Board of Directors Meeting
April 10, 2013
Attendees: Steve Deutsch L. David Rooney
Corinna Caracci Niza Cardona
L. David Eaton Kevin Saunders
Rachel Rigolino Beth King
Anthony Adamo Rose Faber
Josh Simpson Lara Russo
Others Present: Donald A. Diamond, Jr. Anita Pelletier, Esq.
Rob White, Envisions Evelyn Gezo, Dietitian
Ralph Perez-Rogers, Sodexo Steve O’Reilly, Sodexo
Numerous unidentified students
Numerous unidentified others
Recording Secretary: Janet M. Cosh
Call to Order: 10:00 a.m.
Steve confirmed that everyone had received the materials needed for today’s meeting and sought approval of the Agenda. Roberto made a motion to add 3 minutes to the Public Comment section of the Agenda. There was no discussion. Motion passed.
Steve asked if there were any comments, corrections or additions to the Minutes from the March 13, 2013 meeting. There were none. The Minutes were unanimously approved.
Union representative Maria Mach read a prepared statement on behalf of CSEA 751. She announced the ratification of a new Contract with Sodexo the month prior to the meeting, which brought about improvements but did not raise wages to her satisfaction. She noted that concerns have been raised about food quality, sustainability and environmental practices on campus and it is her belief that there are no major differences on these issues amongst the 3 bidders; she also believes food quality will go up or down depending on meal plan pricing regardless of the vendor. She urged the Board to consider how well Sodexo works with and appreciates an organized labor force, and contrasted that with the rough experience SUNY Purchase had with Chartwells when they sought to organize in 2004. While CSEA has little experience with Aramark, her research shows that in 2010 the National Labor Relations Board found Aramark guilty of violating Labor Law when they refused to recognize and bargain with a newly elected union. She stated that no matter which vendor is chosen the CAS Board is responsible for holding the contractor accountable for the quality of the food and service, and noted that changes come from a well written contract with goals and objectives the Board is willing to enforce. She noted that CSEA and the students stand together in support of this goal.
An unidentified student addressed the Board, stating that students care about where their money goes; what it supports; the food they eat; transparency; and worker rights. She noted that they do not support any one bidder but do support the worker’s union; they are passionate about local food and healthy options; and they endorse small local businesses. She urged the Board to include language in the contract that recognizes the union; increases the presence of local, sustainable food on campus; and incorporates the goals and objectives of the Real Food Challenge.
An unidentified student addressed the Board saying that students believe that investing in the use of local, regional, ecologically sustainable, humane and fair foods benefits current students; is an investment in the recruitment and retention of future students; fosters community relations; and places our institution in alignment with leading universities across the country.
A group of unidentified students reiterated the above sentiments in unison.
An unidentified theater student referenced a personal connection to certain food service workers on campus and noted that her college experience would be negatively affected if she knew these workers were not being treated fairly. She stated that personal research has lead her to believe that it took Sodexo a long time to develop a good relationship with their workers; she feels this relationship would need to be rebuilt if a new vendor is hired and vocalized her support of keeping Sodexo.
An unidentified student read a statement asking the school and associated contractors to adopt a policy of neutrality towards attempts by workers to organize a union; to refrain from any threats, coercion or interference to promote or deter union representation; and to allow employees to decide the issue of union representation through a legal and democratic process of their own choosing.
An unidentified student addressed the Board asking that if a new vendor is awarded the contract they rehire all current employees based on seniority; ensure that no retained employees are dismissed without cause; retain a preferential hiring list of those not retained and rehire based on seniority; and ensure the workers freedom to speak and transparency. To encourage transparency and accountability, she sought assurance that the school and associated contractors would not retaliate against employees who discuss food safety or quality issues with students, administration, or a food service contractor. She also asked for a zero tolerance policy for all vendors with recorded human rights abuses.
Steve thanked all for their passionate and earnest comments. He stated that he would not ask the Board to go into Executive Session but noted that anyone else on the Board was free to do so.
Vendor Selection, Food Service:
Rob from Envision Strategies directed the Board’s attention to his power point presentation which was displayed on the screen. He noted that each bid was scored based on several components such as technical, financial, and risk analysis. Various Board Members assisted with the scoring of the technical component, which included programmatic components. He explained that a vote would be taken at the conclusion of his presentation and, if there were a clear selection, negotiations would move forward with the chosen vendor. He indicated that many of the things discussed today were already included in the proposed Contract but the opportunity remains to strengthen the final Contract. He stated that he was asked to highlight opportunities or things to watch out for as the Board makes its decision and these are contained in his Risk Analysis.
He reviewed the Technical Score for each vendor noting that it was compiled from evaluations submitted by 10 Board Members and resulted in 2435 points for Sodexo; 2415 points for Aramark; and 2368 for Chartwells. Additional scores based on interviews and site visits of 1209 for Sodexo; 1077 for Aramark; and 1008 for Chartwells were added in resulting in a total score of 3644 for Sodexo; 3492 for Aramark; and 3376 for Chartwells. He also provided weighted averages for each vendor, which resulted in 560 points for Sodexo; 562 for Aramark; and 523 for Chartwells. He noted that the proximity of the technical scores was indicative of the fact that all 3 proposals were compliant with the RFP, and the only real scoring differences were on site visits and interviews.
Rob explained that there were 2 sets of financial figures, the original and the Best and Final Offer (BAFO). He stated that the opportunity to submit a BAFO came about because it was believed the vendors learned more about the intent and desires of the New Paltz community from discussions and clarifications made subsequent to the submission of the original proposals, and it was thought to be in the best interests of CAS if the bidders were given a chance to make both programmatic and financial changes. He reviewed and explained the financial figures noting that Aramark made no changes to meal plan rates; increased commissions from 11.5% to 15%; increased capital investments from $4.3 to $6.3 million over the 5 year term and made additional commitments to donations and equipment reserves. This resulted in an overall increase in their offer from $15 to $16.9 million. He noted that Aramark reduced their meal plan rates causing their return to increase from $1.3 to $1.8 million per year; increased commissions from 16% to 23%; and increased capital investments as well. This resulted in an overall increase in their offer from $15.4 to $21.4 million. Sodexo made no changes in their meal plan rates or commissions and only slight changes to their community and scholarship fund, resulting in an increase from $19.8 to $19.9 million on their return.
He noted that he typically sees commission rates ranging from around 10% to the high teens; a good healthy percentage is 15%; and a rate of 23% is very aggressive. He reminded the Board that these are simply proposals and if Chartwells is chosen we could negotiate the rate down and/or ask for assurances that their figures are sustainable. Steve noted that Sodexo’s current rate is 10% and even 15% is a big increase; and that if the investment and signing bonuses were combined into one line, that number is comparable amongst the bidders at around $6.5 million for a 5-year contract. Rob clarified the fact that the deposits are not gifts, but rather a way of financing which the operators provide you in advance that you subsequently pay back through the cost of the program.
Rob stated that the interview scores are subjective as there is no metric for something based on personal impressions. These scores were 90 for Sodexo; 95 for Aramark; and 82 for Chartwells.
He believes these numbers are based on how well the proposed management team understood the New Paltz program; how well their skill set and experience aligned with what we were asking; and how well the overall program was presented.
Roberto sought clarification on programmatic and financial changes between the original and the BAFO offers. Rob replied that he did not track those changes but would be able to pull that information and get back to him; noting that the most significant change was with the financials. Steve acknowledged that this process is complicated. He stated that the purpose of today’s presentation was to show the actual return to CAS; noting that on the surface Chartwells appears to have the best financial proposal but that was largely dependent on a 23% commission return on non-board revenue, a figure higher than the industry standard and something which he, Donald, and Rob find questionable and unrealistic. In addition, Chartwells stated that they would hire 50 additional employees, keep the union rates, and give CAS more money with no indication of how they would pay for the same. David Eaton agreed with the need to be critical of the commission rate, noting that this money would need to come from somewhere and the most susceptible components would be the meal plans and auxiliary restaurants where price issues already exist. Steve warned the Board of a specific instance where a campus was forced to renegotiate a Chartwells’ contract in the second year in order to bring the rate down so the vendor could get more money to put back into the program.
Discussions followed regarding impressions and opinions of the interviews, management team, site visits, food quality and offerings, work atmosphere, commitment to sustainability and recycling, and how it related to the New Paltz campus. References were made to Chartwells regarding the high quality of food, impersonal and empty presentation, and lack of a connection with the Chartwells staff. Comments were received regarding the impressive presentation, management team, caring atmosphere, technical components, signage, and ‘Produce on Demand’ and ‘Piece of Mind’ programs run by Aramark.
Steve informed the Board that he had spoken to individuals in his position at other colleges who had accounts with Sodexo, Aramark and Chartwells. Feedback on Aramark was positive; and feedback on Chartwells was mixed with one account expressing extreme displeasure and another indicating that they were renegotiating the financial component of the contract in the second year. Feedback on Sodexo was mostly positive with the biggest complaint being that middle management positions were left vacant for long periods of time at Marist.
Rob reviewed the Risk Assessment portion of his presentation, noting that Sodexo was assigned a low risk; Aramark a moderate risk; and Chartwells a high risk. He noted that if the incumbent team is doing a good job and will be retained they are typically given the lowest risk rating; this was the case with Sodexo. An additional reason Sodexo received a low risk rating was the fact that they had not changed their figures substantially between their first offer and the BAFO which he felt was indicative of the fact that their initial offer was also their best offer. In the case of Aramark, they proposed a new team, their return increased 13% from their initial to the BAFO, and they had the most aggressive sales projections resulting in a significant increase in their commission rate without a significant change in the program. Chartwells represented the highest risk due to their extremely high commission rate; a significant drop in the daily meal plan cost; and a 63% increase in their investment.
At the conclusion of the discussion, Steve explained that Members would use a paper ballot to vote by assigning a number of 1, 2 or 3 to each vendor with 1 being the best or highest rating and 3 being the lowest; the vendor with the lowest total numerical number would be the winner. Josh sought clarification of Steve’s email wherein he indicated that the vote was a recommendation but that Steve would ultimately have the final say on awarding the Contract. Steve noted that he intended to follow the Board’s wishes but would need to discuss the same with the President before a final determination could be made. Josh asked to be included in these discussions as Vice Chairman of the Board and SA President; Steve agreed. Steve explained that he intended to meet with the President not because he’s involved in the decision but because we have a contract with the campus to provide a service and the President can cancel the contract with CAS; noting that his intention was simply to make sure our client is happy but for all other intents and purposes today’s decision would be the final decision.
Janet distributed ballots to voting Members; collected the same once they were complete; and delivered the completed ballots to Steve who read the scores to Donald who tallied the same. The vote resulted in a score of 26 for Chartwells, and a tie of 14 for Sodexo and Aramark after one invalid vote was thrown out.
Dave Rooney made a motion to eliminate Chartwells from consideration and redo the vote on a 1, 2 basis; seconded by Anthony. There was no discussion. The motion passed by way of a unanimous show of hands. Steve made an amendment to the motion by instructing the Board to vote by simply indicating Sodexo or Aramark on their ballot. There was no objection. The motion passed. The vote was redone in similar fashion resulting in a score of 6 for Sodexo and 4 for Aramark.
Steve sought volunteers for a committee to advise himself, Rob and CAS attorneys on details of the contract regarding issues such as sustainability, financial reporting, and control. Corinna, Niza, Rachel, Josh, Lara, Rose, Roberto and Anthony volunteered to be on the same. Anita noted that if a Committee contains a majority of Board Members they would be subject to the Open Meetings Law. Roberto raised concerns that if the size of the Committee was reduced everyone who wanted to participate would not be able to do so. Corinna proposed that 1 person from each constituency be part of the committee so each group is represented. Anthony asked if he could appoint a designee to sit in his place on the Committee; Steve agreed. Rose and Lara agreed to step down. It was agreed that the Committee would consist of Corinna, Rachel, Josh, Roberto and a designee of Anthony, along with Brian Obach of the Sustainability Committee.
A motion was made by Josh to adjourn the meeting; seconded by Lara. There was no discussion. Motion passed by a unanimous show of hands.
Meeting adjourned at 11:16 p.m.