One of the world's biggest food services companies is falling under increasing
scrutiny from lawmakers.
Sodexo, Inc., is already facing questions over its handling of a food service contract with the U.S. Marine Corps. Now the company is also confronting a possible probe over its school lunch business.
DeLauro said the programs warranted further scrutiny after
Sodexo agreed to a $20 million settlement this past July for failing to pass on
rebates to several school districts in New York.
“I write to you today to ask the USDA to begin an investigation by the Officer of the Inspector General and to alert state education and agriculture agencies to the $20 million settlement between New York Attorney General Andrew M. Cuomo and Sodexo for overcharging 21 New York school districts and the SUNY system for food service,” DeLauro said in her letter to Vilsack.
If the department decided to open up a probe, it could put a significant chunk of Sodexo’s business under scrutiny. The French-based company dominates the food services industry, along with Aramark Corp. and the Compass Group, and has contracts across the country to provide school lunches.
A House Democratic aide said an investigation into the school lunch program
would not focus solely on Sodexo. Nonetheless, the company would face questions
over its handling of the school contracts.
“This is classic ‘Let’s go to private contractors to save money.’ Sodexo is just the example,” said the aide. “To think they are not passing along the rebates like they should to make a buck is egregious.”
The USDA does not have direct contracting authority over the school lunch program — that’s up to local and state school districts — but they do have oversight power on how it is run.
“We have issued guidance specifically directed at the issues involved in [the Sodexo] case and we are working to remind states and school districts of their responsibilities in this area,” said Justin DeJong, a USDA spokesman.
A spokeswoman for Sodexo declined to comment for this story.
A probe into Sodexo’s school lunch business is not likely to help in their dispute with the Service Employees International Union (SEIU). The union has been battling to organize Sodexo’s U.S. workers.
Renee Asher, SEIU’s assistant director of communications for property services, said DeLauro’s letter puts the spotlight on Sodexo’s business practices.
“It means a higher level of scrutiny for Sodexo and whether their profits are
being generated at the expense of kids,” Asher said.
In the New York attorney general’s investigation, Sodexo was found to have earned rebates from suppliers that weren’t passed on to schools. Contracts with school districts often stipulate that such savings be shared; withholding them is also a violation of federal law.
Congress’s interest in Sodexo’s handling of school lunches follows intense scrutiny from lawmakers over their performance on a massive food services contract with the U.S. Marine Corps.
In August, Reps. Rob Andrews (D-N.J.), Sanford Bishop (D-Ga.), Marcy Kaptur (D-Ohio) and Steven Rothman (D-N.J.) wrote letters to Pentagon officials asking questions about the contract, which rose in cost from $881 million to $1.2 billion.
The food services company has hired lobbyists to help with its troubles.
Earlier this year, Sodexo hired its first outside lobbyists at Gephardt Group Government Affairs, home to former House Democratic Leader Richard Gephardt (D-Mo.), as well as at Trammell and Company. So far, Sodexo has spent $70,000 on lobbying fees for the two firms, having spent $470,000 overall on lobbying in 2010.