A vendor that supplied Guam’s public schools for decades is crying over spilt milk after the U.S. Department of Agriculture yanked Foremost Foods Inc.’s contract and handed it to a competitor. Foremost argued that its milk should still be on the menu and the Journal has learned that it is exploring its way to force the milk-supply contract to be competitively bid out again.
The U.S. Department of Agriculture forced the school system to stop providing reconstituted milk to its students because the USDA said it did not meet federal standards. The reconstituted milk that Foremost provided was reconstituted from a powder — turned back into a liquid by adding water and coconut oil. The school system cut its contract with Foremost Foods on Sept. 30 2003. The USDA worked out a special arrangement for the school system with another Guam vendor. Foremost would have been in the second and final option year of its contract in 2006.
“I know we are spending more but that’s because it’s a different type of milk required by the USDA ” said Juan P. Flores superintendent of GPSS.
Competing vendors have complained that the sole-source arrangement with Quality Distributors now in its second year is costing far more than a competitively bid contract and they want a chance at it. While Foremost refused an interview the Journal obtained Foremost’s letters to GPSS through a Freedom of Information Act request. The Journal also learned that Foremost recently met with a senator about the situation.
Kings Restaurants LLC which provides breakfast and lunch meals to 19 of the 37 public schools pays 42¢ apiece for half-pint cartons of milk and is on track to provide 2.5 million cartons of milk to students this school year.
Paul J. Cruz director of operations for Kings said he is shopping around for alternatives to the California Sunshine brand provided by Quality. “The product is great milk but at 42¢ it’s a bit pricey if you look at the amount of volume.” Cruz said “We need to follow the federal guidelines but we’re looking at different products and possibly a different line.” Cruz said Foremost used to provide milk at about 36¢ a carton.
Ike Santos acting food services manager with GPSS told the Journal the school system receives money from the federal government for the school lunch program and milk for students. Under the National School Lunch Program GPSS receives reimbursements for feeding public school students. “Essentially it’s the USDA’s money. We were told that we should discontinue serving the reconstituted milk. The USDA through their relationship with the Department of Defense assisted the Guam Public School System by providing the proper milk product through that relationship.” Santos said the Department of Defense receives its commodities and food products from Defense Supply Center Philadelphia a supply center of the Defense Logistics Agency an agency within the Department of Defense.
Santos adamantly disagreed that the USDA arrangement with Quality which is a Department of Defense prime vendor on Guam is a sole-source contract. He said it is simply a USDA requirement.
A letter dated July 10 2003 to GPSS from Janet Allen director of the Special Nutrition Programs of the Western Region under the USDA wrote “We recently addressed Guam’s allowable use of ‘local preference’ differentials in awarding contracts in the federal programs especially for milk contracts. We received assurances Guam Department of Education would not apply these preferences in procurements in the Child Nutrition Programs.” Allen also wrote “As an extension of the local preference issue we have a related concern. It has come to our attention Guam Department of Education does not require institutions participating in the USDA Child Nutrition Programs to purchase and serve fluid milk in these programs.”
Peter McGrath president of Foremost Foods Inc. wrote a letter to GPSS on July 16 2003 and stated “Foremost was not given any local preference. Foremost was the only company that responded to DOE’s invitation for the Milk Supply Contract.” He also said “Under the federal regulations governing the Child Nutrition Programs it is specifically provided that reconstituted milk or recombined milk can be used in Guam in circumstances where other types of fluid milk are not readily available in sufficient quantities.” McGrath added in his letter “Foremost also notes that Congress specifically defined ‘fluid milk product’ to include reconstituted milk.”
With one year remaining on a three-year contract GPSS terminated the agreement. Foremost wrote a letter stating it was entitled to the money outlined in the contract for the remainder of the year. Foremost officially filed a damage claim for outstanding accounts receivables on Dec. 3 2003 in the amount of $722 638.48. The claim was paid out to Foremost.
Santos said DSCP receives commodities from local or prime vendors and then sells it to the USDA. “Because the USDA handles this the school system receives USDA quality commodities and since we get it through the military it’s an avenue of reliability that we didn’t have before.” Santos explained that since the produce and food items arrive with military shipments GPSS does not pay for shipping and that in the event of a typhoon or shipping strike shipments will not be interrupted “If we had a typhoon two weeks before school opens we don’t have to worry that the children won’t get to eat lunch or breakfast. The nutritional requirements of our students are an integral part of the mission of the Guam Public School System.”
When asked whether this arrangement conformed with procurement policies he said “This is not something that went out for bid. This is a USDA mandate.”
Flores said “We are very happy with the arrangement and since the change we’ve actually seen an increase in milk consumption. Our students love it.” MBJ