DoD's $24.5M meat resale contract awarded to Kraft Foods Global, Inc. shows limited competition

Contract Overview

Contract Amount: $24,545,202 ($24.5M)

Contractor: Kraft Foods Global, Inc.

Awarding Agency: Department of Defense

Start Date: 2012-07-01

End Date: 2012-09-30

Contract Duration: 91 days

Daily Burn Rate: $269.7K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: RESALE - MEAT

Place of Performance

Location: NORTHFIELD, COOK County, ILLINOIS, 60093

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $24.5 million to KRAFT FOODS GLOBAL, INC. for work described as: RESALE - MEAT Key points: 1. The contract value of $24.5 million for a 91-day period suggests a high daily expenditure. 2. Awarded as 'NOT AVAILABLE FOR COMPETITION', this indicates a lack of open bidding. 3. The fixed-price contract type aims to control costs, but the limited competition raises concerns about optimal pricing. 4. The product service code (PSC) is not specified, making direct comparisons difficult. 5. The contract was a delivery order, suggesting it was part of a larger, potentially pre-existing agreement. 6. The geographic scope is limited to Illinois, indicating a localized service delivery.

Value Assessment

Rating: questionable

The contract value of $24.5 million over 91 days equates to approximately $269,727 per day. Without specific details on the quantity and type of meat products resold, it is difficult to benchmark this against similar contracts or market rates. The 'NOT AVAILABLE FOR COMPETITION' status inherently limits the ability to assess if the pricing reflects competitive market dynamics or represents a fair value for the goods provided. The lack of a specified PSC further hinders a precise value-for-money assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under the 'NOT AVAILABLE FOR COMPETITION' category, which is synonymous with a sole-source or non-competitive procurement. This means that only one vendor, Kraft Foods Global, Inc., was solicited or considered for this award. The lack of competition means there was no opportunity for other qualified suppliers to bid, potentially leading to higher prices than might be achieved in an open market.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding, as the government did not leverage the price discovery mechanisms inherent in a competitive procurement process.

Public Impact

Military personnel and their families stationed in Illinois benefit from the availability of meat products through the Defense Commissary Agency. The contract ensures the supply of meat for resale within military commissaries. The geographic impact is focused on the state of Illinois, specifically where the Defense Commissary Agency operates. The contract supports the supply chain for food retailers within the military community.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in inflated prices for taxpayers.
Limited transparency due to 'NOT AVAILABLE FOR COMPETITION' status.
Absence of a specified PSC makes detailed performance and value analysis challenging.

Positive Signals

Fixed-price contract type helps to establish a ceiling on costs.
Award to a known entity (Kraft Foods Global, Inc.) suggests a degree of familiarity with the supplier.
Delivery order mechanism implies integration into an existing supply framework.

Sector Analysis

The contract falls within the wholesale trade sector, specifically for general line grocery merchant wholesalers. The Defense Commissary Agency (DeCA) operates as a retail arm of the DoD, providing groceries to military personnel and their families. Contracts like this are crucial for ensuring the availability of goods within these commissaries. The market for food wholesaling is vast, but this contract represents a specific, government-procured segment focused on supporting military communities.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the award to Kraft Foods Global, Inc., a large corporation, it is unlikely that significant subcontracting opportunities for small businesses were mandated or realized through this specific award. The focus appears to be on direct procurement from a major supplier rather than fostering small business participation.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Commissary Agency (DeCA) and potentially the Department of Defense's Inspector General. Accountability measures would be tied to the terms of the firm fixed-price delivery order, ensuring that the specified meat products are delivered as per the agreement. Transparency is limited by the sole-source nature of the award and the lack of detailed public justification for the non-competitive procurement.

Related Government Programs

Defense Commissary Agency Operations
Military Food Supply Chain
Wholesale Food Distribution Contracts
DoD Resale Operations

Risk Flags

Limited Competition
Lack of Justification for Sole Source
Potential for Overpricing
Lack of Detailed Product Specification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.5 million to KRAFT FOODS GLOBAL, INC.. RESALE - MEAT

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 $24.5 million.

What is the period of performance?

Start: 2012-07-01. End: 2012-09-30.

What specific types and quantities of meat products were included in this $24.5 million contract?

The provided data does not specify the exact types or quantities of meat products covered under this $24.5 million contract. The description 'RESALE - MEAT' is general. To conduct a more thorough analysis of value for money, understanding the specific product mix (e.g., beef, poultry, pork, processed meats) and the volumes required would be essential. Without this granular detail, it's challenging to benchmark pricing against market averages or compare it to other similar government or commercial contracts for meat procurement.

What was the justification for awarding this contract as 'NOT AVAILABLE FOR COMPETITION'?

The provided data indicates the contract was 'NOT AVAILABLE FOR COMPETITION' but does not include the specific justification. Typically, sole-source awards require a formal justification, such as the existence of only one responsible source, urgent and compelling needs, or specific statutory authority. Without this justification, it is difficult to assess whether the non-competitive award was appropriate and if taxpayers received fair value. Further investigation into the contract file or agency records would be needed to understand the rationale behind this procurement approach.

How does the daily expenditure of approximately $269,727 compare to typical wholesale meat costs for similar institutions?

The daily expenditure of approximately $269,727 ($24.5M / 91 days) is a significant figure. However, without knowing the specific types, cuts, and quantities of meat procured, a direct comparison to typical wholesale meat costs is difficult. This figure represents the total value of meat supplied to the Defense Commissary Agency in Illinois over the contract period. To benchmark effectively, one would need to compare the unit prices of specific meat items against prevailing wholesale market rates or against DeCA's historical spending on similar items, ideally from competitively sourced contracts.

What is the track record of Kraft Foods Global, Inc. in supplying meat products to government entities?

Kraft Foods Global, Inc. has a history of supplying various food products, including potentially meat-related items, to government entities and large retail operations. However, the specific track record for supplying meat products directly to the Defense Commissary Agency under similar contracts is not detailed in the provided data. Assessing their performance on this specific contract would require reviewing delivery records, quality control reports, and any past performance evaluations. Their general reputation as a large food supplier suggests capability, but specific performance on this type of contract needs verification.

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

The primary risks associated with a sole-source contract for essential food supplies like meat include potential overpricing due to lack of competition, reduced incentive for the supplier to innovate or improve efficiency, and vulnerability to supply chain disruptions if the sole supplier faces issues. Taxpayers may bear the cost of these risks through higher prices. Furthermore, the absence of competitive pressure can limit the government's ability to secure the best possible terms and conditions. Ensuring robust oversight and clear performance standards becomes critical in sole-source situations.

How does this contract fit into the broader spending patterns of the Defense Commissary Agency for food procurement?

This $24.5 million contract for meat resale represents a component of the Defense Commissary Agency's (DeCA) overall food procurement budget. DeCA's mission is to provide quality groceries to military members and families at cost-plus-10 percent, aiming for savings compared to civilian retailers. Contracts for various food categories, including meat, are essential to fulfilling this mission. Understanding how this specific contract's value and terms align with DeCA's total annual spending on meat, and whether it represents a significant portion or a standard procurement, would require analyzing DeCA's broader financial reports and procurement history.

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: $24,545,202

Exercised Options: $24,545,202

Current Obligation: $24,545,202

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0109G3750

IDV Type: IDC

Timeline