DoD's $25.3M Grocery Contract with Kraft Foods Raises Questions on Competition and Value

Contract Overview

Contract Amount: $25,262,364 ($25.3M)

Contractor: Kraft Foods Global, Inc.

Awarding Agency: Department of Defense

Start Date: 2009-10-01

End Date: 2009-12-31

Contract Duration: 91 days

Daily Burn Rate: $277.6K/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 $25.3 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 delivery order may lead to suboptimal pricing. 3. The contract's duration and fixed-price nature present potential risks for cost overruns. 4. Analysis of the grocery wholesale sector is needed to benchmark this spending.

Value Assessment

Rating: questionable

The contract value of $25.3M for a 91-day period is substantial. Without competitive bidding, it's difficult to assess if the pricing reflects fair market value compared to similar grocery wholesale contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was not available for competition, indicating a sole-source or limited-source award. This significantly restricts price discovery and potentially inflates costs for taxpayers.

Taxpayer Impact: The lack of competitive bidding for a large grocery contract likely results in higher costs for taxpayers than a fully competed procurement.

Public Impact

Commissary shoppers may see a wide variety of Kraft products, but potentially at higher prices due to limited competition. Taxpayers bear the cost of potentially inflated prices on essential goods purchased by the military. The Defense Commissary Agency's procurement practices influence the availability and cost of goods for service members and their families.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Potential for overpricing
Short contract duration with high value

Positive Signals

Essential goods procurement
Established supplier relationship

Sector Analysis

The grocery wholesale sector is highly competitive, making the lack of competition for this $25.3M contract concerning. Benchmarks for similar wholesale grocery procurements are essential for evaluating value.

Small Business Impact

This contract does not appear to involve small businesses, as it was awarded to Kraft Foods Global, Inc. Further analysis is needed to determine if small businesses were excluded or had no opportunity to compete.

Oversight & Accountability

Oversight is needed to ensure the Defense Commissary Agency is maximizing competition and achieving best value in its procurements, especially for essential goods like groceries.

Related Government Programs

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

Risk Flags

Lack of competition
Potential for overpricing
Limited transparency in award justification
High value for a short duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.3 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 $25.3 million.

What is the period of performance?

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

What is the justification for not competing this large grocery contract, and what steps are being taken to ensure fair pricing?

The justification for not competing this contract is critical. Agencies must demonstrate that competition was not feasible or would not result in best value. Without this, taxpayers are at risk of paying inflated prices. Steps should include a thorough market analysis and a clear plan for future competitive procurements to drive down costs and increase efficiency.

What is the risk associated with a sole-source award for essential grocery items, particularly concerning price volatility?

The primary risk of a sole-source award for essential groceries is the potential for significantly higher prices compared to a competitive environment. Without market pressure, the awarded vendor has less incentive to offer the lowest possible price. This can lead to budget overruns and reduced purchasing power for the agency, ultimately impacting the goods and services available to military personnel and their families.

How does this contract's pricing compare to industry benchmarks for wholesale grocery distribution, and what is the estimated taxpayer impact?

Without competitive data, a direct comparison to industry benchmarks is challenging. However, the absence of competition suggests a potential for prices above market rates. The estimated taxpayer impact could be millions of dollars in additional costs over the contract period, representing funds that could be reallocated to other critical defense needs or programs.

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: $25,262,364

Exercised Options: $25,262,364

Current Obligation: $25,262,364

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0109G3755

IDV Type: IDC

Timeline