These minutes reflect
discussion and debate at a meeting of a committee of the
Minutes
Senate Committee on Finance and Planning
Tuesday, September 19, 2006
2:30 – 4:15
238A Morrill Hall
Present:
Judith Martin (chair), Rose Blixt, Steve
Fitzgerald, Lincoln Kallsen, Thomas Klein, Michael Korth, Mikael Moseley, Kathleen
O'Brien, Kathryn Olson, Justin Revenaugh, Terry Roe, Karen Seashore, Charles
Speaks, Warren Warwick
Absent:
Daniel Feeney, Marcie Jefferys, Joseph
Konstan, Ian McMillan, Richard Pfutzenreuter, Thomas Stinson, Michael Volna,
George Wilcox, Aks Zaheer, John Ziegenhagen
Guests:
Leslie Bowman (Director, Contract
Administration, University Dining Services), Associate Vice President Laurie
Scheich (Auxiliary Services); Dean Steven Crouch (
[In these minutes: (1) food and beverage
contract request-for-proposals process; (2) budget (model) advisory group; (3)
support service rate setting; (1, continued) statement on the RFP process]
1. Food and Beverage
Contract RFP Process
Professor
Martin convened the meeting at 2:30 and welcomed Vice President O'Brien and her
colleagues Leslie Bowman and Laurie Scheich to provide an update on the process
of development of the food and beverage Request for Proposals.
Vice
President O'Brien recalled that the University in the last few years has
arranged all food and beverage contracts so that they expire in June, 2008, and
it will not enter into any new contracts that extend beyond that date. They are working on drafting an RFP which
would lead to an award in early 2008 and which would begin in mid-2008. She turned to Ms. Bowman to review the
process that is being used.
Ms. Bowman said that the
assumptions are, beyond ending all current contracts in June, 2008, and not
entering new ones, that campus dining and vending services will continue to be
outsourced on the Twin Cities campus and that the "University will issue a
comprehensive RFP for campus food and beverage on TC campus and designated
Coordinate Campuses."
"Comprehensive means it will cover all sites—Twin Cities campus
dining (including residential, retail, and catering operations), non-beverage
vending, Northrop concessions, the Arboretum, Athletics concessions, TCF Bank
Stadium, designated Coordinate Campus dining operations, and System-wide
beverage requirements. This does not
necessarily mean that there would be one vendor; vendors will, within limits,
be allowed to bid on designated parts of the contract.
The
guiding principles are single enterprise, core competencies, and improving
performance and operation efficiencies.
"Single enterprise" means there will be one institutional
position presented to vendors in order to maximize financial and programmatic
benefits to the University and to align contract revenue decisions with
strategic and operational goals.
"Core competencies" means that all contracts will be managed
by a single administrative unit (now they are dispersed), that they will
identify and approve new food venues using a business case analysis, and
departments will not be able independently to open on-campus food venues (they
must present a business case analysis to the administration). "Improve performance and enhance
operational efficiencies" means the University wants to maximize labor
productivity, ensure a commitment to customer service, ensure food quality,
variety, and creativity, and ensure campus and customer value.
Professor
Speaks asked in what sense these are "core competencies." Ms. Bowman said at present, for example,
there are different people in different offices involved in these
contracts—people who may not have experience in contract administration or in
food, which is why they propose to consolidate contract responsibility in one
office.
The
development of the RFP will be led by an Executive Steering Committee, which
will appoint an advisory committee, make decisions on policy issues, review and
approve the final RFP, make recommendations on how contract revenue will be
allocated, and make a final recommendation to the President and Board of
Regents on awarding the contract(s). The
steering committee is co-chaired by vice presidents O'Brien and Pfutzenreuter
and also includes Senior Vice President Robert Jones, Senior Vice President and
Provost Thomas Sullivan, Vice President Kathryn Brown, and Associate Vice President
Scheich.
The
Advisory Committee will oversee and direct the process for developing the RFP
and its evaluation criteria, a communications plan, recommend decisions on the
award, appoint work groups and coordinate their efforts, ensure stakeholders
and resources are used appropriately, and recommend membership for an RFP
evaluation team. The Advisory committee
is co-chaired by Ms. Bowman and Interim Associate Vice President Mike
Berthelsen and includes representatives from a number of University offices. The faculty representative is Professor
Marvin Marshak; the student representative is Nathan Wanderman. Professor Speaks asked if any of the members
have had experience in developing an RFP; Ms. Bowman said they have.
The
work groups will develop RFP language, requirements, and benchmarks, create the
RFP, provide information as requested, and assist the evaluation team with
analysis and follow-up. Separate work
groups will be appointed for (for example), athletics and rec sports,
beverages, financial, Arboretum, Northrop, residential dining, and so on. Ms. Scheich said that these groups are now
being formed and they would welcome membership from faculty, staff, and
students who are interested.
What
kind of organizations do they expect to respond to the RFP, Professor Seashore
asked? Ms. Bowman said there are three
major food management companies: Aramark, Sodexho, and Chartwells. There are also smaller companies that might
bid on parts of the contract; for example, there are concessions companies that
might bid on athletics and on the new stadium portion of the RFP. It may be that big companies will bid on
everything or small companies may bid on parts.
Do they expect big companies to bid on parts but not all, Professor
Martin asked? They will set requirements
on what can be bid on separately, Ms. Bowman said.
Must
they award contracts to the lowest bidder, Professor Speaks asked? They will have different evaluation criteria
with different weights, Ms. Bowman said, so the respondents who are awarded
contracts will be the ones who best meet the criteria.
Professor
Hendel observed that there are several levels involved in the process—executive
committee, advisory committee, work groups—but what is problematic at the
University is that it does not, early in a process, bring in substantive
expertise that is available on the campus.
For example, Food Science and Nutrition and units in the
Professor
Seashore went on to comment that the University often advertises itself as an
incubator for small businesses. Is there
any room to think about a small business component of the RFP rather than
assuming it will go to something like Halliburton? It sounds as if there is no way a local
person could say he or she could run a better sandwich bar. Ms. Bowman said it will depend on the
package; some parts will be stand-alone and could be operated by a small
business. One problem is that there is a
bargaining unit on campus and this is sometimes challenging for small
businesses. The committee will look at
components that could be bid separately.
There are also two venues which have large kitchens that prepare food
for smaller areas that do not have preparation kitchens, but perhaps an
independent coffee shop could work.
There
are probably things about the existing food and beverage service that people
like now and probably things that need to be fixed, Professor Roe observed; do
they know what those things are? They
have hired a consultant to look at the contract and identify ways to strengthen
it and make contract administration easier, Ms. Bowman said. Students are talking about what they want in
the Student Unions (hours, days, etc.) and they will work with the students on
service levels.
Professor
Martin commented that as the University tries to get faculty to teach outside
standard day hours, and students to take classes outside regular hours
(especially 8-12), there must be food for people at other than normal times.
Professor
Warwick said he was concerned about the "assumptions" Ms. Bowman
presented at the outset. They are not
assumptions, they are conclusions (i.e., service will be outsourced, there will
be one administrative office to administer contracts, there will be one
comprehensive contract). What led to
them? Ms. Bowman agreed that they are
conclusions and said they are based on many discussions with many groups. In the case of the comprehensive contract,
they have learned that it could provide a higher return to the University.
Professor
Speaks asked how binding any contract will be—will there be an out provision if
the vendor does not perform adequately?
There will be such a provision, Ms. Bowman said; but it could be difficult
for a campus to change vendors mid-contract, Ms. Scheich added. A change in vendors would create turnover and
stress on the campus. Vice President
O'Brien said that in her experience, if the University has a clear idea what it
is purchasing, if there are measurables and clear performance standards, then
everyone will know what is expected and when it is not being delivered. But the process starts with the University
knowing what it wants to buy. One
suggestion from the consultant is that there be a scorecard approach on some
matters, rather than just contract language that might be vague, Ms. Bowman
said.
Two
constraints that affect contract negotiations are the University's $12-per-hour
minimum wage and the location of some venues (in the basement). Vice President O'Brien said the University
will insist on the $12-per-hour living wage; that is University policy. Dr. Kallsen emphasized he was not saying the
University's policy was bad, only that it may make it more difficult to
compete. As for venues, Ms. Bowman said
they will remain where they are but they will indicate the University will not
build any new ones in basements or non-traffic areas as new buildings are
constructed. (On the other hand, she
said, the facility in the basement of Walter Library is doing very well.) His point only was that the University has
done things that put them in an interesting position, Dr. Kallsen said. And the cost of operating at the University
is not cheap, Ms. Bowman added.
Professor
Seashore asked about the data evaluating the current food services apart from
the dorms. Why do people walk blocks off
campus to eat? Ms. Bowman pointed out
that except for one facility, for people in the AHC the food options in the
community are closer than those at the University, a situation that is true in
a number of other areas on campus as well.
The other reason is that people look for variety; they may eat on campus
one-two days and then go elsewhere for something different. The Twin Cities campus has 26 food venues,
which may be the most of any university in the country.
What
have they learned from their assessment of food service on campus that will
affect the RFP, Professor Seashore inquired?
That people want variety on campus, Ms. Scheich said—but there is a cost
for that in terms of production and labor efficiency. Other points they've taken from the
assessment is the need for better use of technology, clearly identifying what
the vendor is responsible for and what the University is responsible for, and
building in flexibility so that there are new food concepts
How
long will the contract be, Professor Seashore asked? Ms. Bowman said that was not settled; the
current contract was 10 years.
Will
most of the 26 venues remain, Professor Martin asked? The consultant has recommended they look at
which ones break even and which do not.
They also need to be cognizant of those which serve needs even if they
do not break even; if there is a need, they will provide a food service venue
even if does not make money. As the
University expands with perhaps five new biomedical buildings, Professor Martin
said, there will likely be additional needs in that area. Ms. Bowman said they would look at the
demographics and what services are already available.
Professor
Hendel said this is very important work and very complex. Is there, in the process, any benchmarking
component or comparisons with other major research universities? There is like no cause-effect relationship
between a great food service and a top-three ranking, but these are all of one
piece: if the University is to be top
three, it must strive to be so in many areas of endeavor. Ms. Bowman reported on contacts she has
developed through her national association and said she has developed access to
helpful resources.
Ms.
Olson said she has visited the new
Professor
Martin thanked Vice President O'Brien and Mss. Bowman and Scheich for joining
the meeting.
2. Budget (Model) Advisory
Group
Professor
Martin next reported that she and Professor Feeney are the two faculty members
on a Budget Advisory Committee (composed mostly of deans) appointed by Senior
Vice President Cerra last summer to look at what is and is not working with the
new budget model. It is a tweaking
group. They have issues to talk about
but their list is not exhaustive. One
perennial topic is interdisciplinary research and teaching, how to account for
it, and whether there are built-in barriers.
They meet monthly and she will bring back issues to this Committee.
Professor
Roe reminded Committee members he had served on the Metrics and Measurement
task force and said that to the extent they can keep things transparent,
colleges can provide costs and explain where expenditures are made so the
community can see. That will also be
important for future adjustment and fine-tuning of the budget model.
One
big question that this Committee has dealt with in the past was subsidies; it
was not always easy to get information on them.
One hopes the new budget model will make them more visible so that one
can ask whether the subsidies make sense, Professor Martin said.
3. Support Service
Rate-Setting
Professor
Martin welcomed Dean Crouch and Interim Co-Dean Morrison to discuss
rate-setting by support units in the new budget model. Professor Morrison offered the comment at the
beginning that the deans are as upset as the faculty about the process and that
it may be only the central service units are happy with it.
If
one of the questions that has arisen from the budget model implementation is
"why does service X cost so much," another one is "what am I
getting for my money?" Dr. Kallsen reported. Those questions in turn have led to a
discussion of service levels in order help the campus understand what it is
buying. Ms. Tonneson in the Budget and
Finance Office has helped to set up a mechanism to talk about these issues.
Ms.
Tonneson, who was welcomed to the meeting at the point by Professor Martin,
added a little more description of the Budget Advisory Group that Professor
Martin had just reported on. It will
discuss whatever the current issues about the budget model are, Ms. Tonneson
said, and will deal with issues that come to its attention from across the
University.
Ms.
Tonneson distributed a handout that included the membership of the Budget
Advisory Committee as well as a flow chart illustrating how consultation with
academic units on support-unit rate-setting will occur. There are six service categories or cost
pools for which this consultation model would work, she said: facilities and utilities, research
administration, the libraries, student services, technology, and the
Professor
Martin suggested that this Committee would be the appropriate faculty group to
consult with on facilities and utilities.
Other service units should meet with other appropriate Senate
committees, she said. This process has
just started, Ms. Tonneson said, so the timing for this year may be a little
off (because consultation is supposed to take place before October). Dr. Kallsen said they would appreciate advice
on where the units should go for faculty consultation; Professor Martin
promised she would write to Professor Chomsky, chair of the Faculty
Consultative Committee, to bring this process to her attention and to make
suggestions on appropriate consultation that will avoid duplication.
Professor
Roe said that those six categories are units that departments and colleges buy
services from. If the budget model
works, the administration should receive complaints and compliments about what
the departments and colleges are buying.
That is the goal, Ms. Tonneson agreed.
The collaborative groups can also help educate the University community
about what programs exist in each of the service areas.
If
a department does not like what a service is doing, can it contract for its own
service, Professor Martin asked? She
answered her own question:
"Probably not." But
they will be able to go, for example, to Facilities Management and raise
questions about what should be happening.
The question is what changes with this model, Professor Seashore
said. With this process the units can
explain entirely what they do and what their priorities are, Ms. Tonneson
explained.
Professor
Martin turned to the two deans who had been invited to contribute their views
because it is often they who have the big picture. Dean Morrison said that people who've been on
this Committee for more than a year have the big picture as well as the
deans. The issue that arises is the one
Ms. Tonneson mentioned: the dialogue
about services and the ability to ask questions about them; it may be that
units may not need service levels that are being provided and the unit is
spending too much money in some areas and not enough in others. What is sensible to an administrative office
may not be so sensible in the units (e.g., turning off the building blowers at
6:00, when in the
Dean
Crouch agreed that consultation is important.
Last year the formulas for charging for support services were developed
as part of the budget model but without oversight because of a lack of time for
consultation. Now there will be
consultation and the colleges can make their views known.
How
many people are there in the Budget and Finance office, Dean Morrison asked Ms.
Tonneson. (Five.) The University has 17,000 employees, 60,000
students, 4 or 5 major campuses, and these five people are expected to make
business sense of the institution. That
is impossible, he said, and no one would run a business that way. This consultation process is an effort to
enlist people's help.
Professor
Seashore asked how investment decisions are made. In one college they know what they need to do
to provide student services in order to match what other top-three universities
provide; in another they may need new equipment for new faculty. How are those needs adjudicated in the new
budget model? Dean Morrison said it
depend on the changes. If there is an
overall need for a change in student services, then the discussion would be
through the model provided by Ms. Tonneson.
If a college needs three new pieces of equipment, the request would go
through the compact process. But there
is only one pool of funds, Professor Seashore observed. Who has final approval? In the case of the service units, Ms.
Tonneson said, the President gives final approval on budgets subject only to
changes that might arise because of legislative action (e.g., a cut in
funding). There is pressure to keep
support budgets low but there are also strategic investments in this part of
the University, so there will be some increases. There will be discussions with deans in the
compact process about academic versus support unit priorities. Professor Seashore said she understood that;
it is an annual process. There is also
an exceptional process for deciding on very expensive buildings. But what about the in-betweens, where the
units are starved for five years in order to accomplish something? Student services could be like
buildings: they can be examined for
their long-term competitiveness.
The
advantage of this model is that in the old days, if a college got five new
buildings, the University paid for heat, light, custodial services, and so on,
Professor Morrison said. Now, if a
college builds five buildings, it must structure its budget to pay for those
costs. That is if they OWN the building,
Ms. Blixt said, and it is different for assigned space; when a unit is told
where it will be, those costs are harder to swallow. Colleges need to feel they own their space;
why would they invest in it if they do not
believe they will occupy it for the long term? Dean Crouch observed that if he is successful
in obtaining a new Physics building, his reward is that he has $2 million per
year in operating costs, so the college would have to increase its research
funding.
Professor
Seashore said she was talking about a strategic investment that requires other
units to cut back. That is a decision the
President makes, Dean Morrison said. He
could say that Physics is so important he will give IT the $2 million per year
to pay the building costs. There will be
a number of situations where the income stream is not sufficient to pay for
vital facilities, Professor Roe commented, and there will be need for an executive
decision. This model may drive deans to
think hard about whether they want to ask for a new building in the compact
process, Professor Martin surmised. In
economic terms, Professor Roe said, the rules have been changed but units are
in the old equilibrium—they are stuck with space.
Some
deans are more strategic than others, Professor Seashore said. If the compact process is more important than
it was before, what happens to a college with a non-strategic dean? Is it just left out? The question is whether impressions would
flow out of the budget model or guide the understanding of what it means to be
a dean in 2008, Professor Roe commented.
Some will love the new system and thrive in it; others will not. It will be up to faculty and departments to
get the attention they need.
Apropos
Ms. Blixt's point about colleges not making improvements to space they do not
know they own, Professor Martin said there are negotiations about space to
address those questions. As Vice
President O'Brien has commented a number of times, the University has 26
million square feet of space, not all of which it might build if it were
starting anew. The University owns all
the space, Ms. Olson pointed out, but if a college tries to improve space it is
stuck with code requirements and asbestos costs and so on. She said she would like to see discussions
about how those items are funded.
Projects are stymied because of asbestos or other factors. The University would see more improvement of
space it if helped pay for these code costs.
Dean Morrison said some of those costs might be absorbed centrally and
the administration may need to rethink how it allocates HEAPR funds. The administration could say that it will
provide funding for asbestos removal, for example. Locations that need the funds could be moved
up the HEAPR list.
Professor
Martin thanked Deans Crouch and Morrison and Ms. Tonneson for joining the
meeting.
1. Food and Beverage
RFP Process, Continued
Mr.
Klein asked if the Committee wished to make a statement about healthy foods and
nutrition that would go beyond point made by distribution of the minutes. It was agreed that Professor Martin would
circulate a draft statement that reflected the points made in the discussion;
the statement could be taken to the Senate on September 28 in order get the
President's attention and give it more weight.
Professor
Speaks said he did not hear, in discussions about the executive and advisory
committees and the work groups, about what is expected to be different. The "competencies" that were
presented to the Committee are efficiencies.
But what will be different from what the University has now? Apart from vending, the food is better than
it was 12 years ago, Professor Seashore said.
Professor Speaks agreed but said that is no justification for appointing
three different groups if the goal is only "better than what we had." What also needs to appear on just about every
statement from committees is that the University is too quick to run outside
and ignores its own internal expertise.
The
Committee, subsequent to the meeting, agreed unanimously on the following
statement [which was approved unanimously by the University Senate on 9/28/06]:
The
Senate Committee on Finance and Planning has been updated on the process for
developing the Request for Proposals for the University's food and beverage
contract beginning in July, 2008. We appreciate the effort University Services
is putting into improving food service, developing a more effective contract
and communicating the process.
Based
on what we have learned, the Committee recommends that the University place
attention in the RFP and contract process on the desire of many in the
University community for healthier foods. We note that
this concern may be implied within the goals to improve performance and
operational efficiencies, and while we noted that University wellness/nutrition
representatives are identified as stakeholders, we recommend more explicit
acknowledgment of this concern in the process. The Committee makes the
following two recommendations for this process.
1. The Executive Steering Committee should
include as a member an individual University faculty expert on healthy foods and
nutrition.
2. The Advisory Committee should consult
specifically with departments and faculty in the University who are experts on
nutrition and health, such as Food Science and Nutrition and appropriate
departments in the
Professor
Martin adjourned the meeting at 4:15.
--
Gary Engstrand