DoD's $14.6M Dry Grocery Contract with General Mills: Limited Competition Raises Cost Concerns

Contract Overview

Contract Amount: $14,619,547 ($14.6M)

Contractor: General Mills Inc

Awarding Agency: Department of Defense

Start Date: 2008-09-01

End Date: 2008-09-30

Contract Duration: 29 days

Daily Burn Rate: $504.1K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE

Sector: Other

Official Description: RESALE - DRY GROCERY

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55426

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $14.6 million to GENERAL MILLS INC for work described as: RESALE - DRY GROCERY Key points: 1. Significant spending on dry groceries highlights essential supply chain needs. 2. Sole-source nature of the contract limits competitive pricing advantages. 3. Potential for overpayment exists due to lack of competitive bidding. 4. The Defense Commissary Agency relies on consistent supply for service members.

Value Assessment

Rating: questionable

The contract value of $14.6M for a single delivery order is substantial. Without competitive pricing data, it's difficult to assess if this price is fair compared to similar bulk grocery wholesale contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not available for competition, indicating a sole-source award. This significantly limits price discovery and potentially leads to higher costs for the government.

Taxpayer Impact: The lack of competition likely results in taxpayers paying a premium for these essential grocery items.

Public Impact

Ensures availability of essential dry grocery items for Department of Defense personnel and their families. Supports the Defense Commissary Agency's mission to provide quality goods at a savings. Highlights the government's reliance on large, established suppliers for bulk goods.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competitive pricing
Potential for inflated costs

Positive Signals

Ensures supply of essential goods
Supports military families

Sector Analysis

The Defense Commissary Agency operates within the broader government procurement sector for essential goods. Spending benchmarks for wholesale grocery distribution are typically driven by volume and competitive market rates.

Small Business Impact

This contract does not appear to involve small businesses, as it is a direct award to a large corporation, General Mills Inc.

Oversight & Accountability

The sole-source nature of this contract warrants scrutiny to ensure the government received fair value. Further review of the justification for the sole-source award is recommended.

Related Government Programs

General Line Grocery Merchant Wholesalers
Department of Defense Contracting
Defense Commissary Agency Programs

Risk Flags

Sole-source award
Lack of competition
Potential for price inflation
Limited transparency in pricing
No small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.6 million to GENERAL MILLS INC. RESALE - DRY GROCERY

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 $14.6 million.

What is the period of performance?

Start: 2008-09-01. End: 2008-09-30.

What was the justification for awarding this contract on a sole-source basis?

The justification for a sole-source award is critical for understanding why competition was bypassed. Typically, this is due to a lack of available sources, urgent and compelling needs, or specific government requirements that only one vendor can meet. Without this information, it's impossible to fully assess the necessity of the sole-source approach and its impact on pricing.

What is the estimated cost savings that would have been achieved through a competitive bidding process?

Estimating cost savings from a competitive process is challenging without market research or historical data from similar competitive contracts. However, for a $14.6 million contract awarded sole-source, it's reasonable to assume that competitive bidding could have yielded savings ranging from 5% to 20%, depending on market conditions and the number of bidders.

How does the per-unit cost of these groceries compare to commercial market prices?

Direct comparison of per-unit costs is difficult without specific product details and commercial market data. However, sole-source contracts often lack the downward price pressure inherent in competitive procurement. Therefore, it is probable that the per-unit costs are higher than what could be achieved through open competition, impacting overall value for taxpayer dollars.

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

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

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $14,619,547

Exercised Options: $14,619,547

Current Obligation: $14,619,547

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0104G3048

IDV Type: IDC

Timeline