DoD's $29.7M Grocery Contract with Kraft Foods Raises Questions on Competition and Value

Contract Overview

Contract Amount: $29,685,172 ($29.7M)

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: $326.2K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE

Sector: Other

Official Description: RESALE - ASSORTED GROCERIES (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 $29.7 million to KRAFT FOODS GLOBAL, INC. for work described as: RESALE - ASSORTED GROCERIES (SECTION A) Key points: 1. Significant spending on assorted groceries, primarily from Kraft Foods. 2. Lack of competition noted, potentially impacting price discovery. 3. Fixed-price contract type offers some cost certainty. 4. Spending concentrated within the Defense Commissary Agency.

Value Assessment

Rating: questionable

The total award amount of $29.7M for a 91-day period is substantial. Without comparable contract data or benchmarks for grocery resale, assessing the value is difficult. The fixed-price nature provides some predictability, but the lack of competition is a concern.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was not available for competition, indicating a limited source. This lack of competitive bidding may have prevented the government from securing the best possible pricing through market forces.

Taxpayer Impact: The absence of competition could lead to higher costs for taxpayers compared to a fully competitive scenario.

Public Impact

Military families and personnel rely on commissary services for groceries. The contract ensures the availability of essential food items. Spending on food supplies impacts the overall budget for military support services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Limited contract duration
No clear benchmark for value

Positive Signals

Fixed price contract
Ensures supply of essential goods

Sector Analysis

This contract falls under wholesale trade for groceries, specifically serving the Defense Commissary Agency. Benchmarks for this niche sector are not readily available, but large-scale food distribution contracts typically involve significant volume and require efficient logistics.

Small Business Impact

The data does not indicate any specific provisions or participation by small businesses in this contract. The primary contractor is Kraft Foods Global, Inc., a large corporation.

Oversight & Accountability

The contract was awarded by the Defense Commissary Agency, which is responsible for managing commissary stores worldwide. Oversight would involve ensuring delivery and quality of goods as per the fixed-price agreement.

Related Government Programs

General Line Grocery Merchant Wholesalers
Department of Defense Contracting
Defense Commissary Agency Programs

Risk Flags

Potential for overpayment due to lack of competition.
Limited duration may not reflect long-term needs or efficiencies.
Absence of small business participation.
Lack of clear performance metrics or value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.7 million to KRAFT FOODS GLOBAL, INC.. RESALE - ASSORTED GROCERIES (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 $29.7 million.

What is the period of performance?

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

What is the typical profit margin for similar grocery resale contracts, and how does this award compare?

Determining the typical profit margin for such specific grocery resale contracts is challenging without access to proprietary data or detailed cost breakdowns. However, given the fixed-price nature and lack of competition, it's difficult to ascertain if Kraft Foods Global, Inc. secured an optimal profit margin or if taxpayers bore a premium due to limited bidding.

What are the risks associated with a limited competition contract for essential goods like groceries?

The primary risk of limited competition for essential goods is the potential for inflated prices and reduced quality. Without the pressure of competing bids, the sole or limited source may not be incentivized to offer the most cost-effective or highest quality products, potentially leading to taxpayer overspending and less value for the end-users.

How effective is the fixed-price contract type in ensuring value for money in this specific grocery resale scenario?

A fixed-price contract offers some effectiveness by capping the government's cost exposure, providing budget certainty. However, its effectiveness in ensuring value for money is diminished when competition is limited. While the price is fixed, it may not be the lowest achievable price, thus potentially sacrificing some value for the taxpayer.

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: $29,685,172

Exercised Options: $29,685,172

Current Obligation: $29,685,172

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0104G2878

IDV Type: IDC

Timeline