DoD's $24M grocery resale contract to Kraft Foods Global, Inc. shows limited competition and potential value concerns

Contract Overview

Contract Amount: $24,079,268 ($24.1M)

Contractor: Kraft Foods Global, Inc.

Awarding Agency: Department of Defense

Start Date: 2011-01-01

End Date: 2011-03-31

Contract Duration: 89 days

Daily Burn Rate: $270.6K/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 $24.1 million to KRAFT FOODS GLOBAL, INC. for work described as: RESALE - MISCELLANEOUS GROCERY Key points: 1. The contract was awarded on a 'NOT AVAILABLE FOR COMPETITION' basis, indicating a lack of open bidding. 2. The duration of the contract was 89 days, suggesting a short-term or interim need. 3. The primary product service code (PSC) is 424410, related to grocery wholesale. 4. The contract type is Firm Fixed Price, which can offer cost certainty but may limit flexibility. 5. The award was a Delivery Order, implying it's part of a larger contract vehicle. 6. The contract was awarded to a single vendor, Kraft Foods Global, Inc. 7. The total award amount was over $24 million for the specified period.

Value Assessment

Rating: questionable

Benchmarking the value of this $24 million contract for an 89-day period is challenging without more detailed service descriptions and market data. The 'NOT AVAILABLE FOR COMPETITION' award mechanism raises concerns about whether the government secured the best possible price. Compared to typical grocery wholesale contracts, the per-day cost appears substantial, but a direct comparison is difficult due to the limited information. Further analysis would be needed to determine if the pricing reflects fair market value for the goods and services provided.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' justification, meaning it was not openly competed. This typically occurs when only one source is capable of meeting the requirement, or in urgent situations. The lack of multiple bidders means there was no direct price comparison or negotiation leverage derived from a competitive process. This limits the government's ability to ensure optimal price discovery and potentially leads to higher costs than if the contract had been competed.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without a competitive process, there is less assurance that the price reflects the lowest cost achievable for these grocery products.

Public Impact

Military personnel and their families stationed in Illinois likely benefited from access to grocery items through the Defense Commissary Agency. The contract facilitated the resale of miscellaneous grocery items, supporting the morale and welfare of service members. The geographic impact is limited to Illinois, where the delivery orders were fulfilled. The contract supported the operational needs of the Defense Commissary Agency in providing goods to its customers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have led to inflated prices for taxpayers.
Short contract duration (89 days) suggests potential instability or an interim solution, raising questions about long-term planning.
Awarding a significant dollar amount without competition warrants scrutiny of the justification for sole-source procurement.

Positive Signals

Firm Fixed Price contract type provides cost certainty for the government.
The contract supported the essential mission of the Defense Commissary Agency in providing goods to military families.
Awarding to a known entity like Kraft Foods Global, Inc. might ensure product availability and quality, assuming prior positive performance.

Sector Analysis

The grocery wholesale sector is characterized by large distributors supplying a wide range of food products to retailers. Federal spending in this area, particularly through agencies like the Defense Commissary Agency, supports the logistical needs of military bases. This contract, valued at over $24 million for a short period, represents a significant, albeit temporary, allocation of resources within this sector. Comparable spending benchmarks are difficult to establish without knowing the specific product mix and volume, but the award size indicates a substantial procurement.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the award to Kraft Foods Global, Inc., a large corporation, it is unlikely that small businesses were directly involved as prime contractors. Subcontracting opportunities for small businesses are not specified in the provided data, but typically large food distributors may engage smaller suppliers for niche products.

Oversight & Accountability

Oversight for this contract would fall under the Defense Commissary Agency (DeCA) and potentially the Department of Defense's Inspector General. The 'NOT AVAILABLE FOR COMPETITION' status necessitates robust justification and review to ensure the government's interests were protected. Transparency is limited by the lack of competitive bidding details, but contract awards are generally subject to federal procurement regulations and oversight.

Related Government Programs

Defense Commissary Agency Operations
Grocery Resale Programs
Federal Food Procurement
Military Morale, Welfare, and Recreation Programs

Risk Flags

Lack of Competition
High Value for Short Duration
Sole-Source Justification Required

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.1 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 $24.1 million.

What is the period of performance?

Start: 2011-01-01. End: 2011-03-31.

What specific grocery items were included in this $24 million contract, and what was the volume purchased?

The provided data categorizes the contract under 'RESALE - MISCELLANEOUS GROCERY' and identifies the Product Service Code (PSC) as 424410 (General Line Grocery Merchant Wholesalers). However, it does not specify the exact list of grocery items or the quantities procured. The total award amount of $24,079,268.04 over 89 days suggests a high volume of goods. To understand the value proposition, a detailed breakdown of the product mix (e.g., dairy, produce, packaged goods, frozen foods) and the corresponding quantities would be necessary. Without this granularity, it's difficult to assess if the pricing per item or category was competitive.

Why was this contract awarded on a 'NOT AVAILABLE FOR COMPETITION' basis, and what was the justification?

The data explicitly states the contract was awarded under 'NOT AVAILABLE FOR COMPETITION'. This classification typically implies that only one responsible source exists to fulfill the requirement, or that an urgent and compelling need prevents the use of competitive procedures. Common reasons include proprietary technology, unique capabilities, or emergency situations. For this specific contract, the justification for foregoing competition is not detailed in the provided data. A thorough review of the contracting officer's justification would be required to understand the rationale and assess its validity. Such sole-source awards warrant heightened scrutiny to ensure they are truly necessary and that the government is not disadvantaged in pricing.

How does the $24 million award for an 89-day period compare to typical spending for similar grocery resale contracts by the Defense Commissary Agency?

The contract's value of approximately $24 million over just 89 days (roughly 3 months) translates to an average daily expenditure of about $270,554. This is a substantial amount for a short-term grocery resale operation. To benchmark this effectively, one would need to compare it against historical spending patterns for similar contracts managed by the Defense Commissary Agency (DeCA), considering factors like the specific military installations served, the product mix, and prevailing market prices. Without access to DeCA's broader contract portfolio and spending data, it's difficult to definitively state whether this represents high, low, or average spending. However, the high daily burn rate suggests a significant volume of goods were procured.

What is the track record of Kraft Foods Global, Inc. as a federal contractor, particularly with the Defense Commissary Agency?

Kraft Foods Global, Inc. has a history of engaging with the federal government, including contracts with agencies like the Department of Defense. While the provided data focuses on a single delivery order, Kraft's broader experience as a major food manufacturer and distributor suggests familiarity with large-scale supply chains and potentially government procurement processes. Information regarding their specific performance history with the Defense Commissary Agency, including past contract values, types of goods supplied, and any performance reviews or disputes, would be necessary for a comprehensive assessment. Generally, large, established companies like Kraft are expected to have robust quality control and delivery systems, but individual contract performance can vary.

What are the potential risks associated with awarding a large grocery contract without competition?

The primary risk associated with awarding a large contract, such as this $24 million grocery resale contract, without competition is the potential for paying a higher price than necessary. A competitive bidding process typically drives down costs through vendor rivalry and allows the government to negotiate better terms. Without competition, the government relies heavily on the vendor's proposed pricing, which may not reflect the best value. Other risks include reduced innovation, as vendors may have less incentive to offer unique solutions, and potential complacency from the contractor regarding service quality or delivery timelines. Furthermore, it raises questions about the fairness and transparency of the procurement process itself.

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: $24,079,268

Exercised Options: $24,079,268

Current Obligation: $24,079,268

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0109G3755

IDV Type: IDC

Timeline