DoD's $24.7M lunch meat contract awarded to Kraft Foods Global, Inc. raises questions on competition and value

Contract Overview

Contract Amount: $24,764,623 ($24.8M)

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: $272.1K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE

Sector: Other

Official Description: RESALE - ASSORTED LUNCH MEATS (SECTION A)

Place of Performance

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

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $24.8 million to KRAFT FOODS GLOBAL, INC. for work described as: RESALE - ASSORTED LUNCH MEATS (SECTION A) Key points: 1. The contract's value of $24.7 million for lunch meats suggests a significant volume of goods procured. 2. Awarded as 'NOT AVAILABLE FOR COMPETITION', this raises concerns about potential lack of competitive pricing. 3. The short duration of 91 days for this delivery order may indicate a need for immediate supply rather than long-term strategic sourcing. 4. The Product Service Code (PSC) is blank, hindering detailed analysis of the specific goods or services procured. 5. The contract was awarded to a single vendor, Kraft Foods Global, Inc., limiting price discovery and potentially increasing costs. 6. The absence of small business set-aside flags suggests this contract did not prioritize small business participation.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of a specific Product Service Code and the nature of the award. However, a $24.7 million expenditure for lunch meats, even for a large organization like the Department of Defense, warrants scrutiny. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value or if taxpayers received the best possible deal. The fixed-price contract type offers some cost certainty, but the lack of competition is a primary concern for value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under 'NOT AVAILABLE FOR COMPETITION', indicating a sole-source or limited competition scenario. This means that only one vendor, Kraft Foods Global, Inc., was considered for this procurement. The lack of a competitive bidding process prevents other potential suppliers from offering their products and services, which can lead to higher prices and reduced innovation. The rationale for this limited competition is not provided, making it difficult to assess its justification.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the most competitive pricing. The absence of multiple bids limits the government's ability to negotiate favorable terms and potentially leads to overspending on essential supplies.

Public Impact

Military personnel and their families stationed at various Defense Commissary Agency (DECA) locations benefit from the availability of lunch meats. The contract ensures a consistent supply of food products for commissaries, supporting the morale and well-being of service members. The geographic impact is likely widespread, covering commissary facilities serviced by the Defense Commissary Agency across the United States and potentially overseas. The contract supports the food distribution and wholesale industry, specifically impacting Kraft Foods Global, Inc. and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition for a significant dollar amount raises concerns about price fairness.
The absence of a specific Product Service Code makes it difficult to fully understand the scope and nature of the procurement.
The short contract duration might indicate reactive procurement rather than strategic planning.
No indication of small business participation or subcontracting opportunities.

Positive Signals

The contract was awarded to a major food supplier, potentially ensuring product quality and reliability.
Fixed-price contract type provides some cost predictability for the government.
The Defense Commissary Agency is responsible for providing quality goods to military families, and this contract supports that mission.

Sector Analysis

The procurement of food items like lunch meats falls under the broader category of general wholesale trade and food services. The Defense Commissary Agency (DECA) is a significant purchaser of food products to support military personnel and their families. While specific market data for 'assorted lunch meats' is not readily available, the broader grocery wholesale market is substantial. This contract represents a portion of the Department of Defense's overall food procurement spending, which is a critical component of military support services.

Small Business Impact

There is no indication from the provided data that this contract included any small business set-aside provisions or subcontracting goals. The award to Kraft Foods Global, Inc., a large corporation, suggests that small businesses were likely not directly involved in fulfilling this specific contract. This could mean missed opportunities for small businesses to participate in government contracting and contribute to the supply chain.

Oversight & Accountability

Oversight for this contract would fall under the Defense Commissary Agency (DECA) and the Department of Defense. As a delivery order under a larger contract, its execution would be monitored by DECA contracting officers. Transparency is limited by the 'NOT AVAILABLE FOR COMPETITION' status and the lack of detailed public information. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the performance or award of the contract.

Related Government Programs

Defense Commissary Agency Food Procurement
Department of Defense Food Services
General Line Grocery Merchant Wholesalers
Federal Food Supply Contracts

Risk Flags

Lack of Competition
Potential for Overpricing
Limited Transparency
No Small Business Participation Indicated

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.8 million to KRAFT FOODS GLOBAL, INC.. RESALE - ASSORTED LUNCH MEATS (SECTION A)

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 $24.8 million.

What is the period of performance?

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

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

The provided data states the contract was 'NOT AVAILABLE FOR COMPETITION,' which typically implies a sole-source award. However, the specific justification for this determination is not included. Common reasons for sole-source awards include a lack of adequate competition, urgent and compelling needs where only one source can fulfill the requirement, or specific national security concerns. Without further documentation from the agency, it is impossible to definitively state the reason for this limited competition. This lack of transparency is a concern for ensuring fair and competitive procurement practices.

How does the unit cost of these lunch meats compare to similar government or commercial contracts?

Direct comparison of unit costs is not possible with the provided data. The contract specifies 'RESALE - ASSORTED LUNCH MEATS (SECTION A)' with a total value of $24,764,623.20 over 91 days. However, the data does not include the quantity of lunch meats procured, the specific types of meats, or their unit prices. Furthermore, since this was a sole-source award, there are no comparable bids from other vendors to establish a benchmark. To assess value for money, a detailed breakdown of quantities and unit prices, along with comparisons to commercially available prices or other government contracts for similar items, would be necessary.

What are the potential risks associated with awarding a large food supply contract without competition?

The primary risk of awarding a large food supply contract without competition is the potential for inflated prices. When vendors know they are the only option, they may have less incentive to offer their best pricing. This can lead to taxpayers paying more than necessary for the goods. Additionally, a lack of competition can stifle innovation and reduce the quality of service over time, as there is no competitive pressure to improve. It also raises concerns about the fairness and transparency of the procurement process, potentially eroding public trust.

What is the historical spending pattern for lunch meat procurement by the Defense Commissary Agency?

The provided data only pertains to a single delivery order awarded in 2008. To understand historical spending patterns, one would need to analyze DECA's procurement data over several fiscal years. This would involve looking at the total amount spent on lunch meats, the number of contracts awarded, the types of competition used (e.g., full and open, sole-source), and the primary contractors. Without this broader historical context, it's difficult to determine if this $24.7 million award is typical, an outlier, or indicative of a trend in DECA's procurement strategy for such items.

What is the track record of Kraft Foods Global, Inc. in fulfilling government contracts, particularly for food supplies?

Kraft Foods Global, Inc. is a large, established food manufacturer and distributor. As such, it likely has a history of fulfilling numerous commercial and potentially government contracts. However, the provided data does not detail Kraft's specific track record with the Department of Defense or the Defense Commissary Agency for this particular type of product. A comprehensive assessment would require reviewing past performance evaluations, any contract disputes or terminations, and the overall volume and nature of their government business. Without this specific performance data, it's difficult to definitively assess their track record for this contract.

Does the 'General Line Grocery Merchant Wholesalers' classification accurately reflect the specialized nature of lunch meat procurement?

The classification 'General Line Grocery Merchant Wholesalers' (NAICS code 424410) is a broad category that encompasses businesses primarily engaged in wholesaling a wide variety of food and non-food grocery products. While lunch meats are indeed grocery items, this classification might not fully capture the specialized nature of procuring specific types of processed meats, which could involve unique handling, storage, and quality control requirements. It suggests a general wholesale function rather than a highly specialized food service or meat processing supplier. This broad classification could impact how the procurement is categorized and analyzed within broader economic or spending data.

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: $24,764,623

Exercised Options: $24,764,623

Current Obligation: $24,764,623

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0104G2873

IDV Type: IDC

Timeline