Implement

Public Institutions: Draft Food Service Management Contracts

This stage guides a public institution in incorporating values-based procurement requirements into its food service contract with a food management company.
  • Public 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 a public 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 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.

As mentioned, public institutions may be bound by federal, state, or local procurement laws, which may limit the institution’s ability to incorporate certain values-related requirements into the food service contract. For example, until 2024, institutions receiving federal funding couldn’t include geographic preferences, including local preferences. [6] This rule was amended in 2024 to allow preferences for “local” businesses in solicitations. [7] The model recommendation and alternatives below include ways public institutions can incorporate values-based preferences in their food service contracts. However, institutions must consult their legal team to ensure their food service contracts don’t include prohibited provisions or fail to include required provisions.

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].

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.

Alternative: Enumerate Specific Details

In addition to the model recommendation, a public 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

A public 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. [8] 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: Specifying Values-Based Partners for Transactions

Some public 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.

Real-World Examples: Culinary Standards, Specifications, and Purchasing Requirements 

Greenfield Community College Commits to Climate-Conscious Food Purchasing

“Greenfield Community College strives to provide high quality fresh food, support our local economy and decrease our carbon footprint by purchasing as much locally grown, locally produced food and products as possible (with seasonal food availability in mind). The College requests that 20% or more of all produce purchased will be grown within a 50 mile radius of GCC and preferably purchased directly from farmers or already existing farm to school programs. The College would like to see this percentage increase over the life of the contract.”

  • Contract
  • FSMC-Operated
  • Public Institution
  • University

Omak School District (WA) Commits to Supporting Local Agriculture Through Its Food Purchasing

“Local Purchases. The [Management Company] shall allow twenty percent (20%) of the fresh produce food budget for local farm to school purchases. In those instances, the [Management Company] may apply a geographic preference when procuring unprocessed locally grown or locally raised agricultural products in accordance with The Food, Conservation, and Energy Act of 2008 (P.L. 110-246).” 

  • Contract
  • FSMC-Operated
  • K-12 School
  • Public Institution

Portland State University’s Sustainable Food Purchasing Efforts

“Dining Services Goals: Sustainability – General Procurement
PSU supports and encourages the procurement of goods produced in environmentally friendly and socially responsible ways.
i. [Management Company] shall support and procure food products that meet sustainability standards, equivalent to the Food Alliance, in the areas of pesticide reduction, soil and water conservation, wildlife habitat conservation, care for livestock, non-GMO products, and safe and fair working conditions to the maximum extent feasible during the performance of this contract.
iii. [Management Company] will participate in future campus based education efforts to promote awareness and understanding of sustainable agriculture, benefits of local foods, organics, and of “green” products and systems (i.e. recycling and composting).

Dining Services Goals: Sustainability – Local Food Procurement
i. The [Management Company] shall develop meaningful partnerships with local growers and producers wherever possible—Local to be defined as products grown and processed in the Northwest (Oregon, Washington, Idaho, and Northern California) with an emphasis on Oregon and Washington grown and processed products within 150 miles of the campus.”

  • Contract
  • FSMC-Operated
  • Public Institution
  • University

Tracking, Data Collection, and Reporting Requirements

A public institution must track progress to evaluate values-based procurement efforts. The management company should be prepared to collect and report purchasing data consistent with institutional definitions and requirements, as outlined in the RFP. This requirement should 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. A public institution may also be required to report certain values-based procurement metrics to a regulating body. Public institutions should consult with their legal or procurement team to ensure such reporting requirements are included in the contract.[9]

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 set forth 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. [10]

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

Public 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].

Real World Examples: Tracking and Data Collection Expectations in a Food Service Contract

Greenfield Community College Requires Quarterly Purchasing Reports

“Greenfield Community College strives to provide high quality fresh food, support our local economy and decrease our carbon footprint by purchasing as much locally grown, locally produced food and products as possible (with seasonal food availability in mind). The College requests that 20% or more of all produce purchased will be grown within a 50 mile radius of GCC and preferably purchased directly from farmers or already existing farm to school programs. The College would like to see this percentage increase over the life of the contract. Purchasing reports shall be provided to the Comptroller and/or Director of Purchasing and Business Services quarterly detailing this purchasing history.“

  • Contract
  • FSMC-Operated
  • Public Institution
  • University

ASU Requires Quarterly and Annual Reporting of Food Purchases from Local Growers

“6.3 [. . .] [Management Company] shall provide quarterly and annual reports to the [Institution] documenting actual percent of cost of sales with local growers and producers.”

  • Contract
  • FSMC-Operated
  • Public Institution
  • University

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. [11] 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.

Importantly, management companies are legally required to return all rebates to school food authorities and districts receiving federal nutrition funds. [12] Despite this requirement, enforcement and accountability can be difficult. Accordingly, food service contracts should clearly address rebate reporting and handling. [13]

Model Recommendation

The management company will provide full disclosures on all rebates, allowances, and incentives received from its suppliers. The management company will return to [Institution] the full amount of the discount, rebate, or applicable credit received from purchases made on behalf of [Institution].

Alternative: Rebate Disclosure and Reporting Without Return Requirement

The model recommendation asserts a requirement to report and return any rebates, allowances, and incentives received by a management company. The alternative does not require the management company to return the rebate but does require disclosure to promote transparency and accountability.

The management company will provide [insert tracking period (e.g., monthly, bi-monthly quarterly, semi-annually, annually, upon request)] reporting on any rebates, allowances, and incentives received from its suppliers in purchasing on behalf of [Institution].

Real-World Examples: Volume Rebate Disclosure Contract Provisions

USDA Offers Example Contract Language for Rebates and Credits to School Food Authorities

USDA Prototype Language for Return of Discounts, Rebates and Credits to School Food Authorities:
“Allowable costs will be paid from the nonprofit school food service account to the contractor net of all discounts, rebates and other applicable credits accruing to or United States Department of Agriculture Food and Nutrition Service 3101 Park Center Drive Alexandria, VA 22302-1500 AN EQUAL OPPORTUNITY EMPLOYER received by the contractor or any assignee under the contract, to the extent those credits are allocable to the allowable portion of the costs billed to the SFA.”

  • Contract
  • FSMC-Operated
  • K-12 School
  • Public Institution

USDA Offers Example Contract Language for Rebates and Credits to School Food Authorities

USDA Prototype Language for Return of Discounts, Rebates and Credits to School Food Authorities:
“The _________ _____________ School District shall ensure that ___ _______ (Company/Food Service Management Company) fully discloses all discounts, rebates, allowances, and incentives received by the Company from its suppliers. If the Company receives a discount, rebate, allowance, or incentive from any supplier, the Company must disclose and return to the _______ School District the full amount of the discount, rebate, or applicable credit that is received based on the purchases made on behalf of the ______ School District. All discounts, rebates, allowances, and incentives must be returned to the ________ School District during a mutually agreed upon timeframe that is beneficial to the School District.”

  • FSMC-Operated
  • K-12 School
  • Public Institution

Vendor Communication Requirements

The contract provides an opportunity to establish a public 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]. 

Real-World Examples: Vendor Communication Contract Provisions 

Portland State University Commits to Build Relationships with Local Growers and Producers

“Dining Services Goals: Sustainability – Local Food Procurement
i. The [Management Company] shall develop meaningful partnerships with local growers and producers wherever possible – Local to be defined as products grown and processed in the Northwest (Oregon, Washington, Idaho, and Northern California) with an emphasis on Oregon and Washington grown and processed products within 150 miles of the campus.”

  • Contract
  • FSMC-Operated
  • Public Institution
  • University

ASU Uses RFP to Mandate FSMCs to Create Meaningful Partnerships with Local Producers

“6.3 Contractor shall have meaningful partnerships with local growers and producers.”

  • FSMC-Operated
  • Public Institution
  • RFP
  • University

Footnotes

[6] See 2 CFR § 200.319(c) (2020), amended by 2 CFR § 200.319 (2024).

[7] 2 CFR § 200.319 (2024).

[8] See, e.g., Emory University Sustainability Guidelines for Food Service Purchasing, Emory Univ. Sustainable Food Comm., https://sustainability.emory.edu/wp-content/uploads/2018/02/SustFoodPurchGuidelns5-27-16.pdf.; see also Sample Language & Resources for Local Foods in Contracts & RFPs, Massachusetts Farm to School 6, https://www.farmtoinstitution.org/sites/default/files/imce/uploads/Local%20Food%20Language%20for%20Contracts.pdf.

[9] See, e.g., Locally Grown and Unprocessed Food Item Tracking Log, Office of the State Superintendent of Education (Oct. 8, 2024), https://osse.dc.gov/fr/publication/locally-grown-and-unprocessed-food-item-tracking-log.

[10] 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.

[11] Farm to Institution New England, Setting the Table for Success: A Toolkit for Increasing Local Food Purchasing by Institutional Food Service Management 11-16, https://www.farmtoinstitution.org/food-service-toolkit#3-institutional-purchasing-101.

[12] CFR § 210.21(f)(i).

[13] As discussed in Implement: Public Institutions Request for Proposals with Food Service Management Company, requirements about rebate disclosures should also be included in the RFP.