DoD's $16.7M Grocery Resale Contract with Kraft Foods Raises Concerns Over Competition and Value

Contract Overview

Contract Amount: $16,748,966 ($16.7M)

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: $283.9K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE

Sector: Other

Official Description: RESALE - ASSORTED GROCERIES (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 $16.7 million to KRAFT FOODS GLOBAL, INC. for work described as: RESALE - ASSORTED GROCERIES (SECTION A) Key points: 1. Significant spending on assorted groceries highlights reliance on established suppliers. 2. Lack of competition for this contract warrants further investigation into pricing and alternatives. 3. The fixed-price contract structure may not fully mitigate risks associated with fluctuating grocery costs. 4. Analysis of the grocery wholesale sector is needed to benchmark this contract's value.

Value Assessment

Rating: questionable

The contract value of $16.7M for assorted groceries is substantial. Without competitive bidding, it's difficult to assess if this price reflects fair market value compared to similar large-scale grocery procurement contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was not available for competition, indicating a limited source procurement. This lack of competition likely impacted price discovery, potentially leading to higher costs for the government.

Taxpayer Impact: The absence of competitive bidding for a large grocery contract raises concerns about taxpayer money being spent efficiently and whether a better price could have been secured.

Public Impact

Military families and personnel rely on commissary services for groceries, making supply chain efficiency crucial. The contract's duration and value suggest a significant impact on the availability and cost of essential food items. Dependence on a single supplier for a broad category like groceries could pose risks during supply chain disruptions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of Competition
Potential for Overpricing
Supply Chain Risk

Positive Signals

Essential Goods Procurement
Established Supplier Relationship

Sector Analysis

The Defense Commissary Agency procures a wide range of goods, including groceries, to support military communities. Benchmarking this contract against private sector wholesale grocery purchasing or other government grocery contracts is essential for value assessment.

Small Business Impact

The data does not indicate any specific provisions or analysis related to small business participation in this contract. Further review would be needed to determine if small businesses were involved or could have been.

Oversight & Accountability

The limited competition and fixed-price nature of this contract suggest a need for robust oversight to ensure fair pricing and consistent supply. Auditing procurement processes and market research is recommended.

Related Government Programs

General Line Grocery Merchant Wholesalers
Department of Defense Contracting
Defense Commissary Agency Programs

Risk Flags

Limited competition raises concerns about fair pricing.
Lack of transparency in the procurement process.
Potential for overpayment due to absence of bidding.
Vulnerability to supply chain disruptions from a single source.
Need for independent market analysis to validate pricing.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.7 million to KRAFT FOODS GLOBAL, INC.. RESALE - ASSORTED GROCERIES (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 $16.7 million.

What is the period of performance?

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

What was the justification for limiting competition on this significant grocery procurement contract?

The justification for limiting competition is not provided in the data. Typically, such limitations occur due to specific circumstances like urgent needs, sole-source capabilities, or existing long-term agreements. Understanding the rationale is crucial for assessing if the government received the best possible value and if alternative competitive strategies could have been employed.

How does the per-unit cost of these groceries compare to market rates, given the lack of competition?

Without competitive bids, a direct per-unit cost comparison to market rates is challenging. The absence of competition suggests that the government may not have benefited from price reductions typically achieved through bidding. An independent market analysis or review of similar contracts would be necessary to benchmark pricing and identify potential overspending.

What are the potential risks associated with relying on a single supplier for assorted groceries, especially concerning price volatility?

Relying on a single supplier for a diverse category like groceries carries risks of price volatility, as the government is subject to the supplier's pricing structure without competitive pressure. This could lead to increased costs if market prices rise. Additionally, supply chain disruptions affecting the sole supplier could impact the availability of essential goods for commissary users.

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: $16,748,966

Current Obligation: $16,748,966

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0104G2878

IDV Type: IDC

Timeline