DoD's $25M grocery resale contract to Kraft Foods Global, Inc. awarded via non-competitive means

Contract Overview

Contract Amount: $25,192,732 ($25.2M)

Contractor: Kraft Foods Global, Inc.

Awarding Agency: Department of Defense

Start Date: 2010-10-01

End Date: 2010-12-31

Contract Duration: 91 days

Daily Burn Rate: $276.8K/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 $25.2 million to KRAFT FOODS GLOBAL, INC. for work described as: RESALE - MISCELLANEOUS GROCERY Key points: 1. Contract awarded on a non-competitive basis, raising questions about price discovery and potential value. 2. The contract's duration of 91 days suggests a short-term need or a bridge to a future procurement. 3. Focus on grocery resale indicates a need for essential goods within a specific operational context. 4. The firm fixed price contract type offers cost certainty but may limit flexibility. 5. Lack of competition suggests potential risks related to contractor performance and innovation. 6. The contract's value, while significant, needs to be benchmarked against similar resale agreements.

Value Assessment

Rating: questionable

The contract's value of over $25 million for a 91-day period is substantial. Without comparable contracts or detailed cost breakdowns, it is difficult to definitively assess value for money. The non-competitive nature of the award means there was no market pressure to ensure the lowest possible price. Benchmarking against similar grocery resale contracts, especially those awarded competitively, would be necessary for a thorough evaluation. The firm fixed price structure provides predictability but could lead to overpayment if costs are lower than anticipated.

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. The specific justification for this approach is not provided, but it implies that only one source was deemed capable of fulfilling the requirement. The lack of competition means that taxpayers did not benefit from the price reductions typically achieved through a bidding process. This raises concerns about whether the government obtained the best possible value.

Taxpayer Impact: Sole-source awards limit opportunities for other businesses and can result in higher prices for taxpayers due to the absence of competitive pressure.

Public Impact

Serves military personnel and their families by providing access to essential grocery items. Ensures the availability of food and household necessities within Defense Commissary Agency (DECA) operations. Supports the morale and welfare of service members by offering familiar and affordable goods. The contract's geographic impact is likely tied to the locations served by the Defense Commissary Agency, primarily within Illinois based on the provided state code.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Non-competitive award limits oversight and potential for cost savings.
Short contract duration may indicate an interim solution, potentially leading to repeated non-competitive awards.
Lack of transparency in the sole-source justification hinders public scrutiny.
Firm fixed price could lead to overpayment if contractor's actual costs are lower.

Positive Signals

Ensures continuity of essential grocery supplies for military families.
Firm fixed price provides budget certainty for the Defense Commissary Agency.
Contract awarded to a known entity (Kraft Foods) potentially reduces onboarding risks.

Sector Analysis

The grocery wholesale industry is a mature market with established players. This contract falls within the wholesale distribution of groceries, a sector characterized by large volumes and established supply chains. The Defense Commissary Agency (DECA) operates as a retailer for military personnel and their families, requiring a steady supply of goods. Benchmarking this contract's value would involve comparing it to other large-scale food distribution contracts, both within the government and in the commercial sector, considering factors like product mix, delivery logistics, and service level agreements.

Small Business Impact

The contract was awarded to Kraft Foods Global, Inc., a large corporation, and there is no indication of small business set-asides or subcontracting requirements. This sole-source award to a prime contractor does not appear to directly benefit small businesses through set-aside provisions. The absence of subcontracting plans means that opportunities for small businesses to participate in fulfilling this specific contract are likely limited.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Commissary Agency (DECA) and potentially the Department of Defense's Inspector General. Given the sole-source nature, oversight would focus on ensuring the contractor meets the terms of the contract, delivers goods as specified, and adheres to the firm fixed price. Transparency is limited due to the non-competitive award, making it harder to assess the full scope of oversight and accountability mechanisms without further details on the justification for the sole-source award.

Related Government Programs

Defense Commissary Agency Operations
Grocery Wholesale Distribution
Military Resale Programs
Food Supply Chain Management

Risk Flags

Sole-source award
Lack of competition
Short contract duration
No small business participation indicated

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.2 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 $25.2 million.

What is the period of performance?

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

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

The provided data indicates the contract was 'NOT AVAILABLE FOR COMPETITION,' signifying a sole-source award. However, the specific justification is not detailed. Typically, sole-source awards are made when only one responsible source is available or capable of meeting the agency's needs. This could be due to unique capabilities, proprietary technology, or urgent and compelling circumstances. Without the official justification document (e.g., a Justification and Approval - J&A), it's impossible to determine the precise rationale. This lack of transparency is a common concern with sole-source contracts, as it limits the public's ability to understand why competition was bypassed and whether the government truly received the best value.

How does the per-unit cost of groceries under this contract compare to commercial market rates?

Determining the exact per-unit cost comparison is challenging without a detailed breakdown of the specific grocery items included in this contract and their quantities. The contract value of $25,192,732.14 is for a broad category of 'RESALE - MISCELLANEOUS GROCERY' over a 91-day period. Kraft Foods Global, Inc. is a major supplier, and their pricing may reflect bulk purchasing power and established distribution networks. However, as a sole-source award, there's no direct competitive benchmark. To assess value, one would need to compare the unit prices for specific comparable items (e.g., a dozen eggs, a gallon of milk, a loaf of bread) against prices from other wholesale distributors or large commercial retailers serving similar populations, while accounting for delivery and service costs.

What are the risks associated with a short-term, non-competitive contract for essential goods?

Short-term, non-competitive contracts for essential goods like groceries present several risks. Firstly, the lack of competition can lead to inflated prices, as the government doesn't benefit from the cost-saving pressures of a bidding process. Secondly, a short duration (91 days in this case) might indicate an interim solution, potentially leading to repeated sole-source awards if a long-term strategy isn't established, creating a cycle of limited oversight. Thirdly, reliance on a single supplier without competition can create vulnerabilities in the supply chain; if the sole provider faces disruptions, the availability of essential goods could be jeopardized. Finally, the absence of competitive evaluation means less scrutiny on the contractor's performance standards and potential for innovation.

What is Kraft Foods Global, Inc.'s track record with government contracts, particularly with the Defense Commissary Agency?

Kraft Foods Global, Inc. is a major food manufacturer and distributor with a significant presence in the commercial market. While specific contract history with the Defense Commissary Agency (DECA) isn't detailed in the provided data, large food conglomerates often hold numerous contracts with various government entities, including military commissaries and exchanges, for supplying food products. Their track record would typically involve assessing past performance ratings, on-time delivery rates, product quality compliance, and responsiveness to issues. Given their scale, it's probable they have experience supplying similar goods to government organizations, but a thorough review would require accessing contract performance databases and historical award data.

How does this contract fit into the broader spending patterns for grocery and food supplies within the Department of Defense?

This contract represents a portion of the Department of Defense's (DoD) overall spending on food and grocery supplies, primarily managed through the Defense Commissary Agency (DECA). DECA's mission is to provide quality military grocery stores to service members and their families worldwide. Spending in this category is substantial, encompassing a wide range of products from fresh produce to packaged goods. This specific $25 million contract for miscellaneous groceries, awarded non-competitively over 91 days, is likely one of many procurement actions to ensure stock availability. Broader spending patterns would involve analyzing total annual commissary sales, the mix of competitive vs. non-competitive awards, and the distribution of spending across different food categories and suppliers.

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: $25,192,732

Exercised Options: $25,192,732

Current Obligation: $25,192,732

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0109G3755

IDV Type: IDC

Timeline