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Comptroller Concerned About College Cafeteria ‘Sweeteners’ – In Contracts, That Is

Comptroller Peter V.R. Franchot (D), right, and Gov. Lawrence J. Hogan Jr. (R) at a Board of Public Works meeting last year. Photo by Danielle E. Gaines

Maryland’s governor and comptroller said Wednesday that they want an explanation from the University System of Maryland about provisions in dining hall contracts that include unrelated gifts to college campuses and require fee payments if contract extensions aren’t approved.

Comptroller Peter V.R. Franchot (D) said he has been concerned about such provisions in contracts for years, but the issues came to a head on Wednesday when two dining services renewal contracts at Frostburg State University and the University of Maryland Eastern Shore were on the Board of Public Works agenda.

The University of Maryland Eastern Shore contract under consideration with Thompson Hospitality Services of Reston, Va., included a $100,000 unrestricted gift to the campus and up to an $80,000 catering allowance during a one-year renewal period.

“I’m not suggesting there are any improprieties, but optically, it doesn’t look very good and I find the process of adding sweeteners to contracts unusual and hope that you can take the word back to the University System that these should not be included in these contracts,” Franchot told Joe Evans, a USM representative, during the meeting. “…It’s certainly my hope that bids are judged by their ability to meet the requirements of the contract, not by how big the gift to the university is.”

The comptroller said he raised similar concerns when a gift provision was included in a 2013 dining services contract for Towson University.

The comptroller also raised concerns about the amortization schedule for capital upgrades that the private companies undertake at the college campuses. The one-year contract renewal at the Eastern Shore campus costs the state $6.4 million.

Since the start of the contract in July 2014, Thompson has invested more than $4.2 million in renovations and upgrades, including a new cafeteria, café areas, a food truck and equipment purchases. If the Board of Public Works had opted not to approve the one-year renewal, the state would have had to pay for the remaining unamortized investment and forgo another $1.7 million of promised investments.

At Frostburg State, Compass Group USA agreed to make a $7.3 million capital investment over 10 years, governed by a five-year contract and the five-year renewal under consideration Wednesday. The company has invested $6.5 million so far and the university would be required to pay $3.3 million if the contract renewal wasn’t approved.

The agreements put Board of Public Works members in the position of approving a contract or triggering a payment of millions of dollars, Franchot said.

“I’m much more interested in renewing a contract based around the vendor doing a good job, not on the vendor holding a payment over our heads,” Franchot said. He said capital improvement agreements in the future should end with the first option on a signed contract, not continue into possible renewal periods.

State Treasurer Nancy K. Kopp took a more understanding view, but said it would be helpful for the board to have more information about amortization agreements before voting on contract renewals.

The third member of the panel, Gov. Lawrence J. Hogan Jr. (R), said he hoped not to see similar provisions in contracts before the Board of Public Works in the future.

“I think we’re going to need a response in writing from the University System to address these issues that the comptroller has raised,” the governor said.

University System of Maryland representatives were not able to immediately answer questions about the contracts on Wednesday.

Despite the concerns aired by the comptroller, the board voted 3-0 to approve the contract extensions.

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Comptroller Concerned About College Cafeteria ‘Sweeteners’ – In Contracts, That Is