DoD's $24.9M grocery resale contract to Kraft Foods Global, Inc. awarded via non-competitive process

Contract Overview

Contract Amount: $24,941,117 ($24.9M)

Contractor: Kraft Foods Global, Inc.

Awarding Agency: Department of Defense

Start Date: 2009-04-01

End Date: 2009-06-30

Contract Duration: 90 days

Daily Burn Rate: $277.1K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: RESALE - MISCELLANEOUS GROCERY

Place of Performance

Location: NORTHFIELD, COOK County, ILLINOIS, 60093

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $24.9 million to KRAFT FOODS GLOBAL, INC. for work described as: RESALE - MISCELLANEOUS GROCERY Key points: 1. Contract awarded through a non-competitive process, raising questions about price discovery and potential value for money. 2. The contract's duration of 90 days suggests a short-term need or a bridge to a future procurement. 3. Focus on miscellaneous grocery items indicates a specific niche within the Defense Commissary Agency's broader food supply chain. 4. The fixed-price contract type offers cost certainty but may limit flexibility if market conditions change significantly. 5. Awarded to a single vendor, Kraft Foods Global, Inc., highlighting potential reliance on established suppliers for specific goods. 6. The contract's value of over $24.9 million for a 90-day period warrants scrutiny of per-unit costs and market comparables.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the limited information on specific grocery items and the non-competitive award. However, a $24.9 million expenditure over 90 days for miscellaneous grocery resale suggests a high per-diem cost. Without details on the exact products and quantities, it's difficult to compare pricing against market rates or similar contracts. The lack of competition inherently limits the government's ability to secure the best possible price through a bidding process.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. The data indicates it was 'NOT AVAILABLE FOR COMPETITION.' This approach is typically used when only one vendor can provide the required goods or services, or in urgent situations. The lack of competition means that the government did not solicit bids from other potential suppliers, which can impact price negotiation and potentially lead to higher costs than if multiple offers were considered.

Taxpayer Impact: Taxpayers may not be receiving the most competitive pricing due to the absence of a bidding process. This sole-source award bypasses the opportunity for market forces to drive down costs through vendor competition.

Public Impact

Military personnel and their families benefit from the availability of grocery items through the Defense Commissary Agency. The contract ensures the supply of miscellaneous grocery items, contributing to the overall food offerings at commissaries. The geographic impact is likely concentrated in Illinois, where the contract is managed, but the goods supplied serve military communities. The contract supports the logistics and supply chain workforce involved in delivering these grocery products to commissaries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Non-competitive award limits price scrutiny and potential savings.
Short contract duration (90 days) may indicate a stop-gap measure or potential for future sole-source extensions.
Lack of detailed product information makes it difficult to assess the true value and necessity of the expenditure.

Positive Signals

Ensures continued availability of essential grocery items for military families.
Fixed-price contract provides cost predictability for the government.
Awarded to a known entity, Kraft Foods Global, Inc., potentially leveraging existing relationships and supply chains.

Sector Analysis

The Defense Commissary Agency (DeCA) operates a global chain of commissaries providing groceries to military personnel and their families. This contract falls within the broader food and beverage wholesale sector, specifically focusing on miscellaneous grocery items. The market for grocery wholesaling is highly competitive, with numerous distributors and manufacturers vying for contracts. However, specific niche requirements or existing supplier relationships can sometimes lead to non-competitive awards. DeCA's overall spending on food and related supplies represents a significant portion of the Department of Defense's non-personnel budget.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a sole-source award to a large corporation, Kraft Foods Global, Inc., there are no direct subcontracting implications for small businesses stemming from this specific award mechanism. The focus is on a large prime contractor, rather than fostering opportunities within the small business ecosystem through set-asides or mandated subcontracting goals.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Commissary Agency (DeCA), a component of the Department of Defense. As a delivery order under a larger contract vehicle (implied by 'AW': 'DELIVERY ORDER'), oversight would focus on ensuring timely delivery, product quality, and adherence to the fixed-price terms. Transparency is limited due to the non-competitive nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Commissary Agency Operations
Grocery and Food Supply Chain Management
Department of Defense Retail Operations
Federal Food Procurement

Risk Flags

Sole-source award bypasses competition.
High daily expenditure for a short duration.
Lack of specific product details hinders value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.9 million to KRAFT FOODS GLOBAL, INC.. RESALE - MISCELLANEOUS 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 $24.9 million.

What is the period of performance?

Start: 2009-04-01. End: 2009-06-30.

What specific 'miscellaneous grocery' items were included in this $24.9 million contract?

The provided data does not specify the exact 'miscellaneous grocery' items covered under this contract. The description 'RESALE - MISCELLANEOUS GROCERY' is broad and lacks granular detail. To fully assess the value and necessity of this expenditure, a breakdown of the product categories, quantities, and specific items would be required. Without this information, it is difficult to determine if the $24.9 million allocated over 90 days represents a fair market price for the goods provided to the Defense Commissary Agency.

Why was this contract awarded on a sole-source basis instead of being competed?

The data explicitly states the contract was 'NOT AVAILABLE FOR COMPETITION,' indicating a sole-source award. Common justifications for sole-source contracts include situations where only one responsible source can provide the required supplies or services, or in cases of urgent and compelling need. Without further documentation or justification from the awarding agency (Defense Commissary Agency), the specific reason for bypassing the competitive bidding process remains unclear. This lack of competition limits the government's ability to explore alternative suppliers and potentially secure better pricing.

How does the $24.9 million value for a 90-day contract compare to typical spending for similar grocery resale contracts?

A contract valued at approximately $24.9 million over a 90-day period translates to roughly $277,000 per day. This daily expenditure for 'miscellaneous grocery resale' appears substantial. However, a direct comparison to similar contracts is difficult without knowing the specific product mix, volume, and geographic scope. Typically, the Defense Commissary Agency procures a wide range of food products. A non-competitive award of this magnitude for a short duration warrants scrutiny to ensure it aligns with market rates and represents efficient use of taxpayer funds, especially when compared to potentially larger, competitively bid contracts for broader grocery supply.

What is the track record of Kraft Foods Global, Inc. in fulfilling government contracts, particularly with the Department of Defense?

Kraft Foods Global, Inc. is a major food and beverage company with a history of supplying products to various markets, including potentially government entities. While the provided data focuses on this specific contract, a comprehensive assessment of their track record would involve reviewing their performance on past and current government contracts. This includes examining on-time delivery rates, product quality compliance, and any history of disputes or contract modifications. Information on their past performance with the Defense Commissary Agency or other DoD components would be crucial for evaluating their reliability and suitability for fulfilling such requirements.

What are the potential risks associated with awarding a significant grocery contract on a sole-source basis?

The primary risk associated with a sole-source award is the potential for inflated pricing due to the lack of competition. Without competing bids, the government may pay more than necessary. Other risks include reduced innovation, as the sole provider may have less incentive to improve products or services. There's also a risk of vendor lock-in, making it difficult to switch suppliers in the future. Furthermore, a sole-source award can raise concerns about fairness and equal opportunity for other potential vendors in the market.

Does the short duration (90 days) of this contract suggest a specific market condition or a temporary need?

The 90-day duration of this contract is notably short for a procurement valued at $24.9 million. This brevity could indicate several possibilities: it might be a bridge contract to cover a gap while a larger, long-term contract is being procured through a competitive process; it could be fulfilling an urgent, temporary need that does not warrant a longer commitment; or it might represent a specific, short-term promotional or seasonal requirement. The short timeframe, combined with the sole-source nature, suggests a potentially reactive procurement rather than strategic, long-term planning.

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

Parent Company: Kraft Foods Inc. (UEI: 877147228)

Address: THREE LAKE DR, NORTHFIELD, IL, 60093

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $24,941,117

Exercised Options: $24,941,117

Current Obligation: $24,941,117

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0109G3750

IDV Type: IDC

Timeline