DoD's $14.3M grocery resale contract with Kraft Foods Global, Inc. awarded via non-competitive means

Contract Overview

Contract Amount: $14,284,304 ($14.3M)

Contractor: Kraft Foods Global, Inc.

Awarding Agency: Department of Defense

Start Date: 2008-02-01

End Date: 2008-03-31

Contract Duration: 59 days

Daily Burn Rate: $242.1K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE

Sector: Other

Official Description: RESALE - ASSORTED GROCERY

Place of Performance

Location: COLONIAL HEIGHTS, COLONIAL HEIGHTS CITY County, VIRGINIA, 23834

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $14.3 million to KRAFT FOODS GLOBAL, INC. for work described as: RESALE - ASSORTED GROCERY Key points: 1. The contract's value of over $14 million for grocery resale suggests a significant volume of goods, but the lack of competition raises questions about optimal pricing. 2. Awarded as a 'not available for competition' contract, this limits the potential for price discovery and may result in higher costs for the government. 3. The short duration of 59 days for this delivery order indicates a specific, immediate need rather than a long-term strategic sourcing effort. 4. While Kraft Foods is a major supplier, the absence of other bidders prevents benchmarking against market alternatives for similar grocery wholesale services. 5. The contract's fixed-price nature provides cost certainty but does not inherently guarantee value for money without competitive pressure. 6. The Defense Commissary Agency's reliance on a single supplier for this specific need warrants scrutiny regarding potential supply chain vulnerabilities.

Value Assessment

Rating: questionable

Benchmarking the value of this $14.3 million contract is challenging due to its non-competitive nature and short duration. Without comparable bids or market analysis, it's difficult to ascertain if the pricing reflects fair market value for assorted grocery resale. The fixed-price contract offers predictability but doesn't inherently ensure cost-effectiveness when competition is absent. The value proposition is further obscured by the lack of detailed performance metrics or unit cost data provided.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was explicitly marked as 'not available for competition,' indicating a sole-source award. This means that only one vendor, Kraft Foods Global, Inc., was considered for this requirement. The lack of a competitive bidding process prevents the government from exploring offers from multiple suppliers, which could have led to better pricing, innovative solutions, or improved terms. Consequently, the government did not benefit from the price discovery mechanisms inherent in a competitive environment.

Taxpayer Impact: Taxpayers may have paid a premium for these groceries due to the absence of competition. Without bids from other suppliers, it's impossible to know if a lower price could have been secured, potentially leading to less efficient use of public funds.

Public Impact

Military personnel and their families stationed in Virginia benefit from access to groceries through the Defense Commissary Agency. The contract ensures the availability of assorted grocery items, supporting the morale and well-being of service members and their dependents. The geographic impact is primarily focused on commissary facilities within Virginia, where the delivery orders were fulfilled. While specific workforce implications are not detailed, the contract supports the operational needs of the Defense Commissary Agency and its supply chain partners.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpayment and suboptimal pricing.
The sole-source nature limits transparency and accountability in the procurement process.
Short contract duration may indicate a reactive procurement rather than strategic planning.
Absence of detailed performance metrics makes it difficult to assess the contractor's effectiveness.
Reliance on a single supplier could pose risks to supply chain continuity if issues arise with Kraft Foods.

Positive Signals

Kraft Foods Global, Inc. is a well-established supplier with a known product catalog.
The fixed-price contract provides cost certainty for the government.
The contract supports the Defense Commissary Agency's mission to provide goods to military families.
The award was made to a large, reputable corporation, potentially indicating a degree of reliability.

Sector Analysis

The grocery wholesale industry is characterized by large distributors supplying a wide range of food products to retailers and institutional buyers. This contract falls within the broader wholesale trade sector, specifically serving the unique needs of military commissaries. The Defense Commissary Agency operates as a significant buyer, aiming to provide goods at cost-plus-10-percent markup to military personnel. Comparable spending benchmarks for wholesale grocery distribution to large institutional clients can vary widely based on volume, product mix, and geographic scope, but multi-million dollar contracts are common for such entities.

Small Business Impact

This contract does not appear to involve small business set-asides, as it was awarded to Kraft Foods Global, Inc., a large corporation. There is no information provided regarding subcontracting opportunities for small businesses. The focus on a single large supplier suggests that the primary benefits of this contract are not directed towards fostering the small business ecosystem within the grocery wholesale sector.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Commissary Agency and the Department of Defense's contracting and financial management offices. Accountability measures are generally established through the terms and conditions of the fixed-price delivery order, including delivery schedules and product specifications. Transparency is limited due to the sole-source nature of the award, with public visibility primarily through contract databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Commissary Agency Operations
Military Resale Programs
Grocery Wholesale Procurement
Department of Defense Supply Chain Management

Risk Flags

Sole-source award
Lack of competition
Limited performance data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.3 million to KRAFT FOODS GLOBAL, INC.. RESALE - ASSORTED GROCERY

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 $14.3 million.

What is the period of performance?

Start: 2008-02-01. End: 2008-03-31.

What is the typical track record of Kraft Foods Global, Inc. in fulfilling government contracts, particularly for grocery resale?

Kraft Foods Global, Inc. has a history of supplying goods to various government entities, including the Department of Defense. Their experience as a major food manufacturer and distributor suggests a capacity to handle large-scale orders and maintain product quality. However, specific performance data for this particular contract or similar sole-source awards is not publicly detailed. Government contract databases often show a pattern of awards to large corporations like Kraft for food supplies. While generally considered a reliable supplier, the absence of competitive bidding in this instance means there's less public information available to rigorously assess their performance against market alternatives for this specific requirement.

How does the value of this $14.3 million contract compare to similar grocery resale contracts awarded by the DoD or other federal agencies?

Direct comparison of this $14.3 million contract is difficult without knowing the exact scope, duration, and specific product mix. However, the Defense Commissary Agency (DECA) manages a substantial budget for commissary operations, which includes procurement of a wide variety of food and household items. Contracts for grocery wholesale can range significantly, from smaller regional awards to multi-million dollar national agreements. Given that this was a delivery order with a short duration (59 days), the $14.3 million figure represents a substantial amount for a limited period, suggesting a high volume of goods. Without access to DECA's internal procurement data or more detailed contract specifics, it's hard to benchmark precisely, but it indicates a significant procurement event for the specified period and location.

What are the primary risks associated with awarding a contract of this magnitude on a sole-source basis?

The primary risks associated with awarding a contract of this magnitude on a sole-source basis include potential overpayment, lack of innovation, and reduced accountability. Without competition, the government loses the opportunity to negotiate the best possible price, potentially leading to higher costs for taxpayers. A sole-source award can also stifle innovation, as the incumbent contractor may have less incentive to improve services or offer new solutions. Furthermore, the lack of competing bids reduces transparency and makes it harder to hold the contractor accountable for performance compared to a scenario with multiple bidders vying for the contract. There's also a risk of vendor lock-in, making it difficult to switch suppliers in the future if performance issues arise or better options become available.

What does the 'General Line Grocery Merchant Wholesalers' (NAICS 424410) classification imply about the services provided under this contract?

The NAICS code 424410, 'General Line Grocery Merchant Wholesalers,' indicates that the contract was for the wholesale distribution of a broad range of grocery products. This typically includes perishable and non-perishable food items, beverages, and potentially related household goods. Merchant wholesalers buy goods from manufacturers or other wholesalers and sell them to retailers or other businesses. For the Defense Commissary Agency, this means Kraft Foods Global, Inc. was responsible for supplying a diverse inventory of standard grocery items, acting as an intermediary between the producers and the commissary stores, ensuring shelves are stocked for military families.

Given the short duration (59 days), what might have been the specific circumstances leading to this delivery order?

A short contract duration of 59 days for a delivery order of this value often suggests an urgent or immediate need that could not be fulfilled through standard, longer-term procurement processes. Possible circumstances include unexpected shortfalls in existing supply chains, a sudden surge in demand, the expiration or termination of a previous contract, or a need to bridge a gap until a new, longer-term contract could be awarded. It could also represent a specific, time-bound requirement, such as stocking for a particular event or a temporary increase in personnel requiring provisions. The 'not available for competition' status further implies that there wasn't sufficient time or justification to conduct a full competitive solicitation.

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: FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Kraft Foods Inc. (UEI: 877147228)

Address: 930 SOUTH AVE SUITE 11, COLONIAL HEIGH, VA, 23834

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $20,000,000

Exercised Options: $14,284,304

Current Obligation: $14,284,304

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0104G2872

IDV Type: IDC

Timeline