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The D.C. Council approved a one-year, $35 million D.C. Public Schools food vendor contract on Tuesday with international conglomerate SodexoMagic that, with additional options, could be worth $186 million over five years.
The approval comes a year after D.C. settled a whistleblower lawsuit against previous mega-vendor Chartwells/Thompson Hospitality for $19.4 million amid allegations of fraud, price-gouging, and poor-quality food.
But despite a one-year year extension of Chartwells’ contract last summer and instructions to DCPS to deviate from such reliance on a single vendor—much less one with a checkered past—the Council approved by an eight-to-three vote a result that several members denounced as just another a large corporate cop-out.
In the runup to the vote, nutrition experts and healthy-food advocates repeatedly cautioned that Sodexo, which posted $22.5 billion in sales as of May, according to Forbes, settled a $20 million False Claims Act case in New York in 2010. It repeatedly has sustained findings of spoiled or expired food, discrimination, and employee safety violations over the past several years.
“In considering this contract, I needed to know whether the contract does right by our kids—especially ones who can’t opt out if school meals fall short—and whether it does right by District taxpayers,” said Ward 6 Councilmember Charles Allen, who voted to oppose the deal. “I think it’s my job to ask if we are getting a good value for the tens of millions of dollars that we’re spending with a company whose track record elsewhere gives me pause.”
At-Large Councilmember Elissa Silverman said the contract perpetuates reliance on a single vendor and criticized it for failing to include meaningful financial penalties for noncompliance or adequate cost controls. Silverman emphasized concern for the health and well-being of children of low-income families and said that DCPS needs to make quality school food a higher priority.
“This is an issue that affects all children, from every part of the city, but it most affects our low-income children,” she said. “These meals are often their best meals of the day, and for some students, they can be the only real meal they get. They deserve better, if we are serious about helping them learn, build healthy lives, and reach their full potential.”
Added Ward 3 Councilmember Mary Cheh, architect of the District’s Healthy Schools Act and a persistent advocate for improvements to the school food program: “We are substituting one bad partner for another. With its past history, how can we in good conscience trust our children’s well-being to Sodexo?”
However, At-Large Councilmember David Grosso, chair of the Committee on Education, advocated for the contract and said that any large company “has issues,” and that it is “the nature of the beast.” Grosso also said that if the Council did not approve the contract, then 10 schools whose extended school year begins on Aug. 8 could be at risk of not being able to feed their students. As is his custom, Grosso voted “present” and promised strict oversight of the new vendor.
Council Chairman Phil Mendelson sided with the education committee chair and said he would like to see more in-school food preparation and a greater variety of vendors, and noted that Sodexo’s is only a one-year contract with options. “There are not many companies that can come in and do business at this scale,” he said. “There just aren’t.”
Under the contract, Sodexo will serve 101 of the 113 schools in DCPS, which has an enrollment of more than 48,000 students. D.C. Central Kitchen, under a contract that the Council also approved, will serve the remaining 12 schools.
Tuesday’s vote came as little surprise to anyone who has closely followed the DCPS food services saga over the last year.
In the wake of the 2015 Chartwells settlement and facing opposition to a two-year extension of that company’s contract, the Council granted Chartwells a one-year extension on the premise that it was too late to find a replacement. It also directed DCPS to explore the potential for future in-house meal preparation and conduct a procurement to select multiple vendors that would spur competition and give the city alternatives in the marketplace.
Early on, DCPS officials agreed to divide the schools into clusters that would allow them to make multiple awards to prospective vendors. A DCPS timeline called for stakeholder input and public disclosure of a new Request For Proposals that would lead to a contract award ready for Council approval by April 18 and implementation by June 27.
But in March, D.C. Auditor Kathy Patterson reported that DCPS had made no effort to explore the in-house option, and in fact had neglected its own kitchen facilities. Patterson and her staff found broken ovens, unused equipment, and cafeterias built to serve more students than attend the schools. By April 1, sources already were fearing that a large award to Sodexo was imminent, City Paper reported at the time.
Then, in May, following an Associated Press story about Chancellor Kaya Henderson soliciting contributions to a charity gala from a top Chartwells official, a citizens group called the D.C. School Food Project wrote to the Board of Ethics and Government Accountability and requested an investigation into any undue influence. (Sodexo made contributions to the same gala, AP reported.) The citizens group also complained about delays and lack of transparency in the procurement process and lack of responsiveness to citizen concerns.
Finally, on May 20, DCPS announced its awards. Yet the contract did not surface until June 27, as the Council session was drawing to a close. Grosso introduced an approval resolution that would allow him to hold a “public roundtable” before the contract came before the Council, but made clear that the Council would be unable to change any terms or performance metrics in the contract.
At that roundtable last Wednesday, more than a dozen students, parents, and cafeteria workers presented arguments as to why the Council should not approve the Sodexo deal. Only two of the five education committee members—Grosso and Allen—were present, with the most probing questions coming from Silverman and Cheh. No one testified on behalf of Sodexo or to advocate for contract approval. No one directly involved with the procurement process testified. Government testimony was limited to DCPS Chief Operating Officer Nathaniel Beers, who frequently was unable to answer questions.
The most comprehensive testimony was offered by Dr. Ivy Ken, a DCPS parent, member of the D.C. School Food Project, and an associate professor of sociology at George Washington University. “As you know, Chartwells/Thompson Hospitality just spent most of a decade bilking this city,” she wrote in her expanded testimony, detailing $48 million in costs that exceeded the contract price from 2009 through 2012. “So what company has DCPS chosen to replace Chartwells? Sodexo. A company with $22 billion in revenue last year. A company that has a remarkable record of poor service, bad food, racial discrimination, union busting, and more.”
Ken noted that, contrary to the RFP and industry practices, the contract allows Sodexo to pocket rebates from food suppliers, a practice that resulted in the company having to settle an $18 million lawsuit in 2010. “And while they used to hide the fact that they held on to the rebates… they have now figured out that they should get it right in the contract—right up front, before our eyes,” she wrote.
Ken also detailed mandates in the Chartwells contract that went missing from the contract with Sodexo. Under the previous contract, she said, meat had to be free of hormones, antibiotics, genetically modified organisms, bad smells, or deterioration; processed fish was not to contain more than 500 milligrams of sodium per serving; beef was not to be served more than once a week; eggs had to be U.S. Department of Agriculture Grade A; schools had to serve dark green leafy and orange vegetables weekly; and 20 percent of food ingredients and products had to be locally grown and/or locally processed.
The issues of rebates and nutrition intersect, she wrote, when a vendor purchases large volumes of lower-quality food at a lower price and keeps the rebates for itself: “So we’ve gutted the nutritional requirements. We’ve handed over millions of dollars in rebates to a multinational corporation. And where, exactly are the kids in this? Who is looking out for them? One might think it would be DCPS.”
Not so, said Ken, citing what she considers a lack of student satisfaction and food waste surveys, and a litany of examples of DCPS denying the public any “robust engagement” and engaging in back-room negotiations with Sodexo. “In September last year,” she wrote, “DCPS officials sat right here and assured this committee that they would split the District into clusters and encourage competition so that no one, single mega-company would dominate the way Chartwells has. And yet here we are. Again.”
Councilmembers hammered Beers for more than an hour until he conceded that if they disapproved the contract he would enact an emergency plan to have D.C. Central Kitchen and Revolution Foods, a Sodexo subcontractor, step in while a new contract could be negotiated. Such recourse would not be necessary.
Just this week, however, City Paper learned that a qualified bidder that lost out on the contract, Genuine Foods, a company formed by former DCPS food services director-turned-whistleblower Jeffrey Mills, has retained the law firm Davis Wright Tremaine. In a letter sent Monday to Mendelson, Grosso, and their Council colleagues, obtained by City Paper, the firm proposed that DCPS include Genuine Foods in its food services program and alluded to the potential for a bid protest. None of the 13 councilmembers responded to a request for comment on the letter.
Ken, like the councilmembers who opposed the deal, said she wishes DCPS had not waited until just before Council recess to submit the contract, only to have the Council determine that it’s too late to turn away from another mega-vendor.
“They kept saying that the contract is going to have to be approved no matter how many problems existed. I’m still hoping for a third way. Are we really stuck with yes or no?”