DoD's $17.8M health and beauty products contract awarded to Kimberly-Clark Corporation shows potential value concerns

Contract Overview

Contract Amount: $17,876,028 ($17.9M)

Contractor: Kimberly-Clark Corporation

Awarding Agency: Department of Defense

Start Date: 2009-07-01

End Date: 2009-09-30

Contract Duration: 91 days

Daily Burn Rate: $196.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: RESALE - HEALTH AND BEAUTY PRODUCTS

Place of Performance

Location: NEENAH, WINNEBAGO County, WISCONSIN, 54956

State: Wisconsin Government Spending

Plain-Language Summary

Department of Defense obligated $17.9 million to KIMBERLY-CLARK CORPORATION for work described as: RESALE - HEALTH AND BEAUTY PRODUCTS Key points: 1. The contract's value appears high relative to its short duration, suggesting a need for detailed cost analysis. 2. Limited competition for this contract raises questions about price discovery and potential overpayment. 3. The fixed-price nature of the contract shifts some risk to the government if costs exceed projections. 4. This contract falls within the wholesale trade sector, supplying essential goods to military personnel. 5. The absence of small business set-asides warrants examination of subcontracting opportunities. 6. Oversight of this contract should focus on ensuring the quality and necessity of the products procured.

Value Assessment

Rating: questionable

The total award amount of $17.8 million for a 91-day period is substantial. Without specific unit pricing or comparison to similar commissary procurements, it's difficult to definitively benchmark value. However, the high aggregate value for a short-term delivery order suggests that either the volume of goods was exceptionally large, or the per-unit costs may be elevated. Further analysis would be needed to compare this to typical wholesale pricing for health and beauty products in a retail or commissary setting.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as 'NOT AVAILABLE FOR COMPETITION,' indicating a sole-source or limited competition scenario. The specific justification for this approach is not provided in the data. Sole-source awards can lead to higher prices due to the lack of competitive pressure, potentially limiting the government's ability to secure the best value. The absence of multiple bidders means there was no direct comparison of offers to determine the most cost-effective option.

Taxpayer Impact: Taxpayers may have paid a premium for these health and beauty products due to the lack of competitive bidding. Without a competitive process, there is less assurance that the government secured the lowest possible price for the goods.

Public Impact

Military personnel and their families stationed at facilities served by the Defense Commissary Agency (DeCA) are the primary beneficiaries, gaining access to essential health and beauty items. The contract delivers a range of health and beauty products, contributing to the morale and well-being of service members. The geographic impact is tied to the locations served by the Defense Commissary Agency, potentially across various military installations. This contract supports the supply chain for retail goods within the military community, indirectly impacting logistics and distribution workforces.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have led to inflated prices.
The high total award value for a short duration raises questions about cost-effectiveness.
No small business participation was indicated, potentially limiting broader economic impact.
The specific products procured and their necessity at this price point require further scrutiny.

Positive Signals

Ensures availability of essential health and beauty products for military personnel.
The contract was awarded to a known entity (Kimberly-Clark), suggesting a degree of reliability in supply.
Fixed-price contract structure provides some cost certainty for the government.

Sector Analysis

This contract falls within the wholesale trade sector, specifically dealing with drugs and druggists' sundries merchant wholesalers (NAICS 424210). This sector involves the distribution of health, beauty, and pharmaceutical products. The Defense Commissary Agency (DeCA) operates as a retail arm for military personnel, and contracts like this are crucial for stocking its shelves. Comparable spending benchmarks would involve analyzing other large-scale procurement contracts for similar consumer goods by government agencies or large retail chains.

Small Business Impact

The data indicates that this contract did not include small business set-asides (sb: false) and was not awarded to a small business (ss: false). This suggests that opportunities for small businesses to participate, either as prime contractors or potentially through subcontracting, were not explicitly prioritized or were unavailable. Further investigation into the subcontracting plan, if one existed, would be necessary to understand the full impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the purview of the Defense Commissary Agency (DeCA) and potentially the Department of Defense's Inspector General. Accountability measures would involve monitoring delivery schedules, product quality, and adherence to contract terms. Transparency is limited by the 'not available for competition' designation, which typically requires a justification that may not be publicly accessible. The fixed-price nature provides some level of cost oversight, but performance monitoring is key.

Related Government Programs

Defense Commissary Agency Operations
Military Retail and Services
Wholesale Trade Procurement
Health and Personal Care Product Distribution

Risk Flags

Sole-source award
High value for short duration
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.9 million to KIMBERLY-CLARK CORPORATION. RESALE - HEALTH AND BEAUTY PRODUCTS

Who is the contractor on this award?

The obligated recipient is KIMBERLY-CLARK CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Commissary Agency).

What is the total obligated amount?

The obligated amount is $17.9 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 'NOT AVAILABLE FOR COMPETITION,' which is synonymous with a sole-source award. However, the specific justification for this determination is not included. Typically, sole-source justifications are required for situations where only one responsible source can provide the required supplies or services, such as unique capabilities, urgent needs, or follow-on work to a previous sole-source award. Without the official justification document, it's impossible to ascertain the precise reasoning. This lack of transparency can raise concerns about whether competition was genuinely impossible or if it was simply bypassed.

How does the per-unit cost of these health and beauty products compare to market rates or similar government contracts?

The provided data does not include per-unit cost information, making a direct comparison to market rates or similar government contracts impossible. The total award of $17.8 million over 91 days is a significant sum, but without knowing the quantity of items procured, it's difficult to infer unit pricing. To assess value for money, one would need access to the detailed pricing structure within the contract or data from comparable procurements by the Defense Commissary Agency or other federal entities for similar product categories. Benchmarking against commercial retail prices or wholesale distributor price lists would also be necessary.

What is Kimberly-Clark Corporation's track record with the Department of Defense and the Defense Commissary Agency?

Kimberly-Clark Corporation is a large, established manufacturer of consumer packaged goods, including health and beauty products. While this specific data point represents a single delivery order, the company likely has a history of supplying goods through various channels, potentially including government contracts. Its track record with the DoD and DeCA would typically be assessed based on past performance evaluations, on-time delivery rates, product quality, and compliance with contract terms in previous engagements. A review of the Federal Awardee Performance and Integrity Information System (FAPIIS) might provide further insights into their performance history.

What is the expected impact of this contract on the availability and variety of health and beauty products for military personnel?

This contract is intended to ensure the consistent availability of essential health and beauty products for military personnel and their families through the Defense Commissary Agency (DeCA). By procuring these items, the contract directly supports the commissary's mission to provide quality goods at prices comparable to or lower than civilian retailers. The specific variety of products would depend on the detailed list of items included in the delivery order, which is not provided here. However, the substantial award suggests a significant quantity and likely a range of common health and personal care items.

Are there any identified risks associated with this specific contract award or the contractor?

The primary risk identified is the lack of competition, which can lead to higher prices and reduced value for taxpayers. The sole-source nature means the government did not benefit from competitive bidding. Additionally, the high total award value for a relatively short period raises questions about cost-effectiveness and whether the government is receiving fair market value. Without specific performance data, there's also a general risk associated with any contract that the delivery may not be timely or that the products may not meet quality standards, although Kimberly-Clark is a reputable manufacturer.

How does this contract fit into the broader spending patterns for health and beauty products within the Department of Defense or military retail operations?

This contract represents a specific instance of procurement for health and beauty products by the Defense Commissary Agency (DeCA), a component of the DoD. DeCA's overall budget and spending on various product categories, including health and beauty, would provide context. Analyzing historical spending data for similar product categories over multiple years would reveal trends, seasonality, and the typical scale of such procurements. This single $17.8 million award for a short period suggests that such procurements can be substantial, but its proportion relative to DeCA's total annual sales or procurement budget would offer a clearer picture of its significance.

Industry Classification

NAICS: Wholesale Trade › Drugs and Druggists' Sundries Merchant Wholesalers › Drugs and Druggists' Sundries Merchant Wholesalers

Product/Service Code: MISCELLANEOUS

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: 401 N WAKE ST, NEENAH, WI, 54956

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $17,876,028

Exercised Options: $17,876,028

Current Obligation: $17,876,028

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0109G3828

IDV Type: IDC

Timeline