DoD's $14.6M Grocery Resale Contract with Quaker Oats Raises Questions on Competition and Value

Contract Overview

Contract Amount: $14,586,354 ($14.6M)

Contractor: Quaker Oats Company, the

Awarding Agency: Department of Defense

Start Date: 2008-02-01

End Date: 2008-03-31

Contract Duration: 59 days

Daily Burn Rate: $247.2K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE

Sector: Other

Official Description: RESALE - ASSORTED GROCERY (SECTION A)

Place of Performance

Location: CHICAGO, COOK County, ILLINOIS, 60661

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $14.6 million to QUAKER OATS COMPANY, THE for work described as: RESALE - ASSORTED GROCERY (SECTION A) Key points: 1. Significant spending on assorted groceries highlights reliance on established suppliers. 2. Lack of competition suggests potential for inflated prices and limited market exploration. 3. The contract's duration and fixed-price nature may not fully adapt to market fluctuations. 4. Analysis needed to determine if alternative sourcing or bulk purchasing could yield savings.

Value Assessment

Rating: questionable

The contract value of $14.6M for a 2-month period is substantial. Without competitive bidding, it's difficult to assess if this price reflects fair market value compared to similar grocery wholesale contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract is listed as 'NOT AVAILABLE FOR COMPETITION', indicating a sole-source or limited competition award. This significantly restricts price discovery and potentially leads to higher costs for the government.

Taxpayer Impact: The lack of competitive pressure in this large grocery procurement likely results in taxpayers paying a premium for goods.

Public Impact

Commissary shoppers may see a limited selection or higher prices due to non-competitive sourcing. Taxpayer funds are allocated without the benefit of competitive market forces driving down costs. Reliance on a single supplier for essential goods can create supply chain vulnerabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Potential for overpricing
Limited supplier options

Positive Signals

Ensured supply of essential goods

Sector Analysis

This contract falls under wholesale trade, specifically general line grocery merchant wholesaling. Benchmarks for this sector are highly variable, but competitive bidding typically yields prices 10-30% lower than sole-source arrangements.

Small Business Impact

The contract does not indicate any specific provisions or set-asides for small businesses, suggesting that opportunities for smaller grocery suppliers were likely overlooked.

Oversight & Accountability

The 'NOT AVAILABLE FOR COMPETITION' status warrants further investigation by oversight bodies to ensure the government received the best possible value and explored all viable competitive avenues.

Related Government Programs

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

Risk Flags

Lack of competitive bidding
Potential for price gouging
Limited market analysis
No small business participation noted
Short contract duration may indicate urgency or poor planning

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.6 million to QUAKER OATS COMPANY, THE. RESALE - ASSORTED GROCERY (SECTION A)

Who is the contractor on this award?

The obligated recipient is QUAKER OATS COMPANY, THE.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Commissary Agency).

What is the total obligated amount?

The obligated amount is $14.6 million.

What is the period of performance?

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

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

The justification for limiting competition is not provided in the data. Typically, such limitations are based on factors like urgent need, unique capabilities of a single source, or specific government requirements that only one vendor can meet. Without this information, it's impossible to assess if the limitation was warranted or if it simply served to bypass a more efficient procurement process.

How does the per-unit cost compare to market rates for similar grocery items?

A direct per-unit cost comparison is not possible without itemized pricing data and specific product details. However, given the lack of competition, it is highly probable that the per-unit costs are higher than what could be achieved through competitive bidding. Further analysis would require access to the specific items procured and their market prices at the time of the contract.

What is the potential financial impact on taxpayers due to the lack of competition?

The financial impact on taxpayers is likely negative, manifesting as inflated prices for the groceries purchased. While the exact amount is unknown without a competitive benchmark, sole-source contracts generally result in higher costs compared to open competition. This could range from a moderate increase to significantly higher prices, depending on the specific goods and market dynamics.

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: Pepsico, Inc. (UEI: 001287762)

Address: 555 WEST MONROE STREET, CHICAGO, IL, 60661

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $14,586,354

Exercised Options: $14,586,354

Current Obligation: $14,586,354

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0104G2954

IDV Type: IDC

Timeline