DoD's $16.7M grocery resale contract with Quaker Oats awarded without competition

Contract Overview

Contract Amount: $16,786,344 ($16.8M)

Contractor: Quaker Oats Company, the

Awarding Agency: Department of Defense

Start Date: 2008-10-01

End Date: 2008-12-31

Contract Duration: 91 days

Daily Burn Rate: $184.5K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE

Sector: Other

Official Description: RESALE - ASSORTED GROCERY (SECTION A)

Place of Performance

Location: CHICAGO, COOK County, ILLINOIS, 60661

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $16.8 million to QUAKER OATS COMPANY, THE for work described as: RESALE - ASSORTED GROCERY (SECTION A) Key points: 1. The contract's value of $16.7M for grocery resale raises questions about potential overspending without competitive bidding. 2. Awarding this contract on a non-competitive basis limits opportunities for price discovery and potentially higher costs for taxpayers. 3. The short duration of 91 days suggests a tactical award rather than a strategic sourcing initiative. 4. The lack of a specified Product Service Code (PSC) makes it difficult to benchmark against similar procurements. 5. The contract was awarded to a single supplier, indicating a potential lack of market research or a specific need. 6. The absence of small business participation noted on this contract warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: questionable

The $16.7 million price tag for assorted grocery resale, particularly for a 91-day period, appears high without a competitive benchmark. The absence of a specified Product Service Code (PSC) hinders direct comparison to similar government contracts for grocery wholesale. Given the nature of grocery resale, it is plausible that competitive bidding could have yielded a more favorable price for the government. The fixed-price contract type offers some cost certainty, but the lack of competition overshadows this benefit.

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. The Defense Commissary Agency (DECA) did not provide details on the number of bidders or the justification for limiting competition. This lack of open competition means that potential savings through a bidding process were likely forgone, and the government may not have secured the best possible pricing or terms.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the price reductions typically achieved through competitive bidding, potentially leading to higher overall spending for essential goods.

Public Impact

Military personnel and their families benefit from access to groceries through the Defense Commissary Agency. The contract supports the Defense Commissary Agency's mission to provide quality goods at a savings to service members. The geographic impact is likely nationwide, serving commissaries where Quaker Oats products are distributed. The contract supports the supply chain for grocery products, indirectly impacting the food manufacturing and distribution workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices for taxpayers.
Absence of small business participation raises concerns about equitable distribution of contract value.
Short contract duration suggests a potential gap-filling measure rather than strategic procurement.
Unspecified PSC makes it difficult to assess the scope and value accurately.

Positive Signals

Ensures availability of specific grocery items for military families.
Fixed-price contract provides cost predictability for the awarded amount.
Awarded to a known entity, potentially ensuring product quality and availability.

Sector Analysis

The grocery resale sector within the federal government, primarily managed by agencies like the Defense Commissary Agency (DECA), involves procuring a wide range of food and household items for military communities. This contract falls under the broader category of wholesale trade and distribution of food products. Comparable spending benchmarks are difficult to establish without a specific PSC, but the overall federal spending on commissary operations runs into billions annually, with a significant portion dedicated to product acquisition.

Small Business Impact

The provided data indicates that small business participation was not a factor in this specific award (sb: false, ss: false). This sole-source contract did not include a small business set-aside. There is no information available regarding subcontracting plans with small businesses. This lack of engagement with the small business sector for this particular procurement means that potential opportunities for small businesses to contribute to the federal supply chain were missed.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Commissary Agency's internal procurement and financial oversight mechanisms. As a delivery order under a larger framework (implied by 'delivery order'), the initial contract award would have undergone review. However, the lack of competition limits the transparency typically afforded by a bidding process. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Commissary Agency Operations
Federal Grocery Procurement
Wholesale Food Distribution Contracts

Risk Flags

Lack of Competition
Potential for Overpricing
No Small Business Participation Identified

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.8 million to QUAKER OATS COMPANY, THE. RESALE - ASSORTED GROCERY (SECTION A)

Who is the contractor on this award?

The obligated recipient is QUAKER OATS COMPANY, THE.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $16.8 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 indicates the contract was awarded under 'NOT AVAILABLE FOR COMPETITION,' which is a designation for sole-source or limited competition procurements. However, the specific justification for this determination is not detailed in the provided data. Typically, such justifications would include reasons like urgency, lack of available sources, or specific technical requirements that only one contractor can meet. Without this explicit justification, it is difficult to assess the necessity of bypassing the competitive bidding process and whether it was in the best interest of the government.

How does the $16.7 million price compare to similar grocery resale contracts awarded competitively?

Direct comparison is challenging due to the absence of a specific Product Service Code (PSC) and the sole-source nature of this award. Competitive contracts for similar grocery resale items, especially those with longer durations or larger volumes, often yield lower per-unit costs due to economies of scale and price pressures from multiple bidders. The $16.7 million figure for a 91-day period, without competitive context, raises concerns about potential overpayment. Benchmarking would require access to detailed pricing data from comparable competitive awards within the Defense Commissary Agency or other federal food procurement programs.

What are the potential risks associated with awarding a contract of this value without competition?

The primary risk is financial, as the government may have paid a higher price than necessary due to the lack of competitive pressure. This can lead to inefficient use of taxpayer funds. Another risk is reduced innovation, as sole-source awards do not incentivize contractors to offer novel solutions or cost-saving measures. Furthermore, it can create a perception of favoritism or a lack of due diligence in procurement processes. For the Defense Commissary Agency, relying on a single source could also pose supply chain risks if the contractor faces production or distribution issues.

What is the historical spending pattern for this specific type of grocery resale contract with The Quaker Oats Company?

The provided data only details this single contract award from October 1, 2008, to December 31, 2008. It does not offer historical spending patterns for this specific contract or for The Quaker Oats Company with the Defense Commissary Agency. To assess historical spending, one would need to query federal procurement databases for prior or subsequent contracts awarded to this vendor for similar goods or services, noting the award mechanisms (competitive vs. sole-source) and values to identify trends or patterns.

What oversight mechanisms are in place to ensure the quality and delivery of goods under this contract?

Standard oversight for such contracts typically involves quality assurance personnel from the Defense Commissary Agency who would inspect goods upon delivery to ensure they meet specifications. Contract officers monitor performance against contract terms, including delivery schedules and product quality. Given this was a delivery order, the initial contract award would have had its own oversight framework. However, the lack of competition might mean less scrutiny on the initial pricing and vendor selection process compared to a fully competed contract.

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: Pepsico, Inc. (UEI: 001287762)

Address: 555 WEST MONROE STREET, CHICAGO, IL, 60661

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $16,786,344

Exercised Options: $16,786,344

Current Obligation: $16,786,344

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0104G2954

IDV Type: IDC

Timeline