The Case against Fixed Cost Contract for NJ School Food Service

NJ Division of Food and Nutrition has announced that they are dramatically changing the way school districts contract with Food Management companies. The new method emphasizes cost over quality. For years, the NJ Business Administrators lobbied against a USDA initiative that would have imposed this type of contracting and prevailed but NJDA is now unilaterally requiring we abandon our current system. NJ Schools are leaders in quality nutrition programs. A vast majority of the state uses Food Service Management Companies and enjoy food service programs that operate at no cost. The Business Administrator community was not consulted, so the Division of Food and Nutrition could learn of our objectives for our schools and concerns about the Fixed Cost method of contracting.

The Fixed Cost contracting method has management companies being awarded contracts based on a cost per meal. The current method has management companies reimbursed for actual costs plus a fee for their service.

The concerns are:

The Loss of Flexibility

·       Any change a district requires could result in the need to seek new proposals. This is costly, time consuming, and delays implementation of projects the district wants.

For example

-        Change in lunch schedule

-        Addition of new services

-        Increasing number of cashiers, etc.

·       Food quality could suffer. Higher quality ingredients result in a higher cost per meal.

·       Participation in lunch program can suffer. If cost is the emphasis, and quality drops, the number of students dining in school will decline.

·       Nutrition Initiatives that encourage students to make healthy choices increase costs and may not be feasible due to the Fixed Cost.

Unintended Consequences

The Fixed Cost method rewards management companies when:

-        They work short staff

-        They use lower cost ingredients

-        They negotiate vendor rebates that they can retain

Inflation in costs such as food and labor may force the management company to compromise on quality to keep within the proposed Fixed Cost.

NJ Schools want:

·       To choose a company that best addresses the objectives of their community

·       To retain the flexibility we currently enjoy

·       Preserve our Quality Nutrition programs

Please pass the resolution to support quality nutrition programs for New Jersey students.