DoD's $24M Cheese Purchase: Kraft Foods Dominates Limited Competition

Contract Overview

Contract Amount: $24,040,905 ($24.0M)

Contractor: Kraft Foods Global, Inc.

Awarding Agency: Department of Defense

Start Date: 2012-04-01

End Date: 2012-06-30

Contract Duration: 90 days

Daily Burn Rate: $267.1K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: RESALE - CHEESE

Place of Performance

Location: NORTHFIELD, COOK County, ILLINOIS, 60093

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $24.0 million to KRAFT FOODS GLOBAL, INC. for work described as: RESALE - CHEESE Key points: 1. Significant spending on a single commodity (cheese). 2. Kraft Foods is the sole supplier, raising competition concerns. 3. Limited competition may lead to suboptimal pricing. 4. Sector context: Grocery wholesale for military commissaries.

Value Assessment

Rating: fair

The total award of $24M for cheese over 90 days is substantial. Without comparable contract data or a benchmark, assessing the pricing fairness is difficult, especially given the limited competition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was not available for competition, indicating a sole-source or limited source award. This lack of competitive bidding likely prevented price discovery and potentially resulted in higher costs for the government.

Taxpayer Impact: Taxpayers may have overpaid due to the absence of competitive pricing mechanisms for this significant cheese purchase.

Public Impact

Military families receive access to essential grocery items through commissaries. Reliance on a single supplier can impact product variety and availability. Government spending on food staples affects agricultural markets and food producers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Potential for overpricing
Reliance on a single vendor

Positive Signals

Ensures supply of a specific product
Supports established vendor relationships

Sector Analysis

This contract falls within the wholesale grocery sector, specifically supplying commissaries. Spending benchmarks for similar commodity purchases by the Defense Commissary Agency would be relevant for comparison.

Small Business Impact

The data does not indicate any involvement of small businesses in this contract, suggesting a focus on larger, established suppliers for this specific procurement.

Oversight & Accountability

Oversight is needed to ensure the pricing is reasonable despite the limited competition and to explore future opportunities for competitive bidding on commissary supplies.

Related Government Programs

General Line Grocery Merchant Wholesalers
Department of Defense Contracting
Defense Commissary Agency Programs

Risk Flags

Limited competition
Sole-source award potential
Lack of price benchmarking data
Significant contract value for a single commodity

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.0 million to KRAFT FOODS GLOBAL, INC.. RESALE - CHEESE

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 $24.0 million.

What is the period of performance?

Start: 2012-04-01. End: 2012-06-30.

What is the per-unit cost of the cheese purchased and how does it compare to market rates?

The provided data does not include per-unit cost details or allow for direct comparison to market rates. To assess value, a breakdown of the $24 million award by specific cheese types and quantities would be necessary, followed by benchmarking against commercial wholesale prices for similar products.

What are the risks associated with awarding a large contract for a staple good to a single supplier?

The primary risks include potential price inflation due to lack of competition, reduced negotiation leverage for the government, and vulnerability to supply chain disruptions if the sole supplier faces issues. This also limits opportunities for other vendors, including small businesses, to compete for government contracts.

How effectively does this procurement method serve the needs of military families while ensuring fiscal responsibility?

While ensuring the availability of cheese for military families, the limited competition raises concerns about fiscal responsibility. The government may not be achieving the best possible price, potentially diverting funds that could be used for other commissary needs or services.

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: $24,040,905

Exercised Options: $24,040,905

Current Obligation: $24,040,905

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0109G3755

IDV Type: IDC

Timeline