DoD's $13.4M yogurt purchase for commissaries shows potential for better price discovery

Contract Overview

Contract Amount: $13,414,131 ($13.4M)

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: $147.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE

Sector: Other

Official Description: RESALE - YOGURT

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55426

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $13.4 million to GENERAL MILLS INC for work described as: RESALE - YOGURT Key points: 1. The contract awarded to General Mills Inc. for yogurt highlights a significant expenditure within the Defense Commissary Agency. 2. While the specific value-for-money is difficult to ascertain without detailed cost breakdowns, the fixed-price nature suggests some cost certainty. 3. The 'NOT AVAILABLE FOR COMPETITION' status raises questions about whether the government secured the best possible pricing. 4. Performance context is limited to a short 91-day duration, suggesting a tactical procurement rather than a long-term strategic one. 5. This contract falls within the broader category of food and grocery wholesale, a sector with established market dynamics. 6. The lack of competition is a key risk indicator, potentially leading to inflated costs for taxpayers.

Value Assessment

Rating: questionable

Benchmarking the value of this specific yogurt purchase is challenging due to the lack of detailed cost information and the limited scope of the contract. However, the absence of competitive bidding suggests that the government may not have achieved optimal pricing compared to a scenario with multiple offers. The fixed-price contract type provides some predictability, but without market comparisons or cost analysis, assessing true value-for-money remains difficult. The raw dollar amount of $13.4 million for a 91-day delivery order indicates a substantial volume, underscoring the importance of competitive sourcing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' basis, indicating that the Defense Commissary Agency did not solicit bids from multiple vendors. This sole-source approach limits the opportunity for price discovery and potentially reduces the incentive for the contractor to offer the most competitive pricing. Without a competitive process, it's impossible to determine how many bidders might have participated or what alternative pricing structures could have been achieved.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the best possible price for goods and services, as the benefit of competition in driving down costs is absent.

Public Impact

Military personnel and their families benefit from the availability of essential grocery items like yogurt through the commissary system. The services delivered include the wholesale supply of yogurt to Defense Commissary Agency facilities. The geographic impact is primarily within the United States, supporting commissary operations nationwide. Workforce implications are minimal for this specific contract, likely involving logistics and distribution personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher prices for taxpayers.
Limited contract duration might indicate a reactive procurement rather than strategic planning.
Absence of detailed cost breakdowns hinders thorough value-for-money assessment.

Positive Signals

Fixed-price contract offers some cost certainty.
Procurement supports essential goods for military families.
General Mills Inc. is a known supplier, suggesting a degree of reliability.

Sector Analysis

The procurement of groceries, including yogurt, falls under the broad 'Wholesale Trade' sector, specifically within the 'General Line Grocery Merchant Wholesalers' category. This sector is characterized by established supply chains and significant market competition for consumer goods. The Defense Commissary Agency acts as a major buyer, leveraging its scale to provide goods to military communities. Comparable spending benchmarks would involve analyzing other large-scale food procurements by government agencies or major retail distributors.

Small Business Impact

This contract does not appear to involve small business set-asides, as indicated by 'sb: false'. There is no information provided regarding subcontracting opportunities for small businesses. The primary contractor, General Mills Inc., is a large corporation, suggesting that the direct impact on the small business ecosystem for this specific procurement is likely minimal.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Commissary Agency's internal procurement and financial management systems. Accountability measures are inherent in the fixed-price contract terms, requiring delivery of specified goods. Transparency is limited by the sole-source nature of the award and the lack of publicly available detailed cost breakdowns. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Commissary Agency Operations
Food and Beverage Procurement
Wholesale Grocery Distribution
Military Support Services

Risk Flags

Sole-source award
Lack of transparency in pricing
Limited performance duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $13.4 million to GENERAL MILLS INC. RESALE - YOGURT

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 $13.4 million.

What is the period of performance?

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

What is the historical spending pattern for yogurt procurement by the Defense Commissary Agency?

Analyzing historical spending patterns for yogurt by the Defense Commissary Agency (DECA) is crucial for understanding trends, identifying potential cost efficiencies, and assessing the impact of market fluctuations. Without access to DECA's specific historical procurement data for yogurt, a comprehensive analysis is not possible. However, general trends in the food wholesale market suggest that prices can be influenced by factors such as commodity costs (e.g., milk prices), seasonal demand, and supplier competition. A review of past contracts, including their duration, volume, pricing structures, and competition levels, would reveal whether DECA has consistently relied on sole-source awards or if competitive bidding has been more prevalent. Significant year-over-year increases or decreases in spending could indicate changes in demand, shifts in supplier pricing power, or evolving procurement strategies. Understanding these patterns helps in evaluating whether the current $13.4 million award for a 91-day period represents a typical expenditure or an outlier.

How does the unit cost of this yogurt purchase compare to commercial retail prices or other government contracts?

Comparing the unit cost of this $13.4 million yogurt purchase to commercial retail prices or other government contracts is essential for assessing value for money. However, the provided data lacks the specific unit quantity or detailed product specifications (e.g., brand, type of yogurt, packaging size) needed for a direct comparison. Commercial retail prices vary widely based on brand, store, promotions, and volume purchased. Government contracts, especially those awarded non-competitively, may not reflect market-driven pricing. To perform a meaningful comparison, one would need to know the total number of units procured under this contract and the specific product details. If this were a bulk purchase of a standard item, comparing the per-unit price to wholesale distributors' pricing or to similar fixed-price contracts awarded competitively by other agencies for comparable products would be the most appropriate method. The absence of this information makes a definitive value assessment difficult.

What are the risks associated with awarding a contract of this magnitude on a sole-source basis?

Awarding a contract of $13.4 million on a sole-source basis carries several significant risks. Primarily, it eliminates the potential for price competition, which is a key mechanism for ensuring the government obtains goods and services at the best possible price. Without competing bids, the selected contractor has less incentive to offer the lowest price, potentially leading to higher costs for taxpayers. Furthermore, sole-source awards can indicate a lack of market research or planning, or they might suggest that only one supplier is capable of meeting the requirement, which itself could be a risk if that supplier faces disruptions. This lack of competition also reduces transparency and makes it harder to benchmark pricing against market rates. Over time, a pattern of sole-source awards can weaken the government's negotiating position and potentially foster complacency among contractors.

What is General Mills Inc.'s track record with government contracts, particularly with the Defense Commissary Agency?

General Mills Inc. has a history of supplying food products to various government entities, including potentially the Defense Commissary Agency (DECA). Assessing their track record involves reviewing past contract performance, including on-time delivery, product quality, and adherence to contract terms. Information on previous DECA contracts with General Mills would be particularly relevant to understand their established relationship and performance history within this specific agency. A review of federal procurement databases (like FPDS or SAM.gov) could reveal the number and value of contracts awarded to General Mills, the agencies involved, and any reported issues or positive performance indicators. A strong track record with DECA might suggest reliability, while a history of performance problems could raise concerns about future contract execution. Without specific data on their past performance with DECA, it's difficult to definitively assess their reliability for this yogurt procurement.

What are the potential implications of this contract on the broader food supply chain and market competition?

This $13.4 million contract for yogurt, awarded non-competitively to General Mills Inc., has limited implications for the broader food supply chain and market competition due to its specific nature and duration. As a sole-source award for a defined quantity over 91 days, it represents a specific demand fulfillment rather than a broad market-shaping initiative. While it guarantees a significant sale for General Mills, it does not preclude other suppliers from competing for other DECA contracts or serving other markets. The primary impact is on the direct parties involved: DECA secures its supply, and General Mills fulfills an order. The lack of competition in this instance means that the broader market's competitive dynamics are not directly tested or influenced by this particular transaction. However, if such sole-source awards become a pattern for essential goods, it could subtly shift market dynamics by reducing the overall competitive pressure on large suppliers over time.

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: $13,414,131

Exercised Options: $13,414,131

Current Obligation: $13,414,131

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HDEC0104G3050

IDV Type: IDC

Timeline