The vendor that provides food services to the D.C. Public Schools has told the D.C. Council that it wants to withdraw from the contract this fall, a sudden and unexpected move that puts immediate pressure on the District to find a new provider for nearly 100 schools.
Chartwells-Thompson Hospitality, the District schools’ embattled food vendor, informed council members Tuesday that it wants to quit the lucrative contract and move on after a large whistleblower settlement and wranglings over allegations of mismanagement.
“Recently it has become clear to us that we are no longer a valued partner to DCPS,” Rhonna Cass, president of Chartwells School Dining Services, wrote in a letter submitted to the council Tuesday morning. “As such, we think the best course is for us to exit the contract and allow DCPS to move forward in another direction.”
Chartwells’s decision shocked council members and left uncertain the city’s path forward for feeding thousands of D.C. students once schools open in late August. During a hearing Tuesday, council members wondered whether they could legally compel the company to provide food service for the coming school year or whether they would need to install a new vendor within weeks.
“We have school kids that will need food, and how do we repair this situation?” said council member Anita Bonds (D-At Large).
The company clarified its intentions later in the day in a follow-up letter to council members, saying that it intends to continue providing food until the school system identifies a new food services operator and that it would be “agreeable” to having the school system hire any of its employees to help with the transition.
“While it is our desire to finalize the transition prior to the fall term, we understand that this may not be achievable,” Cass wrote. “Our joint focus should be the well-being of the students, and we will do our part.”
The largest food vendor for the District’s public school system has been under scrutiny since it agreed to pay $19 million to settle a whistleblower lawsuit alleging that the company overcharged the city and mismanaged the school district’s meals programs. The agreement was announced last month.
Chartwells admitted no wrongdoing in the settlement and said in the initial letter to the council that it “chose to resolve this matter amicably instead of litigating which would have lasted years and served as a significant distraction to us, DCPS and the District. . . . Our hope was this resolution would allow us all to move past the distractions and return our collective focus to serving students.”
Ann Pendleton, a spokeswoman for Chartwells, said the company is “dedicated to ensuring a smooth transition.”
DCPS officials declined to comment Tuesday.
The $32 million annual food services contract was up for approval by the council just weeks after the Chartwells settlement agreement was announced. Council member Mary Cheh (D-Ward 3) asked the council to delay approving the contract so that it could receive a more thorough review.
Council members then sought assurances from D.C. Public Schools that the school system would more closely monitor Chartwells during the coming year and move quickly to rebid the contract to find a new vendor.
Mayor Muriel E. Bowser’s team and the chairman of the council’s education committee, David Grosso (I-At Large), did not contest the contract, citing concerns that the District had no choice but to extend it because the city lacked enough time to vet possible replacements.
The two sides agreed last week that the administration would rebid the Chartwells contract for the 2016-2017 school year, more closely monitor the company’s finances and increase the frequency of student surveys regarding the quality of Chartwells’s school meals.
As Cheh and the mayor’s representatives put the final touches on that deal Tuesday, the letter arrived from Chartwells indicating that it would rather get out of the contract entirely.
“In the face of being held to higher standards, it looks like Chartwells — consistent with poor behavior all along — decides to cut and run,” Cheh said in an interview.
Council members blasted the surprise announcement during the Tuesday legislative meeting, calling it potentially harmful to students and possibly breaking the terms of the company’s contract with the city.
“I am very disappointed in the actions today by Chartwells,” said council member Elissa Silverman (I-At Large). “It clearly shows that Chartwells is not putting students first.”
The council adjourned Tuesday for the remainder of the summer. Its next scheduled meeting is Sept. 22, a month into the school year.
Through a spokesman, Bowser (D) said: “While the council is on recess, we will fix this. We will explore all legal options and new opportunities to better serve our children.”
The city schools first contracted with Chartwells in 2008, seeking to save money and improve food quality.
Cass outlined Chartwells’s achievements since then in her letter to the council, saying that the company expanded the availability of fresh fruits and vegetables, and renovated kitchens that were once used to reheat prepackaged frozen foods. She said the company saved the District money, even if it did not achieve “aspirational” cost savings. It said that DCPS was losing $11.6 million annually in 2008, when the company partnered with the city schools. And last year, food losses were estimated at $5 million.
An independent audit in 2012 found that losses in the food services program exceeded $10 million annually in the early years of the contract. In fiscal 2012, DCPS reported a $20 million deficit for food services.
In a complaint that followed the whistleblower lawsuit, the D.C. attorney general alleged that Chartwells knowingly submitted false invoices that the school system paid and used “self-dealing purchasing arrangements” that inflated costs for the District.
Cass denied these allegations in the company’s letter to the council Tuesday. “We vehemently disagreed with the allegations as we viewed that DCPS bore much of the responsibility for the savings deficit,” she wrote.