Report Questions New Jersey School Contract Practices

Foodservice contract companies operating in New Jersey schools may be overcharging districts millions of dollars, according to a study by the Clarion Group consulting firm. The study, “Hard to Swallow: Do Private Food Service Contractors Shortchange New Jersey Schools?” was commissioned by the Service Employees International Union (SEIU), which is attempting to organize cafeteria workers in a number of the state’s districts.

The report analyzes the foodservice operations in 10 New Jersey districts that are managed by either Sodexo or Chartwells. Among its key findings: the contractors overcharged the districts studied by an estimated $320,000 for workers compensation and liability insurance, a figure that potentially reaches $12 million if pro-rated to the 378 New Jersey school districts that use private foodservice management.

In addition, the report found that Sodexo withholds rebate money in two districts (Piscataway and Long Branch) despite federal regulations that prohibit such withholding, and that the 10 districts studied all retained their existing contractors in competitive RFP processes, “raising immediate questions about whether the bidding process is truly competitive,” according to Clarion’s executive summary.

In addition, some renewed contract terms studied were found to be more favorable to the existing contract holder than the RFP terms outlined.