DoD's $19.2M Grocery Resale Contract with Kraft Foods Raises Questions on Competition and Value

Contract Overview

Contract Amount: $19,213,141 ($19.2M)

Contractor: Kraft Foods Global, Inc.

Awarding Agency: Department of Defense

Start Date: 2009-01-01

End Date: 2009-03-31

Contract Duration: 89 days

Daily Burn Rate: $215.9K/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 $19.2 million to KRAFT FOODS GLOBAL, INC. for work described as: RESALE - ASSORTED GROCERY Key points: 1. Significant spending on assorted groceries highlights reliance on established suppliers. 2. Lack of competition for this contract may lead to suboptimal pricing. 3. The fixed-price contract structure offers some cost certainty but limits potential savings. 4. Analysis of grocery wholesale benchmarks is needed to assess value for money.

Value Assessment

Rating: questionable

The contract value of $19.2M for a 3-month period is substantial. Without competitive bidding, it's difficult to ascertain if this price reflects fair market value compared to similar wholesale grocery contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was not available for competition, suggesting a sole-source or limited-source award. This significantly restricts price discovery and potentially inflates costs for taxpayers.

Taxpayer Impact: The absence of competition likely results in higher prices than could be achieved through a competitive process, impacting taxpayer funds.

Public Impact

Taxpayers may be overpaying for essential grocery items due to lack of competition. The Defense Commissary Agency's procurement practices warrant closer examination for efficiency. Dependence on a single supplier for a broad range of goods can create supply chain vulnerabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Potential for overpayment
Limited price discovery

Positive Signals

Fixed price contract provides cost certainty

Sector Analysis

The grocery wholesale sector is generally competitive, with numerous distributors. Spending benchmarks for similar large-scale grocery procurements are essential to evaluate the fairness of this contract's pricing.

Small Business Impact

The data does not indicate any specific involvement or benefit to small businesses in this contract, which is concerning given the scale of spending.

Oversight & Accountability

The 'NOT AVAILABLE FOR COMPETITION' status necessitates a review of the justification for this procurement approach to ensure accountability and adherence to best practices.

Related Government Programs

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

Risk Flags

Lack of competitive bidding
Potential for inflated pricing
Limited transparency in price discovery
Absence of small business participation
Need for strong contract oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.2 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 $19.2 million.

What is the period of performance?

Start: 2009-01-01. End: 2009-03-31.

What was the specific justification for awarding this contract without competition, and how does it align with federal procurement regulations?

Federal regulations typically require full and open competition unless specific exceptions apply, such as a sole-source justification based on unique capabilities or urgent needs. The justification for this contract's limited competition status needs to be thoroughly reviewed to ensure it meets these stringent criteria and that taxpayer funds are being used responsibly.

How does the per-unit cost of groceries under this contract compare to market rates or other government contracts for similar items?

Without access to detailed pricing data and market comparisons, it's impossible to definitively assess value. However, the lack of competition strongly suggests that prices may be higher than achievable through competitive bidding. Benchmarking against commercial wholesale prices and other agency contracts is crucial for a proper value assessment.

What mechanisms are in place to ensure the quality and timely delivery of groceries, given the sole-source nature of the award?

While the contract type is fixed price, oversight is still critical. The Defense Commissary Agency should have robust quality assurance surveillance plans (QASPs) to monitor product quality, freshness, and delivery schedules. Performance metrics and clear remedies for non-performance are essential to mitigate risks associated with limited competition.

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: $19,213,141

Exercised Options: $19,213,141

Current Obligation: $19,213,141

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0104G2872

IDV Type: IDC

Timeline