DoD Spends $14M on Cereal and Pop Tarts via Sole-Source Contract with Kellogg Company
Contract Overview
Contract Amount: $14,064,807 ($14.1M)
Contractor: Kellogg Company
Awarding Agency: Department of Defense
Start Date: 2009-04-01
End Date: 2009-06-30
Contract Duration: 90 days
Daily Burn Rate: $156.3K/day
Competition Type: NOT AVAILABLE FOR COMPETITION
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: RESALE - CEREAL & POP TARTS
Place of Performance
Location: BATTLE CREEK, CALHOUN County, MICHIGAN, 49017
State: Michigan Government Spending
Plain-Language Summary
Department of Defense obligated $14.1 million to KELLOGG COMPANY for work described as: RESALE - CEREAL & POP TARTS Key points: 1. Significant spending on basic grocery items highlights potential for bulk purchasing efficiencies. 2. Sole-source nature raises questions about price competitiveness and potential for overpayment. 3. Short contract duration (90 days) suggests a tactical procurement rather than strategic. 4. The 'General Line Grocery Merchant Wholesalers' NAICS code indicates a broad category, not specific to these items.
Value Assessment
Rating: questionable
The contract value of $14M for a 90-day period for cereal and Pop Tarts appears high. Without specific per-unit data or comparison to commercial pricing, it's difficult to assess value, but the sole-source nature suggests limited price discovery.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The contract was not available for competition, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers as there is no competitive pressure to offer the best price.
Taxpayer Impact: Taxpayer funds are used for this purchase. The lack of competition means the government may not be getting the best possible price for these goods.
Public Impact
Commissary shoppers may see a consistent supply of Kellogg's products. Potential for higher prices on these specific items due to lack of competition. Funds allocated to this contract could potentially be used for other defense needs if savings were realized through competition.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- High value for short duration
- Lack of competition
Positive Signals
- Procurement of essential commissary items
- Firm fixed price contract provides cost certainty
Sector Analysis
This purchase falls under the broad 'General Line Grocery Merchant Wholesalers' category. Spending benchmarks for specific grocery items like cereal and Pop Tarts are typically driven by commercial market prices and volume discounts, which are not readily available in federal spending data.
Small Business Impact
The data does not indicate whether small businesses were involved in this contract. As a sole-source award to Kellogg Company, it is unlikely that small businesses were primary beneficiaries, though they could be subcontractors.
Oversight & Accountability
The sole-source nature of this award warrants review to ensure justification for lack of competition was adequate and that pricing was reasonable given the circumstances. Oversight should focus on future opportunities for competitive bidding.
Related Government Programs
- General Line Grocery Merchant Wholesalers
- Department of Defense Contracting
- Defense Commissary Agency Programs
Risk Flags
- Sole-source award lacks competition
- Potential for inflated pricing
- High dollar value for a short-term grocery purchase
- Lack of transparency on justification for sole-source
Tags
general-line-grocery-merchant-wholesaler, department-of-defense, mi, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $14.1 million to KELLOGG COMPANY. RESALE - CEREAL & POP TARTS
Who is the contractor on this award?
The obligated recipient is KELLOGG COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Commissary Agency).
What is the total obligated amount?
The obligated amount is $14.1 million.
What is the period of performance?
Start: 2009-04-01. End: 2009-06-30.
What was the justification for awarding this contract on a sole-source basis, and was it thoroughly documented?
The provided data states the contract was 'NOT AVAILABLE FOR COMPETITION,' implying a sole-source award. A thorough review would require access to the contract file to verify the specific justification (e.g., unique capability, urgent need) and ensure it met regulatory requirements for sole-source procurements. Without this documentation, the rationale remains unclear.
How does the per-unit cost of these items compare to commercial retail prices or other government contracts for similar goods?
The data does not provide per-unit cost breakdowns or commercial pricing benchmarks. Comparing the total contract value ($14M) over 90 days to typical grocery prices is difficult without knowing the exact quantities. The lack of competition suggests the government may be paying a premium compared to competitive market prices.
Could this procurement have been handled more effectively through competitive bidding or a different contract vehicle?
Given that these are common grocery items, it is highly probable that competitive bidding could have yielded better pricing and value for the government. Exploring options like GSA schedules or other competitively awarded contracts for food supplies might have been more effective than a sole-source award.
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: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: ONE KELLOGG SQUARE, BATTLE CREEK, MI, 49016
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $14,064,807
Exercised Options: $14,064,807
Current Obligation: $14,064,807
Contract Characteristics
Commercial Item: COMMERCIAL ITEM
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: HDEC0104G2973
IDV Type: IDC
Timeline
Start Date: 2009-04-01
Current End Date: 2009-06-30
Potential End Date: 2009-06-30 00:00:00
Last Modified: 2019-06-07
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