What is Food Service Management Company Procurement

Food Service Management Company (FSMC) is an organization that works on behalf of a school nutrition program sponsor. FSMCs are for-profit entities that work directly with non-profit School Food Authority (SFA). However, there are federal regulations that direct the collaboration of the two industries.

Activities of FSMC

A Food Service Management Company operates under strict federal procurement regulations. In addition, FSMCs are very competitively bid on by school nutrition program sponsors. All FSMCs should have the required federal required clauses to qualify to be bid. The SFAs must investigate the financial, operational and administrative issues of the FSMC since the SFA must prepare all bid documents and agree on the contract terms. Some of the activities an FSMC is expected to perform include:

  • Bookkeeping
  • consultation services
  • Menu development
  • Preparation of reimbursement claims
  • Purchasing
  • Managing and organizing the program documents such as meal counts and menu production

The FSMC Process

Organizations are advised to read the guidelines of FSMCs before contracting the procurement process. This is because of the timeline and timetables that should be followed according to the federal regulations. If any SFA wants to bid on an FSMC, they need to do it early enough before starting any school year.

Even though the FSMC works on behalf of the School Food Authority, child nutrition programs and legal responsibilities remain under the SFA jurisdiction. SFA’s responsibility is to read the guidelines and plan for the bidding process while sticking to the proposed FSMC timetable. Below are some of the things an SFA should do to increase their chances of getting an FSMC bid.


There are different types of contracts that the SFA and FSMC agree upon. But all contracts follow a state prototype that is unique to other regions. The federal regulation serves as a guide on the type of contracts drawn up for a bid.

To encourage competition and get the best contract, SFAs send their Request for Proposal to many FSMCs. This approach increases the chances of finding the most complementary FSMCs bids. The SFAs also must renew their bids annually and seek approval from other important bodies such as BNHS. Some don’ts in the contracts are:

  • No modification of already posted contracts are allowed. Any documentation or template of the contracts should remain the same once the contract is posted.
  • If any involved parties alter the Request for Proposal (RFP), a hefty fine is applied. The SFAs may pay more funds there than school nutrition funds
  • All documents of the contract must be up to date

There are different types of contracts used by the School Food Authority (SFA) sponsors. The two main contracts used are fixed price and cost-reimbursable contracts. A sponsor will bid on the contrast that best serves the interests of the SFA.

Fixed Price Contracts

For the fixed price contracts, all the meal costs are known beforehand. The amount includes the profit and overhead incurred. In this type of contract, there is no need for the National Volume Discounts and Rebates to monitor the transactions. There are many websites with such contracts, and it would be best to research the best offers available.

Cost-reimbursable Contracts

In such contracts, the FSMC draws and passes on costs such as food prices and labor. They also include fixed management or/and administrative fee, making financial monitoring a little difficult. This contract calls for the SFAs to ensure the FSMC fees comply with the National Volume Discounts and Rebates regulations.

FMSC Rules

There are some rules and regulations that the FSMC and SFA must adhere to for the process to run smoothly. These rules are in line with federal procurement regulations. They include:

No Changes Allowed

There should be no material change made in the RFPs once the contract has been signed. Any change can be translated as changing the terms and conditions of the agreement. A change that may influence other bidders to change their decisions. The changes made should not increase or decrease the total value of the RFP.

Advisory Board

Once the contract is signed and agreed upon, both parties should create an advisory board. This board must consist of the students, parents and teachers of the institution. The advisory board is expected to meet biannually to decide the menu planning.


The SFAs are required to perform self-check visits twice every year. On such visits, they should fill a monitoring form for every food item on the menu. However, the contracts are only valid for one year with a four times renewal policy limit. The SFA is expected to submit all necessary and corresponding documents for all new and renewed contracts to relevant bodies for approval.

The RFPs prices are determined by the yearly percentage change in consumer price index for all urban consumers. However, prices remain unaffected for the renewed contracts. Further and extensive research on FSMC procurement is highly advised.


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