581-051-0580 Contract Terms Required (1) Financial terms and payment provisions must be objective and unambiguous, such that two different parties are able to independently calculate the cost or payment and obtain identical results. Administrative and management fees must be itemized in detail to accurately describe the actual costs incurred by the FSMC for which the Sponsor will make payment. (2) All revenue and expenses must accure to the non-profit school food service account, never the District or the FSMC. (3) Where a contract provides for special functions outside the nonprofit school food service, the contract must delineate the cost allocation for those special functions in such a manner as to demonstrate that labor costs will not be double billed for program meals and special function meals. (4) The contract shall provide a fiscal guarantee to the District. (5) Where the contract permits a la carte food sales and the conversion of a la carte sales into equivalent pattern meals, the calculation to make that conversion is to be the current NSLP free reimbursement rate plus the commodity value rate. (6) No change in charges payable to the FSMC from the Sponsor shall be permitted upon contract renewal unless the contract in place contains specific terms permitting such change. (7) Annual increases in charges payable to the FSMC from the Sponsor upon contract renewal shall be limited to such reasonable predictions of anticipated increased costs as are defined in the original Contract. (8) Contracts shall be based on a one-month accounting period, consistent with Department and Sponsor accounting practices. (9) The following terms are prohibited and may not be included in any contract for the management of food service operations in Oregon schools: (a) A "cost plus" fee structure in which the Sponsor pays to the FSMC cost plus a percentage of cost or income; (b) Duplicate fee structures that permit a FSMC to bill management fees and charge the same costs as cost-reimbursable expenses; (c) Purchasing clauses, where the Sponsor makes purchases that limit the selection of vendors to only those approved by the FSMC; (d) Acceleration clauses that require full payment of multi-year equipment purchases if the contract is not renewed; (e) Interest may not be charged for past due invoices, equipment purchases, or any other reason to the extent that federal program funds are used in payment; (f) Contingent return provisions that make the financial guarantee of the contract contingent upon contract renewal or multi-year performance of the contract; (g) Automatic renewal of the contract, or any other process for renewal inconsistent with OAR 581-051-0550 or any provision acting as penalty for non-renewal; (h) Subcontracting of food service management operations; (i) Loans from the FSMC to the District, whether in the form of direct lending, advances of payments, or deferral of invoices due; and (j) Restrictions on the ability of the Sponsor to rehire non-management FSMC food service employees in the event that the contract is not renewed. Statutory/Other Authority: ORS 326.051, 7, CFR 210.21, 7 CFR 210. 16, 7 CFR 220.7(d), 7 CFR 220.16, 7 CFR 225.15(m), 7 CFR 225.17, 7 CFR 226.21, 7 CFR 226.22, 7 CFR 250.53, 7 CFR 250.31 & 2 CFR 200 subpart D History: ODE 7-2022, minor correction filed 01/10/2022, effective 01/10/2022 ODE 28-2004, f. & cert. ef. 8-10-04 ODE 6-1999, f. & cert. ef. 1-12-99