DoD's $30M+ grocery contract to General Mills Inc. shows limited competition and raises value questions

Contract Overview

Contract Amount: $30,351,805 ($30.4M)

Contractor: General Mills Inc

Awarding Agency: Department of Defense

Start Date: 2009-01-01

End Date: 2009-03-31

Contract Duration: 89 days

Daily Burn Rate: $341.0K/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 $30.4 million to GENERAL MILLS INC for work described as: RESALE - DRY GROCERY Key points: 1. The contract awarded to General Mills Inc. for dry grocery resale highlights a lack of competitive bidding. 2. Analysis of the contract's value is challenging due to the absence of a competitive process. 3. The fixed-price contract type offers some cost certainty but may not reflect market dynamics. 4. The short duration of the delivery order suggests a tactical procurement rather than a long-term strategic one. 5. The specific product category, 'RESALE - DRY GROCERY', indicates a focus on commissary or resale operations. 6. The contract's value, while significant, needs to be benchmarked against similar bulk grocery procurements.

Value Assessment

Rating: fair

Benchmarking the value of this $30.3 million contract is difficult without comparable bids. The fixed-price nature provides cost certainty for the government, but the lack of competition means the price may not reflect the most advantageous market rate. Without knowing the specific items and quantities, a precise per-unit cost comparison is not feasible. However, the absence of competition inherently raises questions about whether the government secured the best possible value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' designation, indicating a sole-source procurement. This means only one vendor, General Mills Inc., was solicited. The lack of competition limits the government's ability to explore alternative suppliers or negotiate potentially lower prices through a bidding process. It suggests circumstances where competition was deemed impractical or impossible.

Taxpayer Impact: Taxpayers may not have received the benefit of competitive pricing, potentially leading to a higher cost for the goods procured compared to an open market scenario.

Public Impact

Military personnel and their families benefit from the availability of dry groceries through resale operations. The contract ensures the supply of essential food items for commissary or similar resale facilities. The geographic impact is primarily within the operational areas served by the Defense Commissary Agency. The contract supports the supply chain for food distribution within the Department of Defense.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competitive bidding may result in suboptimal pricing for taxpayers.
Sole-source award limits transparency and potential cost savings.
Short contract duration might indicate a reactive procurement rather than strategic planning.

Positive Signals

Ensures availability of essential dry grocery items for military families.
Fixed-price contract offers some predictability in government spending.
Award to a known entity like General Mills Inc. may imply established supply chain reliability.

Sector Analysis

The procurement falls within the broader wholesale trade sector, specifically general line grocery merchant wholesalers. This contract represents a small fraction of the overall federal spending on food and subsistence for the Department of Defense. Comparable spending benchmarks would involve analyzing other large-scale food supply contracts awarded by the DoD or other federal agencies to ensure fair market pricing and efficient resource allocation.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no information provided regarding subcontracting plans. The award to a large corporation like General Mills Inc. suggests that the primary focus was on fulfilling a large-scale supply requirement rather than promoting small business participation.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Commissary Agency (DECA) and the Department of Defense's internal audit and inspection mechanisms. The fixed-price nature of the contract provides a degree of accountability for the final cost. However, the lack of competition limits the scope for external oversight focused on price reasonableness derived from market competition.

Related Government Programs

Defense Commissary Agency Operations
Department of Defense Food Supply Contracts
Federal Grocery Procurement
Wholesale Food Distribution Contracts

Risk Flags

Sole-source award raises concerns about price reasonableness.
Lack of competition limits transparency in government spending.
Short contract duration may indicate a non-strategic procurement approach.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.4 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 $30.4 million.

What is the period of performance?

Start: 2009-01-01. End: 2009-03-31.

What is the track record of General Mills Inc. in fulfilling federal contracts, particularly for the Defense Commissary Agency?

General Mills Inc. has a history of supplying goods to the federal government. While this specific contract is a delivery order valued at over $30 million, its sole-source nature and short duration (89 days) suggest it might be part of a larger framework or a specific, urgent need. A comprehensive review would require examining all contracts awarded to General Mills Inc. by the DoD and other agencies to assess performance, delivery timeliness, and compliance with contract terms. Without access to detailed performance data for this specific order, it's difficult to definitively assess their track record solely based on this information. However, as a major food manufacturer, they are generally expected to have robust supply chain and fulfillment capabilities.

How does the value of this contract compare to similar bulk grocery procurements by the federal government?

Direct comparison of this $30.3 million contract's value is challenging without knowing the exact product mix, quantities, and delivery locations. Federal grocery procurements can vary significantly based on these factors. However, for context, the Defense Commissary Agency (DECA) manages a substantial grocery resale program. Annual sales for DECA are in the billions of dollars. This single contract, while large, represents a portion of that overall spending. To benchmark effectively, one would need to identify comparable fixed-price delivery orders for similar dry grocery categories awarded to other large wholesalers or manufacturers by agencies like the DoD or GSA, looking at price per unit or per pound for staple items.

What are the primary risks associated with a sole-source award for essential supplies like dry groceries?

The primary risk of a sole-source award for essential supplies is the potential for inflated pricing due to the absence of competitive pressure. The government may end up paying more than it would in a competitive environment. Another risk is reduced innovation and service quality, as the contractor faces less incentive to improve offerings. Furthermore, sole-source awards can create dependency on a single supplier, which can be problematic if that supplier experiences disruptions. Transparency is also reduced, making it harder for oversight bodies and the public to verify that taxpayer money is being spent efficiently and effectively.

What is the expected effectiveness of this contract in ensuring the availability of dry groceries for military personnel and families?

The effectiveness of this contract in ensuring the availability of dry groceries hinges on General Mills Inc.'s ability to meet the specified delivery requirements within the contract period. As a large, established food manufacturer, the expectation is that they possess the logistical capabilities to fulfill the order. The contract's purpose is to replenish stock or meet specific demand within the Defense Commissary Agency's resale operations. Assuming the contract terms accurately reflect the demand and General Mills fulfills its obligations, the contract should be effective in maintaining the supply of these essential items, thereby supporting the quality of life for military members and their families.

What are the historical spending patterns for dry grocery procurement by the Defense Commissary Agency or similar entities?

Historical spending patterns for dry grocery procurement by the Defense Commissary Agency (DECA) reveal a consistent and significant investment in food supplies to support military communities. DECA's overall budget and sales figures indicate billions of dollars spent annually on a wide array of grocery items. Procurement typically involves a mix of competitive bids for high-volume, standardized goods and potentially sole-source or limited competition awards for specialized items or during specific circumstances. Analyzing past contracts would show trends in pricing, supplier diversity, and the proportion of spending allocated to different food categories, including dry groceries. This helps establish a baseline for evaluating current contract values and competition levels.

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: $30,351,805

Exercised Options: $30,351,805

Current Obligation: $30,351,805

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0104G3048

IDV Type: IDC

Timeline