DoD's $24.4M grocery resale contract with Kraft Foods Global, Inc. awarded via non-competitive means

Contract Overview

Contract Amount: $24,419,445 ($24.4M)

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: $271.3K/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 $24.4 million to KRAFT FOODS GLOBAL, INC. for work described as: RESALE - MISCELLANEOUS GROCERY Key points: 1. The contract's value of $24.4 million for a 90-day period suggests a high per-diem spending rate. 2. Awarded as a 'not available for competition' delivery order, the rationale for bypassing competitive bidding requires scrutiny. 3. The fixed-price contract type offers cost certainty but may limit incentives for cost savings by the contractor. 4. The Defense Commissary Agency (DECA) is responsible for this contract, indicating its role in providing goods to military personnel and families. 5. The North American Industry Classification System (NAICS) code 424410 points to wholesale distribution of general grocery lines. 6. The contract's short duration of 90 days suggests it may be for immediate or temporary needs, or a bridge to a larger procurement.

Value Assessment

Rating: questionable

The contract value of $24.4 million over 90 days equates to approximately $271,327 per day. Without specific details on the volume and type of groceries procured, it is difficult to benchmark this against similar contracts. However, the absence of competition raises concerns about whether this daily rate represents a fair market price. The fixed-price nature provides cost certainty for the government, but the lack of competitive pressure might mean the price is not optimized for value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under the 'NOT AVAILABLE FOR COMPETITION' category, indicating that a competitive process was not utilized. The specific justification for this sole-source award is not provided in the data. Typically, sole-source awards occur when only one responsible source can provide the required supplies or services. The lack of competition means there were no other bidders to compare against, potentially impacting price discovery and the government's ability to secure the best possible terms.

Taxpayer Impact: Taxpayers may not be receiving the best value when contracts are awarded without competition, as the government loses the opportunity to benefit from price reductions driven by competitive bidding.

Public Impact

Military personnel and their families stationed in Illinois (ST: IL, SN: ILLINOIS) likely benefit from the availability of groceries through the Defense Commissary Agency. The contract supports the supply chain for essential food and household items within military commissaries. This contract contributes to the operational readiness and morale of the armed forces by ensuring access to goods. The contract's impact on the broader food distribution workforce is indirect, primarily supporting wholesale operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and suboptimal value for taxpayer funds.
The sole-source nature of the award prevents an assessment of the contractor's performance against potential competitors.
The short duration might indicate a reactive procurement rather than strategic planning, potentially leading to less efficient resource allocation.

Positive Signals

The fixed-price contract type provides budget certainty for the Defense Commissary Agency.
The contract ensures the continued availability of essential grocery items for military communities.
The award to Kraft Foods Global, Inc., a known entity, suggests a degree of reliability in supply, assuming past performance is positive.

Sector Analysis

This contract falls within the wholesale trade sector, specifically general line grocery merchant wholesalers (NAICS 424410). The Defense Commissary Agency (DECA) operates a global chain of commissaries, functioning as a retail arm for military personnel and their families. This contract supports DECA's mission by ensuring the supply of grocery products. Comparable spending benchmarks would typically involve analyzing other large-scale food distribution contracts, particularly those serving institutional or government clients, to assess unit costs and overall value.

Small Business Impact

The data indicates that small business participation (SB: false) and set-asides (SS: false) were not applicable to this specific contract. Therefore, this award does not appear to have directly benefited small businesses through a set-aside. There is no information provided regarding subcontracting opportunities for small businesses under this contract.

Oversight & Accountability

Oversight for this contract would fall under the purview of the Defense Commissary Agency (DECA), a component of the Department of Defense. As a federal contract, it is subject to various oversight mechanisms, including potential audits by the Government Accountability Office (GAO) or the DoD Inspector General. Transparency regarding the justification for the sole-source award and the specific terms of the delivery order would be key to assessing accountability.

Related Government Programs

Defense Commissary Agency Operations
Military Resale Operations
Grocery Wholesale Distribution
Federal Food Procurement

Risk Flags

Sole-source award without clear justification
Potential for non-competitive pricing
Limited transparency on value for money

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.4 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 $24.4 million.

What is the period of performance?

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

What was the specific justification for awarding this contract on a sole-source basis ('NOT AVAILABLE FOR COMPETITION')?

The provided data does not include the specific justification for awarding this contract as 'NOT AVAILABLE FOR COMPETITION'. Typically, sole-source procurements are justified under circumstances such as only one responsible source being available, urgent and compelling needs, or specific national security requirements. Without the official justification document (e.g., a Justification and Approval or J&A), it is impossible to determine the precise reasons why competitive bidding was bypassed for this $24.4 million grocery resale contract.

How does the daily spending rate of approximately $271,327 compare to typical grocery wholesale costs for similar military installations?

Benchmarking the daily spending rate of approximately $271,327 requires detailed information on the volume, type, and specific items procured under this contract, as well as the number of commissaries or customers served. Without this granular data, a direct comparison to typical wholesale costs for similar military installations is challenging. However, this rate suggests a significant volume of goods being distributed. To perform a meaningful comparison, one would need access to DECA's historical spending data for comparable periods and locations, or industry data on large-scale food distribution contracts serving institutional clients.

What is the track record of Kraft Foods Global, Inc. with the Defense Commissary Agency or other federal agencies for similar supply contracts?

The provided data indicates Kraft Foods Global, Inc. (co: KRAFT FOODS GLOBAL, INC.) was awarded this specific delivery order. To assess their track record, one would need to examine historical contract data for Kraft Foods Global, Inc. with DECA and other federal agencies. This would involve looking at the number of previous awards, their values, contract types (e.g., fixed-price, cost-plus), performance ratings (if available), and any instances of contract disputes or terminations. A positive history of reliable delivery and competitive pricing on past contracts would mitigate some concerns associated with a sole-source award.

Given the short 90-day duration, was this contract intended as a bridge to a larger, competitively awarded contract?

The short 90-day duration (dur: 90) of this delivery order, with an end date of June 30, 2009, strongly suggests it was intended as a short-term solution. Such durations are often used to bridge gaps between expiring contracts and the award of a new, potentially larger, competitively solicited contract. It could also represent a response to an immediate, unforeseen need. Without further context on DECA's procurement pipeline or the circumstances surrounding this award, it's difficult to confirm definitively, but a bridging strategy is a common reason for short-term, non-competitive awards.

What are the potential risks associated with awarding a large grocery contract without competition, particularly concerning price and supply chain resilience?

Awarding a significant contract like this ($24.4 million) without competition introduces several risks. Primarily, the government may not achieve the most favorable pricing, as the absence of competing bids removes the downward pressure on costs that competition typically provides. This could lead to overspending. Additionally, relying on a single source, even a large established company, can reduce supply chain resilience. If Kraft Foods Global, Inc. were to face unforeseen disruptions (e.g., production issues, transportation problems), the Defense Commissary Agency would have limited immediate alternatives, potentially impacting the availability of groceries for military personnel and their families.

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: $24,419,445

Exercised Options: $24,419,445

Current Obligation: $24,419,445

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0109G3755

IDV Type: IDC

Timeline