Implement

Private Institutions: Draft Food Service Management Contracts

This stage guides an institution in incorporating values-based procurement requirements into its food service contract with a food management company.
  • Private Institution
  • FSMC-Operated
Implement: 

How Can the Parties Incorporate Values-Based Procurement Into the Contract?

This stage of the Toolkit includes several examples of how an institution and its management company can incorporate values-based procurement into the food service contract. Importantly, these recommendations do not cover all essential elements of a food service contract. The values-based procurement personnel at an institution should work closely with the institution’s legal team and procurement team to develop a food service contract that complies with all applicable rules while still incorporating the institution’s values-based food purchasing guidelines.

An institution incorporating values-based procurement into a food service contract with a management company should focus on the following contract provisions:

  • Culinary Standards, Specifications, and Purchasing Requirements
  • Tracking, Data Collection, and Reporting Requirements
  • Volume Rebate Disclosure Requirements
  • Vendor Communication Requirements

Culinary Standards, Specifications, and Purchasing Requirements

A food service contract will include an institution’s culinary standards, specifications, and purchasing requirements for all food operations. The institution’s food purchasing guidelines, along with any other requirements and preferences related to values-based procurement in food purchasing, should be incorporated into the food service contract in this section.

Keep In Mind:

These model recommendations often refer to an institution’s food purchasing guidelines, which can be incorporated into specific contract terms and attached in full as an appendix to the contract.

Model Recommendation

The management company will use its best efforts to adhere to [Institution’s Food Purchasing Guidelines] and utilize practices and processes to support [Institution’s] desired purchasing goals. [Institution’s Food Purchasing Guidelines] are incorporated into the contract as Appendix [X]

Alternative: Enumerate Specific Details

In addition to the model recommendation, an institution may also choose to include specific details related to its values-based purchasing requirements. This approach will work for institutions with set purchasing thresholds or specialized requirements for management companies. For example, specialized requirements may include requiring the management company to lead educational offerings related to food operations, contribute marketing or promotional materials, or serve on committees related to food operations at the institution. Additionally, an institution may choose to enumerate specific culinary standards, specifications, and requirements for specific product types in the food service contract.

Options for Enumerating Specific Details:

  • Per [Institution’s] [mandate; objective; goal], [X percent/X pounds] of [Institution’s] food [purchasing/products] must be [particular values-based requirements].
  • Per [Institution’s] [mandate; objective; goal], [X percent of Institution’s vendors] must engage in [particular values-based behavior].
  • Per [Institution’s] [mandate; objective; goal], [Institution] must purchase [X percent; X pounds] from producers engaging in [particular values-based behavior].
  • To support [Institution’s] [mandate; objective; goal], the management company will [e.g., offer educational events related to values-based food; provide marketing materials about values-based purchases; participate in advisory meetings about the values-based procurement program].

Option for Enumerating Specific Culinary Standards, Specifications, and Requirements:

The following table includes specifications that will be required at [Institution’s dining facilities], it being understood that substitutions may be made in the event of disruptions in the supply chain with [Institution’s] approval. Additionally, it is encouraged that the management company meets the “options for innovation” criteria.

CategoryRequired ElementsOptions for Innovation
Liquid Milk and Dairy[Insert institution’s requirements from Food Purchasing Guidelines][Additional, non-binding preference from institution’s Food Purchasing Guidelines]
Eggs[Insert institution’s requirements from Food Purchasing Guidelines][Additional, non-binding preference from institution’s Food Purchasing Guidelines]
Vegetables[Insert institution’s requirements from Food Purchasing Guidelines][Additional, non-binding preference from institution’s Food Purchasing Guidelines]
Legumes[Insert institution’s requirements from Food Purchasing Guidelines][Additional, non-binding preference from institution’s Food Purchasing Guidelines]
Fruits[Insert institution’s requirements from Food Purchasing Guidelines][Additional, non-binding preference from institution’s Food Purchasing Guidelines]
Poultry[Insert institution’s requirements from Food Purchasing Guidelines][Additional, non-binding preference from institution’s Food Purchasing Guidelines]
Beef[Insert institution’s requirements from Food Purchasing Guidelines][Additional, non-binding preference from institution’s Food Purchasing Guidelines]
Pork[Insert institution’s requirements from Food Purchasing Guidelines][Additional, non-binding preference from institution’s Food Purchasing Guidelines]
Seafood[Insert institution’s requirements from Food Purchasing Guidelines][Additional, non-binding preference from institution’s Food Purchasing Guidelines]
Grocery (coffee, tea, etc.)[Insert institution’s requirements from Food Purchasing Guidelines][Additional, non-binding preference from institution’s Food Purchasing Guidelines]
Grains[Insert institution’s requirements from Food Purchasing Guidelines][Additional, non-binding preference from institution’s Food Purchasing Guidelines]
Cereals[Insert institution’s requirements from Food Purchasing Guidelines][Additional, non-binding preference from institution’s Food Purchasing Guidelines]
Prepackaged products[Insert institution’s requirements from Food Purchasing Guidelines][Additional, non-binding preference from institution’s Food Purchasing Guidelines]
Other[Insert institution’s requirements from Food Purchasing Guidelines][Additional, non-binding preference from institution’s Food Purchasing Guidelines]
[Insert additional categories, or delete categories, as needed][Insert institution’s requirements from Food Purchasing Guidelines][Additional, non-binding preference from institution’s Food Purchasing Guidelines]

Alternative: Procurement Based on Hierarchical Standards

An institution may consider adopting a hierarchical approach to guide its management company in procuring individual products. Under this approach, the institution lists its goal specifications for a product and identifies the highest-priority criteria for selecting vendors to meet that goal. It then ranks secondary priorities to follow if the higher priorities are not available. [1] This method is useful because it gives the management company flexibility while still ensuring that the institution’s purchasing goals are achieved to some degree.

Option Based on Hierarchical Standards:

  • Specific product type: [e.g., Milk and Dairy]
    • Ultimate Goal: [e.g., from [Institution’s county or state farms/dairies and certified sustainable]
    • First priority: [e.g., hormone and antibiotic free]
    • Next priority: [e.g., grass-fed]
    • Next priority: [e.g., from regional dairies/farms]
    • Next priority: [e.g., from [Public Institution’s state dairies/farms]
    • Next priority: [e.g., certified organic (USDA)]

Alternative: Identifying Values-Based Partners

Some institutions maintain specific values-based partnerships with organizations, such as nonprofits, food hubs, or producers, to advance goals like sourcing local food, fostering equitable food relationships, and supporting small businesses. For example, an institution may have a memorandum of understanding (MOU) with a nonprofit specializing in food systems. These nonprofits can provide expertise and leverage existing relationships with food hubs or producers to advance the institution’s values-based procurement goals. Formalizing such partnerships in the food service contract ensures that the management company incorporates that partnership into ongoing food procurement.

Option for Identifying Values-Based Partners:

The [Institution] is deeply committed to purchasing products from [Values-Based Partner]. In furtherance of that commitment, the management company will:

  • Assist the [Values-Based Partner, members of Values-Based Partner] in obtaining vendor certification;
  • Regularly communicate with [Values-Based Partner] about the management company’s desired products for the growing cycle, the number of products the management company can purchase, and the fair market value the management company can pay for products;
  • Track the products purchased from [Values-Based Partner] and include that data in the quarterly purchasing reports provided by the management company to [Institution];
  • Together with [Institution], develop and regularly update an orientation manual for local farms, including [Partner Organization], that includes logistics, points of contact, and anything else farms may need to know to build a successful relationship with the management company;
  • Together with [Institution], develop and regularly update standard operating procedures for purchasing products directly from local farms, including [Partner Organization] and local food distributors.

Tracking, Data Collection, and Reporting Requirements

An institution must track progress to effectively implement and evaluate values-based procurement efforts. The management company should be prepared to collect and provide information on food purchasing in a way that aligns with institutional definitions and requirements. These expectations will be expressed in the RFP and must also be memorialized in the food service contract.

Food data is typically tracked by volume or dollars spent, but other metrics may be used, based on the institution’s food purchasing guidelines. Metrics should reflect the institution’s values, such as measuring the amount of food that qualifies as “local” or “sustainable.” The contract should also require regular, scheduled reporting on values-based purchasing to ensure that the management company is complying with both values-based goals and contract terms.

Model Recommendation

The management company will track the products purchased from values-based vendors by spend and percentage of total spend for the tracking period. Values-based vendors are vendors that meet standards outlined in [Institution’s Food Purchasing Guidelines].

The management company will also track the following metrics: [specific standards in the Institution’s Food Purchasing Guidelines, or other standards as negotiated].

Examples of specific standards include, but are not limited to:

  • Spend and percentage of total spend from “local” vendors. [Include institution’s definition of “local”].
  • Spend and percentage of total spend from “sustainable” vendors. [Include institution’s definition of “sustainable”].
  • Spend and percentage of total spend from [insert producer group] vendors.
  • Spend and percentage of total spend from vendors with [insert certifications or desired production practices].

Data pertaining to metrics identified by [Institution] will be included in [insert negotiated tracking period (e.g., monthly*, bi-monthly*, quarterly*, semi-annually, annually, upon request)] reports of food purchases provided by the management company to [Institution]. The management company will provide reports digitally in [insert institution’s preferred data organization software].

*We recommend monthly, bi-monthly, or quarterly reports to facilitate the flow of information between the institution and the management company, address any fluctuations or deficiencies in purchasing more regularly, and build a record for institutional memory and future reference. However, the tracking period is something the institution and management company may negotiate.

Alternative: Tracking by Weight

Tracking products by price lets an institution measure spending on values-based products as a percentage of the overall food budget. This facilitates comparison across years, which can be easier to interpret than a metric based solely on product weight. However, an institution may prefer tracking by weight (or by both weight and price), especially if it has goals tied specifically to product weight or if it anticipates purchasing large volumes of products with fluctuating prices.

When deciding which metrics to track, an institution should consider what methods are feasible, which metrics best demonstrate progress, and how the data might be used to communicate about the program. [2]

These alternatives are particularly useful for institutions:

  • With values-based goals or institutional mandates tied specifically to product weight;
  • With values-based goals or institutional mandates tied to both product weight and price;
  • Operating in regions with significant price fluctuations; or
  • Purchasing high volumes of products subject to considerable price variability.

Options for Tracking Purchases by Weight Alone or Both Weight and Price:

  • The management company will track the products purchased from [desired vendor(s)/product(s) as identified by Institution] by weight.
  • The management company will track the products purchased from [desired vendor(s)/product(s) as identified by Institution] by both price (spend and percentage of total spend) and weight.

Alternative: Additional Reporting Requirements

Institutions differ in their data analysis capabilities and have different audiences in mind when considering values-based purchasing data. One institution may need detailed reports that track trends and progress, while another may require simpler formats that are easy to interpret and share with various stakeholders, such as executives, staff, students, or the public.

Option for Additional Reporting:

Every [insert time period (e.g., monthly, bi-monthly, quarterly, semi-annually, annually)], the management company will also provide [insert desired report format(s) (e.g., data visualizations, graphics, charts, social media content, vendor quotes/testimonies] summarizing purchasing progress or highlighting [selected metrics related to Institution’s values-based purchasing goals].

Volume Rebate Disclosure Requirements

An institution should use the food service contract to require its management company to provide transparent information about volume discounts and, whenever possible, not incorporate that discount into the product unit price.[3] Increased transparency helps an institution better understand the costs associated with different vendors, and it reinforces the expectation that the management company will be prepared to work with values-based vendors, not just traditional vendors.

Model Recommendation

[Institution] is committed to expanding its food purchasing with vendors that align with [Institution’s Food Purchasing Guidelines]. To advance this commitment, the management company will provide transparency in its food purchasing on behalf of [Institution], such as disclosing the value and nature of any volume discount rebates, incentives, and credits received from vendors. This information can be presented to [Institution] through [insert tracking period (e.g., monthly, bi-monthly, quarterly, semi-annually, annually, upon request)] reporting.

Alternative: Requiring Rebate Disclosures

While the model recommendation merely requires transparency around volume rebates and discounts, an institution may want to impose stricter reporting requirements. An institution that wants specific, detailed information about volume rebates may specify the exact metrics and format it requires its management company to produce.

Option Requiring Exact Volume Rebate Information:

[Institution] is committed to expanding its food purchasing with vendors that align with [Institution’s Food Purchasing Guidelines]. To advance this commitment, [Institution] seeks transparency in its food purchasing, including relevant information about volume discount rebates, incentives, and credits from vendors. The management company will provide [insert tracking period (e.g., monthly, bi-monthly, quarterly, semi-annually, annually, upon request)] reporting on the value and nature of any volume rebates, incentives, and credits received from vendors.

Vendor Communication Requirements

The contract provides an opportunity to establish an institution’s expectation of open communication between the management company and values-based vendors. As noted throughout this Toolkit, values-based vendors are vendors that meet the institution’s purchasing guidelines. They might be producers and farmers or food hubs and aggregators. These vendors are often new to selling into institutional markets and through management companies. The management company should understand the institution’s goal to increase purchasing from these vendors and provide information about its vendor certification process to ensure values-based vendors can be added to its approved vendor list.

Model Recommendation

For values-based vendors pursuing vendor certification, the management company must provide information about the requirements to complete certification, remain in regular contact with these vendors through the process, and, if necessary, assist these vendors in achieving certification. For certified values-based vendors, the management company must establish a communication schedule to discuss product needs, purchasing amounts and frequency, and pricing.

The management company is expected to regularly communicate with vendors that meet [Institution’s Purchasing Guidelines] about the management company’s vendor certification process and purchasing logistics [e.g., desired products for the growing cycle, the amount of products the management company could purchase, and the fair market value the management company could pay for products].

Alternative: Incorporate Standard Operating Procedures

If an institution has standard operating procedures for communication between the management company and vendors, it may reference those procedures. The food service contract could also instruct the management company to develop standard operating procedures for purchasing products from values-based vendors.

Options Incorporating or Referencing Standard Operating Procedures:

  • In accordance with [Institution’s Standard Operating Procedures], the management company is expected to [insert requirements from standard operating procedures].
  • Together with [Institutional Representative], the management company will develop standard operating procedures for purchasing products from [values-based] vendors that align with [Institution’s Purchasing Guidelines].

Footnotes

[1] See e.g., Sustainability Guidelines for Food Service Purchasing from the Emory University Sustainable Food Committee, Emory University, https://sustainability.emory.edu/wp-content/uploads/2018/02/SustFoodPurchGuidelns5-27-16.pdf; Sample Language & Resources for Local Foods in Contracts & RFPs, Massachusetts Farm to School and Farm to Inst. New England (FINE) 6, https://www.farmtoinstitution.org/sites/default/files/imce/uploads/Local%20Food%20Language%20for%20Contracts.pdf.

[2] Advancing School Food Procurement: Driving Values-Based Purchasing through Competitive Solicitations, The Common Mkt. 31 (Nov. 2022) https://www.thecommonmarket.org/assets/uploads/reports/Advancing-School-Food-Procurement-Driving-Values-Based-Purchasing-through-Competitive-Solicitations.pdf.

[3] Setting the Table for Success: A Toolkit for Increasing Local Food Purchasing by Institutional Food Service Management, Farm to Inst. New England, https://www.farmtoinstitution.org/food-service-toolkit.