Defense Commissary Agency awards $20.6M contract for soybean processing, highlighting a sole-source procurement

Contract Overview

Contract Amount: $20,589,920 ($20.6M)

Contractor: THE J. M. Smucker Company

Awarding Agency: Department of Defense

Start Date: 2009-10-01

End Date: 2009-12-31

Contract Duration: 91 days

Daily Burn Rate: $226.3K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: RESALE - JAM/JELLY/SYRUP

Place of Performance

Location: ORRVILLE, WAYNE County, OHIO, 44667

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $20.6 million to THE J. M. SMUCKER COMPANY for work described as: RESALE - JAM/JELLY/SYRUP Key points: 1. Contract awarded to The J. M. Smucker Company for soybean processing services. 2. The contract was not available for competition, indicating a sole-source award. 3. The duration of the contract was 91 days, suggesting a short-term need. 4. The contract type is Firm Fixed Price, providing cost certainty. 5. The award amount was approximately $20.6 million. 6. The North American Industry Classification System (NAICS) code is 311222, related to soybean processing.

Value Assessment

Rating: questionable

Benchmarking the value for this specific soybean processing contract is challenging due to the sole-source nature and limited public data on comparable services. The firm fixed price structure offers predictability, but without competitive bidding, it's difficult to ascertain if the $20.6 million represents optimal value for the Defense Commissary Agency. Further analysis would require access to internal cost data or market surveys for similar specialized processing services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. The data indicates it was 'NOT AVAILABLE FOR COMPETITION'. This typically occurs when only one vendor can provide the required goods or services, or for specific strategic reasons. The lack of competition means there was no opportunity for price discovery through bidding, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without multiple bids, there's less assurance that the price reflects the most economical option available in the market.

Public Impact

The primary beneficiaries are likely military personnel and their families who utilize commissary services, as the processed soybeans may be used in food products sold within these facilities. The services delivered involve soybean processing, a critical step in the food supply chain. The geographic impact is primarily within the United States, supporting the Defense Commissary Agency's operations. Workforce implications are likely within the food processing sector, though specific details are not provided.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the justification for sole-source procurement.
Short contract duration (91 days) may indicate a reactive or urgent need, potentially impacting planning and cost-efficiency.
Limited information on performance metrics or contractor track record for this specific service.

Positive Signals

Firm Fixed Price contract provides cost certainty for the government.
Award to a known entity (The J. M. Smucker Company) may suggest established capabilities.
Contract supports essential commissary operations for military families.

Sector Analysis

The food processing industry, specifically soybean processing, is a significant sector within the broader food manufacturing market. This contract falls under the agricultural and food production sub-sector. While specific market size data for soybean processing for government contracts is not readily available, the broader U.S. soybean industry is substantial, with significant domestic and international trade. This contract represents a niche procurement within that larger ecosystem, likely supporting the Defense Commissary Agency's food supply chain.

Small Business Impact

There is no indication that this contract involved small business set-asides or subcontracting opportunities. The award was made to The J. M. Smucker Company, a large corporation. Without specific subcontracting plans or set-aside requirements, the direct impact on the small business ecosystem for this particular contract is likely minimal.

Oversight & Accountability

Oversight mechanisms for this contract would typically be managed by the Defense Commissary Agency (DECA). As a sole-source award, the justification and approval process would be subject to specific federal acquisition regulations. Transparency is limited due to the non-competitive nature. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Commissary Agency Operations
Food and Agriculture Procurement
Commodity Processing Contracts
Sole-Source Procurements

Risk Flags

Sole-source award without clear justification.
Potential for inflated pricing due to lack of competition.
Limited transparency regarding contract performance metrics.
Short contract duration may indicate reactive procurement.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.6 million to THE J. M. SMUCKER COMPANY. RESALE - JAM/JELLY/SYRUP

Who is the contractor on this award?

The obligated recipient is THE J. M. SMUCKER COMPANY.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $20.6 million.

What is the period of performance?

Start: 2009-10-01. End: 2009-12-31.

What is the specific justification for awarding this contract on a sole-source basis to The J. M. Smucker Company?

The provided data states the contract was 'NOT AVAILABLE FOR COMPETITION,' indicating a sole-source award. Specific justifications for sole-source procurements typically fall under categories such as unique capabilities, urgent and compelling needs, or when only one responsible source exists. Without further documentation from the Defense Commissary Agency, the precise reason for bypassing competition remains undisclosed. This lack of transparency is a common concern with sole-source awards, as it limits the government's ability to ensure it is receiving the best possible price and value through competitive market forces.

How does the $20.6 million contract value compare to typical market rates for soybean processing services of this nature?

Directly comparing the $20.6 million contract value to market rates for soybean processing is difficult without more specific details on the scope of services, volume, and quality requirements. As a sole-source award, there is no competitive benchmark. To assess value, one would need to analyze the contractor's cost breakdown, compare it to industry benchmarks for similar processing tasks (e.g., crushing, refining, packaging), and consider the duration and specific deliverables. The absence of competitive bids means the government did not benefit from price discovery mechanisms that typically drive down costs.

What are the potential risks associated with a sole-source contract of this magnitude?

The primary risk associated with a sole-source contract of this magnitude is the potential for overpayment due to the lack of competitive pressure. Without competing bids, the government may not achieve the most favorable pricing. Other risks include reduced innovation, as the contractor may have less incentive to improve efficiency or offer new solutions. Furthermore, sole-source awards can raise concerns about fairness and equal opportunity for other potential suppliers. Ensuring robust oversight and justification for the sole-source determination is crucial to mitigate these risks.

What is the track record of The J. M. Smucker Company in fulfilling government contracts, particularly for food processing?

The J. M. Smucker Company is a well-established food processing company with a long history in the consumer goods market. While specific details on their historical government contract performance are not provided in this data snippet, their extensive experience in food production suggests they possess the necessary capabilities for such a contract. Government agencies often contract with large, reputable companies for essential goods and services. A deeper dive into federal procurement databases (like FPDS) would be necessary to analyze their complete track record with various government entities.

How does this contract fit into the broader spending patterns of the Defense Commissary Agency for food-related goods and services?

This $20.6 million contract for soybean processing represents a specific component within the Defense Commissary Agency's (DECA) overall food procurement strategy. DECA's mission is to provide high-quality, low-cost groceries to military members and their families. Spending on raw materials, processing, and finished food products constitutes a significant portion of their budget. This contract likely supports the supply chain for various food items sold in commissaries, such as cooking oils, processed foods, or animal feed ingredients derived from soybeans. Understanding its place requires analyzing DECA's total food budget and the proportion allocated to such processing services.

Industry Classification

NAICS: Manufacturing › Grain and Oilseed Milling › Soybean Processing

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: ONE STRAWBERRY LANE, ORRVILLE, OH, 44667

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $20,589,920

Exercised Options: $20,589,920

Current Obligation: $20,589,920

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0107G3563

IDV Type: IDC

Timeline