Food Service Management Company (FSMC) Procurement
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An FSMC is an entity that performs one or more activities of the food service operation on behalf of a school nutrition program sponsor. These activities may include any or all of the following services: bookkeeping, menu development, preparation of reimbursement claims, organization and maintenance of program documents (such as daily meal counts, menus, and menu production records), meal preparation and service, consulting services, and purchasing services.
Federal regulations require that all purchases of goods and services using food service revenues follow federal procurement regulations. Specifically, sponsors must adhere to a competitive bidding process, and FSMC contracts must include federally required clauses. In addition, the sponsor, not the FSMC, is responsible for preparing all bid documents and the agreed upon contract.
When deciding whether contracting with a FSMC will provide the best possible food service operation, the SFA should consider all financial, administrative and operational issues. Contracting with a FSMC means that a for-profit business will operate the SFAs nonprofit Child Nutrition Program. The SFA must maintain legal authority and responsibility for the Child Nutrition Program at all times.
FSMC Procurement Process and Timeline
It is recommended that organizations begin by reading “Contracting with Food Service Management Companies: Guidance for School Food Authorities,” view the webinar titled “What to Know Before Contracting with a Food Service Management Company,” and plan the process of procuring FSMC services with the “Timetable for Procuring a Food Service Management Company.” Any school food authority, SFA, that has decided to procure FSMC services for the next school year must begin the RFP process no later than the end of February. The SFA must have the RFP advertised no later than the end of March.
Contract Types and Base Year RFP/Contract:
When bidding for FSMC services, the state prototype must be used regardless of what type of contract is bid. To encourage competition and to obtain the best contract possible, SFAs are encouraged to submit their RFP to as many FSMCs as possible. Federal regulations require that SFAs annually submit all new contracts, corresponding bid documents, and/or annual contract extensions to the Iowa Department of Education (IADE), Bureau of Nutrition & Health Services (BNHS), for prior approval.
Fixed Price - In a fixed price contract, the FSMC sells a meal for a Fixed Price including their profit and overhead. All costs are known beforehand. Fixed Price contracts require no monitoring of National Volume Discounts and Rebates.
For current Fixed Price RFP, RFP Exhibits, and Base Year Checklist, contact Cheryl Benson or 515-868-2847
Cost Reimbursable -In a cost reimbursable contract, the FSMC passes along all costs (Food, Labor, etc.) and adds an administrative fixed fee and/or a management fixed fee.; Financial monitoring of this contract is more complex, and the SFA is responsible for ensuring that All National Volume Discounts and Rebates are being passed along.
For current Cost Reimbursable RFP, RFP Exhibits, and Base Year Checklist, contact Cheryl Benson or 515-868-2847
FSMC Post Award and Renewal
Material Change - No item may be added or replaced if it would constitute a material change to the contract. In general, a material change can be thought of as a change made to a contract after it has been awarded that alters the terms and conditions of that contract substantially enough, to the extent that had other bidders known of these changes in advance, they could have bid differently and more competitively. As such it is not expected that the total value of this RFP will increase or decrease significantly.
Advisory Board - After procuring FSMC services, the SFA, with participation from the FSMC, must establish an Advisory Board that meets at least twice a year and is composed of students, teachers, and parents who will assist in menu planning.
Self-Monitoring - SFAs must conduct self-monitoring visits and complete a monitoring form for each food service site twice a year, no later than December 1 and March 1. The form must be submitted to email@example.com.
FSMC contracts may be valid for up to one year from the date that they are signed by all parties and may be renewed for up to four additional one-year terms. Federal regulations require that SFAs annually submit all new contracts, corresponding bid documents, and/or annual contract extensions to the Iowa Department of Education (IADE), Bureau of Nutrition & Health Services (BNHS), for prior approval.
Fixed Price Addendum - The fixed price per meal/Meal Equivalent may be increased on an annual basis by the Yearly Percentage Change in the Consumer Price Index for All Urban Consumers, as published by the U.S. Department of Labor, Bureau of Labor Statistics, Food Eaten Away from Home (CPI). The CPI rate will be submitted to the SFA by BNHS annually. No other price increases are allowed for renewals.
Fixed Fee Addendum Prototype - coming soon
Cost Reimbursable Addendum- Management and General and Administrative Expense Fees may be increased on an annual basis by the Yearly Percentage Change in the Consumer Price Index for All Urban Consumers, as published by the U.S. Department of Labor, Bureau of Labor Statistics, Food Eaten Away from Home (CPI). The CPI rate will be submitted to the SFA by BNHS annually. No other price increases are allowed for renewals.
Cost Reimbursable Addendum Prototype
Addendum Required Language
FSMC Procurement Resources
List of FSMCs operating in Iowa
Summary of Allowable and Unallowable Expenditures
School Meals Legislation
Procurement Regulations 2 CFR 210
2 CFR 200.317-326 Super Circular
Iowa Learning Online Professional Development