DoD spent $25M on grocery wholesale for Afghanistan, raising questions about value and logistics

Contract Overview

Contract Amount: $25,060,050 ($25.1M)

Contractor: Supreme Foodservice Gmbh

Awarding Agency: Department of Defense

Start Date: 2011-09-01

End Date: 2011-09-30

Contract Duration: 29 days

Daily Burn Rate: $864.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: PRIME VENDOR AFGHANISTAN

Plain-Language Summary

Department of Defense obligated $25.1 million to SUPREME FOODSERVICE GMBH for work described as: PRIME VENDOR AFGHANISTAN Key points: 1. The contract awarded to Supreme Foodservice GmbH for $25.06 million represents a significant expenditure for wholesale grocery supply. 2. The short duration of 29 days suggests a specific, potentially urgent need rather than a long-term supply chain solution. 3. The contract was awarded under full and open competition, indicating a broad market search. 4. The prime vendor was Afghanistan, suggesting a focus on supporting operations in that region. 5. The fixed-price contract type aims to control costs, but the overall value-for-money needs further scrutiny given the context. 6. The absence of small business set-asides or subcontracting plans warrants examination of broader economic impacts.

Value Assessment

Rating: questionable

The $25.06 million awarded to Supreme Foodservice GmbH for wholesale groceries in Afghanistan warrants scrutiny. While the firm fixed-price structure is intended to cap costs, the specific context of supplying a theater of operations like Afghanistan can introduce unique logistical challenges and overheads that may inflate per-unit costs compared to domestic supply. Benchmarking against similar contracts for deployed forces or contingency operations would be necessary to definitively assess value, but the sheer scale for a single month's supply suggests a need for detailed cost breakdown and justification.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit offers. The presence of 3 bidders suggests a degree of competition, which is generally positive for price discovery. However, the effectiveness of this competition in driving down costs for a specialized service like supplying a remote operational theater needs to be evaluated. The specific requirements and logistical complexities may have limited the number of truly capable bidders.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to secure the best possible prices through market forces. The fact that multiple vendors participated suggests that taxpayer funds were likely exposed to competitive pressures, potentially preventing excessive pricing.

Public Impact

The primary beneficiaries of this contract are the U.S. military personnel and potentially allied forces operating in Afghanistan, who received essential food supplies. The service delivered was the wholesale distribution of general line groceries, crucial for sustaining troop morale and operational readiness. The geographic impact is concentrated in Afghanistan, highlighting the logistical challenges of supporting deployed forces in complex environments. Workforce implications are likely related to the logistics, transportation, and warehousing sectors within the operational area and potentially for the prime vendor's global operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High dollar value for a short-duration contract raises questions about cost-efficiency and potential overpricing.
The remote operational theater (Afghanistan) introduces significant logistical complexities that can drive up costs and risks.
Lack of transparency regarding specific line items and profit margins makes a thorough value assessment difficult.
The short contract duration might indicate a reactive procurement rather than strategic planning, potentially leading to less favorable terms.

Positive Signals

Awarded under full and open competition, suggesting an effort to leverage market forces.
The firm fixed-price contract type provides cost certainty for the government.
The prime vendor's specialization in food services for challenging environments may indicate relevant expertise.

Sector Analysis

This contract falls within the wholesale trade sector, specifically general line grocery merchant wholesalers. The market for supplying food to military operations in deployed or contingency zones is a specialized niche within this broader sector. Such contracts often involve complex logistics, security considerations, and adherence to strict quality standards, differentiating them from standard commercial wholesale operations. Comparable spending benchmarks would likely be found in other Department of Defense contracts supporting overseas bases or contingency operations, where similar logistical and supply chain challenges exist.

Small Business Impact

There is no indication that this contract involved small business set-asides or subcontracting plans. The prime vendor, Supreme Foodservice GmbH, is a large international company. This suggests that the primary economic benefit related to small businesses would likely be indirect, through their potential role as suppliers to the prime vendor, rather than through direct contract awards or mandated subcontracting.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Contract Management Agency (DCMA) and the relevant contracting officer within the Defense Logistics Agency (DLA). Accountability measures are inherent in the firm fixed-price contract, which obligates the vendor to deliver specified goods at an agreed-upon price. Transparency is often limited in operational support contracts due to security and logistical sensitivities, but reporting requirements on delivery and quality would be standard.

Related Government Programs

Defense Logistics Agency (DLA) Food and Subsistence
Contingency Contracting
Logistics Support Services
Overseas Base Support Contracts

Risk Flags

High Cost for Short Duration
Logistical Complexity in Deployed Theater
Limited Competition Data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.1 million to SUPREME FOODSERVICE GMBH. PRIME VENDOR AFGHANISTAN

Who is the contractor on this award?

The obligated recipient is SUPREME FOODSERVICE GMBH.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $25.1 million.

What is the period of performance?

Start: 2011-09-01. End: 2011-09-30.

What is the typical profit margin for wholesale food suppliers in contingency operations compared to commercial markets?

Profit margins for wholesale food suppliers in contingency operations can vary significantly due to heightened risks, logistical complexities, and specialized requirements. While commercial wholesale margins might range from 1-5%, contracts supporting deployed forces often include premiums to account for factors such as security escorts, specialized transportation, extended payment terms, and the potential for disruptions. Without specific data from Supreme Foodservice GmbH or comparable contracts, it's difficult to pinpoint an exact margin. However, it is reasonable to assume that margins in such high-risk, high-complexity environments could be higher than in stable domestic markets, potentially ranging from 5-15% or more, depending on the specific contract terms and competitive landscape.

How does the per-unit cost of groceries supplied under this contract compare to standard U.S. retail or wholesale prices?

Direct comparison of per-unit costs is challenging without detailed line-item data from the contract and knowledge of the specific grocery items procured. However, it is highly probable that the per-unit costs under this contract were significantly higher than standard U.S. retail or wholesale prices. This premium would be attributed to the substantial logistical overhead associated with transporting goods to Afghanistan, including international freight, customs, security, last-mile delivery in a potentially unstable environment, and the costs associated with maintaining supply chain integrity under challenging conditions. The prime vendor's operational costs, including staffing, warehousing, and risk mitigation in the theater, would also be factored into the pricing.

What were the specific logistical challenges in supplying food to Afghanistan that justified the contract's value?

Supplying food to Afghanistan presents numerous logistical challenges. These include the vast distances from established supply hubs, the need for secure transportation routes susceptible to disruption, potential political instability affecting access, and the requirement for temperature-controlled storage and transit to maintain food safety and quality. Furthermore, ensuring a consistent and reliable supply chain requires robust infrastructure, qualified personnel, and adherence to stringent military standards. The contract's value would reflect the costs associated with overcoming these hurdles, including air or sea freight, overland transport with security, warehousing facilities, inventory management, and the risk premiums necessary to operate in such an environment.

How many bidders participated in the 'full and open competition' for this contract, and what does this imply about market availability?

The data indicates that three bidders participated in the full and open competition for this contract. While three bidders suggest some level of market interest, it is a relatively small number for a "full and open" solicitation, especially for a contract valued at over $25 million. This could imply that the market for specialized food supply services in contingency operations is limited, or that the specific requirements of the solicitation (e.g., geographic scope, delivery timelines, security clearances) may have restricted the pool of capable and willing participants. A low number of bidders, even under open competition, can sometimes indicate potential barriers to entry or a lack of robust competition, which could impact price discovery.

What is the track record of Supreme Foodservice GmbH in fulfilling similar large-scale food supply contracts for military or governmental organizations?

Supreme Foodservice GmbH has a documented history of providing food services and logistics support to military and governmental organizations, particularly in challenging or remote locations. They have been a significant contractor for organizations like NATO and various national militaries, often operating in regions experiencing conflict or requiring extensive logistical support. Their experience typically involves managing complex supply chains, ensuring food safety and quality standards, and adapting to diverse operational environments. While specific performance metrics for past contracts are not detailed here, their sustained presence as a prime vendor suggests a capacity to meet the demanding requirements of such operations, though like any large contractor, they may have faced scrutiny or challenges on specific projects.

Industry Classification

NAICS: Wholesale Trade › Grocery and Related Product Merchant Wholesalers › General Line Grocery Merchant Wholesalers

Product/Service Code: SUBSISTENCE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Supreme Group Holding Sarl (UEI: 400210806)

Address: TURBINENWEG 2, ZIEGELBRUECKE

Business Categories: Category Business, Foreign Owned, Limited Liability Corporation, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $25,060,050

Exercised Options: $25,060,050

Current Obligation: $25,060,050

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPM30011D3502

IDV Type: IDC

Timeline