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Food Service Management Company (FSMC)

Below covers important information regarding the use of a food service management company in public and non-public schools and institutions participating in the Child Nutrition Programs. Please read it in its entirety.

Please Note: All contracts/extensions are between a School Food Authority (SFA) and a Food Service Management Company (FSMC) and are subject to review and approval by New York State Education Department (NYSED) in accordance with applicable federal and state law. While this guidance provides information on the requirements of federal and State statutes and regulations, the document should not be considered all-inclusive. The SFA should carefully read each contract item in the prototype to ensure both the SFA’s needs and local procurement requirements are being met and all blanks provided in the prototype have been accurately completed. This guidance is not intended to be a manual on the law of contracts or constitute legal advice nor is it intended to supplant the actual terms of the contract. Always consult your legal counsel for legal advice concerning contracts. The SFA’s attorney should be involved in the development of the contract so that required contract terms are included in the contract and the terms of the contract are properly drafted to achieve the SFAs desired outcomes and to ensure that there are no conflicting terms. Per Federal procurement procedures found under 2 CFR 200.18(k), the SFA alone is responsible, in accordance with good administrative practice and sound business judgement, for the settlement of all contractual and administrative issues arising out of its procurement. Issues may include, but are not limited to, source evaluation, disputes, protests, and claims. Bid protests will go directly to the district for resolution. Therefore, it would be best practice for the SFA to have a policy or, at the very least, a procedure in place to handle and resolve disputes relating to its procurements. 

Important information regarding contracting during COVID-19. In response to the novel coronavirus (COVID-19) public health emergency, the United States Department of Agriculture (USDA) has granted a nationwide waiver of food service management company (FSMC) contracts duration requirement. This waiver applies to School Food Authorities (SFAs) who administer the National School Lunch Program (NSLP)/School Breakfast Program (SBP)/Summer Food Service Program (SFSP) and SFSP sponsors.

This waiver permits SFAs to negotiate a one-year FSMC contract extension that would not otherwise be eligible for extension through SY 2021-2022 or June 30, 2022. SFAs and SFSP sponsors may use emergency noncompetitive procurement methods to negotiate the one-year FSMC extension or a new contract for SY 2021-2022/SFSP 2021. Please note that contracts resulting from noncompetitive proposals may not exercise renewal options.

SFAs opting to utilize the provisions of this waiver are still required to use NYSED prototype documents. The Type II prototype is required for emergency one-year contracts that are not the extension of the current contract. However, these contracts can be awarded based on non-competitive procurement. The prototype extension will be required for SFAs that are extending the current contract for one additional year. When extending the contract all  guidelines set forth in this guidance must be followed.

Every SFA should be annually reviewing its FSMC contract with no expectation by either party to renew the contract. USDA has issued guidance on how to determine if there will be a “material change” to an existing FSMC Contract. SFAs must use the following criteria to determine if the changes constitute a material change to the contract: 

  1. If the cost of the contract were increased or decreased, would it have caused bidders to bid differently if the prospective change had existed at the time of bidding?
  2. Would the prospective change materially affect the scope of services, types of food products, volume of food products, etc., in both the solicitation document and resulting contract? For example, the Final Rule requires schools to serve whole grain-rich products, specific varieties of vegetables and increased amounts of fruit, etc., which already may be included in current contracts. 
If costs to meet the new standards will result in increased costs beyond what is stipulated in the current contract the SFA must go out to bid. The SFA cannot pay the FSMC for “additional costs”.

Both the SFA and the FSMC must review their current contract. SFAs and FSMCs should be mindful of the increase of the bid price against the Consumer Price Index for All Urban Consumers (CPI-U) when determining if there is a material change to the contract. The current CPI-U can be found at https://www.bls.gov/regions/new-york-new-jersey/news-release/consumerpriceindex_newyorkarea.htm.

The United States Department of Agriculture (USDA) has revised regulations to rectify audit deficiencies in SFAs that use a FSMC. The regulations clarify the SFA’s responsibility to follow proper procurement procedures, limit the use of the nonprofit school food service funds to costs resulting from proper procurement and contracts and detail the State Agency’s responsibility to review and approve SFA procurement procedures and contracts. 

If the board of education, staff or students are not satisfied with the current FSMC, or if the SFA wants to make material changes to the food service operation to fulfill the recommendations of their wellness plan, the contract must be re-bid using the NYSED’s revised bid specifications and contract for 2021-2022. 

It is required that all public schools, non-public schools, residential child care institutions and jails participating in the National School Lunch Program (NSLP), School Breakfast Program (SBP) and/or Special Milk Program (SMP) that use the services of a FSMC, caterer, or consultant preparing meals on site, on a daily basis and running their food service operation in whole or in part, must competitively bid for services by complying with the following: 

Please note: The information highlighted below is not required for non-competitive procurement.

1. SFAs must use the 2021-2022 bid specification and agreement provided by NYSED. Failure to use the prototype contract will result in disapproval of the contract and the SFA having to rebid. Any changes to the prototype contract must be approved in writing by NYSED prior to letting bids. Adding information to the required schedules in the prototype is not considered a change and would not be required to be pre-approved.  Therefore: 

  • Complete NYSED Prototype Pre-bid FSMC Contracts are to be emailed to cn@nysed.gov prior to letting bids.
  • The NYSED Child Nutrition Program (CN) Office must approve all FSMC contracts or extensions for SFAs to receive reimbursement for meals, snacks and milk served to students.
  • Any changes, additions and/or deletions (also referred to as riders, addenda or addendum) to the State Agency prototype contract must be submitted for review and approved prior to letting bids as required by the revised regulations and included in the designated portion of each contract type. Failure to do so will result in the SFA being required to properly rebid the contract.
  • Schedules A-I must contain complete information and be included in with the prototype pre-bid contract for review and approval by the NYSED CN Office. The SFA will be notified by email, once the pre-bid has been approved. Completing Schedules A-I is not considered a change to the contract therefore, does not require pre-approval prior to bidding.
  • Altered specifications and/or contract are to be emailed in to NYSED CN Office prior to letting bids.
  • After bids have been let, the contract term is for one year and may be extended each year, for an additional four years.
  • An increase to the bid price is limited to no more than the increase in the Consumer Price Index for Urban Consumers (CPI-U) for the New York-Northeastern New Jersey area. (Please visit https://www.bls.gov/regions/new-york-new-jersey/news-release/consumerpriceindex_newyorkarea.htm for the appropriate extension percentage.)
  • Going out to bid prior to submitting the pre-bid for approval to our office may result in withholding reimbursement and/or potential loss of funds.
  • Significantly changing menu items offered to students that result in higher costs to the FSMC are material changes to the food service operation and will require re-bidding of the current contract.
  • Consult your school attorney to determine what other areas are considered material changes to the contract. 

2. SFAs must follow the bidding procedures outlined in New York State General Municipal Law §103. Specifically: 

  • Advertise the bid in the official school district’s newspaper or one having general circulation in that locality. The SFA is required to submit a notarized affidavit of publication from the newspaper that advertised the bid as proof of publication. Failure to provide the affidavit of publication with the submission of the signed contract will cause the contract to be disapproved and will require re-bidding of the contract.
  • At least five days shall elapse between the first publication of such advertisement and the date so specified (in the advertisement) for the opening and reading of bids. It is the SFA’s responsibility to ensure that the bid notice was published and enough time elapsed between the first advertisement and the date bids are opened.  It is recommended that SFAs allow two weeks before advertised bids are opened and read, thereby providing ample time for bidders to visit the sites where work will be performed.
  • Visits to the sites where work will be performed must be scheduled after the bid has been advertised. (The requirements of the bid specification and agreement must be known to all potential bidders at the time the work site is examined in order to provide a level playing field for all potential bidders, including the incumbent FSMC. The goal of competitive bidding is to provide a level playing field for all potential bidders. Creating an advantage for one potential bidder is inappropriate and unallowable). Failure to follow this procedure will result in the disapproval of the contract and will require the SFA to properly re-bid the contract.
  • The SFA must include with their contract submission a copy of the board meeting minutes selecting the winner of the bid if the lowest bidder is not chosen.
3. Bid documents and extensions must be approved by the CN office prior to the start of the contract/extension. The SFA must ensure that the final contract or extensions are submitted to CN prior to the start of the contract. Failure to adhere to these due dates may result in reimbursement hold and/or possible loss of reimbursement. 

Click here to download a copy of the 2021-2022 Food Service Management Company Contract.

If you have any questions, please contact Jamie McMillian in Child Nutrition Program Administration at (518) 473-8781. 

USDA Nondiscrimination Statement

In accordance with Federal civil rights law and U.S. Department of Agriculture (USDA) civil rights regulations and policies, the USDA, its Agencies, offices, and employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, sex, disability, age, or reprisal or retaliation for prior civil rights activity in any program or activity conducted or funded by USDA. 

Persons with disabilities who require alternative means of communication for program information (e.g. Braille, large print, audiotape, American Sign Language, etc.), should contact the Agency (State or local) where they applied for benefits. Individuals who are deaf, hard of hearing or have speech disabilities may contact USDA through the Federal Relay Service at (800) 877-8339.  Additionally, program information may be made available in languages other than English.

To file a program complaint of discrimination, complete the USDA Program Discrimination Complaint Form, (AD-3027) found online at: https://www.usda.gov/oascr/how-to-file-a-program-discrimination-complaint, and at any USDA office, or write a letter addressed to USDA and provide in the letter all of the information requested in the form. To request a copy of the complaint form, call (866) 632-9992. Submit your completed form or letter to USDA by:

(1)     mail: U.S. Department of Agriculture
         Office of the Assistant Secretary for Civil Rights
         1400 Independence Avenue, SW
         Washington, D.C. 20250-9410;

(2)     fax: (202) 690-7442; or

(3)     email: program.intake@usda.gov.

This institution is an equal opportunity provider.

 

Click here for Nondiscrimination Statement translations.

Los demás programas de asistencia nutricional del FNS, las agencias estatales y locales, y sus beneficiarios secundarios, deben publicar el siguiente Aviso de No Discriminación:

De conformidad con la Ley Federal de Derechos Civiles y los reglamentos y políticas de derechos civiles del Departamento de Agricultura de los EE. UU. (USDA, por sus siglas en ingles), se prohíbe que el USDA, sus agencias, oficinas, empleados e instituciones que participan o administran programas del USDA discriminen sobre la base de raza, color, nacionalidad, sexo, discapacidad, edad, o en represalia o venganza por actividades previas de derechos civiles en algún programa o actividad realizados o financiados por el USDA.

Las personas con discapacidades que necesiten medios alternativos para la comunicación de la información del programa (por ejemplo, sistema Braille, letras grandes, cintas de audio, lenguaje de seas americano, etc.), deben ponerse en contacto con la agencia (estatal o local) en la que solicitaron los beneficios. Las personas sordas, con dificultades de audición o discapacidades del habla pueden comunicarse con el USDA por medio del Federal Relay Service [Servicio Federal de Retransmisión] al (800) 877-8339. Además, la información del programa se puede proporcionar en otros idiomas.

Para presentar una denuncia de discriminación, complete el Formulario de Denuncia de Discriminación del Programa del USDA, (AD-3027) que está disponible en linea en: http://www.ocio.usda.gov/sites/default/files/docs/2012/Spanish_Form_508_Compliant_6_8_12_0.pdf. y en cualquier oficina del USDA, o bien escriba una carta dirigida al USDA e incluya en la carta toda la información solicitada en el formulario. Para solicitar una copia del formulario de denuncia, llame al (866) 632-9992. Haga llegar su formulario lleno o carta al USDA por:

(1)     correo: U.S. Department of Agriculture
         Office of the Assistant Secretary for Civil Rights
         1400 Independence Avenue, SW
         Washington, D.C. 20250-9410;

(2)     fax: (202) 690-7442; o

(3)     correo electrónicoprogram.intake@usda.gov.

Esta institución es un proveedor que ofrece igualdad de oportunidades.

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