DoD spent $15.4M on lunch meats, with Kraft Foods Global Inc. as the sole provider

Contract Overview

Contract Amount: $15,446,740 ($15.4M)

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: $261.8K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE

Sector: Other

Official Description: RESALE - ASSORTED LUNCH MEATS (SECTION A)

Place of Performance

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

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $15.4 million to KRAFT FOODS GLOBAL, INC. for work described as: RESALE - ASSORTED LUNCH MEATS (SECTION A) Key points: 1. The contract represents a significant expenditure for a single food category, raising questions about bulk purchasing efficiencies. 2. Sole-source procurement limits competitive pressure, potentially leading to higher costs for taxpayers. 3. The short duration of the delivery order (59 days) suggests a need for immediate supply rather than long-term strategic sourcing. 4. While Kraft is a known supplier, the lack of competition prevents benchmarking against other potential vendors. 5. The contract falls under wholesale grocery distribution, a sector with established market prices that could be used for comparison. 6. The absence of small business participation is noted, though not unexpected for this type of commodity contract.

Value Assessment

Rating: fair

The total award amount of $15.4 million for a two-month period for assorted lunch meats appears high, especially considering it was a sole-source award. Without competitive bids, it is difficult to ascertain if this price represents fair market value. Benchmarking against similar commodity contracts for military commissaries or large institutional food service providers would be necessary to determine value for money. The fixed-price nature of the contract provides some cost certainty, but the lack of competition is a significant concern.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Kraft Foods Global, Inc., was solicited. The reason for this limited competition is not detailed in the provided data. Sole-source awards typically occur when only one responsible source can provide the required goods or services, or in cases of urgent need. The lack of a competitive bidding process means that the government did not benefit from potential price reductions or service enhancements that could have been offered by multiple vendors.

Taxpayer Impact: Sole-source procurement limits the government's ability to leverage competition to secure the best possible prices, potentially resulting in higher costs for taxpayers compared to a fully competed contract.

Public Impact

Military personnel and their families stationed in Virginia will benefit from the availability of assorted lunch meats through the Defense Commissary Agency. The contract ensures the supply of essential food items for commissary operations during the specified period. The primary geographic impact is within Virginia, where the Defense Commissary Agency operates. The contract supports the supply chain for food wholesalers and distributors, indirectly impacting the workforce within that sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have led to inflated pricing.
Sole-source award raises questions about the necessity and justification for not seeking multiple bids.
Short contract duration might indicate reactive procurement rather than strategic planning.
No data provided on performance metrics or quality of goods delivered.

Positive Signals

Kraft Foods Global, Inc. is a known entity in the food supply industry.
Fixed-price contract provides cost certainty for the government.
Contract ensures availability of a specific food item for a defined period.

Sector Analysis

The contract falls within the broader food and beverage wholesale distribution sector. This sector is characterized by large players and established supply chains. The Defense Commissary Agency (DeCA) is a significant customer for food suppliers, aiming to provide groceries to military personnel and their families at a discount. Spending benchmarks for similar commodity food contracts within the Department of Defense or other large federal agencies could provide context, but are not available here. The market for lunch meats is competitive among manufacturers, but the wholesale distribution and government procurement aspects can limit the number of viable bidders.

Small Business Impact

The provided data indicates that small business participation was not a factor in this contract, as indicated by 'sb': false and 'ss': false. This is common for large-scale commodity procurements where established large corporations often have the scale and infrastructure to meet demand. There is no indication of subcontracting opportunities for small businesses within this specific award. The impact on the small business ecosystem is likely minimal, as the contract was not set aside for small businesses.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Commissary Agency (DeCA), which manages commissary operations. Accountability measures would be tied to the terms of the fixed-price delivery order, ensuring that Kraft Foods Global, Inc. delivers the specified lunch meats within the agreed timeframe and to the required specifications. Transparency is limited due to the sole-source nature and the lack of detailed performance data. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Commissary Agency Operations
Military Food Service Contracts
Wholesale Food Distribution Contracts
Department of Defense Commodity Purchases

Risk Flags

Sole-source award lacks competitive justification.
High expenditure for a short-duration commodity contract.
No performance metrics or quality assurance details provided.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.4 million to KRAFT FOODS GLOBAL, INC.. RESALE - ASSORTED LUNCH MEATS (SECTION A)

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 $15.4 million.

What is the period of performance?

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

What is the typical profit margin for Kraft Foods Global, Inc. on similar wholesale food contracts?

Determining the exact profit margin for Kraft Foods Global, Inc. on this specific contract is not possible with the provided data. Profit margins in the wholesale food distribution sector can vary significantly based on product type, volume, competition, and contract terms. For commodity items like lunch meats, margins are often tighter, especially in large-volume contracts. However, sole-source contracts, by definition, lack competitive pressure, which could allow for higher margins than would be achievable in a competitive bidding environment. Industry averages for food distributors can range from 1-5% net profit, but this specific contract's profitability for Kraft would depend on their internal cost structure, negotiated price, and the specific terms of the delivery order.

How does the $15.4 million expenditure compare to annual spending on lunch meats by the Defense Commissary Agency?

The provided data indicates a total award of $15,446,740.37 for a delivery order that spanned approximately two months (February 1, 2008, to March 31, 2008). This equates to a monthly expenditure rate of roughly $7.72 million. To compare this to annual spending, we would need to annualize this figure, suggesting an approximate annual run rate of $92.6 million if this rate were sustained. However, this was a single delivery order, not necessarily indicative of the entire annual procurement for lunch meats by the Defense Commissary Agency. Annual spending would likely be higher and spread across multiple contracts, vendors, and potentially different types of lunch meat products. Without historical data or broader contract information for DeCA's lunch meat procurement, a direct annual comparison is speculative.

What were the specific types and quantities of 'assorted lunch meats' included in this contract?

The provided data summary, including the description 'RESALE - ASSORTED LUNCH MEATS (SECTION A)', does not specify the exact types or quantities of assorted lunch meats covered under this contract. 'Assorted' implies a variety, which could include items such as turkey, ham, roast beef, bologna, and other processed meat products commonly found in lunch meat selections. The 'SECTION A' designation might refer to a specific part of a larger solicitation or contract document where these details would be enumerated. To determine the specific items and quantities, one would need to access the full contract award documents, including any attached statements of work, specifications, or delivery schedules.

What is the justification for the sole-source award to Kraft Foods Global, Inc. for this contract?

The provided data indicates the contract was 'NOT AVAILABLE FOR COMPETITION' and was a 'SOLE SOURCE'. However, the specific justification for this sole-source determination is not included in the summary data. Typically, sole-source awards require a formal justification, often documented in a Justification and Approval (J&A) document. Common reasons include: only one responsible source exists to meet the government's needs, an urgent and compelling requirement that precludes competition, or a national emergency. Without the J&A, it is impossible to definitively state why competition was precluded for this $15.4 million lunch meat contract awarded to Kraft Foods Global, Inc.

What is the track record of Kraft Foods Global, Inc. with the Defense Commissary Agency for similar food supply contracts?

The provided data indicates that Kraft Foods Global, Inc. was awarded this specific $15.4 million delivery order for assorted lunch meats by the Defense Commissary Agency (DeCA). While this confirms a past relationship, the summary data does not offer details on Kraft's overall track record with DeCA, such as the number of previous contracts, their value, performance history, or any issues encountered. Kraft Foods is a large, established food manufacturer and distributor, suggesting they likely have experience supplying government entities. A comprehensive assessment of their track record would require reviewing historical contract awards, performance evaluations (e.g., CPARS reports), and any documented issues or commendations related to their dealings with DeCA or other federal agencies.

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: $25,000,000

Exercised Options: $15,446,740

Current Obligation: $15,446,740

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0104G2873

IDV Type: IDC

Timeline