Companies may owe schools lots of lunch money

The Agriculture Department (USDA) will audit a national school-lunch program to investigate claims that food-service companies are violating the law by failing to pass on rebate savings to school districts. 

The audit could affect companies such as Sodexo Inc., Aramark Corp. and the Compass Group, which provide many of the nation’s school lunches.

In a Feb. 25 letter obtained by The Hill, Agriculture Secretary Tom Vilsack told Rep. Rosa DeLauro (D-Conn.) that USDA’s Office of the Inspector General “plans to initiate an audit” on how food-service companies are adhering to their school-lunch contracts. 

According to Vilsack, the audit would have two objectives: to “identify and evaluate the corrective actions” taken by USDA to make sure food-service companies adhere to their contracts with local school districts and “to assess the effectiveness” of prior controls implemented by the department to stop waste and fraud.

In September 2010, DeLauro wrote to Vilsack asking that USDA look into problems with the National School Lunch and Breakfast Programs. As reason for the probe, she cited a $20 million settlement reached between Sodexo and New York state in July after the company was found not to  have passed on rebates to several school districts.

USDA confirmed that audit would happen later this year.

“OIG expects to begin work on the audit this August,” Paul Feeney, deputy counsel for USDA’s Office of the Inspector General, told The Hill. 

Another department official said it takes any problems with the school-lunch program very seriously.

“The National School Lunch and Breakfast Programs are the foundation of the national hunger safety net for children across the country,” said a USDA spokesman. “Since learning of the settlement, the Department’s Food and Nutrition Service has taken a number of steps to educate and help our partners at the state and local levels learn about their rights and responsibilities in procurement matters.”

Local and state school districts, and not the USDA, have direct contracting authority over the school lunch program. But the department does oversee how the program is being run.

Worries about school districts being cheated out of savings have been on the minds of lawmakers since New York state’s settlement with Sodexo last year.

Sodexo was found to have earned rebates from suppliers that weren’t forwarded onto schools, according to the New York attorney general’s investigation. Withholding them can be a violation of federal law because contracts with school districts often require savings from rebates to be shared with them.