DoD's $20.9M grocery resale contract with Kraft Foods Global, Inc. awarded via non-competitive means

Contract Overview

Contract Amount: $20,943,140 ($20.9M)

Contractor: Kraft Foods Global, Inc.

Awarding Agency: Department of Defense

Start Date: 2008-10-01

End Date: 2008-12-31

Contract Duration: 91 days

Daily Burn Rate: $230.1K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE

Sector: Other

Official Description: RESALE - ASSORTED GROCERY

Place of Performance

Location: COLONIAL HEIGHTS, COLONIAL HEIGHTS CITY County, VIRGINIA, 23834

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $20.9 million to KRAFT FOODS GLOBAL, INC. for work described as: RESALE - ASSORTED GROCERY Key points: 1. Contract awarded as a delivery order under an existing contract, suggesting potential for streamlined procurement. 2. The fixed-price contract type offers cost certainty for the government. 3. The contract duration of 91 days indicates a short-term need for these goods. 4. The North American Industry Classification System (NAICS) code 424410 points to wholesale distribution of groceries. 5. The contract was awarded to a single entity, raising questions about competitive pricing. 6. The absence of small business set-aside flags suggests this was not specifically targeted for small business participation.

Value Assessment

Rating: questionable

Benchmarking the value of this specific $20.9 million contract is challenging without comparable data for similar short-term, non-competitive grocery resale agreements. The fixed-price nature provides some cost control, but the lack of competition means there's no direct market comparison to assess if the pricing is optimal. Without more information on the specific goods and services procured, a definitive value-for-money assessment is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' designation, indicating it was not openly competed. This suggests that either a pre-existing contract vehicle was utilized, or specific circumstances justified a sole-source award. The lack of multiple bidders means there was no opportunity for price discovery through a competitive bidding process, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure to drive down prices. The government did not benefit from the potential cost savings that typically arise from a competitive bidding environment.

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 grocery items. The contract ensures the availability of a range of grocery products, supporting the morale and well-being of service members. The geographic impact is concentrated within the areas served by the Defense Commissary Agency, primarily in Virginia. The contract supports the supply chain and distribution workforce involved in delivering these goods to commissaries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have resulted in inflated prices compared to a fully competed contract.
Limited transparency into the justification for a sole-source award.
Potential for reduced product variety or less favorable terms due to absence of competitive negotiation.

Positive Signals

Fixed-price contract provides budget certainty for the government.
Ensures a consistent supply of essential goods to military families.
Awarded to a known entity, potentially leveraging existing relationships and supply chains.

Sector Analysis

This contract falls within the wholesale trade sector, specifically for general line grocery merchants. The Defense Commissary Agency (DECA) operates a global chain of commissaries, providing groceries to military personnel and their families. The market for grocery wholesale is large and competitive, but this specific award was not subject to that broad competition, instead relying on a specific procurement mechanism. Comparable spending benchmarks would typically involve analyzing DECA's overall procurement spend on groceries and comparing it to industry averages for distribution costs.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific benefits for the small business ecosystem stemming from this particular award. The focus was likely on fulfilling the primary requirement through an established supplier.

Oversight & Accountability

Oversight for this contract would fall under the Defense Commissary Agency (DECA), a component of the Department of Defense. Accountability measures would be tied to the terms and conditions of the fixed-price delivery order, including delivery schedules and product quality. Transparency is limited due to the non-competitive nature of the award, with the justification for the sole-source award being the primary document for scrutiny.

Related Government Programs

Defense Commissary Agency Operations
Military Resale Operations
Grocery Supply Chain Management
Department of Defense Procurement

Risk Flags

Non-competitive award
Lack of price competition
Short contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.9 million to KRAFT FOODS GLOBAL, INC.. RESALE - ASSORTED 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 $20.9 million.

What is the period of performance?

Start: 2008-10-01. End: 2008-12-31.

What was the specific justification for awarding this contract on a non-competitive basis?

The provided data indicates the contract was awarded under 'NOT AVAILABLE FOR COMPETITION' (ct: 'NOT AVAILABLE FOR COMPETITION'). This designation typically implies that a full and open competition was not feasible or appropriate. Common reasons for such awards include the existence of a prior contract or order under which the supplies or services were procured, the need for standardization, or urgent and compelling circumstances. Without access to the specific contract file or justification documentation, the precise reason remains unknown. However, the fact that it's a delivery order suggests it might have been placed against an existing indefinite-delivery/indefinite-quantity (IDIQ) contract or a similar pre-negotiated agreement.

How does the fixed-price contract type benefit the government in this scenario?

A fixed-price contract type, as indicated by 'pt: FIXED PRICE', is generally advantageous for the government when the scope of work is well-defined and risks associated with cost overruns are manageable. In this case, it means Kraft Foods Global, Inc. agreed to provide the specified grocery items at a predetermined price. This provides the Department of Defense with cost certainty, making budgeting more predictable. The contractor assumes the risk of cost increases; if their expenses rise, their profit margin decreases, but the government's payment remains fixed. This structure is beneficial for procuring standard goods like groceries where market prices can fluctuate but the overall cost is relatively predictable over the short term of the contract.

What is the significance of the contract being a 'Delivery Order'?

The contract being a 'Delivery Order' (aw: 'DELIVERY ORDER') signifies that it is likely a task order placed against a larger, pre-existing contract vehicle, such as an Indefinite Delivery/Indefinite Quantity (IDIQ) contract. This approach is often used for recurring needs or when specific quantities and delivery times are not known at the outset of the overarching contract. For the government, it allows for flexibility in ordering needed supplies or services as requirements arise, without needing to conduct a full competitive procurement for each individual order. For the contractor, it represents a confirmed order under an established agreement. The short duration (91 days) suggests this was a specific, time-bound need fulfilled via this mechanism.

What are the potential risks associated with a non-competitive award for grocery supplies?

The primary risk associated with a non-competitive award, such as this one designated 'NOT AVAILABLE FOR COMPETITION', is the potential for paying a higher price than would be achieved through a competitive process. Without multiple bidders vying for the contract, there is less pressure on the contractor to offer the lowest possible price. This can lead to reduced value for taxpayer money. Additionally, a lack of competition might reduce the incentive for the contractor to innovate or offer superior service, as there is no direct threat from competitors. Transparency can also be a concern, as the justification for bypassing competition needs to be robust to ensure fairness and prevent potential impropriety.

How does the NAICS code 424410 inform our understanding of this contract?

The North American Industry Classification System (NAICS) code 424410, 'General Line Grocery Merchant Wholesalers,' provides critical context for this contract. It indicates that Kraft Foods Global, Inc. is acting as a wholesaler, distributing a wide variety of grocery products. This is distinct from manufacturing or direct retail. For the Department of Defense and the Defense Commissary Agency, this means the contract is focused on the procurement and distribution logistics of a broad range of food and household items typically found in a grocery store. Understanding this classification helps in assessing the scope of goods and services expected and comparing the contract's value to other wholesale distribution agreements within the federal government or the broader market.

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: FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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

Address: 930 SOUTH AVE SUITE 11, COLONIAL HEIGH, VA, 23834

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $20,943,140

Exercised Options: $20,943,140

Current Obligation: $20,943,140

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0104G2872

IDV Type: IDC

Timeline