DoD Spends $27M on Groceries from Kraft Foods, Lacking Competition

Contract Overview

Contract Amount: $27,099,665 ($27.1M)

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: $304.5K/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 $27.1 million to KRAFT FOODS GLOBAL, INC. for work described as: RESALE - ASSORTED GROCERIES (SECTION A) Key points: 1. Significant spending on groceries highlights reliance on major suppliers. 2. Lack of competition raises concerns about price discovery and value. 3. Short contract duration suggests potential for future competitive bidding. 4. Defense Commissary Agency's role in procurement warrants scrutiny.

Value Assessment

Rating: questionable

The contract value of $27M for a 3-month period is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar grocery wholesale contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was not available for competition, indicating a sole-source or limited competition scenario. This significantly hinders price discovery and potentially leads to inflated costs for taxpayers.

Taxpayer Impact: Taxpayers may be overpaying due to the absence of competitive pricing mechanisms.

Public Impact

Military families and personnel rely on commissary services for groceries. Procurement practices impact the overall cost of military support services. The use of fixed-price contracts can shift risk to the government if not properly benchmarked.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Potential for overpricing
Limited contract duration may not reflect long-term needs

Positive Signals

Essential goods provided to military personnel
Fixed-price contract provides cost certainty if priced correctly

Sector Analysis

This contract falls under wholesale grocery distribution, a sector characterized by established supply chains and significant competition. Benchmarks for similar wholesale grocery contracts would typically show competitive pricing.

Small Business Impact

The data indicates this contract was awarded to a large corporation (Kraft Foods Global, Inc.) and does not suggest any participation or benefit for small businesses.

Oversight & Accountability

The Defense Commissary Agency is responsible for this procurement. Oversight should focus on the justification for limited competition and the process for ensuring fair pricing in future solicitations.

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 prices
Limited contract duration
Absence of small business participation
High contract value for a short period

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.1 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 $27.1 million.

What is the period of performance?

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

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

The provided data states the contract was 'NOT AVAILABLE FOR COMPETITION.' A thorough review would be needed to understand the specific reasons, such as a unique product requirement, a critical delivery need, or a prior sole-source justification that may have expired or been misapplied. Without this information, assessing the validity of the limited competition is impossible.

How can the government ensure fair pricing when competition is limited or unavailable?

When competition is limited, agencies should leverage market research, historical pricing data, and independent cost estimates to establish a fair and reasonable price. Price negotiation, cost analysis, and potentially using economic-price-adjustment clauses tied to market indices can help mitigate risks. Regular review of sole-source justifications is also crucial.

What is the potential impact of short-term contracts on overall grocery procurement efficiency?

Short-term contracts, like this 3-month delivery order, can provide flexibility but may also lead to higher administrative costs and missed opportunities for long-term savings through strategic sourcing and volume discounts. If the need is ongoing, a longer-term contract with competitive pricing would likely be more efficient and cost-effective for the government.

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: $27,099,665

Exercised Options: $27,099,665

Current Obligation: $27,099,665

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0104G2878

IDV Type: IDC

Timeline