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Distinguishing an FSMC from a Meal Vendor


Nutrition Services Division Management Bulletin
Purpose: Policy, Action Required

To: School Nutrition Program Sponsors

Number: NSD-SNP-11-2013
Attention: District Superintendents, Administrators Business Officials, Purchasing Agents, and Food Service Directors Date: August 2013
Subject: Distinguishing a Food Service Management Company from a Meal Vendor
Reference: Title 7, Code of Federal Regulations, parts 210, 215, 220, 3016, and 3019; California Public Contract Code Section 20112; California Education Code

This Management Bulletin (MB) provides information to help School Food Authorities (SFA) determine whether a contract with a meal vendor is truly a vended meal contract or a Food Service Management Company (FSMC) contract. This distinction is crucial because it affects the bidding process, the resulting contract, the extent of services, and the compliance with state laws or statutes, and federal regulations.

Food Service Management Companies

School Nutrition Program regulations under Title 7, Code of Federal Regulations (7 CFR), Section 210.2 define an FSMC as “a commercial enterprise or a nonprofit organization which may be contracted with by the SFA to manage any aspect of the school food service.” Therefore, a company is considered an FSMC if it performs a combination of services, such as:

Meal Vendors

Neither California State nor federal regulations provide a definition of a meal vendor. However, it is commonly understood that companies providing prepared meals to SFAs, and nothing more, are meal vendors. In this capacity, a meal vendor may also develop menus and menu production records, but would not be considered an FSMC. However, additional services (usually conducted by the SFA) provided by a company, may constitute food service management and must be bid for and procured as such.

Meal vendors may not have access to individual student meal eligibility, should not be collecting meal payments, conducting point of service meal counts, providing program oversight, collecting claim data, or acting as an employee of or agent for the SFA.
Competitive Procurement

Both California State laws and federal regulations require all procurements to be conducted in a manner promoting open and free competition (7 CFR, sections 3016.36[c] and 3019.43, and California Public Contract Code, Section 20112). As part of the competitive procurement process, SFAs must conduct either a formal or an informal bidding process. A formal bidding process must occur when the one-year value of the contract equals or exceeds the applicable small purchase threshold. As a reminder, as of August 30, 2012, the federal small purchase threshold is $150,000. The California State small purchase threshold, effective January 1, is adjusted annually and published in the Bid Threshold Adjustment letter, which is available on the California Department of Education (CDE) Correspondence Web page at http://www.cde.ca.gov/fg/ac/co/.

Bid Process for Meal Vendor Contracts

SFAs contracting for vended meals (preparation and delivery) shall prepare a written Invitation for Bid (IFB) and provide it to as many potential bidders as possible. The goal of an IFB is to obtain a minimum of three price quotes. SFAs may not bypass the competitive bidding process by entering into a contract as a result of discussions with only one vendor.

At this time, SFAs contracting for vended meals do not need to submit bid documents to the CDE for prior approval; however, they must annually submit a signed copy of the contract and contract extensions. SFAs must retain sufficient records detailing the significant history of the procurement, as outlined in 7 CFR, Section 3016.36(b)(9). These records include, but are not limited to, the following:

SFAs shall make all bid documents available for review, upon request, to the CDE, the U.S. Department of Agriculture (USDA), and the federal Office of Inspector General. The CDE retains the right to request of any SFA to submit bid documents for prior approval (7 CFR, sections 210.21[c][1], 215.14a[c][1], and 220.16[c][1]).

Bid Process for Food Service Management Company Contracts
As with vended meal contracts, FSMC contracts must follow a competitive bidding process, using formal or informal bidding procedures. However, SFAs must submit all bid documents to the CDE’s School Food Services Contracts Unit (SFSCU) for approval prior to issuance (7 CFR, sections 210.19[a][5] and 220.16[c][1]). Bid documents may be sent by e-mail to SFSCONTRACTS@cde.ca.gov.

For detailed information on the procurement process, visit the CDE FSMC Procurement Web page at http://www.cde.ca.gov/ls/nu/sn/fsmcproc.asp. For guidance on contracting with an FSMC, you may download the USDA Contracting with Food Service Management Companies: Guidance for School Food Authorities from the USDA Guidance and Resources Web page at http://www.fns.usda.gov/cnd/guidance/default.htm.

Summary

CDE requirements for procuring the services of an FSMC differ significantly from the requirements for procuring a meal vendor. While both require a competitive bidding process, all bidding documents for procuring the services of an FSMC must be submitted to the CDE for approval prior to issuance. SFA staff who are unsure about the extent of services they are seeking may contact any member of the SFSCU (listed below), by phone at 800-952-5609, or by e-mail at SFSCONTRACTS@cde.ca.gov.

Rae Vant, Unit Manager, 916-445-2307, rvant@cde.ca.gov
Estee Coloma-Anderson, 916-445-4308, ecolomaanderson@cde.ca.gov
Tim DeHerrera, 916-324-7131, tdeherrera@cde.ca.gov
Sonja Fussi, 916-327-2220, sfussi@cde.ca.gov
Shelly Taunk, 916-322-9366, staunk@cde.ca.gov

Questions:   Nutrition Services Division | 800-952-5609
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