DoD's $20.3M contract for jams, jellies, and syrups awarded to J.M. Smucker raises questions about competition and value

Contract Overview

Contract Amount: $20,333,125 ($20.3M)

Contractor: THE J. M. Smucker Company

Awarding Agency: Department of Defense

Start Date: 2010-10-01

End Date: 2010-12-31

Contract Duration: 91 days

Daily Burn Rate: $223.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: RESALE - JAM/JELLY/SYRUP

Place of Performance

Location: ORRVILLE, WAYNE County, OHIO, 44667

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $20.3 million to THE J. M. SMUCKER COMPANY for work described as: RESALE - JAM/JELLY/SYRUP Key points: 1. The contract's value of over $20 million for food products warrants scrutiny regarding pricing and potential for bulk discounts. 2. Awarded on a non-competitive basis, the lack of open competition limits price discovery and potentially increases costs for taxpayers. 3. The short duration of 91 days suggests a specific, potentially urgent need, but the contract value seems high for such a brief period. 4. The sole awardee, The J. M. Smucker Company, is a large, established food manufacturer, indicating a focus on known entities rather than broader market engagement. 5. The absence of small business set-aside flags suggests this contract did not prioritize opportunities for smaller enterprises in the food supply chain. 6. The fixed-price contract type offers cost certainty but may not fully capture potential savings if market prices fluctuate favorably. 7. The contract falls under the 'RESALE - JAM/JELLY/SYRUP' category, indicating it's for resale through commissaries, not direct operational use.

Value Assessment

Rating: questionable

Benchmarking the value of $20.3 million for jams, jellies, and syrups is challenging without specific product details and quantities. However, given the non-competitive award and the relatively short 91-day duration, the per-unit cost or overall value may not reflect the best possible price. Large food manufacturers often have economies of scale, but the lack of competition prevents verification of whether these savings were passed on to the government. Compared to typical government food procurement, this contract's value for these specific items appears substantial and warrants further investigation into the pricing structure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a 'NOT AVAILABLE FOR COMPETITION' basis, indicating that a full and open competition was not conducted. This typically occurs when only one source is capable of meeting the government's needs, or in cases of urgent and compelling requirements. The lack of multiple bidders means there was no opportunity for price negotiation or comparison against other market offerings, potentially leading to a higher price than if the contract had been competed.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the most competitive pricing, potentially resulting in taxpayer funds being spent at a premium compared to a competed scenario.

Public Impact

Military personnel and their families benefit from the availability of these food products through the Defense Commissary Agency. The contract ensures the supply of essential grocery items, specifically jams, jellies, and syrups, for resale. The geographic impact is primarily within the United States, supporting the Defense Commissary Agency's retail operations. The contract supports the workforce of The J. M. Smucker Company and potentially its suppliers within the food manufacturing and distribution sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competitive bidding may lead to inflated prices.
High contract value for a short duration raises questions about efficiency.
Sole-source award limits transparency and accountability in pricing.
Absence of small business participation opportunities.

Positive Signals

Ensures availability of specific food products for military families.
Award to a known, large manufacturer suggests reliability of supply.
Fixed-price contract provides cost certainty for the government.

Sector Analysis

The food manufacturing sector is characterized by large, established players and complex supply chains. Government procurement of food products, particularly for resale through commissaries, is a significant market. This contract, for jams, jellies, and syrups, falls within the broader food processing and distribution industry. Comparable spending benchmarks for such items are difficult to ascertain without detailed product specifications, but the $20.3 million value suggests a substantial quantity or high-value product line. The Defense Commissary Agency (DeCA) is a major purchaser of consumer goods for military communities.

Small Business Impact

This contract does not appear to have included a small business set-aside. The award to The J. M. Smucker Company, a large corporation, indicates that opportunities for small businesses to supply these specific products directly to the Defense Commissary Agency were likely limited or non-existent for this particular award. There is no information provided regarding subcontracting plans, which could potentially involve small businesses, but the primary award mechanism did not prioritize them.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Commissary Agency (DeCA) and potentially the Department of Defense's Inspector General if concerns arise regarding waste, fraud, or abuse. As a sole-source award, the justification for non-competition would be subject to review. Transparency is limited due to the lack of a competitive process, making it harder to assess the full extent of oversight applied to pricing and performance.

Related Government Programs

Defense Commissary Agency Operations
Food and Beverage Procurement
Grocery Resale Programs
Department of Defense Food Services

Risk Flags

Sole-source award lacks competitive pricing.
High value for a short-duration contract.
Limited transparency in pricing justification.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.3 million to THE J. M. SMUCKER COMPANY. RESALE - JAM/JELLY/SYRUP

Who is the contractor on this award?

The obligated recipient is THE J. M. SMUCKER COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Commissary Agency).

What is the total obligated amount?

The obligated amount is $20.3 million.

What is the period of performance?

Start: 2010-10-01. End: 2010-12-31.

What specific types and quantities of jams, jellies, and syrups were procured under this contract?

The provided data does not specify the exact types or quantities of jams, jellies, and syrups. The contract is categorized under 'RESALE - JAM/JELLY/SYRUP' and awarded to The J. M. Smucker Company. Without a detailed product list or quantity breakdown, it is difficult to precisely assess the value proposition. The total award amount of $20,333,125.44 over a 91-day period suggests a significant volume or a premium product line. Further details would be required from the contract's statement of work or associated documentation to understand the specific items and their associated costs.

What was the justification for awarding this contract on a sole-source basis?

The contract was explicitly marked as 'NOT AVAILABLE FOR COMPETITION,' indicating a sole-source award. Common justifications for sole-source contracts include situations where only one responsible source can provide the required supplies or services, or in cases of urgent and compelling need. For a food product like jams and jellies, a sole-source justification might stem from unique product formulations, specific branding requirements tied to the J. M. Smucker Company, or an urgent need that precluded a competitive solicitation. The Defense Commissary Agency would have had to formally document and approve this justification.

How does the pricing of these food products compare to commercial market rates or other government contracts?

Direct comparison of pricing is difficult without specific product details and quantities. However, the sole-source nature of this award raises concerns about whether the government secured the most competitive pricing. Typically, sole-source contracts may result in higher prices compared to those awarded through full and open competition, as there is less market pressure to offer discounts. Benchmarking against commercial market rates would require identifying identical or highly similar products and their retail or wholesale prices. Without this granular data, it's challenging to definitively state if the pricing was optimal, but the lack of competition is a red flag for potential overpayment.

What is the track record of The J. M. Smucker Company in fulfilling government contracts, particularly with the Defense Commissary Agency?

The J. M. Smucker Company is a large, well-established food manufacturer with a significant presence in the commercial market. While specific details of their past government contract performance are not provided in the data, their longevity and market position suggest a capacity to fulfill large-scale supply agreements. For contracts with the Defense Commissary Agency, their ability to consistently supply products that meet quality and delivery standards would be crucial. Past performance evaluations, if available through government databases like the Contractor Performance Assessment Reporting System (CPARS), would offer more insight into their reliability and adherence to contract terms.

What is the historical spending pattern for jams, jellies, and syrups by the Defense Commissary Agency or the Department of Defense?

The provided data only includes a single contract award for $20.3 million for jams, jellies, and syrups from October 1, 2010, to December 31, 2010. This does not provide a historical spending pattern. To understand historical spending, one would need to analyze procurement data over multiple years for similar products and agencies. This would involve searching databases for previous contracts awarded by the Defense Commissary Agency or other DoD entities for these food items, noting award amounts, contract types, and awardees. Such an analysis would reveal trends in spending, identify key suppliers, and highlight any significant changes in procurement volume or cost over time.

What are the potential risks associated with a sole-source award for essential food supplies?

The primary risk associated with a sole-source award for essential food supplies is the potential for inflated pricing due to the lack of competition. This can lead to inefficient use of taxpayer funds. Another risk is dependency on a single supplier, which could create vulnerabilities in the supply chain if the supplier faces production issues, quality control problems, or financial instability. Furthermore, sole-source awards reduce transparency, making it harder to ensure fair pricing and optimal value for the government. While the awardee is a reputable company, the absence of competitive pressure inherently carries risks related to cost and potentially innovation.

Industry Classification

NAICS: Manufacturing › Grain and Oilseed Milling › Soybean Processing

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

Address: ONE STRAWBERRY LANE, ORRVILLE, OH, 44667

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $20,333,125

Exercised Options: $20,333,125

Current Obligation: $20,333,125

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0107G3563

IDV Type: IDC

Timeline