DoD's $26.6M grocery resale contract to Kraft Foods Global, Inc. awarded via non-competitive process

Contract Overview

Contract Amount: $26,567,576 ($26.6M)

Contractor: Kraft Foods Global, Inc.

Awarding Agency: Department of Defense

Start Date: 2011-04-01

End Date: 2011-06-30

Contract Duration: 90 days

Daily Burn Rate: $295.2K/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 $26.6 million to KRAFT FOODS GLOBAL, INC. for work described as: RESALE - MISCELLANEOUS GROCERY Key points: 1. The contract value represents a significant portion of wholesale grocery distribution for the Defense Commissary Agency. 2. Awarded as a delivery order, indicating it's part of a larger, potentially pre-existing agreement. 3. The fixed-price contract type suggests cost certainty for the government, but may limit flexibility. 4. The short duration (90 days) implies this was a specific, time-bound need rather than ongoing support. 5. Lack of competition raises questions about potential overpayment and missed opportunities for better pricing. 6. The contractor, Kraft Foods Global, Inc., is a major player in the food industry, suggesting established supply chains.

Value Assessment

Rating: questionable

Benchmarking the value of this specific delivery order is challenging without knowing the scope of the underlying contract or the specific grocery items procured. However, the $26.6 million value for a 90-day period for miscellaneous grocery resale suggests a substantial volume. The lack of competitive bidding prevents a direct comparison to market rates or assessment of whether the fixed price represents optimal value for money. Without more detail on the items and quantities, it's difficult to definitively assess if the pricing was fair.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' status, indicating a sole-source procurement. This means the Defense Commissary Agency did not solicit bids from multiple vendors. The reasons for this sole-source award are not detailed, but it typically occurs when only one vendor can meet the requirement, often due to proprietary products, urgent needs, or existing long-term relationships. The lack of competition limits price discovery and potentially leads to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure to drive down prices. Without a bidding process, there's less assurance that the government secured the most cost-effective solution for these grocery items.

Public Impact

Military personnel and their families stationed in Illinois benefit from access to groceries through the Defense Commissary Agency. The contract supports the Defense Commissary Agency's mission to provide high-quality goods at a savings to service members. This specific delivery order likely ensured the availability of a wide range of miscellaneous grocery items. The contract has implications for the food supply chain and distribution networks serving military bases in Illinois.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have resulted in higher prices than a competitive procurement.
The sole-source nature limits transparency into the justification for selecting this specific vendor.
Short contract duration could indicate a reactive procurement rather than strategic planning.
No small business set-aside information is provided, potentially excluding smaller suppliers.

Positive Signals

Awarded to a major food industry player, suggesting reliability in supply.
Fixed-price contract offers budget certainty for the procured items.
Supports the morale and welfare of military families by ensuring commissary stock.

Sector Analysis

This contract falls within the wholesale grocery distribution sector, a critical component of the food supply chain. The Defense Commissary Agency (DECA) operates commissaries worldwide, providing groceries to military personnel and their families. The market for wholesale food distribution is large and competitive, but specific contracts for government entities can sometimes be sole-sourced due to unique logistical requirements or existing relationships. Benchmarking requires comparing similar large-scale grocery distribution contracts, which are often complex due to varying product mixes and delivery needs.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the procurement was likely aimed at larger, established suppliers capable of handling the scale of the order. There is no information on subcontracting requirements, so the direct impact on the small business ecosystem is unclear, but the absence of a set-aside means opportunities for small businesses to directly compete or participate as subcontractors may have been limited.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Commissary Agency (DECA) and potentially the Department of Defense's Inspector General. As a delivery order under a larger contract, oversight would focus on ensuring delivery terms, quality, and pricing align with the contract's stipulations. Transparency is limited by the sole-source nature of the award; however, contract award data is generally publicly available. Accountability rests with DECA to justify the sole-source decision and manage the contractor's performance effectively.

Related Government Programs

Defense Commissary Agency Operations
Grocery and Food Supply Chain Management
Federal Food Procurement
Military Resale Operations

Risk Flags

Sole-source award
Lack of detailed justification for non-competition
Limited performance data available
Short contract duration may indicate urgency or limited scope

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.6 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 $26.6 million.

What is the period of performance?

Start: 2011-04-01. End: 2011-06-30.

What specific types of 'miscellaneous grocery' items were included in this $26.6 million delivery order?

The provided data classifies the contract under 'RESALE - MISCELLANEOUS GROCERY' and the North American Industry Classification System (NAICS) code 424410 for 'General Line Grocery Merchant Wholesalers'. However, it does not specify the exact list of grocery items procured under this $26.6 million delivery order. This category typically encompasses a broad range of food and non-food grocery items, excluding specialized categories like fresh produce, meat, or dairy if those are handled under separate contracts. The lack of itemization makes it difficult to assess the value proposition for specific product categories.

What was the justification for awarding this contract to Kraft Foods Global, Inc. on a sole-source basis?

The contract was marked as 'NOT AVAILABLE FOR COMPETITION', indicating a sole-source award. Specific justifications for sole-source procurements are often detailed in the contract's justification and approval (J&A) document, which is not provided here. Common reasons include unique capabilities, urgent and compelling needs where competition is impractical, or if the item is only available from a single source. Without the J&A, it's impossible to determine the precise rationale, but it suggests that DECA determined that only Kraft Foods Global, Inc. could fulfill this particular requirement at that time.

How does the $26.6 million value for a 90-day period compare to typical spending for similar grocery resale contracts?

A $26.6 million expenditure over a 90-day period equates to approximately $8.87 million per month or roughly $295,000 per day. This figure represents a substantial daily outlay for miscellaneous grocery items. Without access to DECA's broader contract portfolio or specific benchmarks for wholesale grocery distribution for military commissaries, a direct comparison is difficult. However, this daily rate suggests a significant volume of goods being supplied, likely serving multiple commissary locations or a large customer base within Illinois, given the 'ST' and 'SN' codes indicating Illinois.

What is the track record of Kraft Foods Global, Inc. in fulfilling government contracts, particularly with the Defense Commissary Agency?

Kraft Foods Global, Inc. is a major, well-established player in the food manufacturing and distribution industry. While this specific data point is for a delivery order, companies of this size typically have extensive experience with government contracts, including those with the Department of Defense and its various agencies like DECA. Their long-standing presence in the market suggests a capacity to manage large-scale supply chains and meet delivery requirements. However, a comprehensive assessment would require reviewing their past performance ratings, any past disputes or contract terminations, and the volume and nature of their previous government awards.

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

The primary risk of awarding a contract without competition is the potential for paying a higher price than necessary. Without competing bids, there is no market pressure to ensure the lowest possible cost. This can lead to inefficient use of taxpayer funds. Other risks include a lack of innovation, as the incumbent contractor may have less incentive to improve services or offer new products. Furthermore, it can create a barrier to entry for other capable suppliers, potentially limiting future competition and reducing overall market efficiency. There's also a risk that the sole-source justification might be weak or based on outdated information.

What oversight mechanisms were in place for this specific delivery order, given its sole-source nature and short duration?

Oversight for this delivery order would primarily be managed by the contracting officers and contract specialists within the Defense Commissary Agency (DECA). Key oversight functions would include verifying that the goods delivered met the specifications outlined in the contract, ensuring timely delivery, and confirming that the invoicing and payment processes were accurate according to the firm fixed-price terms. Given the short 90-day duration, oversight might have been more focused on immediate execution and delivery confirmation. The Department of Defense's Inspector General could also conduct audits or investigations if performance issues or potential fraud were suspected.

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: $26,567,576

Exercised Options: $26,567,576

Current Obligation: $26,567,576

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0109G3750

IDV Type: IDC

Timeline