DoD's $24.7M grocery resale contract with Kraft Foods Global, Inc. awarded via non-competitive means

Contract Overview

Contract Amount: $24,667,618 ($24.7M)

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: $274.1K/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: NORTHFIELD, COOK County, ILLINOIS, 60093

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $24.7 million to KRAFT FOODS GLOBAL, INC. for work described as: RESALE - MISCELLANEOUS GROCERY Key points: 1. Contract awarded as a delivery order under an existing contract, suggesting potential for streamlined procurement. 2. The contract's value of $24.7 million for a 3-month period indicates a high daily expenditure. 3. The 'NOT AVAILABLE FOR COMPETITION' award type raises questions about the justification for sole-sourcing. 4. The fixed-price contract type offers cost certainty for the government, but may limit flexibility. 5. The product service code (PSC) is not specified, hindering detailed analysis of the goods procured. 6. The contract was awarded to a single vendor, Kraft Foods Global, Inc., limiting potential for price negotiation.

Value Assessment

Rating: questionable

The contract's value of approximately $24.7 million for a 90-day period equates to roughly $274,000 per day. Without specific details on the goods or services provided, it is difficult to benchmark this against similar contracts. The 'NOT AVAILABLE FOR COMPETITION' award suggests that a competitive process was not undertaken, which typically leads to less favorable pricing for the government compared to open competition. The firm fixed-price structure provides cost certainty but may not reflect the best possible value if market prices fluctuated significantly during the contract period.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' basis, indicating that a full and open competitive process was not utilized. The specific justification for this sole-source award is not provided in the available data. Awarding contracts without competition can limit the government's ability to secure the most competitive pricing and may reduce the pool of potential vendors, potentially impacting innovation and market responsiveness.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as the government may not benefit from the price reductions typically achieved through competitive bidding processes.

Public Impact

Military personnel and their families stationed in Illinois benefit from access to grocery items through the Defense Commissary Agency. The contract supports the Defense Commissary Agency's mission to provide high-quality groceries at a savings to service members. The contract's geographic impact is focused on Illinois, where the delivery order is being fulfilled. The contract likely supports jobs within Kraft Foods Global, Inc. and its supply chain, including logistics and distribution within Illinois.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpayment and reduced value for taxpayer funds.
The short duration of the contract (90 days) suggests a need for ongoing procurement, potentially indicating a lack of long-term strategic sourcing.
Absence of a specified Product Service Code (PSC) hinders a clear understanding of the goods procured and their market value.
The sole-source nature of the award warrants scrutiny to ensure it was appropriately justified and that no viable alternatives were overlooked.

Positive Signals

The firm fixed-price contract provides budget certainty for the Defense Commissary Agency.
Awarding to Kraft Foods Global, Inc., a known entity, may ensure a reliable supply of specified grocery items.
The contract supports the morale and welfare of military personnel and their families by providing access to essential goods.

Sector Analysis

This contract falls within the wholesale trade sector, specifically for general line grocery merchant wholesalers. The Defense Commissary Agency (DeCA) operates commissaries worldwide, providing groceries to military personnel and their families. The market for grocery wholesaling is large and competitive, with many established players. However, government procurement, especially for specialized needs or within specific geographic constraints, can sometimes lead to non-competitive awards if a particular vendor is deemed essential or uniquely capable for a short-term need. The value of this specific delivery order, while substantial for its duration, represents a small fraction of the overall federal spending on food and grocery-related goods.

Small Business Impact

The provided data indicates that small business participation was not a factor in this specific contract, as it was awarded to Kraft Foods Global, Inc. and there is no indication of small business set-asides or subcontracting requirements. This contract does not appear to have a direct impact on the small business ecosystem, as the prime contractor is a large corporation. Future contracts for similar goods might offer opportunities for small businesses if competed more broadly or if specific subcontracting goals are established.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Commissary Agency (DeCA), a component of the Department of Defense. As a delivery order under an existing contract, the initial oversight would have occurred during the parent contract's award. Specific oversight for this delivery order would involve monitoring performance, ensuring timely delivery of goods, and verifying compliance with the firm fixed-price terms. Transparency is limited due to the non-competitive nature and lack of detailed public justification. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Commissary Agency Operations
Grocery and Food Supply Chain Management
Federal Procurement of Consumer Goods
Military Family Support Programs

Risk Flags

Sole-source award justification required
Potential for non-competitive pricing
Lack of detailed product/service information

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.7 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 $24.7 million.

What is the period of performance?

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

What was the specific justification for awarding this contract on a 'NOT AVAILABLE FOR COMPETITION' basis?

The provided data does not include the specific justification for awarding this contract on a 'NOT AVAILABLE FOR COMPETITION' basis. Typically, sole-source justifications are required for such awards and must demonstrate that only one responsible source exists to meet the government's needs, or that exceptional circumstances preclude competition. Reasons can include urgency, unique capabilities, or the need to maintain a critical system. Without this documentation, it is impossible to assess the validity of the sole-source determination and whether it represented the best approach for the government and taxpayers.

How does the per-day cost of this contract compare to typical grocery wholesale costs for the Defense Commissary Agency?

The contract's total value is $24,667,617.60 over 90 days, resulting in a daily expenditure of approximately $274,075.20. Benchmarking this against typical grocery wholesale costs for the Defense Commissary Agency (DeCA) is challenging without more specific data on the types of goods procured and their quantities. DeCA aims to provide savings to military members, implying they negotiate favorable wholesale prices. However, a non-competitive award may not achieve the same level of cost savings as a fully competed contract. A detailed analysis would require comparing the unit prices of the specific items purchased under this contract against DeCA's historical average costs for those same items, obtained through competitive means.

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

Kraft Foods Global, Inc. has a history of supplying goods to government entities, including potentially the Defense Commissary Agency, given its position as a major food manufacturer and distributor. However, the provided data only pertains to this specific delivery order. To assess their track record, a broader review of their past performance on federal contracts would be necessary. This would involve examining contract histories for on-time delivery, quality of goods, compliance with terms, and any past performance issues or disputes. Without access to a comprehensive federal procurement database or specific performance reviews for Kraft Foods Global, Inc. related to DeCA, a detailed assessment of their track record is not possible based solely on this data point.

What are the potential risks associated with awarding a short-term, high-value contract like this without competition?

The primary risk associated with awarding a short-term, high-value contract without competition is the potential for paying a premium price. When competition is absent, vendors may not feel the same pressure to offer their most competitive pricing. This can lead to less value for taxpayer money. Additionally, a sole-source award might overlook innovative solutions or alternative suppliers that could offer better quality, service, or price if given the opportunity. There's also a risk that the justification for the sole-source award might be weak or based on outdated information, potentially indicating a lack of due diligence in exploring competitive options.

How does this contract fit into the broader context of federal spending on grocery and food supplies?

This contract represents a small portion of the overall federal spending on food and grocery supplies. The Department of Defense, through agencies like DeCA, procures vast quantities of food for commissaries, military dining facilities, and operational support worldwide. While $24.7 million is a significant sum for a 90-day period, it is dwarfed by the billions spent annually on food procurement across all federal agencies, including the Department of Agriculture, Veterans Affairs, and others. This specific contract likely addresses a localized or specific need within the DeCA network, possibly for specialized items or to fill a gap during a transition period, rather than representing a major strategic procurement.

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: $24,667,618

Exercised Options: $24,667,618

Current Obligation: $24,667,618

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0109G3755

IDV Type: IDC

Timeline