DoD's $33.7M grocery contract with General Mills Inc. awarded via sole-source, raising questions on competition and value

Contract Overview

Contract Amount: $33,675,488 ($33.7M)

Contractor: General Mills Inc

Awarding Agency: Department of Defense

Start Date: 2008-10-01

End Date: 2008-12-31

Contract Duration: 91 days

Daily Burn Rate: $370.1K/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 $33.7 million to GENERAL MILLS INC for work described as: RESALE - DRY GROCERY Key points: 1. The contract's sole-source nature limits competitive pressure, potentially impacting price efficiency. 2. Analysis of value for money is hindered by the lack of competitive bidding. 3. The contract duration of 91 days suggests a short-term need for these goods. 4. The award was a delivery order under a larger contract, details of which are not provided. 5. The specific product category, 'RESALE - DRY GROCERY', indicates essential food supplies. 6. The contractor, General Mills Inc., is a major food manufacturer, suggesting established supply chains.

Value Assessment

Rating: questionable

Benchmarking the value for money on this $33.7 million contract is challenging due to its sole-source nature and the limited information available regarding the specific delivery order. Without competitive bids, it's difficult to assess if the pricing reflects market rates or if a better value could have been achieved through a competitive process. The fixed-price contract type provides some cost certainty, but the absence of competition prevents a robust comparison to similar contracts or market benchmarks.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This approach bypasses the standard procurement process where multiple vendors submit bids. While sole-source awards can be justified in specific circumstances, they typically result in less price discovery and potentially higher costs for the government compared to fully competed contracts. The lack of competition here means taxpayers may not have received the most advantageous pricing.

Taxpayer Impact: The absence of competition means taxpayers did not benefit from the potential cost savings that could arise from multiple vendors vying for the contract. This could translate to a higher overall expenditure for the goods procured.

Public Impact

Military personnel and their families stationed at the relevant Defense Commissary Agency (DECA) locations benefit from the availability of dry grocery items. The contract ensures the supply of essential food products, contributing to the morale and well-being of service members. The geographic impact is localized to the areas served by the specific DECA facilities receiving these goods. The contract supports the supply chain and distribution network for major food manufacturers like General Mills Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to suboptimal pricing for taxpayers.
Sole-source awards can indicate potential issues with market research or pre-existing relationships.
Limited transparency into the justification for sole-source award.

Positive Signals

Ensures availability of essential dry grocery items for military families.
Award to a large, established manufacturer suggests reliable supply.
Fixed-price contract provides cost certainty for this specific order.

Sector Analysis

The defense commissary system relies on a consistent supply of food and household goods to support military communities. This contract falls within the broader food wholesale and distribution sector, which is characterized by large players and complex logistics. The Defense Commissary Agency (DECA) is a significant purchaser of consumer goods, and its procurement activities can influence market dynamics for food suppliers. Benchmarking against other large-scale food procurement contracts within the federal government would be necessary for a comprehensive value assessment.

Small Business Impact

This contract was awarded to General Mills Inc., a large corporation, and there is no indication of a small business set-aside. Consequently, this award does not directly benefit small businesses through prime contracting. Furthermore, there is no information provided regarding subcontracting opportunities for small businesses within this specific delivery order, which limits the assessment of its impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Commissary Agency (DECA) and the Department of Defense. As a delivery order under a potentially larger contract, specific oversight mechanisms would depend on the terms of that master agreement. Transparency regarding the justification for the sole-source award and the pricing structure is limited based on the provided data. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Commissary Agency Operations
Federal Food Procurement
Wholesale Grocery Distribution Contracts

Risk Flags

Sole-source award without clear justification
Potential lack of competitive pricing
Limited transparency on value for money

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.7 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 $33.7 million.

What is the period of performance?

Start: 2008-10-01. End: 2008-12-31.

What is the track record of General Mills Inc. in fulfilling federal contracts, particularly for grocery items?

General Mills Inc. has a history of receiving federal contracts, primarily through various agencies including the Department of Defense and the Department of Agriculture, for food products. While specific details on performance for every contract are not publicly itemized in a readily accessible format, their status as a major food manufacturer suggests established capabilities in production and distribution. However, the nature of sole-source awards, like this one, means that direct comparisons of their pricing and performance against competitors in a competitive bidding scenario are not available for this specific transaction. Further investigation into past performance evaluations for similar contracts, if available, would be necessary for a comprehensive assessment.

How does the pricing of this $33.7 million grocery contract compare to similar federal procurements or market rates?

Direct price comparison for this $33.7 million contract is difficult due to its sole-source nature and the limited data provided. Without competitive bids, it's impossible to establish a benchmark against what other vendors might have offered or what prevailing market rates are for similar bulk dry grocery items procured under competitive conditions. The Defense Commissary Agency (DECA) procures a wide range of goods, and pricing can vary significantly based on product mix, volume, delivery locations, and contract terms. To assess value, one would ideally compare unit prices for specific items against historical DECA contracts or General Services Administration (GSA) schedules, if applicable, but this information is not available here.

What are the primary risks associated with awarding a large contract like this on a sole-source basis?

The primary risks associated with awarding a large contract on a sole-source basis include potential overpayment due to lack of price competition, reduced incentive for the contractor to offer the best possible value, and a lack of transparency in the procurement process. Taxpayers may bear a higher cost than necessary. Furthermore, sole-source awards can sometimes indicate a failure in market research or an over-reliance on a single supplier, which can create vulnerabilities in the supply chain if that supplier faces issues. It also limits opportunities for new or smaller businesses to enter the federal market.

How effective is the Defense Commissary Agency (DECA) in ensuring value for money in its grocery procurements?

The Defense Commissary Agency (DECA) aims to provide quality goods at savings to military members and their families, which inherently involves seeking value for money. DECA utilizes various procurement strategies, including competitive bidding for many of its needs. However, as demonstrated by this sole-source award, there are instances where competitive processes are bypassed. The effectiveness in ensuring value for money can be variable and depends heavily on the specific contract type, the justification for the procurement method, and the oversight applied. A comprehensive assessment would require analyzing a broader portfolio of DECA contracts, including those awarded competitively.

What are the historical spending patterns for dry grocery items by the Department of Defense or DECA?

Historical spending patterns for dry grocery items by the Department of Defense, particularly through the Defense Commissary Agency (DECA), represent a significant and consistent expenditure. DECA's mission is to provide groceries to military personnel and their families, and dry goods form a substantial portion of this. While the exact total annual spending fluctuates based on operational needs and market prices, it runs into hundreds of millions, if not billions, of dollars annually across all commissary stores. This specific $33.7 million award is a component of that larger, ongoing spending requirement for essential food supplies.

What is the justification for awarding this $33.7 million contract to General Mills Inc. as a sole-source procurement?

The provided data indicates the contract was 'NOT AVAILABLE FOR COMPETITION,' which is a common descriptor for sole-source awards. However, the specific justification or rationale behind this determination is not detailed in the data. Typically, sole-source procurements are justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source can provide the required supplies or services, or in cases of urgent and compelling need where competition is not feasible. Without further documentation from the agency, the precise reason for bypassing competition for this $33.7 million grocery order remains unclear.

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: $33,675,488

Exercised Options: $33,675,488

Current Obligation: $33,675,488

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0104G3048

IDV Type: IDC

Timeline