DoD's $25M grocery resale contract with Kraft Foods Global, Inc. awarded via non-competitive means

Contract Overview

Contract Amount: $25,040,632 ($25.0M)

Contractor: Kraft Foods Global, Inc.

Awarding Agency: Department of Defense

Start Date: 2009-07-01

End Date: 2009-09-30

Contract Duration: 91 days

Daily Burn Rate: $275.2K/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 $25.0 million to KRAFT FOODS GLOBAL, INC. for work described as: RESALE - MISCELLANEOUS GROCERY Key points: 1. Contract awarded on a firm-fixed-price basis, indicating predictable costs for the government. 2. The contract was not competed, raising questions about potential price efficiencies. 3. Delivery order issued for a short duration (91 days), suggesting a specific, immediate need. 4. The contractor, Kraft Foods Global, Inc., is a major player in the food industry. 5. The contract falls under wholesale grocery merchant services, a common procurement category. 6. The value of this specific delivery order is substantial, warranting scrutiny of its necessity and pricing.

Value Assessment

Rating: questionable

Benchmarking the value of this specific delivery order is challenging without comparable non-competitive awards for similar goods and services. The firm-fixed-price structure provides cost certainty, but the lack of competition prevents an assessment of whether the price reflects market value or potential savings. The total award amount of $25,040,632.33 for a 91-day period suggests a high per-diem expenditure. Without competitive bids, it's difficult to determine if this represents a fair price for the goods procured.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as 'NOT AVAILABLE FOR COMPETITION,' indicating a sole-source procurement. This means that only one vendor, Kraft Foods Global, Inc., was solicited or considered for this award. The reasons for this sole-source designation are not provided, but it typically implies a lack of available alternatives or a critical, urgent need that only one source could fulfill.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to secure the best possible prices, potentially leading to higher costs for taxpayers.

Public Impact

Service members and their families benefit from access to grocery items through the Defense Commissary Agency. This contract supports the provision of miscellaneous grocery items. The geographic impact is likely nationwide, serving commissaries across Illinois and potentially other locations. The contract supports the logistics and supply chain for military food retail operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have resulted in above-market pricing.
The short duration and high value of the delivery order warrant further investigation into the specific need and justification for sole-sourcing.
Absence of a Product Service Code (PSC) makes it difficult to categorize the exact nature of the goods procured.

Positive Signals

Awarded to a well-established company, Kraft Foods Global, Inc., suggesting reliability in supply.
Firm-fixed-price contract provides cost predictability for the government.
Supports the Defense Commissary Agency's mission to provide quality goods to military personnel and their families.

Sector Analysis

This contract falls within the wholesale trade sector, specifically general line grocery merchant wholesaling. The market for food distribution to government entities, such as military commissaries, is substantial. While specific benchmarks for sole-source grocery wholesale contracts are not readily available, the overall food wholesale industry is highly competitive. However, this award bypasses that competition, making direct market comparisons difficult.

Small Business Impact

The provided data indicates that small business participation (sb) was false, and there was no indication of a small business set-aside (ss). This suggests that small businesses were not specifically targeted or included in this particular procurement, and the prime contractor is not a small business.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Commissary Agency (DECA) and potentially the Department of Defense's Inspector General. Transparency is limited due to the sole-source nature of the award and the lack of detailed justification publicly available. Accountability would be measured by the successful delivery of goods as per the contract terms.

Related Government Programs

Defense Commissary Agency Operations
Military Food Retail Services
Grocery Wholesale Procurement
Federal Food Supply Chain

Risk Flags

Sole-source award without clear justification
Potential for overpricing due to lack of competition
High value delivery order for a short duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.0 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 $25.0 million.

What is the period of performance?

Start: 2009-07-01. End: 2009-09-30.

What was the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was awarded as 'NOT AVAILABLE FOR COMPETITION,' which is a sole-source designation. However, the specific justification for this determination is not included in the data. Typically, sole-source awards are made when only one responsible source can provide the required supplies or services, such as in cases of urgent and compelling need, unique capabilities, or when a specific brand name is required and no other product is acceptable. Without further documentation, the exact reason for bypassing competition for this $25 million delivery order remains unclear.

How does the per-unit cost of goods under this contract compare to market rates for similar wholesale grocery items?

Directly comparing the per-unit cost is not feasible with the provided data, as it only shows the total award amount for the delivery order ($25,040,632.33) and the contract duration (91 days). The data does not break down the specific items procured or their quantities. Furthermore, since this was a sole-source award, there are no competitive bids to benchmark against. To assess value for money, one would need to compare the prices paid to prevailing market rates for the specific grocery items purchased, which requires detailed itemization and current wholesale pricing data.

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

Kraft Foods Global, Inc. is a major food manufacturer and distributor with a significant presence in the commercial market. While specific details on their historical performance with the Defense Commissary Agency (DECA) are not provided in this data snippet, large corporations like Kraft typically have experience fulfilling government contracts. Their established supply chain and distribution networks would likely enable them to meet the demands of such an order. However, a comprehensive assessment would require reviewing past performance evaluations, any past disputes, and the overall history of their engagements with DECA and other federal agencies.

What is the significance of the 'RESALE - MISCELLANEOUS GROCERY' classification for this contract?

The 'RESALE - MISCELLANEOUS GROCERY' classification indicates that the contract was for the procurement of a variety of grocery items intended for resale, likely through the Defense Commissary Agency's retail outlets. This category suggests a broad range of products rather than specialized or niche items. The 'miscellaneous' aspect implies that the specific list of goods could vary or encompass a wide assortment of common grocery staples. This classification is important for understanding the nature of the goods supplied and their role in supporting the commissary system's offerings to military personnel and their families.

What are the potential risks associated with a sole-source award of this magnitude?

The primary risk associated with a sole-source award of this magnitude ($25 million) is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may not be securing the most cost-effective solution. Other risks include a potential lack of innovation, reduced incentive for the contractor to provide exceptional service beyond contractual minimums, and the possibility that the chosen vendor may not be the most capable or efficient provider if competition had been allowed. Furthermore, the justification for sole-sourcing needs to be robust to ensure public funds are used appropriately.

How does this contract fit into the broader spending patterns of the Defense Commissary Agency for grocery procurement?

This contract represents a significant single delivery order for miscellaneous grocery items. To understand its place in broader spending patterns, one would need to analyze DECA's historical procurement data for similar goods over multiple fiscal years. This would involve looking at the total annual spending on groceries, the proportion allocated to wholesale procurement, and the frequency and value of both competitive and sole-source awards. A $25 million delivery order, even if short-term, suggests a substantial portion of DECA's procurement budget may be allocated to such contracts, especially if similar large orders are placed regularly.

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: $25,040,632

Exercised Options: $25,040,632

Current Obligation: $25,040,632

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0109G3750

IDV Type: IDC

Timeline