Defense Commissary Agency awards $31.5M for flour and baking products to General Mills Inc

Contract Overview

Contract Amount: $31,544,446 ($31.5M)

Contractor: General Mills Inc

Awarding Agency: Department of Defense

Start Date: 2010-04-01

End Date: 2010-06-30

Contract Duration: 90 days

Daily Burn Rate: $350.5K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: RESALE - FLOUR AND OTHER MISCELLANEOUS BAKING PRODUCTS

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55426

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $31.5 million to GENERAL MILLS INC for work described as: RESALE - FLOUR AND OTHER MISCELLANEOUS BAKING PRODUCTS Key points: 1. Contract awarded on a non-competitive basis, raising questions about potential cost savings through competition. 2. The contract value represents a significant portion of the Defense Commissary Agency's spending on baking supplies. 3. Fixed-price contract type suggests predictable costs, but the lack of competition limits price discovery. 4. The duration of 90 days for this delivery order is relatively short, indicating a specific, immediate need. 5. General Mills Inc. is a large, established food manufacturer, suggesting a low risk of contractor failure. 6. The contract falls under the Flour Milling industry code, indicating specialized product sourcing.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging without comparable non-competitive awards for similar quantities of flour and baking products. The firm fixed-price structure provides cost certainty for the agency. However, the absence of competition means there's no direct market comparison to assess if the price is truly optimal or if a better value could have been achieved through a competitive bidding process. The total award amount of $31.5 million for a 90-day delivery order suggests a substantial volume of goods, but without detailed product specifications and market price data for bulk flour and baking ingredients, a precise value-for-money assessment is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' (NAF) designation, indicating that a competitive process was not utilized. This typically occurs when only one source is capable of meeting the agency's needs, or in specific emergency situations. The lack of multiple bidders means that the Defense Commissary Agency did not benefit from the price discovery and potential cost reductions that typically arise from a competitive solicitation process. This approach limits the agency's ability to ensure it is receiving the most economical pricing available in the market.

Taxpayer Impact: Taxpayers may not be receiving the best possible price for these essential baking products due to the absence of a competitive bidding environment. The lack of competition prevents market forces from driving down costs, potentially leading to higher overall expenditures for the agency.

Public Impact

Military personnel and their families benefit from the availability of baking products through the Defense Commissary Agency. The contract ensures the supply of essential ingredients for various food preparation and baking needs within commissary stores. The geographic impact is nationwide, serving commissaries across all military installations where these products are distributed. The contract supports the workforce involved in food production, logistics, and retail operations within the Defense Commissary Agency's supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher prices than a competitive award.
Reliance on a single supplier for critical baking ingredients could pose supply chain risks if not managed proactively.
The 'NOT AVAILABLE FOR COMPETITION' status requires careful justification to ensure taxpayer funds are used efficiently.

Positive Signals

Award to a well-established and reputable supplier like General Mills Inc. reduces performance risk.
Firm fixed-price contract provides cost certainty for the Defense Commissary Agency.
The contract ensures the consistent availability of necessary baking products for commissary operations.

Sector Analysis

The food manufacturing sector, specifically flour milling and baking product supply, is a critical component of the broader food industry. This contract falls within the scope of supplying essential ingredients for retail food operations. The market for bulk flour and baking ingredients is characterized by large-scale producers and distributors. Comparable spending benchmarks for such contracts are difficult to ascertain publicly, especially for non-competitive awards, but the scale of this award suggests a significant volume purchase, likely reflecting the extensive reach of the Defense Commissary Agency.

Small Business Impact

This contract does not appear to involve a small business set-aside, as it was awarded to General Mills Inc., a large corporation. There is no explicit mention of subcontracting requirements for small businesses within the provided data. The focus of this award is on securing a large volume of goods from a primary manufacturer, which may limit direct opportunities for small businesses to participate in this specific procurement. However, General Mills Inc. may engage small businesses in its broader supply chain, which is not detailed here.

Oversight & Accountability

Oversight for this contract would primarily reside with the Defense Commissary Agency's contracting officers and program managers. Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency regarding non-competitive awards is generally subject to federal procurement regulations, which often require justification and documentation. The Inspector General for the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Defense Commissary Agency Operations
Food and Agricultural Products Procurement
Military Food Service Contracts
Commodity Food Purchases

Risk Flags

Lack of Competition
Potential for Overpricing
Supply Chain Dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.5 million to GENERAL MILLS INC. RESALE - FLOUR AND OTHER MISCELLANEOUS BAKING PRODUCTS

Who is the contractor on this award?

The obligated recipient is GENERAL MILLS INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $31.5 million.

What is the period of performance?

Start: 2010-04-01. End: 2010-06-30.

What is the historical spending pattern for flour and miscellaneous baking products by the Defense Commissary Agency?

Analyzing the historical spending patterns for flour and miscellaneous baking products by the Defense Commissary Agency (DECA) is crucial for understanding the context of this $31.5 million award. While specific historical data for this exact category is not provided, DECA's mission is to provide high-quality commissary goods and services to military members and their families at military installations worldwide. This includes a wide range of food products, with baking ingredients being a staple. Past procurements would likely show consistent demand for such items, potentially with fluctuating prices based on market conditions, commodity costs, and supplier competition. The agency typically procures goods through various contract types, including competitive bids and, in some cases, non-competitive awards for specific needs or sole-source situations. Understanding the volume and frequency of past purchases would help determine if this $31.5 million award represents a typical, increased, or decreased level of spending for the specified period and product category.

What specific types of flour and miscellaneous baking products are included in this $31.5 million contract?

The provided data indicates the contract is for 'RESALE - FLOUR AND OTHER MISCELLANEOUS BAKING PRODUCTS' under NAICS code 311211 (Flour Milling). However, the specific breakdown of 'other miscellaneous baking products' is not detailed. This could encompass a wide array of items beyond basic flour, such as sugar, yeast, baking powder, chocolate chips, spices, pre-made baking mixes, or other ingredients essential for baking operations within commissary stores or for resale to patrons. The 'RESALE' designation suggests these products are intended for sale to authorized patrons through commissary facilities, rather than for direct use in preparing meals for the military. A comprehensive understanding of the product list would require access to the full contract statement of work or product catalog, which would detail quantities, specifications, and types of each item procured.

What is the justification for awarding this contract on a 'NOT AVAILABLE FOR COMPETITION' basis?

The justification for awarding this contract on a 'NOT AVAILABLE FOR COMPETITION' (NAF) basis is a critical aspect of procurement transparency and efficiency. Federal Acquisition Regulation (FAR) Part 6 outlines the policies for contracting without full and open competition. Common justifications include: (1) only one responsible source and no other supplies or services will satisfy agency requirements (e.g., unique capabilities, proprietary technology); (2) an urgent and compelling need where delays associated with competitive acquisition would result in unacceptable delays; (3) a statute or executive order expressly authorizing or requiring that the acquisition be from a specified source; or (4) the agency has determined that a specific small business concern is the only source capable of meeting the requirement. Without the specific justification cited by the Defense Commissary Agency, it is impossible to definitively state why competition was precluded. This information is typically documented in the contract file and may be subject to public disclosure under certain conditions.

How does the firm fixed-price contract type mitigate risks for the Defense Commissary Agency?

The firm fixed-price (FFP) contract type is generally considered advantageous for the buyer when the scope of work is well-defined and risks related to cost overruns can be reasonably estimated. For the Defense Commissary Agency (DECA) in this contract for flour and baking products, an FFP structure means that General Mills Inc. is obligated to deliver the specified goods at the agreed-upon price, regardless of their actual costs incurred. This mitigates financial risk for DECA, as it provides cost certainty and predictability. The agency knows precisely how much it will spend on these items, simplifying budgeting and financial planning. Any cost overruns experienced by the contractor are absorbed by General Mills Inc., incentivizing them to manage their production and supply chain efficiently to maintain profitability. This contrasts with cost-reimbursement contracts, where the government bears the risk of cost increases.

What is the typical market size and competitive landscape for flour and baking product suppliers to government agencies?

The market for flour and baking products supplied to government agencies is substantial, driven by the needs of various entities including military commissaries, federal prisons, disaster relief organizations, and other institutional food service providers. The competitive landscape varies depending on the specific product and volume. For large-scale commodity items like bulk flour, the market is often dominated by a few major national or regional producers, such as General Mills Inc., ADM, and Conagra Brands. These large companies possess the production capacity and distribution networks necessary to fulfill significant government contracts. However, for more specialized baking ingredients or smaller quantities, a broader range of suppliers, including smaller manufacturers and distributors, may participate. Government procurement processes, particularly competitive solicitations, aim to foster competition among these players to secure favorable pricing and terms. The prevalence of non-competitive awards, as seen in this case, can indicate market consolidation or specific circumstances that limit broader participation.

Industry Classification

NAICS: Manufacturing › Grain and Oilseed Milling › Flour Milling

Product/Service Code: SUBSISTENCE

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1 GENERAL MILLS BLVD, MINNEAPOLIS, MN, 55426

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

Financial Breakdown

Contract Ceiling: $31,544,446

Exercised Options: $31,544,446

Current Obligation: $31,544,446

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0109G3837

IDV Type: IDC

Timeline