School Nutrition Programs Compliance Handbook

CHAPTER 12- FOOD SERVICE MANAGEMENT COMPANIES AND VENDED MEAL COMPANIES

School Food Authorities (SFA) participating in the School Nutrition Programs (SNP) are responsible for complying with federal regulations for the USDA’s Child Nutrition Programs.  To assist in carrying out this responsibility, SFAs may contract with a Food Service Management Company (FSMC) to manage its food service operations.  SFAs also have the option to contract with a vender to provide vended (catered) meals for their food service operation.

Federal regulation [7 CFR Part 210.2] defines Food Service Management Company (FSMC) as “…a commercial enterprise or nonprofit organization which is or may be contracted with by the SFA to manage any aspect of the school food service.”  A vendor providing vended meals will only provide reimbursable meals for a SFA’s school food services program.  There are specific processes for procuring contracts for a FSMC and for vender to provide vended meals.

Food Service Management Companies

Prior to starting the process for the procurement of a FSMC contract, contact OKDHS School Nutrition Programs (SNP) for additional information on this process.  In contracting with an FSMC, the schools must follow federal procurement procedures set forth by USDA.  Additionally, the sponsor should retain enough knowledgeable staff to coordinate, monitor, review, and control food service operations and to perform the responsibilities that must be retained by the SFA (see table 2). Please refer to the USDA’s guidance manual Contracting with Food Service Management Companies for School Food Authorities for the steps in obtaining a food service management company.  The School Nutrition Program will provide a prototype Food Service Management Agreement, containing the federal requirements.  Table 1 contains a summary of the procurement process for a FSMC.

Table 1: Summary of FSMC Procurement Process

School Food Authorities (SFA) are required to follow a set procurement process [as required by federal regulation 7 CFR Part 210.16] when procuring a contract for a Food Services Management Company (FSMC).  The following is a summary of the required procurement process for a FSMC contract:  SFAs must publicly announce the solicitation for a FSMC contact.  OKDHS School Nutrition Programs’ (SNP) prototype must be used for the request for proposals and contract.  After reviewing prospective vendor proposals, the SFA will select a vendor based on the rating criteria.  Prior to signature, the SFA will submit the contract to OKDHS SNP to ensure changes made to the contract do not conflict with federal and state requirements.  Once OKDHS SNP approves of the agreement, the contract may be signed by both parties.  The SFA will submit a copy of the signed contract and checklist to OKDHS SNP.  The SFA will monitor the contract agreement to ensure the FSMC is in compliance with the contract.

Responsibilities Retained by the SFA

Regardless of whether a Food Service Management Company (FSMC) is utilized, the School Food Authority (SFA) remains responsible for the overall operation and oversight of the child nutrition programs in its schools. Oversight includes periodical on-site reviews to ensure that FSMC are complying with the terms of the contract.  Table 2 contains the responsibilities the SFA must retain for their school food services program.

Table 2: Responsibilities to be Retained by the SFA Contracting with a FSMC

SFAs contracting with a FSMC must retain the following responsibilities:  Signature authority on the agreement to participate in any Child Nutrition Program, including the sponsor’s free and reduced-price statement.  Signature authority on the monthly reimbursement claim.  Development, distribution and collection of parent letters and household application for free meals, reduced-priced meals, and free milk.  Determination of eligibility for free meals and reduced-priced meals a.      Conduct hearings related to free meals and reduced-priced meals eligibility determinations.  Verification of applications for fee meals and reduced-priced meals.  Control of the nonprofit school food services account, as well as overall financial responsibility for child nutrition programs.  Establishment of all program and non-program meal prices and a la carte prices.  Title to USDA Donated Foods (formally known as commodities).  Development of the 21-day cycle menus for the FSMC invitation for bids, as well as changes to the cycle menu after the first 21-days of meal service.  Monitoring responsibilities under program regulations.  Establishment and maintenance of an advisory board comprised of partners, teachers, and students to assist in menu planning.  Maintenance of applicable health certifications and assurances that all state and local regulations are being met by the FSMC preparing or serving meals at a sponsor’s facility.  Assurance that the maximum amount of USDA donated foods are received and utilized by the FSMC and only accrue only to the benefit of the sponsor’s nonprofit school food service account. The FSMC must credit the SFA for the value of all donated foods received for use in the meal service during the school year as required by federal regulation [7 CFR Part 250.51 (a), (b), and (c)].  Control of the quality, extent, and the general nature of its food service.  Responsibility for all contractual agreements entered in connection with the child nutrition programs. a.      Responsibility for ensuring resolution of program review and audit findings.   Completed the OKDHS School Nutrition Programs (SNP) FSMC checklist when initiating and reviewing agreements with a FSMC

SFA-FSMC Contract Document Checklist

SFAs must complete the SFA-FSMC Contract Checklist during the initial contract period and during the renewal this checklist is based on the requirements contained in federal regulation [2 CFR Part 200, 7 CFR Parts 210, 3016, 3017, 3018 and 3019].  This checklist does not include the requirements applicable to those FSMCs subject to the provisions of federal regulation [7 CFR 250.30], State processing of USDA donated food.  For information regarding those requirements, the SFA should contact the State Administering and/or Distributing agency.  The SFA must ensure that the State Distributing agency (OKDHS Food Distribution Programs) has reviewed and approved any processing agreement prior to the delivery of commodities for processing.

Once the checklist is complete, SFAs must submit the contract and the checklist to the State Agency (OKDHS SNP) for review.  This includes the bid/proposal along with the unsigned contract prior to issuance, the signed contract, and all contract renewals.  The state agency (OKDHS SNP) will review the documents prior to approval. 

If the SFA chooses to renew the contract according to federal regulations, the SFA should include a copy of the checklist and submit with the initial contract, and a new checklist cover sheet, when submitting the extension agreement to the SA (OKDHS SNP).  The initial checklist should include notation(s) where changes have occurred.  The basis for renewing the contract, as well as the basis for any fee increases or decreases, if applicable, should be noted on the checklist. 

Though the checklist identifies certain unallowable SFA-FSMC contracts, document provisions, and advisable contract document provisions, it is in no way inclusive of all such provisions.  Scrutiny of the contract document(s) is required to ensure that there are no provisions that have the effect of restricting competition.    

FSMC Contract Renewals

Federal regulation [7 CFR Part 210.16 (d)] sets the duration of the FSMC “…of no longer than one year; and options for yearly renewal of a contract…” that may not exceed four one-year renewals.  The contract can only be renewed if there has not been any material changes. 

“A material change is any change made to a contract after it has been approved that alters the terms and conditions of that contract substantially enough that had other respondents know of these changes in advance, they could have bid differently and more competitively (USDA FNS Contracting with Food Service Management Companies: A Guide for School Food Authorities, May 2016, Page 60)”

If the contract adjustment is just extended the contract for an additional year, this would not be a material change. 

The initial contract is for one year; renewals will require a contract renewal extending the initial contract.  This renewal must be approved by OKDHS School Nutrition Programs (SNP) prior to the document being signed.   OKDHS SNP will review the contract renewal document for compliance with federal and state procurement requirements.  If the renewal is compliant OKDHS SNP will provide written approval for the renewal to be signed.

For questions regarding contract renewals contact OKDHS School Nutrition Programs.

Vended (Catered) Meals

The procurement process for a vended meal contract has a specific process that is similar to the process for procuring a FSMC.  A vendor providing vended meals for use in the school services program will only provide meals for meal services (breakfast, lunch, etc.). 

School Food Authorities (SFA) interested in procuring a vendor to provide vended meals must keep in mind they still need to have a staff familiar with the topics in table 3.

Table 3: Knowledge SFA’s Need to Retain when Contracting with a Vendor for Vended Meals

SFA must have staff who are knowledgeable on the following topics:  Meal patterns for the programs operated [the National School Lunch Program (NSLP), the School Breakfast Program (SBP), and the Afterschool Snack Program].   Knowledge of food safety.   Federal regulation [7 CFR Part 210.30 (b) (1) (iv)] requires new school food services directors to complete eight hours of food safety training within 30 days of beginning in the position, or within five years prior to starting the position.  Knowledge of the requirements of production records, specifically the information required to be documented on the records.

Procurement Process Vended Meal Contract

Prior to starting the process for the procurement contact OKDHS School Nutrition Programs for additional information on this process.  The process for the procurement of a vendor for vended meals has several steps to follow requiring the SFA to contact OKDHS School Nutrition Programs (SNP) throughout the procurement process to provide technical assistance throughout the process.  Once two or more responses have been received a vendor can be selected.  At this point the SFA will, prior to the parties signing the contract will submit to OKDHS SNP’s for approval the vendor responses, documentation for why the vendor was selected, and the unsigned contract for OKDHS SNP’s review and approval.  OKDHS SNP will review the vender responses and the contract for compliance with federal and state procurement requirements.  Once OKDHS SNP provides the SFA with documentation of the approval of the contract, the contract can be signed.  The SFA will then need to provide OKDHS SNP with a signed copy of the contract.  Table 4 summarizes the process of procuring a vended meal contract.

Table 4: Summary of Vended Meal Contract Procurement Process

School Food Authorities (SFA) are required to follow a set procurement process when procuring a contract for a vendor to provide vended meals.  The following is a summary of the required procurement process for a vended meal contract:  SFAs must publicly announce the solicitation for a vended meal contact.  OKDHS School Nutrition Programs’ (SNP) prototype must be used for the request for proposals and well as the contract.  After reviewing prospective vendor proposals, the SFA will select a vendor based on the rating criteria.  Prior to signature, the SFA will submit the contract to OKDHS SNP to ensure changes made to the contract do not conflict with federal and state requirements.  Once OKDHS SNP approves of the agreement, the contract may be signed by both parties.  The SFA will submit a copy if the signed contract and checklist to OKDHS SNP. The SFA will monitor the contract agreement to ensure the vendor is in compliance with the contract.

Vended Meal Contract Monitoring

Throughout the school year the SFA must monitor the vendor to ensure the contract is properly being executed.  Table 5 contains contract monitoring activities a SFA with a vended meal contract must be conducted throughout the school year.

Table 5: Vended Meal Contract – SFA Contract Monitoring Activities

SFA’s with vended meal contract must conduct contract monitoring activities throughout the school year (June 1 – June 30).  The following activities are typical contract monitoring activities a SFA with a vended meal contract would conduct throughout the school year:  Regularly checking the meals to ensure they are compliant with the meal patterns.  Daily checking to ensure the vendor provided the meals ordered.  Daily SFA must keep records of the number of meals ordered, received, and leftovers.  This will assist the SFA with checking the vendor’s monthly statement for accuracy ensuring the charges are correct.  Tracking the meals ordered and the meals leftover will assist in providing data for future orders.  If the SFA receives USDA Donated Foods (formally known as commodities) the SFA needs to monitor the donated foods received through the shipping reports (these reports can be obtained through DF-10 the commodity ordering site). o    The SFA is required to check the donated foods received to ensure the vendor is crediting invoices for the donated foods received.   The vended meal contract requires the vendor to credit the SFA’s invoices for the value of the USDA Donated Foods (commodities) received.

During a procurement review, the USDA requires OKDHS SNP to conduct a review of vended meal contracts for the SFA’s monitoring activities to include crediting of the value of USDA Donated Foods will be assessed.

Vended Meal Contract Extensions

The initial vended meal contract’s duration is one year.  The contract may be renewed up to four additional one-year periods (up to an additional four school years).  For the renewals the price may only be adjusted annually by the yearly percentage change in the Consumer Price Index for All Urban Consumers CPIFAUC), as published by the U.S. Department of Labor.  The price per meal cannot just be increased by the CPIFAUC, a contract renewal will have to be executed permitting the new price and extending the original contract’s duration for another school year.  OKDHS School Nutrition Programs (SNP) must approve the contract renewal before the renewal can be signed to ensure the renewal is compliant with federal and state procurement requirements.

The contract does not permit any other fee increases, or additional cost per meal increase.  If the vender wants to increase their price per meal over the original contract plus the CPIFAUC for the new school year, then the procurement process for a new vended meal contract will have to be started.

For questions regarding contract renewals contact OKDHS School Nutrition Programs.

FSMC and Vended Meal Company Resources

Table 6.1 contains resources available upon request from OKDHS School Nutrition Programs.  To request one of the items in table 6.1 email AFS.School.Nutrition.Programs@okdhs.org.

Table 6.1: FSMC and Vended Meal Company Resources Available from OKDHS School Nutrition Programs

·       USDA Contracting with Food Service Management Companies: Guidance for School Food Authorities. Available upon request by emailing AFS.School.Nutrition.Programs@okdhs.org. ·       OKDHS School Nutrition Programs (SNP) prototype Food Services Management Company (FSMC) prototype documents.  Available upon request by emailing AFS.School.Nutrition.Programs@okdhs.org. ·      OKDHS SNP prototype vended meal contract (catering contract) prototype documents.  Available upon request by emailing AFS.School.Nutrition.Programs@okdhs.org.

Table 6.2 Contains Food Safety resources available online.

Table 6.2: FSMC and Vended Meal Company Resources Available Online
USDA Contracting with Food Service Management Companies webpage: ·       https://www.fns.usda.gov/cn/updated-guidance-contracting-food-service-management	Oklahoma Human Services (OKDHS) Commodity Distribution Unit – Donated Foods On-Line Service (also know as DF-10) ·       http://foodcommodities.okdhs.org/Food10_OK/beginend/welcome01.aspx

 

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