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Districts Using a Food Service Management Company


Nutrition Services Division Management Bulletin

To: Public School District Superintendents, County Superintendents of Schools

Number: 98-108

Attention: Business Managers, Procurement Managers, and Food Service Directors

Date: April 1998

From: School Nutrition Programs

Subject: Purchasing Methods of Districts using a Food Service Management Company for Consulting Services

Reference: Education Code Section 45103.5; Management Advisory 94-111

This Management Bulletin transmits a legal opinion recently issued by the California Department of Education’s (CDE) Legal Office pertaining to the interpretation of Education Code (EC) Section 45103.5.

Background

In June 1994, Management Advisory 94-111 informed all School Nutrition Program sponsors that EC Section 45103.5, effective January 1, 1993, prohibited public school districts from contracting with a food service management company (FSMC) for the management of their food service program.

Previous to the implementation of EC Section 45103.5, FSMCs were able to contract with school districts to manage and administer a food service operation. EC Section 45103.5 clarified the role of these companies by restricting FSMC contracts with public school districts to consulting services only. Management Advisory 94-111 explained that a FSMC is limited to providing advice or consultation and may not perform any food service management duties or supervise food service classified personnel. The advisory further instructed districts that they must assume responsibility for a district-managed food service operation.

Subsequent to the dissemination of Management Advisory 94-111, the Child Nutrition and Food Distribution Division (CNFDD) issued a letter to districts with consulting services contracts reiterating the federal procurement procedures to be followed when using federal funds for purchases in excess of $10,000.

Legal Opinion

CNFDD recently received a legal opinion from the California Department of Education’s Legal Office regarding purchasing methods of a district with a consulting services contract. Following is a summary of the legal opinion:

Does Education Code Section 45103.5 permit a school district that contracts with a management company for consulting services to purchase food and supplies through (or from) the management company using the management company’s corporate bid prices?

No. Education Code Section 45103.5 permits a school district to contract with a management company for consulting services only. The contract must be for consulting services, not the purchasing power of the consultant management company; and thus does not include the purchase of food and supplies at the management company’s corporate bid prices.

Analysis

The question is whether consulting services include the use of the food service management consultant’s corporate bid prices. It does not. A consultant may not perform food service duties, supervise food service personnel or manage any aspect of the food service operations. They may only advise food service personnel related to the management of the food service operation. Making purchases using the management company’s corporate bid prices is not a consulting service, but is akin to the management of the food service operation. School districts are responsible for procuring necessary food and supplies for the food service operation. The school district would not receive the corporate bid prices if it did not have a contract with the management company. Contracts for purchases are not for management consulting services and would not be consistent with Section 45103.5.

Implementation

Districts are required to issue bids for any expenditure of federal funds exceeding $10,000. Implementation of this legal opinion will ensure a district’s compliance with federal competitive bid requirements as well as CDE’s legal interpretation. When conducting Coordinated Review Effort assessments, CNFDD field consultants will determine a district’s compliance with acceptable procurement methods. Please refer to the School Nutrition Guidance Manual, Section 9000 entitled "Contracts", for detailed information.

Questions:   School Nutrition Programs Unit | 800-952-5609
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