|Memo Number : FIN-10-042
Date Created : 11/24/2009
other: Bookkeepers; Purchasing Agents; Child Nutrition Directors
|Section:   Fiscal and Administrative Services - William J. Goff, Assistant Commissioner
Procurement of Food Service Management Company Services
7 CFR 210, 210.19, 220, 215, 3015, 3016, 3016.60(b, 3019, USDA FNS SWO Memo 2008-SP-09 Ark. Code Ann. § 6-21-304
School Food Authorities (SFA)/Local Education Agencies (LEA) that are interested in procuring the services of a Food Service Management Company (FSMC) for school year 2010-2011 for the operation of the federal child nutrition food preparation and service areas must notify the Arkansas Department of Education (ADE), Child Nutrition Unit (CNU) using Attachment A: Letter of Intent. The Letter of Intent to Procure FSMC Food Services must be received by ADE, CNU no later than 4:30 p.m. on December 15, 2009.
A Food Service Management Company (FSMC) Contract is a formal contract between the school district and an outside vendor/food service management company. Generally, the FSMC entity employs the food service workers instead of the school district and provides reimbursable meal services to students. The school district supervises the FSMC to ensure that all state and federal regulations are in compliance.
The School District/LEA Superintendent and School Board President will need to sign the completed Attachment A Form Letter of Intent and return it to:
Attention: Mylissia Blankenship, Assistant Director Of Administration
Arkansas Department of Education
Child Nutrition Unit, Suite 404
2020 West 3rd Street
Little Rock, AR 72205
All correspondence from ADE, CNU regarding the FSMC procurement process will be sent to both the superintendent and the school board president.
With responsibility for final procurement decisions, it is strongly recommended that district administrators, i.e. superintendents, financial directors, school nutrition directors, and school board members review the following documents prior to presenting a Letter of Intent:
Attachment B: FSMC Procurement Timeline for School Year 2010-2011
Attachment C: United States Department of Agriculture (USDA) Policy Memo Code SP 09-2008
The FSMC Procurement Timeline for the procurement process for school year 2010-2011 lists all ADE, CNU required deadlines. Failure by a school district to meet any one of the deadlines will result in the denial of the approval of the Request for Proposal (RFP), thus requiring the district to defer this process until the next school year (2011-2012).
Upon receipt of the Letter of Intent, the following documents will be mailed to the SFA/LEA:
1. A copy of the state agency approved School Year (SY) 2010-2011 Request for Proposal (RFP)/Contract for FSMC Services. SFA/LEA must use the ADE, CNU Prototype RFP/Contract to ensure compliance with all federal regulations.
2. A copy of the SFA/LEA Instructions for Completing the SY 2010-2011 FSMC RFP/Contract.
To receive federal meal reimbursements, the school district will maintain a current Child Nutrition Program Agreement and Policy Statement with the Department of Education, Child Nutrition Unit for participation in the National School Lunch Program and other applicable federal meal service programs. The Agreement and Policy Statement requirements and responsibilities of the district cannot be transferred to the food service management company. The district will be required to do quarterly audits and evaluations of the FSMC operation of contracted meal services.
Procurement of food and labor management services performed by a FSMC shall not include the delegation of any SFA/LEA responsibilities as part of the Agreement and Policy Statement to operate the federal child nutrition programs in the school district. The fiscal responsibilities and accountability for operation of the federal child nutrition program CANNOT be delegated by the district to the FSMC. For example, if an over-claim for reimbursement is assessed by the ADE, CNU for meals served to students that do not meet the nutrition standards, do not have adequate production records to validate meal requirements, or if there is a systemic error in the meals counting and claiming at the point of service, the district will be responsible for repayment of all federal funds to the United States Department of Agriculture. It is up to the district to seek restitution or secure repayment of funds from the FSMC.
It is recommended that the SFA/LEA consult the district legal counsel in matters of regulatory interpretation and contract management issues. Please be reminded that legal counsel for a FSMC is considered an employee of the FSMC. Therefore, legal opinions may reflect the views of the FSMC and not those of the school district’s legal counsel.
Please remember that FSMC input, development and/or advance review of the completed RFP/Contracts is not allowed, since such activities would compromise open and free competition [7 CFR 3016.60(b)].
Caution: In this procurement process, federal regulations supersede state regulations in the matter of procurement ethics. All board members, administrators and district employees shall abide by the following:
No vendor or FSMC shall pay for or provide reimbursement as part of the contract or procurement process for any expenses incurred for items of monetary value such as trips, etc. to visit other FSMC facilities for educational or any other purposes since the parties have a responsibility in the procurement process.
Ark. Code Ann. 6-21-304 requires that all Food Service Contracts, including consulting services, in excess of $10,000 must be formally bid or procured (this issue is discussed in greater detail in Arkansas Attorney General's Opinion Number 95-294). A FSMC Contract is not eligible for a school board exemption from the formal procurement process.
Please review United States Department of Agriculture (USDA) Policy Memo Code SP 09-2008, Final Rule, Procurement Requirements for the National School Lunch, School Breakfast and Special Milk Programs (dated October 31, 2007). The rule explicitly:
(1) limits a SFA/LEA’s use of nonprofit school food service account funds to costs resulting from proper procurements and contracts;
(2) requires that allowable costs paid from the nonprofit school food service account be net of all discounts, rebates and applicable credits; and
(3) requires the ADE, CNU to review and approve IN WRITING the SFA/LEA procurement documents for FSMC services in advance of RFP release and final contract execution.
USDA SP 09-2008 also states that this rule was prompted in part by audits released by the Office of Inspector General which identified that Food Service Management Companies had improperly received purchase discounts and/or USDA donated commodities that were intended to accrue to the SFA’s nonprofit school food service account.
All Arkansas laws regarding procurement, nutrition standards, manager certification, director certification, staff development, and the operation of local education agencies must be followed by the district in conjunction with contracted services. The most restrictive law and regulation is applicable whether it is state or federal.
Other federal information that may be necessary to review can be found under “Agriculture Title 7 http://www.gpoaccess.gov/cfr/retrieve.html. These items should include the following:
•7 CFR 3016 Procurement Regulations
•7 CFR 3017 Debarment and Suspension Regulations
•7 CFR 3018 Lobbying Regulations
•7 CFR 210 National School Lunch Program Regulations
•7 CFR 220 School Breakfast Program Regulations
•7 CFR 225 Summer Food Service Program Regulations, if applicable
•7 CFR 245 Eligibility Regulations
•7 CFR 250 Commodity Regulations
Please be advised that the United States Department of Agriculture (USDA), Food and Nutrition Services will continue to issue policy memo updates in reference to FSMC procurement and regulations; therefore, the ADE, CNU will endeavor to keep school districts informed. If the district has questions, please contact Mylissia Blankenship at 501-324-9502.