DoD's $16M Grocery Contract with Quaker Oats Raises Questions on Competition and Value

Contract Overview

Contract Amount: $16,028,265 ($16.0M)

Contractor: Quaker Oats Company, the

Awarding Agency: Department of Defense

Start Date: 2009-10-01

End Date: 2009-12-31

Contract Duration: 91 days

Daily Burn Rate: $176.1K/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 $16.0 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 responsiveness. 3. The contract's duration and fixed price may not reflect current market fluctuations. 4. Analysis needed to determine if alternative sourcing could yield better value for taxpayers.

Value Assessment

Rating: questionable

The contract value of $16 million for a 3-month period is substantial. Without comparable contract data or a competitive bidding process, it's difficult to assess if the pricing is reasonable compared to similar grocery wholesale agreements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract is listed as 'NOT AVAILABLE FOR COMPETITION,' indicating a sole-source or limited competition award. This significantly restricts price discovery and may lead to higher costs than if multiple vendors had competed.

Taxpayer Impact: The lack of competitive bidding limits the government's ability to secure the best possible prices, potentially resulting in higher taxpayer expenditure for these grocery items.

Public Impact

Commissary shoppers may face higher prices if the government overpays for goods. Taxpayer funds are allocated without a clear demonstration of cost-effectiveness. Reliance on a single supplier could impact the availability and variety of goods.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of Competition
Potential for Overpricing
Limited Market Responsiveness

Positive Signals

Established Supplier Relationship
Guaranteed Supply Chain

Sector Analysis

This contract falls under wholesale trade for general line groceries. Spending benchmarks in this sector are highly variable based on product mix, volume, and supplier agreements. The $16M for a quarter suggests a large volume or specialized items.

Small Business Impact

The contract does not indicate any specific provisions for small business participation. The award to a large corporation like Quaker Oats suggests that small businesses were likely not involved in this particular procurement.

Oversight & Accountability

The 'NOT AVAILABLE FOR COMPETITION' status warrants further oversight to ensure the justification for limited competition was sound and that the pricing was appropriately scrutinized.

Related Government Programs

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

Risk Flags

Lack of competitive bidding
Potential for inflated pricing
Limited transparency in award justification
Short contract duration may not reflect long-term needs
No clear small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.0 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 $16.0 million.

What is the period of performance?

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

What was the specific justification for limiting competition on this substantial grocery contract?

The justification for limiting competition is crucial for understanding the rationale behind awarding the contract to The Quaker Oats Company without a broader bidding process. Without this information, it's impossible to determine if the government adequately explored all available options or if there were unique circumstances necessitating a sole-source or limited approach, which directly impacts the potential for cost savings.

How does the per-unit cost of these groceries compare to market rates or other government contracts?

Benchmarking the per-unit cost against market rates and similar government contracts is essential for assessing value for money. If the costs are significantly higher, it indicates potential overspending and a failure to leverage purchasing power effectively. This comparison would reveal if the fixed price agreement was indeed advantageous or detrimental to the taxpayer.

What is the long-term impact of relying on limited competition for essential supplies like groceries?

Long-term reliance on limited competition can stifle innovation and efficiency within the supply chain. It may lead to complacency from awarded vendors and a lack of incentive to offer competitive pricing or improved services. This can result in sustained higher costs for the government and, consequently, the taxpayer, while potentially limiting access to newer or more cost-effective products.

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: $16,028,265

Exercised Options: $16,028,265

Current Obligation: $16,028,265

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0109G3799

IDV Type: IDC

Timeline