School Food Firm Passes on Seconds
When New York City's schools declared an emergency two years ago because of problems in its food delivery system, U.S. Foodservice rode in to help. When a company that delivered to schools in south Brooklyn and Staten Island hit the brink of bankruptcy and left the city's service in late 2005, U.S. Foodservice picked up that slack, too. And this year, when the city asked for new bids for a restructured delivery program, U.S. Foodservice made an offer.
But now the firm is pulling out. U.S. Foodservice will finish its current contracts for the rest of the school year, but its departure further narrows the field of vendors capable of handling the massive job of keeping New York's school kitchens stocked. And to the extent that it increases costs or stalls efforts to improve nutrition in city schools, that's a problem.
Every day the city's schools feed more people than live in San Francisco in cafeterias located in hundreds of schools spread across 300 square miles. There's frozen chicken and fresh produce, food the city buys as well as goods the federal government donates, breakfast, lunch, snacks, and dinner, and different menus for different grade levels. It's a complicated system and it sometimes things go wrong. In 2000, for example, officers at several food delivery companies were indicted on federal bid-rigging charges, and some went to prison.
Two years ago the city tried to put that scandal behind it and save money by agglomerating its contracts for delivering food to put only three firms in charge of delivering all the food to all the schools.
It didn't work. The companies were too small, the computers didn't operate properly, and deliveries reached the schools late or not at all. The city slapped the delivery firms with big late fines and brought in extra help. Service improved, but fines and disputes over payments persisted. In the summer, one of the original vendors dropped out. And in December, another one (the one mentioned above that was under financial pressure) was forced out or quit, depending on whom you ask.
People from those companies and other firms have questioned whether the delivery program can ever be made to work. Developed on advice from Accenture, the idea was to use fewer companies to take advantages of economies of scale. But the volume of food was simply overwhelming, delivery guys say.
Now, U.S. Foodserviceby far the biggest company involved in the delivery program, with 28,000 employees nationwideis dropping out, citing "highly complex and resource-intensive administrative requirements of providing foodservice to the city schools."
"The Department of Education billing systems are not a good fit with mainstream foodservice practices, and can therefore create unusually high costs in terms of both time and expenses," Rob Meyne, Vice President of Corporate Communications, says in a statement to the Voice.
A spokeswoman for the Department of Education says there's no specific timetable for awarding the new contracts that U.S. Foodservice has passed on.