SunnyvaleRTC

July 12, 2005

SUBJECT: Authorization to Amend an Existing Contract for Senior Lunch Program Services (F0406-75)

REPORT IN BRIEF

Approval is requested to amend an existing contract with Compass Group USA Inc., Bateman Senior Meals, of Santa Clara for the Department of Parks and Recreation for senior lunch program services. This is a short-term solution that addresses quality concerns, pending the conclusion of a competitive proposal process and the submittal of a Report to Council in September intended to offer several alternatives for a long-term solution regarding the provision of a senior lunch program.

While no additional funding is needed, staff recommends that Council approve the amended contract with Compass Group USA Inc., Bateman Senior Meals, in substantially the same form as the attached draft Fourth Amendment and increase the contract amount not to exceed $81,000 to meet the total contract costs for the period of June 2004 through September 2005. Please see Attachment A, Draft Fourth Amendment to Service Agreement.

BACKGROUND

The City contracted with Bateman for senior lunch program services, beginning July 1, 2004. The contract was awarded under the City Manager’s contract award authority of $50,000 since it was estimated that total charges would not exceed $50,000. Subsequently, three Amendments to the original Service Agreement have been issued, copies of which are attached to this report. The Third Amendment extended the contract through September 30, 2005.

At its meeting on March 29 of this year, Council heard testimony from senior participants as to the unsatisfactory quality of food being served for the senior lunch program. Subsequently, Council directed staff to:

During the six-month period following March 29, 2005, prepare and distribute a Request for Proposals (RFP) to qualified food service contractors interested in providing a senior lunch program on a long-term basis with meals prepared on-site to meet a service level of 21,000 meals and an 85% customer satisfaction rating with an initial participant fee of $4.50 per meal (with reservations) and an annual increase not to exceed $.50 per meal per year. Evaluate the proposals and report back to Council.
Continue the existing senior lunch program with Bateman Senior Meals during the RFP process at a reduced fee of $3.00 for members (with reservations).
Implement Budget Modification No. 29 in the amount of $80,000 for Fiscal Year 2004/2005 and increase the Recreation Division budget for Fiscal Year 2005/2006 with an additional subsidy of $25,000 to fund the senior lunch program (in the short-term) during the time it will take to complete the request for proposal process.

Council also directed staff to:

· Look into hiring an on-site chef (City employee).

· Explore contracting with culinary schools.

· Consider returning to the catering business.

· Consider finding another short-term service provider and cancel the existing contract with Bateman.

· Implement quality control measures.

Council discussed ways to improve the quality of services during the time it would take for the RFP process. This report describes the steps taken to improve the quality of lunches served during this interim period and the results of the short-term selection effort. Due to improvements in customer satisfaction and the outcome of the short-term request for proposals process, it is necessary for Council to increase the single contractor payment limit for the existing contract or direct other action(s) to improve the quality of senior meal services.

DISCUSSION

Upon City Council’s direction, Senior Center staff mailed informational notices regarding the short-term and the long-term food service opportunities to over 100 area vendors (mailed out on April 26, 2005). Five vendors expressed interest in the short-term agreement; and proposals were received from two of the five vendors: Bateman Senior Meals of Santa Clara and Culinary Magic Catering of Santa Clara.

The criteria used to evaluate the two short-term service proposals included: completeness of the proposal, experience with similar service, understanding the needs of seniors, approach and creativity of service, start-up plan and strategy, financial status, and cost of service to the City. Out of a total possible score of 350 points from the five staff members rating the proposals, Bateman Senior Meals’ score was 326 compared to 246 for the other proposer.

Bateman is proposing to continue with the main food preparation at its main kitchen site in Santa Clara and assigning a cook to Sunnyvale to prepare some of the food on-site, such as: baking cookies, steaming vegetables, boiling pastas, heating entrées and assembling salads. At least once per week, meals would include, a deli lunch to include a roast beef, turkey, ham or tuna salad sandwich served hot or cold (depending on the day) with soup, side salad with dressing, dessert and milk and also at least once per week, an on-site grilled sandwich, such as ham and swiss cheese, ruben, patty melt or tuna melt with deli salad, vegetable, dessert and milk.

Recognizing that customer satisfaction has been poor, staff initiated the Council-requested quality control measures. Since the March 29, 2005, Council meeting, at its own cost, Bateman Senior Meals has increased its efforts to satisfy seniors and has made staff changes and improvements to its service. As is proposed in its short-term proposal, Bateman has assigned a qualified cook to the Sunnyvale Senior Center kitchen, so that portions of the meals are prepared on-site (vegetables steamed, cookies baked, etc.); and better quality meats and other food products are now used.

Under the existing contract, the cost to the City per meal is $4.00 plus tax. In addition, Bateman is currently paid $60.00 per day for labor costs. With the changes noted above to improve the quality of meals, the cost to the City per meal would be $5.00 plus tax, and the $60.00 per day labor charge will continue. However, the $1.00 increased cost per meal includes the provision of coffee and tea which was previously paid for by the City.

At Council’s direction, staff also lowered the fee charged for the meals from $4.00 to $3.00 (for members of the Senior Center). These efforts have resulted in a significant increase in customer satisfaction and attendance. Participation has increased from a low average of 21 per day during the week of January 3, 2005, to the current level, an average of 56 per day during the week of June 6, 2005. Customer surveys conducted over the past 10 weeks have shown a high level of customer satisfaction, including positive feedback from many of the more vocal critics of the previous meals.

A lowered participant fee, combined with improved quality of meals has increased participation and has resulted in improved revenues. However, the increased payments to the vendor have more than offset improved revenues resulting in a nominal negative impact to the bottom line. However, the planned FY 2005/06 budget for the Senior Lunch Program is adequate to cover the added costs to improve the quality of meals served to seniors. Budget Modification No. 29 approved March 29, 2005 anticipated changes in attendance, revenue, expenses and associated subsidy. No additional fiscal impact is expected.

Based on the greatly improved attendance and customer satisfaction with the current service, the commitment Bateman Senior Meals has shown toward improving its service level and the evaluation of the two short-term proposals received, staff has rated Bateman Senior Meals the best alternative for the senior lunch program until Council is able to make a long-term decision regarding the future of the program.

If services with Bateman are to continue through September 2005, the total expenses will exceed the City Manager’s contract award authority of $50,000.

FISCAL IMPACT

Continuation of the Bateman contract until long-term senior lunch services are determined requires amending the existing contract. Improvements, as noted above, to the quality of meals provided through this contract would increase the meal cost from $4.00 plus tax to $5.00 plus tax. It is estimated that an additional $31,000 would be paid for services from June through September 2005, requiring a total contract amount not to exceed $81,000 for Bateman Senior Meals.

While the costs would increase, revenues would also increase due to increased participation of seniors in the program. The increased revenues would partially offset the increased costs as noted. Funds are available through the Department of Parks and Recreation Activity No. 642090 - Senior Lunch Program in Fiscal Year 2004/05 ($6,000) and Fiscal Year 2005/06 ($25,000).

CONCLUSION

Recent changes made by Bateman Senior Meals, at their own cost, to the senior lunch service have resulted in a significant improvement to the satisfaction of the senior participants and a significant increase in daily attendance. A major contributing factor is the on-site preparation of some portions of the meals, which has greatly improved the serving quality of the food. This improvement combined with a superior proposal leads to the conclusion that Bateman Senior Meals is the best alternative for the short-term senior lunch program service.

PUBLIC CONTACT

Contact with seniors regarding the lunch program has been in-depth and frequent. Staff has conducted ongoing surveys of the senior lunch participants, including six separate surveys in 2004 and a more recent survey in May of 2005. In addition, extensive research has been conducted in order to gather information on other food services for seniors in the Bay Area. Staff visited other senior centers, nutrition sites, and food service programs for comparative data that was shared with the Senior Advisory Committee. The Senior Advisory Committee has also been involved with numerous discussions regarding the senior lunch program and participated in site visits to other senior lunch programs. Senior Center staff has conducted Quarterly Meetings for Senior Center members to discuss issues, including the senior lunch program. Both Council and the Parks and Recreation Commission have held public hearings and considered reports from staff regarding the provision of the senior lunch program.

Public contact for this report was made through posting of Council agendas on the City’s official notice bulletin board, posting of the agendas and report on the City’s web page, publication of the Council agenda in The San Jose Mercury News, and the availability of the report at various City locations including the City Clerk’s office, Library, Parks and Recreation Administration, Community Center, and Senior Center.

ALTERNATIVES

The following alternatives are offered for Council’s consideration:

1. Amend an existing contract with Bateman Senior Meals. Amend an existing contract with Compass Group Inc., Bateman Senior Meals, in substantially the same form as the attached draft Fourth Amendment and in a total contract amount not to exceed $81,000, for senior lunch program services.

2. Other Action as Determined by Council.

RECOMMENDATION

Staff recommends Alternative No. 1 that Council amend an existing contract with Compass Group Inc., Bateman Senior Meals, in substantially the same form as the attached draft Fourth Amendment and in a total contract amount not to exceed $81,000, for senior lunch program services.

In this manner the quality of meals provided through the Senior Lunch Program can be improved in the short-term and the contract spending limit could be increased from the $50,000 as authorized by City Manager July 1, 2004 to $81,000 that would be required to meet the September 2005 senior meal services time line previously established by City Council.

Reviewed by:

Curtis Black

Interim Director, Parks and Recreation

Prepared by: John Lawrence, Recreation Superintendent

Reviewed by:

Elaine Wesely

Purchasing Officer

Reviewed by:

Robert Walker

Assistant City Manager

Reviewed by:

Mary J. Bradley

Director, Finance