STATEMENT OF WORK SKU Based Inventory.pdf

STATEMENT OF WORK (SOW)

SKU-BASED INVENTORY SERVICES

The following requirement is for the performance of SKU-based Inventory Services at all Defense Commissary Agency (DeCA) locations, CONUS (within the contiguous United States) and OCONUS (outside the contiguous Unites States). The Indefinite Delivery/Indefinite Quantity (IDIQ) contract awards are anticipated to be one base year with four, one year option years awarded to multiple awardees.

1. GUIDING PRINCIPLES

1.1. The Contractor will work in collaboration with DeCA personnel, DeCA auditors, and other stakeholders towards success of the inventory services.

1.2. The Contractor will work with DeCA as a trusted business partner to create an environment of transparency during the course of this contract. Except as required by law, Contractor shall not release information concerning any activities related to the DeCA’s inventory services without the consent of DeCA. This restriction will not apply to any information that is publicly available.

2. PERPETUAL INVENTORY PERFORMANCE

2.1. The Contractor is required to perform a quantity based full facility inventory count by Stock Keeping Unit (SKU) for all grocery items sold in a Department of Defense (DoD) Commissary (i.e., military grocery store). The Contractor shall be responsible for providing all supervision, personnel, supplies, equipment, and any other items necessary to perform the inventory. Unless otherwise specified, the term “Contractor” refers to all Contractor personnel, including sub-Contractors, who participate in the inventory process.

Unless otherwise specified, the terms “Government” and “Government Representative” refer to any Government employee whom the Commissary Officer or Manager authorizes, via memo to Store Operations, to participate in the inventory process. Each awardee must provide at least two leads who are regular, permanent employees of the prime Contractor and who are present on-site during the inventory.

2.2. The inventory shall be performed using automated handheld scanners for scanning counts by SKU that can extend cost data by quantity. The Contractor shall provide an automated technical solution for DeCA to track inventory progress by section in real time at each commissary location. Each section count shall be uploaded to the relevant file(s) being maintained by the Contractor immediately after counting that section.

2.3. The Contractor shall provide DeCA with calculations of inventory valuation by SKU, section, and overall store based on SKU cost data provided by DeCA (see Paragraph 12 below).

2.4. The Contractor shall inventory all grocery items in the store, unless marked “Do Not Inventory” (DNI). Grocery items are located in some or all of the following physical locations: the sales area, perishable and nonperishable storage rooms, processing and preparation rooms, contiguous and remote warehouses, and distribution centers (all warehouses and distribution centers are collectively referred to hereafter as a “warehouse and all backup storage areas”).

3. CORPORATE EXPERIENCE

The Contractor shall have at least three years of performing perpetual inventories for the grocery or retail industry. In addition, the team leaders assigned to the DeCA contract shall have a minimum of two years’ experience managing inventory teams.

4. SCHEDULING

4.1. The contractors will be provided a tentative schedule of stores and timeframes for the subsequent calendar years. Changes to inventory performance dates or times are not authorized without prior approval from both the Contracting Officer Representative (COR) and the Contracting Officer.

4.2. Individual inventory location services will be solicited as a request for quote (RFQ) on a quarterly basis approximately 60 days before the service quarter begins. All IDIQ contract awardees will be eligible to compete for individual inventory location services.

4.3. All IDIQ contract holders will be given fair opportunity to provide quotes for every location, except those Contractors that fail an inventory (as defined below) at any location will not be considered for award at that specific location for the following year unless the Contracting Officer has determined the Contractor has sufficiently cured the noted deficiencies.

4.3.1 Contract holders who have unacceptable performance in an immediate past round of services (as determined by the Contracting Officer), will be sent a cure notice and will be considered “unacceptable” until the contract holder has submitted a performance improvement plan and that plan has been approved by the Contracting Officer. Failure to provide a performance improvement plan by the date and time required and/or continued poor performance may result in termination of any awarded task orders and/or the overall contract.

4.3.2 If a location cannot be awarded to any Contractor using the methodology described above, DeCA may consider changing the date of the service and starting the quotation process over again, or providing another opportunity to all contract holders under the original specified date/time conditions for that location.

4.3. The Contractor must contact the Commissary Officer at least two weeks prior to the performance date to coordinate arrival time, and to discuss any other matters pertinent to the inventory.

The Contractor will be provided contact information for each inventory location.

4.4. The Contractor will be performing inventories without a Department of Defense sponsorship. Failure to pursue and obtain applicable access requirements will be considered a breach of the Contractor’s obligations under this Contract.

4.4.1. Ensuring all base access requirements are met in a timely manner to perform the inventory successfully is the sole responsibility of the Contractor. Access to any installation is defined by the installation’s command structure. Contractors shall contact the installation security office directly to determine what the access requirements are for that installation, and shall plan arrivals accordingly. Inventories will be conducted in the United States, Puerto Rico, Guam, the Middle East, Asia, and Europe. It is the Contractor’s responsibility to gain access to the country, state, and installation of each service location awarded to that Contractor. As access and visa requirements continually change, the Contractor must identify and comply with all current access requirements at all locations.

5. INVENTORY PERFORMANCE

5.3. The Government will provide the Contractor a Master File consisting of a download of SKUs and their respective cost data (see Paragraph 11 below) for items carried at the store being inventoried. This download will be provided no later than close of business on the working day (Monday through Friday, excluding federal holidays and base closures) immediately prior to day of the inventory.

5.4. The Contractor must obtain a Government briefing prior to the start of each contract inventory count. A Government representative will orally brief Contractor personnel on safety and security concerns; on the location of break rooms, restrooms, and smoking areas;

and on any other matters considered pertinent to performance of the inventory. A Government representative will conduct a “walk-through” of the commissary facility(s) with the Contractor to review inventory preparation and to identify unique facility characteristics.

6. CONTRACTOR RESPONSIBILITIES

6.3. Upon receipt of the Master File provided by DeCA, the Contractor is responsible for verifying receipt and reviewing the file for any issues that may prevent the Contractor from successfully performing the scheduled inventory. Any such issues in the file shall be immediately reported to the COR upon discovery.

6.4. Upon arrival at the scheduled store, the Contractor shall immediately report to store management and confirm receipt of the Master File and the Contractor’s readiness to conduct the inventory (e.g. base access, equipment, information, and manpower). At this time, the Contractor shall explain to store management its technical approach for completing the scheduled inventory. At a minimum, the technical approach shall include the Contractor’s method for capturing SKU and PLU scanned data, method for tracking inventory progress, and equipment to be provided by the Contractor to DeCA employees to perform validations in accordance with Paragraph 7.4 below.

6.5. Prior to commencing the inventory, the Contractor shall conduct a walkthrough of the store with the designated store management representative and sign the walk-through statement found on the certification form (DeCA Form 40-106A, “SKU Based Perpetual Inventory Certification – Part A” – see Exhibit 1). Following the walk-through, the Contractor is responsible for numbering each section in the store to be inventoried.

Commissary Management reserves the right to review the reasonableness of the Contractor’s section determination (to include the warehouse) and to make changes, as necessary.

6.6. Any items which are outside of their normally designated location at the start of the inventory will be inventoried where they are.

6.7. During conduct of the inventory, the Contractor shall be responsible for reporting inventory progress in accordance with Paragraph 7.2 below and providing handheld devices for validation purposes in accordance with Paragraph 7.4 below. At no point shall the Contractor ask Commissary personnel to assist in counting inventory.

6.8. Following the inventory counting process and validations, the Contractor shall complete its portion of the SKU Based Perpetual Inventory Certification form in accordance with Paragraph 9 below.

6.9. After departing the inventoried store, the Contractor shall submit its final report in accordance with Paragraph 10 below.

7. TECHNICAL SPECIFICATIONS

7.3. The Contractor must provide automated equipment and software capable of capturing scanned SKU data and quantity on hand for both counting and validation purposes. The system must have the ability to automatically include SKUs and PLUs that may not be included in the Master File provided by DeCA into the section count. All items shall be scanned by product SKU, and not the electronic or paper shelf label.

7.4. The Contractor shall provide store management the ability to track inventory progress as sections are counted. DeCA requires the Contractor provide a separate device to track inventory progress.

7.5. A electronic device shall be used for the inventory process which includes the capability for section quantity uploads. Inventory counts shall be uploaded after each section is counted.

7.6. The Contractor shall provide an adequate number of handheld devices to store management for the purposes of performing validations without impeding progress on the Contractor’s performance of the inventory. As stated below in Paragraph 8.2, the validation process shall be automated. These devices must be able to either immediately compare the Contractor’s initial count to DeCA’s validation count or be immediately available to directly upload to the Contractor’s database to validate the Contractor’s initial count to DeCA’s count.

8. VALIDATION

8.1. DeCA employees will perform all validations of inventory counts. The Contractor will be responsible for providing validation equipment and performing recounts as necessary.

8.2. The validation process shall be automated and manual processes for conducting validations is not permitted. All 15 High Risk sections, plus 20% of remaining sections will be validated. Each Section will have no less than 10 SKUs validated. If there are less than 10 SKUs in a section the entire section will be validated. The sections or SKUs to be validated will not be shared with the Contractor prior to commencement of section validations.

8.3. When a section is validated and the count on any item does not match the Contractor count, then a third count shall be performed on those items by the Contractor, with other than the original counter, while accompanied by a DeCA employee. However, if within a section validation performed by DeCA, five (5) or more of the validated items do not match, then the entire section must be recounted by the Contractor and revalidated by a DeCA employee. This counts as a third count validation of an entire section.

8.4. If during validation a SKU was not counted by the Contractor, the entire section shall be recounted by the Contractor and revalidated by a DECA employee. This is considered a third count validation of an entire section. Any validation that has to go to a third count is considered an “Exception” and will be specifically noted on the Inventory Validation Log with “EX”.

8.5. The inventory shall be deemed and recorded as a failure after five (5) instances of going to a third count validation for an entire section. The Government reserves all rights under this contract and applicable law including termination to take appropriate action if failure occurs.

8.6. Inventory Contractors must ensure the integrity of a clean validation count where the person validating has no knowledge of the first count. One way to maintain a sanitized inventory process is to avoid the appearance that inventory count could have been shared with the person validating. Inventory validity is a crucial element of the inventory process and Contractor failure to ensure the integrity of a sanitized process may result in a termination for cause of both the task order and contract.

9. INVENTORY CERTIFICATION

9.1. Prior to departing the premises, the Contractor and designated store management representative shall review, complete, and sign the completed DeCA Form 40-106B (“SKU Based Perpetual Inventory Certification - Part B”). (See Exhibit 2 for DeCA Form 40-106B and instructions.) Note: Final signature by the Contractor and designated store management representative is confirmation that all sections have been counted and all quantities and reported values are correct based on the information provided on the Master File.

9.2. Immediately following the completion of the inventory, the Contractor will provide the items and dollar amount information to be placed in the DeCA Form 40-106B (“SKU Based Perpetual Inventory Certification- Part B”), as well as sign in all three spots on the form. The Contractor will complete the performance evaluation form.

10. FINAL REPORT

No later than 24 hours after completion of the inventory, the Contractor shall send the Final Report in the format provided in Paragraph 11below to the following:

By E-mail: deca.gregg-adams.hq.mbx.inventorydocs@mail.mil Subject: Store Name Current FY Final Inventory Report Body: Contractor Company Name and Point of Contact

11. TECHNICAL FILE REQUIREMENTS

11.1. Catalog file format from DeCA to Contractor: DeCA will provide the item catalog in the following file format to the Contractor for each store:

Front of the Store Inventory file - Fixed weight items

Item Description Item SKU Code Item Cost by each mailto:deca.gregg-adams.hq.mbx.inventorydocs@mail.mil

This column will have the DeCA description of the item from the Master Catalog

This column will include the following:

UPC-A (12 digits with check digit) EAN ( 13 digits with check digit) UPC Compressed (6/7/8 with check digit) JPN (8 with check digit) PLU ( 4 or 5 – no check digits required) cost of each item by each

Sample Grocery Items with UPCs/EAN and JPNs

Back room inventory file for UPC coded items - Fixed weight Items

Item Description Item SKU Code Item Cost by each or

Price per Pound This column will have the DeCA description of the item from the Master

UPC-A (12 digits with check digit) EAN ( 13 digits with check digit) UPC Compressed (6/7/8 with check digit) JPN (8 with check digit) PLU ( 4 or 5 – no check digits required) cost of each item by each

Case Label for Bush’s Baked Beans Original – Fixed Weight UPC on the label and “12” is the Unit quantity within the case

Case Label for Salmon Curry Paste Original – Fixed Weight UPC on the label and “42” is the Unit quantity within the case

Salmon Curry Paste

Front of the store inventory file for Random Weighted Items

Item Description Item SKU Code Item Cost - Price per Pound

This column will have the DeCA description of the item from the Master

Random weight UPCs which starts with a “2”, followed by the PLU and six “0”s for the extended price of the product

This column will have price per pound for random weight items

Random Weighted Items (Front of the Store)

Back room inventory file for Random Weighted Items

Item Description UPC of Random weighted items Price per Pound

DeCA description of the item from the Master

• Random weight UPCs which starts with a “2”, followed by the PLU and six “0”s for the extended price of the product

This column will include the price per pound for random weight items

Random Weight Case Label Chicken Drumsticks- “39.2” is the number of pounds

11.2. The Contractor file format to DeCA shall be provided in the following manner:

For fixed weight items:

Item Description Item SKU Code Item Quantity Total Extended Cost by item T This Contractor shall provide the DeCA description of the item from the Master Catalog

UPC-A (12 digits with check digit)

EAN ( 13 digits with check digit)

UPC Compressed (6/7/8 with check digit)

JPN (8 with check digit) PLU ( 4 or 5 – no check digits required) Other SKUs based on the GS1 standard will need to be included

This column will include the total quantity by each in front of the store and back room of the store

This column will include the total cost by each in front of the store and the back room

For random weight items:

39.2

Item Description Item SKU Code Item Weight Price Per

Pound Total Extended Cost by item This Contractor shall provide the DeCA description of the item from the Master Catalog

This column will include the following:

Random weight UPCs which starts with a “2”, followed by the PLU and six “0”s for the extended price of the product

For Random weight items this column includes the weight of the back room cases and the calculation of the random weight items in front of the store as shown below

For Random weight items this column includes the price per pound

For Random weight items this column include the “Extended price” by Random weight item plus the total cost for the back room random weight cases

Formula to be used for final inventory file back to DeCA for Random weight items:

Extended price = The last 5 digits on the Random weight label =$14.33

Price per pound will be provided in the Item catalog = $4.37

Number of pounds per package = Extended price / Price per pound = 14.33/4.37 = 3.28 pounds

12. CONTRACTOR LIABILITY

12.1. Because of the nature and use of inventories in DeCA’s accounting system, and the disruptions in store operations and sales due to inventory performance, time is of the essence in the performance of this contract. Failure to meet the required schedule, or failure to complete an inventory in the time provided, will be considered a failure of the inventory.

12.2. In the event of a failed inventory, the Government reserves all rights under this contract and applicable law to take appropriate action against the Contractor, with or without an opportunity for the Contractor to cure or to repeat performance.

13. CELL PHONES AND PERSONAL DEVICES

Personal cell phone and other personal electronic device use is prohibited during the time inventories are being conducted (all times in the store except for scheduled breaks), to include the use of mp3 Players, Bluetooth earpieces, and all other personal electronic devices. Contractors shall not access data stored in inventory machines or other inventory recorded data while using a telecommunication device during a break, meal period, or any other time unless the communication is with DeCA contracting office personnel.

14. EMERGENCIES

14.1. If a personal emergency or injury occurs during the process of inventory, Contractor personnel will notify store management immediately.

14.2. If an emergency occurs that impacts safety of the commissary facility or its users, store management will immediately notify the Contractor’s personnel and take appropriate action.