Senator fears agencies are missing out on food contractor rebates

Randy Stotler/AP

The government’s inconsistent and opaque policies for administering contracts for food services have produced overpayments of millions of dollars, a senator charged Wednesday.

Sen. Claire McCaskill, D-Mo., chairwoman of the Senate Homeland Security Subcommittee on Contracting Oversight, released a letter she sent to acting Budget Director Jeffrey Zients urging review of the way 14 agencies have contracted with eight food companies. She said the agreements may have denied the Treasury its share of rebate money that benefited the contractors.

The government spends $6.8 billion annually in food service contracts at military bases, agency cafeterias, national parks and courthouses, with an additional outlay of $11 billion for the National School Lunch Program.

An investigation by McCaskill’s subcommittee concluded that food service agreements under the Federal Acquisition Regulation were overly general, providing “a streamlined, almost boilerplate, approach to contracting for commercial items,” the letter said. The probe was prompted by criminal fraud lawsuits that the Justice Department previously brought against the Kuwait-based war zone dining facility contractor Public Warehousing Co.

Between 2007 and 2011, the inquiry found, contractors reported only 5 percent of the rebates agencies may have been entitled to collect. Companies mentioned included Aramark, Compass, Sodexo, PSC, Sysco, U.S. Foods and Olgoonik.

“The system isn’t working -- it’s unclear when companies are getting discounts and whether they’re required to pass those savings on to taxpayers,” McCaskill said. “It’s just another example of a complete lack of transparency and accountability in government contracting, and it needs to be resolved because it could be wasting millions of taxpayer dollars.”

The Defense Department is by far the biggest federal purchaser of food services, but the probe also covered the departments of Homeland Security, Justice, Labor, State, Treasury, Health and Human Services, Interior, Agriculture and Veterans Affairs, along with the General Services Administration and the U.S. Agency for International Development.

In asking for a review and new guidance from the Office of Management and Budget, McCaskill suggested the multiagency, bulk purchasing approach known as strategic sourcing may be appropriate for federal acquisition of food service. The Obama administration recently encouraged agencies to rely more on strategic sourcing for purchasing products and services.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Sponsored by G Suite

    Cross-Agency Teamwork, Anytime and Anywhere

    Dan McCrae, director of IT service delivery division, National Oceanic and Atmospheric Administration (NOAA)

  • Data-Centric Security vs. Database-Level Security

    Database-level encryption had its origins in the 1990s and early 2000s in response to very basic risks which largely revolved around the theft of servers, backup tapes and other physical-layer assets. As noted in Verizon’s 2014, Data Breach Investigations Report (DBIR)1, threats today are far more advanced and dangerous.

  • Federal IT Applications: Assessing Government's Core Drivers

    In order to better understand the current state of external and internal-facing agency workplace applications, Government Business Council (GBC) and Riverbed undertook an in-depth research study of federal employees. Overall, survey findings indicate that federal IT applications still face a gamut of challenges with regard to quality, reliability, and performance management.

  • PIV- I And Multifactor Authentication: The Best Defense for Federal Government Contractors

    This white paper explores NIST SP 800-171 and why compliance is critical to federal government contractors, especially those that work with the Department of Defense, as well as how leveraging PIV-I credentialing with multifactor authentication can be used as a defense against cyberattacks

  • Toward A More Innovative Government

    This research study aims to understand how state and local leaders regard their agency’s innovation efforts and what they are doing to overcome the challenges they face in successfully implementing these efforts.

  • From Volume to Value: UK’s NHS Digital Provides U.S. Healthcare Agencies A Roadmap For Value-Based Payment Models

    The U.S. healthcare industry is rapidly moving away from traditional fee-for-service models and towards value-based purchasing that reimburses physicians for quality of care in place of frequency of care.

  • GBC Flash Poll: Is Your Agency Safe?

    Federal leaders weigh in on the state of information security


When you download a report, your information may be shared with the underwriters of that document.