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.
Updates for School Year 2023-2024
The White House has announced the public health emergency will end on May 11, 2023. Thus, the use of one-year emergency contracts will no longer be available for the 2023-24 school year. SFAs in an emergency contract or in year 5-8 of a contract extension will be required to go out to bid for the 2023-24 school year.
All management contracts entered into beginning in the 2023-24 school year must adhere to New York State law, Chapter 533, Section 924. This law requires all food service management companies disclose ingredient lists and nutritional information to school districts for all meals provided. The management company must also consolidate nutrition information for any meal that is comprised of separate individual ingredients. The SFA must publish the information on the school district's public website.
- 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?
- 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.
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.
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 2023-2024.
1. SFAs must use the 2023-2024 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 email@example.com 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.
- Best Practices for Contracting with FSMCs
- Guidelines for Submitting a Successful Contract
- Guidelines for Submitting a Successful Extension
- Contract and Extension Information
- Summary of SFA and/or FSMC Ongoing Responsibilities
- The Contract
- Contract Review Process
- Contract Type II
- Contract Type III
- Important Telephone Numbers and Web Addresses
- Important Regulatory References
- Management Company Listed (The New York State Education Department does not endorse any of the companies listed.)