DoD's $20.2M salad contract with J.M. Smucker raises questions on value and competition

Contract Overview

Contract Amount: $20,291,618 ($20.3M)

Contractor: THE J. M. Smucker Company

Awarding Agency: Department of Defense

Start Date: 2012-01-01

End Date: 2012-03-31

Contract Duration: 90 days

Daily Burn Rate: $225.5K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: RESALE - FRESH SALADS

Place of Performance

Location: SALINAS, MONTEREY County, CALIFORNIA, 93901

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $20.3 million to THE J. M. SMUCKER COMPANY for work described as: RESALE - FRESH SALADS Key points: 1. The contract's value appears high for a short-term delivery order, suggesting potential overpayment. 2. Limited competition raises concerns about price discovery and taxpayer value. 3. The fixed-price contract type offers some cost certainty but may not reflect market fluctuations. 4. The duration of 90 days for a delivery order of this magnitude is unusual. 5. The specific product 'RESALE - FRESH SALADS' is vague and lacks detailed specifications. 6. The contractor, J.M. Smucker, is known for consumer goods, not typically fresh food service contracts.

Value Assessment

Rating: questionable

The total award of $20.2 million for a 90-day delivery order of fresh salads seems exceptionally high. Without detailed breakdowns of unit costs or quantities, it's difficult to benchmark against similar contracts. However, the per-day expenditure is substantial, suggesting a potential lack of cost-effectiveness. The pricing may not be competitive given the limited bidding process.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor was solicited. This significantly limits the opportunity for competitive bidding and price negotiation. The lack of competition means the government could not leverage market forces to secure the best possible price or terms.

Taxpayer Impact: Sole-source awards often result in higher prices for taxpayers as there is no pressure on the contractor to offer competitive rates.

Public Impact

Military personnel and their families stationed in California are the primary beneficiaries, receiving fresh salad provisions. The contract delivers essential food services to support morale and well-being within the Defense Commissary Agency. The geographic impact is limited to commissary locations within California. There are no direct workforce implications as this is a supply contract, not a service requiring new personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about inflated pricing.
High award value for a short-term delivery order suggests potential overspending.
Contractor's primary expertise is not in fresh food service, raising quality concerns.
Vague product description ('RESALE - FRESH SALADS') hinders performance assessment.
Unusual duration for a delivery order of this value.

Positive Signals

Contract provides essential food services to military families.
Fixed-price contract offers some cost predictability.
Awarding agency (Defense Commissary Agency) focuses on supporting military personnel.

Sector Analysis

The food service and grocery sector within the federal market is vast, encompassing a wide range of products from basic staples to specialized items. Contracts for commissary supplies are crucial for maintaining the quality of life for service members and their families. While large food conglomerates like J.M. Smucker are common suppliers, their involvement in fresh, perishable goods for direct military consumption, especially via sole-source awards, warrants scrutiny against market norms for such items.

Small Business Impact

This contract does not appear to involve any small business set-asides. The sole-source nature of the award further suggests that opportunities for small businesses to participate, either as prime contractors or subcontractors, were not explored or prioritized in this instance.

Oversight & Accountability

Oversight for this contract would fall under the Defense Commissary Agency (DeCA). As a delivery order under a larger contract vehicle (though the base contract is not specified), oversight would focus on delivery timeliness, product quality, and adherence to the fixed-price terms. Transparency is limited due to the sole-source nature and lack of detailed public justification.

Related Government Programs

Defense Commissary Agency Food Procurement
Military Food Service Contracts
Fresh Produce Supply Contracts
Federal Food Resale Programs

Risk Flags

High Value Award for Short Duration
Sole-Source Justification Unclear
Contractor's Core Competency Mismatch
Vague Product Description
Potential Lack of Price Competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.3 million to THE J. M. SMUCKER COMPANY. RESALE - FRESH SALADS

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: 2012-01-01. End: 2012-03-31.

What is the specific breakdown of costs within the $20.2 million award for fresh salads?

The provided data does not include a detailed cost breakdown for the $20.2 million award. This information would typically include unit prices for different types of salads, quantities ordered, packaging costs, and delivery fees. Without this granular data, it is impossible to perform a thorough cost analysis or benchmark the value effectively. The vagueness of 'RESALE - FRESH SALADS' further complicates understanding what specific items constitute this significant expenditure over a 90-day period.

Why was this contract awarded on a sole-source basis to The J. M. Smucker Company?

The data indicates the contract was 'NOT AVAILABLE FOR COMPETITION,' which is often synonymous with a sole-source award. The specific justification for this sole-source determination is not provided. Typically, sole-source awards are made when only one responsible source can provide the required supply or service, or in cases of urgent and compelling need. For a commodity like fresh salads, a sole-source justification would require a strong rationale, such as unique capabilities, proprietary ingredients, or an emergency situation, none of which are evident from the provided data.

How does the $20.2 million value compare to typical federal spending on fresh salads?

Directly comparing this $20.2 million award for a 90-day period to typical federal spending on fresh salads is challenging without more context. Federal spending on food items varies widely based on location, quantity, type of product, and the specific agency's needs (e.g., commissaries, military dining facilities, disaster relief). However, $20.2 million for 90 days of 'fresh salads' appears exceptionally high, averaging over $224,000 per day. This figure warrants further investigation into the specific items included and the justification for the high cost, especially given the sole-source nature.

What are the performance risks associated with awarding a fresh food contract to The J. M. Smucker Company?

The primary performance risk lies in The J. M. Smucker Company's core business focus. While a large food manufacturer, their known products are primarily shelf-stable consumer goods (like jams, jellies, coffee, and snacks), not typically fresh, perishable food service items requiring specialized handling, temperature control, and rapid distribution chains. This could lead to risks related to product freshness, spoilage, timely delivery, and overall quality control for perishable salads. The Defense Commissary Agency would need robust quality assurance measures in place to mitigate these risks.

What is the historical spending pattern for 'RESALE - FRESH SALADS' by the Defense Commissary Agency?

The provided data only includes details for a single award with an effective start date of 2012-01-01 and an end date of 2012-03-31. There is no historical spending data available within this specific data point to analyze patterns. To understand historical spending, one would need to query broader federal procurement databases for similar contract line items or classifications awarded by the Defense Commissary Agency over multiple fiscal years.

What does the 'Soybean Processing' (ND code) signify in relation to fresh salads?

The National Drug Code (NDC) or similar classification '311222' is listed as 'Soybean Processing.' This appears to be a misclassification or an unrelated data point within the contract details for 'RESALE - FRESH SALADS.' Soybean processing is typically related to the production of soybean oil, meal, or other derivatives, which are not directly associated with the primary components of fresh salads. It's possible this code is an artifact of data entry or relates to a secondary ingredient or processing aid not immediately obvious from the contract title.

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: $20,291,618

Exercised Options: $20,291,618

Current Obligation: $20,291,618

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0107G3563

IDV Type: IDC

Timeline