FFVP Fees in Food Service Mgmt. Company Contracts

This Management Bulletin provides guidance for school food authorities (SFA) that allow their contracted food service management company (FSMC) to charge a fixed fee to the Fresh Fruit and Vegetable Program (FFVP) grant. This guidance is outlined in the U.S. Department of Agriculture (USDA), Food and Nutrition Service (FNS), Policy Memo SP 33-2012: FFVP Fees in FSMC Contracts.

The current USDA FFVP Handbook for Schools indicates that allowable FFVP costs can be broken into two categories: administrative and operational. Operational costs are the main costs of running the FFVP, and include:

• Purchases of fruits and vegetables, including the costs of pre-cut produce and delivery charges
• Non-food items or supplies that are used in serving and cleaning
• Salaries and benefits for employees who prepare and distribute fresh fruits and vegetables

It is important to note that SFAs must use the majority of FFVP funds on the purchase of fresh fruits and vegetables, direct labor, and small supplies. The remaining funds, which cannot exceed 10 percent, must be devoted to planning and managing the program. SFAs are encouraged to fully review all non-food costs as to reasonableness. SFAs must submit FFVP claims that are allowable, verifiable, and fully documented. SFAs must report minimal labor costs in a manner that clearly distinguishes operational and administrative costs, and the actual time allocated to the FFVP. Please refer to the USDA FFVP Handbook and policy memoranda for more information on allowable costs and how to claim them.

Prior to executing an FFVP contract with an FSMC, the SFA must carefully review all contractual provisions allowing the FSMC to charge costs other than actual costs of fresh fruits and vegetables. SFAs are mandated to adhere to the cost limitations within the FFVP, specifically that administrative costs shall not exceed 10 percent of the overall grant.

SFAs must ensure that FSMC contracts include provisions that require the FSMCs to provide full and detailed documentation of allowable costs. The SFA should then use this information provided by the FSMC as a basis for its reimbursement claim under the FFVP (e.g., labor costs, administrative costs, and invoiced costs of fresh fruits and vegetables, etc.). If the FSMC does not provide this information, the SFA is encouraged to exercise one of two options: consider running the FFVP separately from its existing FSMC contract; or relinquish its grant funding. Please remember that any material changes to an existing contract will necessitate that the SFA rebid the contract. A material change to a contract is a modification that exceeds the terms of the original solicitation and resulting contract, and that is substantial enough that had other bidders been aware of the change during the bidding process, they might have bid differently.

In order to claim reimbursement under the FFVP, SFAs are required to comply with the following guidance:

• Provide assurance that the FSMC is completely apprised of all FFVP policies and rules to guarantee the program is operated in compliance with FNS standards
  
  
• Regularly monitor FSMC operations to ensure compliance with relevant FFVP requirements and all provisions of the contract
  
  
• Be able to identify in the solicitation document both the SFA’s and FSMC’s roles and responsibilities in the FFVP service
  
  
• Include a provision in the request for proposal that requires FSMCs to submit a FFVP cycle menu based on the FNS guidance (see next bullet), which could then be used in the scoring process to compare one FSMC’s fixed fee to another
  
  
• Include a provision in the solicitation that requires all FSMCs to document and track FFVP expenses separately and make this documentation easily accessible for the SFA to review

If you have any questions regarding this management bulletin, you may contact the School Food Service Contracts Unit (SFSCU) by email at SFSContracts@cde.ca.gov to be directed to a SFSCU Specialist.