Dive Brief:
- DC's city council is considering a contract with Chartwells and Thompson Hospitality, which has provided lunches to the city’s schools since 2008, even after the company settled a $19 million fraud lawsuit concerning its DC food services just weeks ago.
- In the lawsuit, a former district employee alleged the company overcharged the district for food services. Compass Group USA, the parent company, faced a similar allegation in New York state in 2012 and settled for $18 million.
- District representatives and council members worried that canceling the contract now, which must be renewed annually, could disrupt food services for the coming year and incur additional costs for the district. A DC Council member is planning a hearing in September to dig deeper into the situation.
Dive Insight:
School districts have turned to third party contractors to fill a variety of much-needed services, including school lunches and bus services. Whereas DC's troubles with its contractor came from fraudulent practices (and it's not alone in dealing with fraud), much of the controversy around third-party contractors focuses on districts replacing traditionally public services with private providers. For some, it’s been used a cost or labor-saving tool. Philadelphia, for example, has tried to right its budget and operational troubles in part by turning to outside providers of services like substitute teachers and healthcare. But local unions have objected to contracts and threatened to sue
But districts have also turned to third party vendors to patch up deficits in their own systems. The Lake Havasu District, in Arizona, has turned to third party contractors to fill school therapist positions they were unable to fill themselves and other districts rely on third party providers for school nursing services.