact
The data does not indicate whether small businesses were involved in this contract, either as prime contractors or subcontractors. Further investigation is needed to assess small business participation.
Oversight & Accountability
The limited competition noted for this contract suggests a potential gap in oversight regarding procurement strategies. Ensuring robust competition is key to accountability and maximizing taxpayer value.
Related Government Programs
- General Line Grocery Merchant Wholesalers
- Department of Defense Contracting
- Defense Commissary Agency Programs
Risk Flags
- Lack of competitive bidding
- Potential for overpayment
- Limited transparency on justification for sole-source
- Short contract duration may indicate suboptimal planning
Tags
general-line-grocery-merchant-wholesaler, department-of-defense, il, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $24.9 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 $24.9 million.
What is the period of performance?
Start: 2010-07-01. End: 2010-09-30.
What specific factors led to this contract being 'NOT AVAILABLE FOR COMPETITION'?
The designation 'NOT AVAILABLE FOR COMPETITION' typically implies a sole-source justification, such as a unique capability, urgent need, or a specific brand requirement that only one vendor can fulfill. Without further details from the Defense Commissary Agency, the exact reason remains unclear, but it significantly impacts the potential for competitive pricing and value.
How does the $24.9M expenditure for a 91-day grocery contract compare to industry benchmarks for similar wholesale distribution?
Benchmarking this specific contract is challenging without detailed product breakdowns and market data. However, a $24.9M spend over just three months for miscellaneous groceries suggests a very high volume or premium product mix. Standard wholesale grocery contracts often aim for longer durations and competitive pricing structures to achieve economies of scale and better value.
What is the potential impact on service members and their families if this contract's pricing is not competitive?
If the lack of competition results in inflated prices, service members and their families shopping at commissaries could face higher costs for essential goods. This undermines the benefit commissary privileges are intended to provide, potentially reducing disposable income for military families and impacting morale.
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: $24,934,493
Exercised Options: $24,934,493
Current Obligation: $24,934,493
Contract Characteristics
Commercial Item: COMMERCIAL ITEM
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: HDEC0109G3750
IDV Type: IDC
Timeline
Start Date: 2010-07-01
Current End Date: 2010-09-30
Potential End Date: 2010-09-30 00:00:00
Last Modified: 2019-06-07
More Contracts from Kraft Foods Global, Inc.
- Resale - Assorted Groceries (section A) — $29.7M (Department of Defense)
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- Resale - Miscellaneous Grocery — $26.6M (Department of Defense)
- Resale - Cheese — $26.5M (Department of Defense)
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