DoD's $657M Food Service Contract with Sodexo: A Decade of Fixed-Price Incentives
Contract Overview
Contract Amount: $657,232,794 ($657.2M)
Contractor: Sodexo Management Inc.
Awarding Agency: Department of Defense
Start Date: 2002-10-01
End Date: 2011-03-31
Contract Duration: 3,103 days
Daily Burn Rate: $211.8K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: FIXED PRICE INCENTIVE
Sector: Other
Place of Performance
Location: CAMP LEJEUNE, ONSLOW County, NORTH CAROLINA, 28547
Plain-Language Summary
Department of Defense obligated $657.2 million to SODEXO MANAGEMENT INC. for work described as: Key points: 1. Significant contract value of $657.2M over 9 years. 2. Sodexo Management Inc. secured this large contract. 3. Fixed Price Incentive (FPI) contract type suggests shared risk/reward. 4. Competition was Full and Open, indicating a competitive bidding process.
Value Assessment
Rating: fair
The contract utilized a Fixed Price Incentive (FPI) structure, which can lead to cost efficiencies if managed well. However, the total award of $657.2M over 9 years warrants scrutiny for value compared to industry benchmarks for food services.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under Full and Open Competition, suggesting a robust price discovery process. This method typically yields competitive pricing, but the long duration and specific nature of food services may have influenced final pricing.
Taxpayer Impact: Taxpayer funds were utilized for a large-scale food service contract. The FPI structure aims to balance cost control with performance incentives, potentially optimizing taxpayer value over the contract's life.
Public Impact
Impacts military personnel and their families through food services. Supports a large federal contractor, Sodexo Management Inc. Demonstrates significant government spending in the food service sector. Long contract duration (9 years) implies sustained service provision.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Long contract duration (9 years) may limit flexibility and opportunities for new vendors.
- Fixed Price Incentive contracts can sometimes lead to cost overruns if not closely monitored.
- Lack of specific performance metrics or award details makes value assessment difficult.
Positive Signals
- Awarded under Full and Open Competition, suggesting competitive pricing.
- Sodexo is a major player, potentially offering economies of scale.
- Contract structure includes incentives, aiming for performance and cost efficiency.
Sector Analysis
This contract falls within the Food Service Contractors sector, a critical support service for government operations, particularly in military settings. Benchmarks for similar large-scale, long-term food service contracts are essential for evaluating cost-effectiveness.
Small Business Impact
The data indicates the primary awardee is Sodexo Management Inc., a large corporation. There is no explicit information provided regarding subcontracting to small businesses, which is a potential area for oversight.
Oversight & Accountability
The contract's long duration (9 years) necessitates robust oversight to ensure continued value and performance. Monitoring the incentive structure and adherence to service level agreements is crucial for accountability.
Related Government Programs
- Food Service Contractors
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Long contract duration may reduce competition and innovation.
- Lack of transparency on performance metrics and incentive payouts.
- Potential for cost creep in Fixed Price Incentive contracts.
- No clear indication of small business participation.
- Value for money assessment is difficult without detailed cost breakdowns.
Tags
food-service-contractors, department-of-defense, nc, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $657.2 million to SODEXO MANAGEMENT INC.. See the official description on USAspending.
Who is the contractor on this award?
The obligated recipient is SODEXO MANAGEMENT INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Navy).
What is the total obligated amount?
The obligated amount is $657.2 million.
What is the period of performance?
Start: 2002-10-01. End: 2011-03-31.
What were the specific performance metrics and incentive targets that guided the Fixed Price Incentive structure, and how effectively were they met over the contract's lifespan?
The effectiveness of the Fixed Price Incentive (FPI) structure hinges on clearly defined performance metrics and achievable incentive targets. Without access to the contract's specific clauses, it's difficult to assess how well Sodexo met these goals. A review would need to examine delivery standards, food quality, cost control adherence, and the resulting incentive payouts to determine if the FPI truly optimized value and performance for the Department of Defense.
Given the $657M total award over 9 years, how does the per-service cost compare to industry benchmarks for similar large-scale food service operations, and what factors might explain any discrepancies
A direct comparison of the per-service cost against industry benchmarks is challenging without detailed service volume and pricing breakdowns. However, a $657M award over 9 years averages roughly $73M annually. This figure needs to be contextualized by the number of personnel served, geographic locations, and specific service requirements. Deviations from benchmarks could be attributed to factors like remote locations, specialized dietary needs, or stringent security protocols inherent in military food service contracts.
What was the rationale for a 9-year contract duration, and did this extended period limit opportunities for competitive re-evaluation or innovation in food service delivery?
Long-duration contracts like this 9-year award are often chosen for stability and to allow contractors to amortize significant startup costs or investments in infrastructure. However, such lengthy periods can stifle competition and innovation by locking in a single provider for an extended time. Agencies typically justify these durations by citing the complexity of the service or the need for continuity. A review would assess if periodic reviews or break clauses were included to mitigate these risks.
Industry Classification
NAICS: Accommodation and Food Services › Special Food Services › Food Service Contractors
Product/Service Code: UTILITIES AND HOUSEKEEPING › HOUSEKEEPING SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 4
Pricing Type: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Parent Company: Sodexo (UEI: 261190003)
Address: 9801 WASHINGTONIAN BLVD, GAITHERSBURG, MD, 20878
Business Categories: Category Business, Not Designated a Small Business
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2002-10-01
Current End Date: 2011-03-31
Potential End Date: 2011-03-31 00:00:00
Last Modified: 2016-09-22
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