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Contracting for Management Services


Nutrition Services Division

To: Residential Child Care Institutions

Number: 98-111

Attention: Administrators

Date: July 1998

From: School Nutrition Programs

Subject: Contracting for Management Services

Reference: 7 CFR Part 210.2, 7 CFR 210.16

This Management Bulletin provides information based on guidance recently issued by the United States Department of Agriculture, Food and Nutrition Services, regarding contracts for the management of any aspect of a National School Lunch Program (NSLP) sponsor's food service operation.

Has your residential child care institution (RCCI) entered into a contract with a company to prepare, maintain, or submit any paperwork the State requires to participate in the National School Lunch Program? If so, the important information below applies to your RCCI.

The following policies apply anytime an RCCI chooses to sign a contract agreeing to pay a private company to manage any aspect of the National School Lunch Program and, if applicable, the School Breakfast Program:

  1. Anytime an RCCI or any child nutrition program sponsor contracts for services that will cost less than $100,000 [$150,000 as of 2013] per year, the RCCI must obtain price quotes from an adequate number of sources. The USDA recommends that at least three companies be contacted for a price estimate of the desired services. If more than $100,000 [$150,000 as of 2013] will be spent, competitive bid procedures are to be followed.
  2. The RCCI is responsible for developing the contract between the management company and the RCCI and submitting it for approval to the California Department of Education, School Nutrition Programs Unit. The RCCI must ensure that the management services to be provided by the company are in conformance with the National School Lunch Program agreement.
  3. The duration of a contract shall be no longer than one year. Options for four additional one-year extensions are permissible. A contract cannot contain automatic renewal provisions. The contract must specify the beginning and ending date and must be signed prior to the effective date of the contract.
  4. The contract must specify that either party may cancel the contract for cause upon 60 days notice and specify the required manner of notification.
  5. Although contract renewals are permitted, an RCCI is not required to renew the contract for additional years and should do so only after careful evaluation of the contractor’s performance and determination that the renewal will benefit the RCCI.
  6. The RCCI must retain control of the overall financial responsibility for the NSLP and is responsible for ensuring that the contractor maintain records to support the monthly claim. Such records shall be made available to the RCCI, upon request.
  7. The RCCI must maintain accurate records of all income and expenditures for the nutrition programs. All records shall be retained for a period of 3 years after submission of the final Claim for Reimbursement for the fiscal year. If audit findings have not been resolved, the records shall be retained beyond the 3-year period as long as required for the resolution of the issues raised by the audit.
  8. The RCCI must submit all reports, documents, and correspondence to the State as requested. The RCCI shall not sign blank documents.
  9. If an RCCI agrees to pay finance charges, fines, penalties, and/or legal fees imposed by a contractor, funds from state and federal nutrition programs cannot be used. Funds from State and Federal reimbursements are to be used solely for the operation and improvement of the NSLP and, if applicable, the School Breakfast Program.
  10. The RCCI must retain signature authority on the NSLP agreement, free and reduced price policy statement, and the monthly claims for reimbursement. All aspects of eligibility determination remain the responsibility of the RCCI and cannot be delegated to anyone outside of the RCCI.
  11. All RCCIs must submit the management company contract to the California Department of Education, School Nutrition Programs Unit, for review and approval.
  12. RCCIs will not be reimbursed for meals served before the School Nutrition Programs Unit approves the contract. Contract approval will not be retroactive.
  13. RCCIs are required to submit any extension of the approved original contract with the annual NSLP renewal documents to the School Nutrition Programs Unit.
Questions:   School Nutrition Programs Unit | 800-952-5609
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