DoD's Defense Commissary Agency spent $24.1M on lunch meats, with Kraft Foods Global Inc. as the sole provider

Contract Overview

Contract Amount: $24,118,265 ($24.1M)

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: $271.0K/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 $24.1 million to KRAFT FOODS GLOBAL, INC. for work described as: RESALE - ASSORTED LUNCH MEATS (SECTION A) Key points: 1. The contract value of $24.1 million for lunch meats represents a significant portion of the Defense Commissary Agency's grocery wholesale spending. 2. The sole-source nature of this award raises questions about potential price inflation and lack of competitive pressure. 3. The short contract duration of 89 days suggests a potential need for more strategic, long-term sourcing strategies. 4. The absence of a specific Product Service Code (PSC) makes direct benchmarking difficult, but the category points to wholesale grocery distribution. 5. The contractor, Kraft Foods Global, Inc., is a large, established entity, indicating a reliance on major suppliers for essential goods. 6. The contract was awarded as a Delivery Order, implying it was part of a larger indefinite-delivery contract or schedule.

Value Assessment

Rating: questionable

Benchmarking the value for this specific contract is challenging due to the lack of a detailed Product Service Code (PSC) and the nature of the product (assorted lunch meats). However, a $24.1 million expenditure over less than three months for a single product category, awarded on a sole-source basis, suggests a potentially inflated cost. Without competitive bids, it's difficult to ascertain if this price reflects fair market value or if taxpayers bore a premium due to the lack of competition. Further analysis would require comparing this to similar commissary or military food service contracts for bulk lunch meat procurement.

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 considered. The data indicates it was 'NOT AVAILABLE FOR COMPETITION.' This lack of competition prevents any meaningful assessment of how the contract was competed or how many bidders were involved. Consequently, there was no price discovery mechanism through a competitive bidding process, which typically helps ensure the government receives the best possible pricing.

Taxpayer Impact: The sole-source award means taxpayers did not benefit from the cost savings that typically arise from a competitive bidding process. This could have resulted in a higher price paid for the lunch meats than if multiple suppliers had vied for the contract.

Public Impact

Military personnel and their families stationed at bases served by the Defense Commissary Agency are the primary beneficiaries, receiving access to essential food items. The service delivered is the provision of assorted lunch meats, a staple grocery item, supporting the daily nutritional needs of service members and their families. The geographic impact is national, covering commissary locations managed by the Defense Commissary Agency across various military installations. Workforce implications are minimal for this specific contract, as it primarily involves the supply chain and distribution of pre-packaged goods rather than direct service provision requiring significant on-site labor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Short contract duration (89 days) may indicate a reactive procurement rather than strategic planning, potentially leading to higher prices.
Lack of specific PSC makes it difficult to benchmark performance and cost-effectiveness against industry standards.
Reliance on a single large supplier for a staple food item could create vulnerabilities in the supply chain.

Positive Signals

Contract awarded to a known, large supplier (Kraft Foods Global, Inc.) suggests reliability in delivery.
The Defense Commissary Agency ensures access to goods for military families, fulfilling a critical support function.
The contract was awarded as a Delivery Order, which can streamline the process for obtaining necessary goods.

Sector Analysis

The procurement falls under the wholesale grocery merchant category, specifically focusing on processed meats. The Defense Commissary Agency (DeCA) operates as a retail arm of the DoD, providing groceries to military personnel and their families at discounted prices. Spending in this sector is substantial, as DeCA aims to provide a wide range of food products comparable to civilian supermarkets. Benchmarking this specific contract is difficult without a precise PSC, but the overall grocery wholesale market involves complex supply chains and significant volume. The $24.1 million figure for a specific product line over a short period highlights the scale of DeCA's operations.

Small Business Impact

This contract does not appear to have involved 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 for a commodity item like lunch meats typically does not foster significant subcontracting with small businesses within the direct scope of this particular award.

Oversight & Accountability

Oversight for this contract would fall under the Defense Commissary Agency (DeCA), which is responsible for managing its procurement processes and ensuring contract compliance. Accountability measures would typically involve performance monitoring and adherence to delivery schedules. Transparency is limited by the sole-source nature of the award and the lack of publicly available detailed performance metrics. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Commissary Agency Operations
Military Food Service Contracts
Grocery Wholesale Procurement
Department of Defense Food Supply Chain

Risk Flags

Sole Source Award
Lack of Competition
Potential for Inflated Pricing
Short Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.1 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 $24.1 million.

What is the period of performance?

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

What is the track record of Kraft Foods Global, Inc. in supplying the Defense Commissary Agency or other government entities with similar food products?

Kraft Foods Global, Inc. is a major food manufacturer and distributor with a long history of supplying products to both commercial and government markets. While specific details on their track record with the Defense Commissary Agency (DeCA) for this exact product line and contract type are not provided in the data, large food conglomerates like Kraft typically have established processes for government contracting, including compliance with food safety regulations and delivery logistics. Their extensive experience suggests a capacity to fulfill large-scale orders reliably. However, the sole-source nature of this particular award means that the government did not leverage competitive processes to evaluate Kraft's performance against potential alternatives for this specific procurement, making it difficult to assess if they provided the best value compared to other potential suppliers.

How does the $24.1 million expenditure for lunch meats compare to DeCA's overall annual budget or spending on similar grocery categories?

The provided data indicates a $24.1 million expenditure for assorted lunch meats over a 89-day period (approximately three months). To contextualize this, DeCA's total sales in fiscal year 2022 were approximately $7.7 billion. While $24.1 million represents a significant sum for a single product category, it is a relatively small fraction (less than 0.5%) of DeCA's total annual sales. However, this figure is for a limited duration and specific product type. Without knowing the total annual spending on lunch meats or comparable processed meats, it's challenging to definitively state if this represents an over or under-spending relative to annual needs. The short duration and sole-source award raise concerns about whether this specific period's spending was optimized for value.

What are the potential risks associated with awarding a contract for essential food items on a sole-source basis?

Awarding a contract for essential food items like lunch meats on a sole-source basis carries several risks. Primarily, it eliminates competitive pressure, which can lead to inflated prices as the contractor faces no incentive to offer the most cost-effective solution. This lack of competition can result in taxpayers paying more than necessary. Secondly, it limits the government's ability to explore innovative products or alternative suppliers who might offer better quality, variety, or more efficient delivery methods. Relying on a single source also creates a vulnerability in the supply chain; if the sole contractor experiences production issues, delivery disruptions, or quality control problems, the availability of essential food items for military personnel and their families could be jeopardized without readily available alternatives.

Given the short contract duration (89 days), what does this imply about the procurement strategy for these lunch meats?

The short contract duration of 89 days (approximately three months) for a substantial expenditure of $24.1 million on lunch meats suggests several possibilities regarding the procurement strategy. It could indicate an emergency procurement, a stop-gap measure while a longer-term strategy is developed, or a contract awarded under a pre-existing indefinite-delivery contract (IDIQ) or schedule where this was a specific delivery order. It might also imply that the Defense Commissary Agency (DeCA) intended to re-compete the requirement frequently or that market conditions were perceived as volatile, making longer commitments undesirable. However, frequent short-term procurements can sometimes be less efficient and potentially more costly than well-planned, longer-term contracts, especially if they do not allow for economies of scale or robust price negotiations.

What is the significance of the contract type being 'FIXED PRICE' for this sole-source lunch meat procurement?

The contract type being 'FIXED PRICE' for this sole-source lunch meat procurement means that the total price of the contract was set at the time of award, and Kraft Foods Global, Inc. is obligated to complete the work (deliver the lunch meats) for that agreed-upon amount, regardless of their actual costs. For the government, this offers cost certainty, as the total expenditure is known upfront. However, in a sole-source situation, the 'fixed price' might have been negotiated without the benefit of competitive benchmarking. This means the fixed price itself could be higher than it would have been in a competitive environment. While the fixed-price structure protects the government from cost overruns by the contractor, it does not inherently guarantee that the fixed price represents the best possible value or fair market price due to the absence of 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: $24,118,265

Exercised Options: $24,118,265

Current Obligation: $24,118,265

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0104G2873

IDV Type: IDC

Timeline