DoD's $883M Food Service Contract with Sodexo: A Decade of Firm Fixed Price Spending

Contract Overview

Contract Amount: $883,240,594 ($883.2M)

Contractor: Sodexo Management Inc.

Awarding Agency: Department of Defense

Start Date: 2011-02-23

End Date: 2021-06-09

Contract Duration: 3,759 days

Daily Burn Rate: $235.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: LABOR HOURS

Place of Performance

Location: CAMP LEJEUNE, ONSLOW County, NORTH CAROLINA, 28547

State: North Carolina Government Spending

Plain-Language Summary

Department of Defense obligated $883.2 million to SODEXO MANAGEMENT INC. for work described as: LABOR HOURS Key points: 1. Significant spending of over $883 million on food services. 2. Sodexo Management Inc. is the sole contractor for this period. 3. The contract spans nearly 10 years, indicating long-term reliance. 4. Firm Fixed Price contract type suggests predictable costs but less flexibility. 5. No explicit mention of small business participation.

Value Assessment

Rating: fair

The $883 million awarded over nearly 10 years averages to approximately $88.3 million annually. Without specific benchmarks for food service contracts of this scale and scope, it's difficult to definitively assess pricing. However, the duration and fixed-price nature suggest potential for price escalation or missed savings opportunities if market conditions changed significantly.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is a positive sign for price discovery. However, the fact that Sodexo was the sole awardee for this extensive period raises questions about whether subsequent opportunities were re-competed effectively or if the initial competition set a long-term precedent.

Taxpayer Impact: The firm fixed price structure aims to provide cost certainty for taxpayers. However, the long duration without clear indications of competitive re-evaluation could mean taxpayers are not benefiting from the most competitive pricing available over the entire contract term.

Public Impact

Ensures consistent food services for military personnel over a decade. Significant financial commitment by the Department of Defense. Potential impact on the broader food service contracting market. Long-term contract may limit opportunities for other service providers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of small business participation.
Long contract duration without clear re-competition points.
Fixed-price contract may not adapt to market fluctuations.

Positive Signals

Awarded under full and open competition.
Firm fixed price provides cost predictability.

Sector Analysis

Food service contracting is a significant segment within government procurement, supporting operational readiness and personnel welfare. Benchmarks for such large-scale, long-duration contracts are highly variable, depending on location, service level, and specific requirements. This $883 million award represents a substantial investment in maintaining essential services.

Small Business Impact

The data indicates that small business participation was not a factor in this contract award (sb: false). For a contract of this magnitude, it is unusual not to see provisions or subcontracting goals for small businesses, which could represent a missed opportunity for economic inclusion.

Oversight & Accountability

The contract's long duration (2011-2021) necessitates robust oversight to ensure service quality and adherence to terms. The 'NC' status (likely 'No Change' or similar) suggests a stable, though potentially unoptimized, relationship. Further review of performance reports and any contract modifications would be needed to assess oversight effectiveness.

Related Government Programs

Food Service Contractors
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Lack of small business participation.
Long contract duration may limit competitive pricing over time.
Fixed-price contract may not fully capture market efficiencies.
Potential for contractor complacency due to long-term sole award.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $883.2 million to SODEXO MANAGEMENT INC.. LABOR HOURS

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 $883.2 million.

What is the period of performance?

Start: 2011-02-23. End: 2021-06-09.

What was the rationale for awarding a single, long-term contract to one vendor for food services, and were there opportunities for smaller vendors to participate in subcontracting?

The rationale for a single, long-term contract often centers on efficiency, standardization, and reduced administrative burden. However, the absence of small business participation (sb: false) suggests that subcontracting opportunities may not have been mandated or actively pursued. Future contracts could benefit from incorporating specific small business subcontracting goals to foster broader economic participation and potentially introduce specialized services.

How did the firm fixed price structure impact the government's ability to benefit from potential cost savings or adapt to changing food costs over the contract's 10-year duration?

A firm fixed price (FFP) contract provides cost certainty for the government, shielding it from cost overruns by the contractor. However, it also means the government may not benefit if the contractor achieves significant cost savings. Over a 10-year period, fluctuating food costs and supply chain dynamics could mean the FFP became either disadvantageous to the government (if costs rose significantly) or highly profitable for the contractor (if costs decreased).

Given the significant award amount and duration, what mechanisms were in place to ensure ongoing value and prevent contractor complacency?

While the contract was awarded under full and open competition, the long duration and sole awardee status warrant scrutiny of ongoing value. Mechanisms like regular performance reviews, clear service level agreements, and potential for incentive fees or penalties tied to performance metrics are crucial. Without specific oversight details, it's presumed that standard DoD procurement regulations were followed, but proactive measures to ensure continuous value and prevent complacency are key.

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

Solicitation ID: M0002710R0001

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 9801 WASHINGTONIAN BLVD, GAITHERSBURG, MD, 20878

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $883,240,594

Exercised Options: $883,240,594

Current Obligation: $883,240,594

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline