Food Service Management Companies and Vendors (NSLP)
Guidance for School Food Authorities
Who Contract with Food Service Management Companies
State Agency Responsibilities
When a school food authority (SFA) contracts with a food
service management company (FSMC), the state agency is required
to annually review each contract to ensure the contract meets
the requirements of regulation 210.16. Each state is required
to conduct an on-site review of each SFA contracting with
a FSMC to determine the SFA’s compliance with all provisions
and standards set forth at regulation 210.16. The state agency's
on-site review of the SFA-FSMC operation must be conducted
once every five years and be sufficient in scope to ensure
compliance.
School Food Authority Responsibilities
The National School Lunch Program regulation 210.16 permits
a school food authority to contract with a food service management
company to manage its school food service operations; the
regulations prohibit delegation of certain duties. It is the
SFA’s responsibility to ensure its food service operation
is in conformance with the SFA’s agreement under the
program.
The SFA is responsible for:
- Observing the limits on the use of nonprofit food service
revenues including the use of nonprofit food service account
funds to pay only allowable costs regardless of the costs
billed by the FSMC;
- Determining and verifying the eligibility of children
for free and reduced-price meals;
- Ensuring only reimbursable meals are included on the claim
for reimbursement regardless of the number of meals billed
by the FSMC; and
- Not permitting the accrual of all income and expenses
to the FSMC.
A school food authority is required to have specific procedures
in place to determine the validity of meals claimed for reimbursement.
To ensure the validity of meal counting and claiming systems
at the schools under its jurisdiction, the SFA must conduct
an on-site review of each school prior to February 1 of each
school year. If the review identifies problems with a school's
meal counting or claiming procedures, the SFA shall ensure
that the school implements corrective action and, within 45
days of the review, the SFA must conduct a follow-up, on-site
review to determine if the corrective action resolved the
problems. Whether a SFA self-operates its food services or
uses a food service management company, the SFA must conduct
the on-site review and remains responsible for ensuring deficiencies
are identified and effective actions are taken to correct
any deficiencies that are found.
Contract Duration and Renewals for Food Service Management
and Vended Meal Contracts
School food authorities must ensure that food service management
or vended meal contract language indicates that the duration
of the contract is no longer than one year. Additionally,
options for yearly renewal of a contract must not exceed four
additional one-year extensions. Since the decision to renew
the contract is an affirmative decision made by both parties
to the contract each year, either party, for any reason, may
decide not to exercise the renewal option. If the contract
is not renewed, the SFA must either conduct a new procurement
or self-operate its food service.
Should either party determine revisions to the contract are
necessary, non-material changes are generally made when the
contract is renewed. These alterations cannot result in substantive
changes to the original contract.
The following changes would normally not constitute
a substantive change in the contract:
- Number of schools—new schools added;
- Changes in enrollment—decreases and increases in
student enrollment and the corresponding change expected
in participation;
- Changes in student/adult meal price—meal price changes
(determined by the SFA);
- Per meal cost increases—cost increases limited to
a measurable index; and/or
- Meal equivalency—minor adjustments to the per meal
equivalency as set forth in the contract.
The basis for renewing the contract, including price increase
provisions, if any, should be stated in the contract and be
based on a measurable index such as the Consumer Price Index
for All Urban Consumers. School officials should ensure that
price increases are within the terms of the contract. Click
here for prototype forms that you can use to re-negotiate
your contract. You must submit a copy of the executed renewal
to our office prior to the approval of your program for each
fiscal year. Renewals should be mailed to the Illinois State
Board of Education, 100 North First Street W-270, Springfield,
Illinois 62777.
The Consumer Price
Index-Urban (CPI-U) for the year ending December 2005
has increased 3.4%. The CPI-U, Food Away from Home for the
same period has increased 3.2% and CPI-U, Food has increased
2.3%.
Re-bidding Food Service Management and Vended Meal Contracts
School food authorities have the option to re-bid the food
service management or vended meal contract at any time. Neither
party may make or impose material changes to an existing contract
during the contract year or as part of the annual contract
renewal process. If it is determined that material or substantive
changes are necessary, the SFA must conduct a new procurement
and re-bid the contract or may choose to self-operate its
food service.
Examples of material or substantive changes which could require
the SFA to re-bid the contract include:
- The existing contract and renewals have expired;
- The scope of the contract has substantially changed;
- Addition of a program, such as the School Breakfast Program;
- Major changes to the formula for determining meal equivalency;
- Major shift in responsibilities for SFA/FSMC staff;
- Significant changes in the basis for determining guaranteed
returns; and/or
- The existing contractor has not fulfilled the contract
to the SFA’s satisfaction.
School food authorities are required to meet state and local
procurement regulations that conform to federal procurement
and program regulations when developing the proposal and awarding
the contract. Regarding the procurement process, SFAs cannot
include contract provisions that restrict competition or prevent
companies from bidding on the meal services. To assist in
the preparation of a food service management or vended contract,
prototype contract documents and guidelines are available
by clicking here.
To ensure compliance with federal procurement procedures
and continued funding, prior to seeking bids SFAs must submit
contract documents to the ISBE for review.
Applicability of Federal Requirements to School Food Service
Procurements
In August 2000, a final regulation published in the Federal
Register moved the procurement procedure requirements for
the Child Nutrition Programs from Department regulation 7
CFR Part 3015 to 7 CFR Parts 3016 and 3019. School food authorities
are encouraged to share this information with their legal
counsel. Please refer to the questions and answers link below
for more information regarding how these requirements have
changed the procurement procedures for public and nonprofit
school food authorities.
New Procurement
Procedures Q and A 
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