J.M. Smucker Company awarded $21.1M for jelly sandwiches, raising questions about value and competition

Contract Overview

Contract Amount: $21,165,123 ($21.2M)

Contractor: THE J. M. Smucker Company

Awarding Agency: Department of Defense

Start Date: 2012-07-01

End Date: 2012-09-30

Contract Duration: 91 days

Daily Burn Rate: $232.6K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: RESALE - JELLY SANDWICHES

Place of Performance

Location: ORRVILLE, WAYNE County, OHIO, 44667

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $21.2 million to THE J. M. SMUCKER COMPANY for work described as: RESALE - JELLY SANDWICHES Key points: 1. The contract's value appears high for a relatively short delivery period, suggesting potential overpayment. 2. The lack of competition for this significant award warrants scrutiny regarding pricing and market fairness. 3. A single award without competition indicates potential risks related to contractor performance and innovation. 4. The contract's performance context is limited due to its short duration and sole-source nature. 5. This award positions J.M. Smucker as a key supplier for specific food items within the Defense Commissary Agency. 6. The absence of small business participation raises concerns about broader economic impact.

Value Assessment

Rating: questionable

The awarded amount of $21.1 million for a 91-day delivery period for jelly sandwiches seems disproportionately high. Without comparable contract data or detailed cost breakdowns, it is difficult to benchmark the value for money. The firm fixed-price contract type offers limited flexibility, but the high overall cost suggests potential inefficiencies or a lack of competitive pressure driving down prices. Further analysis of unit costs and market prices for similar products would be necessary to definitively assess value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in emergency situations. The lack of competition means that taxpayers did not benefit from potential price reductions that could arise from a competitive bidding process. It also limits the agency's ability to explore alternative suppliers or innovative solutions.

Taxpayer Impact: The absence of competition means taxpayers may have paid a premium for these jelly sandwiches, as there was no market pressure to ensure the lowest possible price.

Public Impact

Military personnel and their families stationed in Ohio are the primary beneficiaries of these food supplies. The contract delivers essential food items, specifically jelly sandwiches, contributing to morale and sustenance. The geographic impact is localized to operations within Ohio, where the delivery orders are fulfilled. There are no direct workforce implications mentioned, as this appears to be a supply contract rather than a service requiring significant labor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially inflates costs for taxpayers.
High contract value for a short duration raises concerns about efficiency and value for money.
Lack of transparency in the justification for a sole-source award.
Absence of small business participation may indicate missed opportunities for economic inclusion.

Positive Signals

The J.M. Smucker Company is a known entity, potentially reducing supply chain risks.
Firm fixed-price contract provides cost certainty for the agency, assuming the price is fair.
The contract specifies delivery orders, indicating a structured approach to fulfilling needs.

Sector Analysis

The food manufacturing sector, specifically the production of preserved fruits and vegetables, is characterized by established players and fluctuating commodity prices. This contract falls under the broader category of food and beverage supply to government entities. While specific market size data for jelly sandwich contracts is not readily available, the Defense Commissary Agency procures a wide range of food products to support military communities. Benchmarking this contract's value against similar large-scale food supply agreements within the government would be informative.

Small Business Impact

This contract does not appear to include any small business set-aside provisions, nor is there information suggesting subcontracting opportunities for small businesses. The sole-source nature of the award further limits the potential for small business involvement. This could mean missed opportunities to support the small business ecosystem and leverage their capabilities within the federal supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Commissary Agency's internal procurement and quality assurance processes. As a sole-source award, the justification and approval process would be subject to specific regulations. Transparency regarding the rationale for the sole-source designation and the pricing structure is limited in the provided data. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Commissary Agency Food Procurement
Department of Defense Food Services
Federal Food Supply Contracts
Sole-Source Procurement Analysis

Risk Flags

Sole-source award without clear justification.
Potentially high cost relative to contract duration.
Lack of competitive bidding process.
Absence of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $21.2 million to THE J. M. SMUCKER COMPANY. RESALE - JELLY SANDWICHES

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 $21.2 million.

What is the period of performance?

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

What is the typical cost per unit for jelly sandwiches procured by the federal government or similar large institutions?

Determining a precise 'typical' cost per unit for jelly sandwiches is challenging without specific contract details and product specifications. However, based on general market knowledge and bulk purchasing trends, a single-serving jelly sandwich might range from $0.25 to $1.00, depending on ingredients, packaging, shelf life, and volume. The $21.1 million award over a 91-day period for an unspecified quantity of jelly sandwiches suggests a very high unit cost if the quantity is not exceptionally large. For instance, if the contract were for 21 million sandwiches, the unit cost would be approximately $1.00 per sandwich. If the quantity were significantly lower, the unit cost would be substantially higher, raising serious value-for-money concerns. Further data on the quantity and specific product requirements is essential for a robust unit cost analysis.

What is the justification for awarding this contract on a sole-source basis to The J. M. Smucker Company?

The provided data indicates the contract was 'NOT AVAILABLE FOR COMPETITION,' which is synonymous with a sole-source award. Federal procurement regulations allow for sole-source awards under specific circumstances, such as when only one responsible source can provide the required supplies or services, or when there is a compelling urgency. Without additional documentation, the specific justification for this award to The J. M. Smucker Company remains unclear. Agencies must typically publish a justification and approval (J&A) document for sole-source contracts exceeding certain dollar thresholds, detailing why competition is not feasible. The absence of this information suggests a potential lack of transparency or a failure to adhere to best practices in competitive sourcing.

How does the $21.1 million contract value compare to historical spending on similar food items by the Defense Commissary Agency?

Comparing the $21.1 million contract value to historical spending requires access to historical procurement data for similar food items by the Defense Commissary Agency (DCA). The provided data only includes details for this specific contract. To perform a meaningful comparison, one would need to analyze past DCA contracts for bulk food supplies, particularly processed items like sandwiches or related components, over similar or longer periods. Without this historical context, it is difficult to ascertain whether this award represents an increase, decrease, or is in line with previous spending patterns. Analyzing trends in food commodity prices and overall DCA budget allocations would also provide valuable context for evaluating the magnitude of this award.

What are the potential risks associated with awarding a large food supply contract on a sole-source basis?

Awarding a large food supply contract on a sole-source basis carries several potential risks. Firstly, it eliminates the benefit of price competition, which can lead to higher costs for the government and taxpayers. Secondly, it reduces the incentive for the sole contractor to innovate or improve efficiency, as they face no direct competitive pressure. Thirdly, it can create a dependency on a single supplier, making the agency vulnerable to supply chain disruptions, quality issues, or price increases in the future. Lastly, it may signal a lack of market research or strategic sourcing by the agency, potentially overlooking other capable suppliers or more cost-effective solutions. This can also raise concerns about fairness and equal opportunity for other businesses.

What is the significance of the contract being for 'RESALE - JELLY SANDWICHES' and awarded to The J. M. Smucker Company?

The designation 'RESALE - JELLY SANDWICHES' indicates that these food items are intended for sale to consumers, likely within the commissary system for military personnel and their families. The J. M. Smucker Company is a well-known manufacturer of various food products, including jams, jellies, and peanut butter, which are key ingredients for jelly sandwiches. Awarding the contract to them suggests they are either a direct manufacturer of pre-made jelly sandwiches or possess the capability to produce them using their established product lines. The significance lies in leveraging a known brand and manufacturer for a specific consumer-facing product within a government resale channel. However, the sole-source nature of this award to a prominent company warrants scrutiny regarding whether other specialized food service providers could have offered competitive bids.

Industry Classification

NAICS: Manufacturing › Fruit and Vegetable Preserving and Specialty Food Manufacturing › Fruit and Vegetable Canning

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: 1 STRAWBERRY LN, ORRVILLE, OH, 44667

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $21,165,123

Exercised Options: $21,165,123

Current Obligation: $21,165,123

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0112G4272

IDV Type: BOA

Timeline