The Washington school system is having a serious problem this fall getting its corn flakes.
At Glenn Dale, the city-run hospital for the chronically, ill, there has been a shortage of graham crackers and ginger ale.
Lorton Prison has had a problem obtaining margarine and mustard.
The District's narcotics treatment program has run low on the orange drink it mixes with the methadone given daily to about 1,000 addicts.
All of these D.C. government agencies are buying food supplies this fall -- and having trouble obtaining them -- from Carmatek Corp., a two-year-old food distribution company with no listed telephone and no full-time employes.
According to the city's finance department, the firm has not filed a tax registration certificate and has paid no D.C. taxes.
Yet, since October 1978, Carmatek has been awarded about $592,000 in city food procurement contracts, according to the city's Department of General Services. Almost all of them have been given through the city government's "sheltered market" program in which only black and other minority-owned firms are allowed to compete.
The cost to us is astronomical and the service is atrocious," said Joseph M. Stewart, the head of the shool system's food service program, which ordered the corn flakes and other dry cereal to provide free breakfasts for poor youngsters.
"A lot of these minority contractors are really hustling," Stewart said. "But with this firm we're having so many problems that we've had to switch away from cereal (in many schools)."
Edward Kinsey, a Harvard Business School graduate who is president of Carmatek, acknowledged in an interview that there have been "some problems" with deliveries. But Kinsey said many of the city agencies' complaints are "picayunish."
Kinsey said he delivers some goods himself in rented trucks. He said he also purchases commodities for major companies, such as McCormick Spices and Monarch Foods, which provide direct dellivery to D.C. government facilities.
Any delays that have occurred, Kinsey said, are mainly the result of "the terrible amount of time it takes for the District to pay their bills."
"To them getting a delivery is very important, but to me getting paid is equally important," Kinsey said. "Dealing with [D.C. officials] is just like taking to a wall."
Kinsey said he now is owed about $75,000 for food already delivered to the D.C. government. He said he has run up $30,000 in debts to suppliers, many of whom are unwilling to sell him anything more.
To help out, Kinsey has enlisted support from Councilwoman Willie Hardy, who held a meeting with school offices in her office, and from the District government's Minority Business Opportunity Commission.
During the past two months Kinsey has asked for partial payments. He has asked for advance payments before other deliveries are made. He has asked to raise prices above those set in his contracts because of inflation. So far his requests have been turned down.
William B. White, the D.C. school system's chief procurement officer, said he won't sign vouchers authorizing payment to Kinsey, "despite all the pressure . . . until he makes the proper deliveries."
"I do things by the book," said White, "and I'm not going to jeopardize my job or the school system until it's all proper. I'm not going to pay anybody until they deliver exactly what we've ordered."
School Superintendent Vincent Reed said Carmatek's high costs as a "middleman . . . for products that are not in fact minority-produced" have cut into funds available for the school feeding programs, and were "determental well-being of a large number of minority children."
"We believe that some consideration must be given to [the welfare of children]," Reed wrote to the General Services Department, "in addition to the responsibility felt for minority entrepreneurs."
Raymond Saulino, a special assistant in the city's Office of Financial Management said he told Kinsey two weeks ago that he would try to speed up payments.
"He's a minority vendor.He's a small businessman," Saulino said. "We'd like to help."
But Saulino added: "The agencies say he's missed deliveries and substituted products. That's not a question of the District not paying on a bill. The agencies are correct in withholding payment until Mr. Kinsey straightens things out."
The school system's most heated dispute with Kinsey involves a $193,000 contract for dry cereal.
Under the minority procurement program, the city government is paying Carmatek $13.83 for each case of 96 individual-size packages (or 14.4 cents per serving.). The city can buy the same cereal direct from Kellogg's, the manufacturer, for $8.15 a case (or 8.5 cents per serving). That low priceis charged by Kellogg's for orders placed through the federal government supply system in which the District of Columbis is allowed to participate.
Kellogg's would deliver all the cereal in bulk to the school system's main warehouse. Camatek is supposed to make deliveries to individual schools. m
"Of course, the delivery raises the price," White said, "but it shouldn't cost $5.68 more." .
In suburban school systems, which buy several different brands of cereal through open bidding, prices range from 8.6 cents per serving in Montgomery to 12.6 cents per serving in Prince George's County.
Last spring I. Feldman & Co. Inc. a white-owned firm in Northeast Washington, sold Kellogg's cereal to the District's school system for $10.92 a case with the same individual school delivery service. Feldman was not allowed to bid on the fall contract, which was restricted to minority-owned firms.
Like all other D.C. government purchases, the bidding for dry cereal was conducted by the city Department of General Services. Kenneth Quinlan, the contracting officer for the department said his agency decided that the bidding would be restricted to miniority-owned firms in order to satisfy a 1977 law requiring city agencies to allocate at least 25 percent of their contracting dollars to minority businesses.
In September, School Superintendent Reed wrote to the General Services Department strongly criticizing the Carmatek contract. The general services department replied that the school system had to honor a legally valid contract and buy the cereal from Carmatek. But after the order was placed, the cereal took so long to arrive that supplies ran out in mid-October.
At that point, steward said, the school system decided to use frozen breakfast which are heated like TV dinners, all week in most schools rather than have cereal two days a week. The cost of the frozen breakfasts, which include pancakes, waffles, or sausages, is more than double the cost of the cereal, Stewart said.
Despite Kinsey's strong protests, the school system also continued to try to buy some cereal directly from Kellogg's. White said the schools had bought about half their supply from the manufacturer for the past several years while Feldman had the local delivery contract and wanted to continue to do so. But the General Services Department refused to process the order until last week.
Meanwhile, White complained that Carmatek had made incorrect deliveries on other supplies that the school system ordered, in one case substituting jars for cans, in another delivering larger cans of oregano than it wanted.
Kinsey accuses White of being "petty" and said, "He's out to get me."
But White has been adamant. "I'm not going to pay for jars if I order cans," he said. ""I'm not going to pay for apples if I order pears.
While Kinsey's dispute festers with the school system, complaints about his service have come from a long list of other city agencies as well.
Margaret C. Dean, the chief dietician at Glenn Dale Hospital, complained in a memo that after many orders, she has received only one shipment of ginger ale from Carmatek, and that came six weeks late. Margarine has run out several times, she wrote, and the hospital has had to send employers to buy some at a grocery store with emergency funds.
"Will you please help us feed our very ill patients?" Dean wrote to her superiors. "We cannot sacrifice the welfare of our Glenn Dale patients to accommodate companies that show so little concern for our clientele?"
Similar complaints have come from the Corrections Department and the narcotic treatment program. Both said that when Carmatek failed to deliver supplies they had to buy elsewhere with emergency purchase orders to keep their inventories up to minimum levels.
There are two things we can't afford to run out of -- methadone and orange dring," said William Cooks, administrative offices for the Substance Abuse Administration, which operates the drug program. "When Carmatek didn't come through, [with the orange drink] we got scared.We don't want a thousand addicts out there raising cain."
In another letter of complaint, Patricia N. White, food service manager for the D.C. Children's Center at Forest Haven, said Carmatek has "repeatedly given poor delivery service" on margarine, dietetic jello, cookies, and potato chips.
Depite all the complaints, the General Services Department has moved slowly, sending several reprimands to Kinsey but taking no action to terminate any contract.
Eugene Bennett, the department's assistant director in charge of procurement, commented, "People always find fault. You have to look at the motivation of the person making the complaints . . . Here's a relatively new minority contractor. Of course, he's not one of the big boys. We need to provide some assistance."
Unlike other local governments in the Washington area, the District of Coumbia no longer requires performance bonds from its suppliers which can be forfeited if they don't live up to a contract. When the bonds were dropped in 1978, officials said the move would open the way for more small, minority firms to do business with the city.
To try to make sure new contractors can perform, the General Services Department conducts a "suitability" check, which includes a review of their financial records, references, and facilities.
However, for firms bidding under the minority set-aside program, the determination that a company is qualified is made by the Minority Business Opportunity Commission.
Frank Borris, deputy director of the commission, said his agency is so short-staffed that it can only conduct "random" checks to verify the information applicants supply.
When Carmatek was certified in December 1977, the commission was "new and disorganized," Borris said. It's staff has comopletely changed since then, he added, "and what they did two years ago we don't know."
In his application, filed on Oct. 25, 1977, Kinsey said his firm had started just four months before.He listed its address as 1522 14th St. NW, which was also the headquarters of BDK D distributors, a firm that sold Sabrett hotdogs through street vendors.
Kinsey had been president of BDK which it started in early 1976. Last week he said he left the firm before Carmatek was launched, but in a report filed with the D.C. Recorder of Deeds on Oct. 28, 1977, Kinsey is listed as BDK's registered agent and at the head of its list of directors.
On Aug. 19, 1977, BDK was sued in D.C. Superior Court for defaulting on a $140,000 loan, largely financed by the Small Business Adminstration. The suit lists Kiinsey and his wife as defendants along with the company itself and Kinsey's partner at BDK, Edward Picknard.
According to court papers, Kinsey never was served with the lawsuits despite eight attempts to find him and the case was eventually dropped.
BDK also was cited in 1977 for violating D.C. health code regulations and from failing to pay more the $6,000 in D.C. and federal taxes.
Last week both Kinsey and Picknard said Kinsey was no longer associated with BDK.
Kinsey said he established Carmatek in June 1977 because "I wanted to be on my own." He said the firm was named after his wife Carmencita, a former aide to the D. C. City Council who now helps him by typing letters and invoices.
Kinsey said he does most of the paperwork for the business at his apartment in Southwest Washington, and receives payments at a post office box near his home. He said he rents storage space as needed at Kane's Warehouse, 2917 Eighth St., NE. He also has a one-room office there which he lists on his stationary as Carmatek's headquarters.
"We're a small business, just starting out," Kinsey said. "We're trying to make a go of it. It doesn't make sense (for the District) to hold up a whole voucher if on [delivery] if it isn't 100 percent right. If the District tries to impose too many restrictions on small minority companies, it's just criminal."