Some food authorities have contracted with private food service management companies (FSMC) to operate their school food services. In response to this mandate, and as agreed with the offices of the Senate Committee on Agriculture, Nutrition, and Forestry and the House Committees on Agriculture and on Economic and Educational Opportunities, we (1) determined the extent to which food authorities use FSMCs to operate their food services and the impacts that their use has had on various aspects of the lunch program, such as student participation, school food service employment, the generation of revenues through school meal sales, and a la carte sales of food in schools; (2) described the terms and conditions under which schools that participate in the lunch program use FSMCs; and (3) determined the extent to which schools that participate in the lunch program are provided with fast foods and snack foods in vending machines, described the most frequently used types and brands of fast foods commonly offered, and described their nutritional content. Finally, about one-half to two-thirds of the FSMC contracts do not contain all provisions required by USDA’s guidance that we reviewed. The required provisions most often not found in the contracts were those intended to ensure that the food authorities maintain control of the school meals programs. A cost-plus-a-fixed-fee payment structure may include one or more of these fees and may also be quantified as a per-meal fee and/or an annual fee. Many FSMC Contracts Do Not Contain All Eight Required Contractual Provisions That We Reviewed

USDA’s guidance for food authorities’ contracts with FSMCs specifies a number of provisions that must appear in the contracts to ensure that federal requirements are met. The Percentage of Schools Offering Brand-Name Fast Foods Has Increased

The percentage of public schools that participate in the lunch program and offer brand-name fast foods increased substantially from school year 1990-91 through school year 1995-96—from about 2 percent to about 13 percent. Schools’ use of brand-name fast foods appeared to have little effect on the number of schools’ food service workers. 4.4.) 1.5 oz.
Why GAO Did This Study

Pursuant to a legislative requirement, GAO examined the extent to which schools use private food service companies to operate their lunch programs, focusing on the: (1) terms and conditions of the contracts between schools and food service management companies (FSMC); and (2) percentage of schools offering brand-name fast foods that participate in the National School Lunch Program.

What GAO Found

GAO found that: (1) the number of food authorities participating in the school lunch program and contracting with FSMC has increased from 4 to 8 percent; (2) most food authorities use FSMC to reduce their budget deficit and increase revenue; (3) the advantages of using FSMC include paying lower costs for food, payroll, employee benefits, and administration; (4) schools with food service contracts have fewer students participating in school lunch programs than those schools not using FSMC; (5) more food service workers remain employed as a result of schools' contracting with FSMC; (6) food service contracts vary depending on the type of meal and the federal regulations governing the contracts; (7) most food service contracts require an annual fee, half stipulate a per-meal fee, and some stipulate both fees; (8) about one-half to two-thirds of FSMC contracts do not contain standard contractual provisions to ensure compliance with federal requirements; (9) the provisions most often omitted from the contracts are intended to ensure that the food authority maintains control of the school meals program; (10) the failure to include these provisions creates uncertainty regarding FSMC responsibilities and diminishes the food authority's ability to ensure that FSMC adheres to federal requirements; and (11) although the percentage of schools offering brand-name fast foods has increased, the number of items offered is limited.