Public Institutions: Draft Food Service Management Contracts

Federal procurement law applies to federal public institutions that receive federal funds. Federal agencies are governed by the Federal Acquisition Regulations (FAR) and, where applicable, agency FAR supplements and other agency guidance.[14] In addition, federal public institutions must consult the Uniform Guidance, given that there is substantial cross-over and cross-references between the FAR and the Uniform Guidance.[15] While using geographic preference in purchasing decisions is no longer prohibited under the Uniform Guidance,[16] federal agencies must stay up to date on what current regulations permit and prohibit in procurement contracts.

These public institutions will also need to adhere to any applicable state, local, or tribal laws in addition to federal rules under the Uniform Guidance.

State agencies using federal funds for procurement will be governed by the Uniform Guidance.[17] In addition, state agencies must abide by applicable state laws;[18] oftentimes, a state’s department of administrative services will highlight the relevant procurement law and regulations online, as well as provide a procurement manual or other guidance related to state purchasing.[19] State laws can sometimes include more restrictive provisions than their federal counterparts, so it is important to ensure that all restrictions and requirements for preferences for values-based food purchasing are included in the final contract. Since state procurement law varies across the country and is always subject to change, state public institutions should consult with their legal team to ensure all procurement contracts abide by the relevant law.

Like state agencies, city and county public institutions will be subject to Uniform Guidance if receiving federal funds, in addition to any local laws and ordinances. Local laws, similar to state laws, may provide additional preferences or considerations that public institutions must incorporate when soliciting proposals from a management company.[20]

In addition to the general federal procurement standards found in the Uniform Guidance, [21] school food authorities are subject to specific procurement regulations, codified at 7 CFR Part 210. These regulations include specific requirements for school food authorities when working with a food service management company, including requirements for solicitations for proposals and contract requirements. [22] In addition, school food authorities are subject to any applicable state and local laws. School food authorities will also need to be aware of regulations related to Child Nutrition Programs or School Nutrition Programs (SNPs), which are similarly located in the CFR. [23] School food authorities should note that federal regulations impose specific requirements on school food authorities that other public institutions are not bound by. For example, all contracts between a school food authority and a management company must include a termination clause allowing either party to cancel for cause with 60 days’ notice. [24]

Some institutions may choose to be members of group purchasing organizations (GPOs), which are procurement networks that aggregate institutional purchasing to negotiate discounts and between pricing with vendors.[25] GPOs can help member institutions receive discounts and better pricing; however, GPOs can restrict their members to only purchase from select vendors. Institutions in GPOs should be mindful of the sourcing flexibility within their GPOs when contracting.[26]

Preparing a food service contract will likely require coordination with the GPO on allowable contract terms and food sourcing. Some institutions form working groups with other members of the GPO to advocate for different product options or increased flexibility regarding food purchasing.