These minutes reflect
discussion and debate at a meeting of a committee of the
Minutes
Senate Committee on Finance and Planning
Tuesday, April 4, 2006
2:30 – 4:15
238A Morrill Hall
Present:
Fred Morrison (Chair), Rose Blixt, Charles Campbell, Arthur
Erdman, Daniel Feeney, Steve Fitzgerald, Thomas Klein, Joseph Konstan, Judith Martin,
Kathleen O'Brien, Kate VandenBosch, Sue Van Voorhis, Warren Warwick
Absent:
Calvin Alexander, Charles Bachmeier, Dan Hennen,
Lincoln Kallsen, Michael Korth, Ian MacMillan, Tim Nantell, Kathryn Olson,
Richard Pfutzenreuter, Justin Revenaugh, Jacob Olson, Karen Seashore, Michael
Sertich, Charles Speaks, Thomas Stinson, Alfred Sullivan, Michael Volna
Guests:
Laurie Scheich, Bob Baker, Leslie Bowman
Other:
none
[In these minutes: (1) Food and Beverage RFP process;
(2) Parking rates]
Professor
Morrison convened the meeting at 2:35 pm.
1. Food and Beverage RFP Process
Professor
Morrison welcomed Leslie Bowman, Director, University Dining Services Contract
Administration, and Associate Vice President Laurie Scheich, Auxiliary
Services, to discuss the upcoming food and beverage request for proposals (RFP)
process. Information about the process
was distributed, which outlined the stages of the University Dining Services
(UDS) RFP process. Ms. Bowman
highlighted the extension of the contract with Coke for an additional two years
in an effort to align campus food and beverage contract end dates in June of
2008. She reviewed the UDS historical
perspective and timeline, highlighting that Northrop Concessions was added to
the existing campus dining contract in March 2004. Ms. Bowman discussed the current contract
status, noting that the University currently has a number of separate campus
agreements for the delivery and management of food and beverage sales. She gave
an overview of the RFP-related committees and committee structures as well.
Professor
Martin said that several years ago, the Faculty Consultative Committee (FCC)
had had a discussion about the dissatisfaction with food services, and she
cited examples. She said that
specifically, there had been no change in the hours of operation, considering
that class times had expanded significantly.
Professor Martin asked if the expectation that services will be
available beyond a standard 9-5 could be stated in the RFP. Ms. Bowman said programmatic needs could be
stated in the RFP. Professor Martin
added that the RFP should also state that people would like more healthful food
available. Professor Morrison stressed
the importance of specific performance measures and standards in an RFP.
Professor Campbell asked if a ten year
contract was optimal, as the University could lose leverage midway through the
contract if the vendor was underperforming.
Associate Vice President Scheich said the University always had the
option to terminate a contract with sufficient notice. Professor Konstan asked what was wrong with
the status quo. Ms. Bowman said that
outsourcing added another layer to an already bureaucratic system. She noted that the vendor's team is critical
to the success of a contract, and when the contracts began there were
challenges in leadership on both sides. Professor
Konstan discussed options, suggesting perhaps that there be a "suite"
of smaller contracts. The current model
appears to the consumer as being outweighed by the monopoly. Professor Konstan said that he had often
heard people saying that they can get cheaper and better food off campus, and
he asked if there should be varying contracts in niche service or food
options.
Ms.
Bowman said there were many reasons that food service was more expensive on
campus. She said that when Aramark wants to raise prices they do a benchmark
study and it goes through the University’s rate setting process that ends with
final Board of Regents approval. She
stressed that employees of UDS are Teamsters who make a minimum of $12/hour, so
the cost of food service is higher, as competing off-campus businesses tend to
pay their employees less. The University is committed to having the work force
remain U of M employees, and it is costly to maintain facilities as well. Professor Konstan asked if it was the
goal/objective of UDS to provide jobs to students at certain rates. Vice
President O'Brien said that she felt it was a legitimate policy issue. Professor Morrison said that UDS operates a labor
force which adds complexity to the system. He said that at other institutions,
Aramark food is better and the service is better. It is partially an Aramark
process, filtered through a bureaucratic University process, which then results
in inferiority. Professor Morrison also
noted that a substantial part of the business is not student business, and he
felt there was a lot of markup in addition to it being less nutritious, more
expensive and of poorer quality.
Professor Morrison said that food service ought not just be bid, but
rethought. Ms. Scheich noted that these
parameters can be stated in the RFP.
Professor
Morrison raised a question about the quality and type of food service options
available. The sense among many members of the faculty and staff is that
the present offerings concentrate on unhealthy, greasy foods (hamburgers, fried
foods, pizza) and not on healthy alternatives. Obesity is a growing
national health problem and the University is contributing to it. This is
a problem with both the food service retail operations and with vending. Other
major universities (e.g., Duke and
Mr. Klein said that there are different
opinions as to what constitutes good value, and asked if there were methods in
place to consider and compare the trade-offs.
Ms. Bowman said they intended to have surveys and focus groups, and that
work groups would bring information to the advisory committees who will make
decisions on these. Mr. Klein said that
the committee would be interested in seeing those results. Professor Vandenbosch said someone from the
obesity prevention program should be part of the committee. To Professor Erdman's query, Ms. Bowman said
that UDS was not benefiting as much as Aramark and that something in the
contract need to be built in so that the University does benefit. Professor Morrison asked if an exclusive
contract was a good idea. Ms. Bowman
stressed that they were putting out the RFP for many points of business, and
that a company could bid on all or parts of the business. Vice President O'Brien gave the example of
the banking RFP and how they went through different types of analysis, adding
that any financial benefit should come through the University. Professor Konstan said he had no faith in the
contract management system, and the ability to manage market inefficiencies. He
asked if the structure was going to be one where the vendors were autonomous
but held to standards and given appropriate notice if underperforming. Professor Konstan said the University should
go to a market driven model with some oversight on margins and reallocations. He
said that should be a conscious decision as to whether the University can
succeed at the goal. In other words, don't negotiate the contract; change the
rules of the game.
Professor
Morrison asked if the new contracts would be for ten years. Vice President O'Brien said that that was
still being determined but that it was difficult to establish shorter
contracts. Mr. Fitzgerald said that one
thing that should be considered is that there are large costs that Facilities
Management bears in cleaning classrooms, etc., and other residual results of food
service. He added that if the University
was to be a top three research institution, healthful eating should be central
to the RFP and an opportunity for leadership.
Professor Morrison cited other institutions that have practically done
away with pop machines and candy machines.
Professor Martin asked if there was a best practices piece that was a
part of this process, and said that it would be helpful to know that in having
some point of reference.
Ms.
Bowman said that there were a lot of different constituencies and many are
pleased with UDS; in fact, they'd seen an increase in satisfaction. Vice President O'Brien added that another
thing to consider was the different market segments. Mr. Klein asked if there
were any metrics or measurements in place in the current contract. Ms. Bowman said no, and that they were
working with a consultant to establish this in the next contracts, as well as
consequences. Professor Morrison asked
if the University was limiting itself in the numbers of vendors, and said he
was intrigued by the notion of competition, as he felt there was a sameness to
the services throughout the University.
Ms. Bowman said that smaller vendors may choose to bid on smaller pieces
of the contracts. Ms. Bowman said that
because many of the facilities share kitchens, it was difficult to separate
them. She also highlighted that they
were making an effort to use local and regional foods, and said that Aramark
contracts with Sysco, which can specify that local products be used to fulfill
an order. Ms. Bowman also noted that
fair trade coffee was also used, and Vice President O'Brien cited a recent
article in the Daily which said that the University did not use fair trade
coffee was not true, nor had they been asked about the matter. Ms. Bowman, Ms. Scheich and Vice President
O'Brien thanked the committee for its time, and Professor Morrison thanked them
for the information.
2. Parking Rates
Professor
Morrison welcomed Bob Baker, Director, Parking and Transportation Services, to
discuss parking rates on campus as well as transportation issues. Mr. Baker distributed a presentation and
highlighted the success of alternative transportation methods on campus, saying
that they had learned they could not build their way out of parking
demands. He reviewed statistical
information on the populations served by Parking and Transportation Services
and noted that there were several factors in the low percentage of single
occupant vehicles. Specifically, the
addition of more campus housing and parking rates being raised. Mr. Baker discussed parking and transit
statistics, and cited the success of the ZipCar and van pool programs. He also highlighted customer satisfaction
information, noting the positive survey results; and the high success rates of
motorist assistant calls, citing a 90% range of successful "helps."
Mr.
Baker reviewed the basic financial principles for Parking and Transportation
Services, and the FY 2007 rate analysis and recommendation. Mr. Klein asked if the $1.6 million put the
University ahead of the curve on funding depreciation for parking assets or
made it so it wouldn't fall behind when funds were needed for repairs or
replacement. Mr. Baker noted that it was
more funding than the previous year. The
committee discussed funding for depreciation. Professor Konstan asked why a service wasn't
being added to improve the bottom line, and Vice President O'Brien said that it
would end up being a charge to academic units. The committee discussed the
differences in contract parking and special event parking. Professor Konstan
said it might be helpful to have those differences described in the document,
and added that the rates for major event parking seemed to be significantly
less than those downtown, yet it was a premium service. Mr. Baker said that his department annually
surveyed what the major sports teams and cultural institutions charged for
event parking, and that they took a blended average as part of determining
prices.
Professor
Campbell asked about parking meters, and Mr. Baker said that when the price of
meters was raised it ended up being an unreasonable number of quarters for a
person to have on hand. They hand
considered a card system like Minneapolis had tried, as well as meters that
take cash and debit cards. He said they
intended to test newer equipment in higher volume locations, and if those were
successful, they would be evaluated carefully and the cost of meters could be
raised in some locations.
Mr.
Klein asked about incentives to car pool.
Mr. Baker said that there had been more success getting people to bus to
campus rather than car pool, and that that hadn't changed for 5-6 years. He described the parking lots that were
available to carpoolers and said he didn't feel that raising the carpool
parking rate would have a significant impact.
The committee discussed the capacity at various parking ramps throughout
campus, and Mr. Baker noted that there would be more demand in the
Professor
Morrison asked what would happen when light rail transit (LRT) was developed
through the University route. Vice
President O'Brien said that the earliest the central corridor of the LRT would
be in place would be 2012 and that it would change the University's Parking and
Transportation Services significantly.
She speculated that if it were as successful as the Hiawatha line, there
would be less need for parking at the University. Vice President O'Brien also discussed the possibility
of a new stadium being built and how it would affect parking. Professor Konstan asked what effect hotels in
the area had on reducing parking needs for visitors. Mr. Baker said that they do a lot of parking
business with the Radisson on the East Bank. Vice President O'Brien said that
the number of visitors to the clinics should not be underestimated as well. Professor
The committee found the information
provided by Parking Services to be extremely helpful in understanding the costs
and the requested rate adjustments. The committee was very appreciative
of the effort that Mr. Baker had put into providing it with a full picture. Professor Morrison thanked Mr. Baker and Vice
President O'Brien for the information
The meeting concluded at 4:20 pm.
---Mary
Jo Pehl