DoD's $19.1M cereal and rice procurement from Quaker Oats shows limited competition and fair value

Contract Overview

Contract Amount: $19,108,562 ($19.1M)

Contractor: Quaker Oats Company, the

Awarding Agency: Department of Defense

Start Date: 2012-04-01

End Date: 2012-06-30

Contract Duration: 90 days

Daily Burn Rate: $212.3K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: RESALE - CEREAL, RICE, RICE CAKES

Place of Performance

Location: CHICAGO, COOK County, ILLINOIS, 60661

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $19.1 million to QUAKER OATS COMPANY, THE for work described as: RESALE - CEREAL, RICE, RICE CAKES Key points: 1. The contract was awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. While specific performance metrics are not detailed, the fixed-price contract type suggests cost control. 3. The value appears reasonable when benchmarked against similar grocery procurements, though direct comparisons are difficult. 4. The Defense Commissary Agency (DECA) procures a wide range of goods, with this contract representing a small portion of its overall spending. 5. The limited competition raises questions about whether the government secured the best possible price. 6. The contract duration was short, suggesting a need for immediate supply rather than long-term strategic sourcing.

Value Assessment

Rating: fair

The total award amount of $19.1 million for cereal, rice, and rice cakes appears to be within a reasonable range for the quantity and type of goods procured by the Defense Commissary Agency. However, the lack of competitive bidding makes a precise value-for-money assessment challenging. Benchmarking against similar large-scale grocery procurements by other federal agencies or even large commercial entities would provide a clearer picture, but such data is not readily available. The firm fixed-price contract type offers some protection against cost overruns for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, The Quaker Oats Company, was solicited. This approach is typically used when a product is unique, or there is a compelling reason to contract with a specific supplier. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices through market forces. This raises concerns about whether the government obtained the most advantageous pricing possible.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. The sole-source nature prevents verification of whether the price offered was the best available in the market.

Public Impact

Military personnel and their families stationed in Illinois and surrounding areas benefit from access to essential food items. The contract ensures the availability of staple food products like cereal and rice within military commissaries. This procurement supports the Defense Commissary Agency's mission to provide groceries to the armed forces at cost-plus prices. The contract has minimal direct workforce implications, as it primarily involves the distribution of pre-manufactured goods.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Lack of transparency in the procurement process due to non-competitive nature.
Limited data available to assess the true value for money compared to market alternatives.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Ensures availability of essential food items for military families.
Procurement handled by the Defense Commissary Agency, which has established distribution channels.

Sector Analysis

The procurement falls within the broader food and beverage retail sector, specifically focusing on wholesale distribution of grocery items to military commissaries. The Defense Commissary Agency (DECA) is a significant entity within this niche, responsible for providing affordable groceries to service members and their families. While $19.1 million is a substantial amount for a single contract, it represents a small fraction of the overall federal spending on food and subsistence, and an even smaller portion of the total U.S. grocery market. The contract's focus on staple goods like cereal and rice highlights the consistent demand for such items within the commissary system.

Small Business Impact

This contract does not appear to have involved small business set-asides. The award was made directly to The Quaker Oats Company, a large corporation. There is no information provided regarding subcontracting opportunities for small businesses within this specific award. Therefore, the impact on the small business ecosystem is likely negligible for this particular transaction.

Oversight & Accountability

The Defense Commissary Agency (DECA) is responsible for the oversight of this contract. As a component of the Department of Defense, DECA operates under established procurement regulations and policies. Accountability is maintained through contract performance monitoring and financial reporting. Transparency is generally facilitated through public contract databases, although the specifics of sole-source justifications may have limited public detail. Inspector General oversight would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Commissary Agency Operations
Federal Food Procurement
Military Family Support Programs
Wholesale Grocery Distribution

Risk Flags

Sole Source Justification
Limited Competition
Lack of Publicly Available Performance Data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.1 million to QUAKER OATS COMPANY, THE. RESALE - CEREAL, RICE, RICE CAKES

Who is the contractor on this award?

The obligated recipient is QUAKER OATS COMPANY, THE.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $19.1 million.

What is the period of performance?

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

What is the track record of The Quaker Oats Company as a federal contractor?

The Quaker Oats Company, as a federal contractor, has primarily engaged with agencies like the Department of Defense (DoD) through its Defense Commissary Agency (DECA). Historical data indicates a pattern of supplying food and grocery items. While specific details on past performance quality or disputes are not readily available in this summary, the recurring nature of such contracts suggests a baseline level of capability. However, a deeper dive into contract performance reports, past performance questionnaires, and any documented issues or commendations would be necessary for a comprehensive assessment of their track record. The sole-source nature of this particular award might also indicate specific strategic relationships or unique product offerings that have led to direct awards in the past.

How does the value of this contract compare to similar procurements for staple food items by other federal agencies?

Directly comparing the $19.1 million value of this contract for cereal and rice to other federal procurements is challenging due to variations in quantity, quality specifications, delivery locations, and contract types. However, the Defense Commissary Agency (DECA) procures a vast array of grocery items, and this amount represents a significant but not extraordinary sum for a specific product category over a short period. Agencies like the General Services Administration (GSA) or the Department of Agriculture might have contracts for bulk food items, but these often serve different purposes (e.g., food banks, institutional feeding) and have different pricing structures. The sole-source nature of this Quaker Oats contract further complicates direct value benchmarking, as competitive bids typically yield more transparent price comparisons.

What are the primary risks associated with a sole-source award for essential food items like cereal and rice?

The primary risk associated with a sole-source award for essential food items is the potential for inflated pricing. Without competitive bidding, the government may not be securing the best possible price available in the market, leading to increased costs for taxpayers. Another risk is a lack of innovation or responsiveness from the sole supplier, as there is less pressure to improve products or services compared to a competitive environment. Furthermore, reliance on a single supplier can create vulnerabilities in the supply chain; if the supplier faces production issues or disruptions, the availability of these essential items for military personnel and their families could be jeopardized. Ensuring adequate quality control and adherence to specifications also becomes more critical when there is no competitive pressure.

How effective is the Defense Commissary Agency in procuring food items to meet the needs of military families?

The Defense Commissary Agency (DECA) is generally considered effective in its mission to provide groceries to the U.S. Armed Forces at cost-plus prices, offering significant savings compared to traditional retail. Its extensive network of commissaries worldwide ensures access to essential goods for military families, contributing to morale and quality of life. DECA manages a complex supply chain involving numerous vendors and product categories, including staple items like cereal and rice. While the effectiveness can be measured by customer satisfaction, price savings achieved, and product availability, specific performance metrics for individual contracts, like this sole-source award to Quaker Oats, are not publicly detailed. The agency's long-standing operation suggests a functional procurement and distribution system, though like any large organization, it faces ongoing challenges in optimizing costs and supply chain resilience.

What are the historical spending patterns for cereal and rice procurement by the Department of Defense?

Historical spending patterns for specific items like cereal and rice by the Department of Defense (DoD) are complex and distributed across various components, including the Defense Commissary Agency (DECA) and potentially other operational commands. DECA's spending on grocery items is substantial, reflecting the consistent demand from military communities. While the $19.1 million for this specific Quaker Oats contract is a notable figure for a short duration, it's part of a larger, ongoing expenditure on food staples. Analyzing historical data would reveal trends in volume, pricing, and vendor relationships for these items. It's common for agencies to have established relationships with major food manufacturers and distributors, sometimes leading to sole-source or limited-competition awards for specific product lines where brand recognition or established supply chains are critical factors.

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: Pepsico, Inc. (UEI: 001287762)

Address: 555 W MONROE ST, CHICAGO, IL, 60661

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $19,108,562

Exercised Options: $19,108,562

Current Obligation: $19,108,562

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0109G3799

IDV Type: IDC

Timeline