Appendix B

Chronology of Statewide Food and Beverage Vending Machine Contract

Since 1959, the Board of Education and Services for the Blind (BESB) has been authorized under C.G.S. Sec. 10-303 to operate vending machines in state and municipal buildings to raise revenue for programs to assist the blind.¹ Under the law, if any such location wants vending machines, they must contact BESB and offer them the opportunity to operate the machines. If BESB fails to respond to the inquiry or declines the location, then the facility is free to make its own arrangements for vending machine services.

For many years, BESB ran the program using a variety of vendors, each of whom served a small geographic area. BESB had only a limited presence in school and town facilities as a result of only few towns realizing they were required to contact BESB, and BESB not aggressively pursuing locations.

By 1996, BESB had contracts with 70 vendors, operating 650 vending machines in 200 locations. Three-quarters of the machines were in state facilities. Only 17 municipalities had BESB machines.

In 1997, in an effort to increase revenue and improve oversight of contractor performance, BESB began to look at ways to increase the number of installed vending machines and reduce the number of vendors under contract. In 1998, BESB took the first formal steps toward making a change when it issued Request for Proposals (RFP) 9798-27, offering vendors the option of bidding to serve the entire state or one or more of five, large regions. As a result of issues raised during the RFP review process, including concerns about BESB's jurisdiction over a number of state agency locations, the contract process was suspended.

In 1999, BESB issued Request for Qualifications (RFQ) 9899-22 to determine which vendors would be eligible to bid on RFP 9899-23 for a single, statewide vending machine contract. Four venders were offered the opportunity to submit proposals; three did so. As a result of that process, on June 29, 1999, BESB signed a 10-year contract with Coca-Cola Bottling Company of New England. Under the agreement, Coca-Cola and its approved subcontractors have exclusive rights to supply food and beverage vending machines in state and municipal buildings where BESB operates such machines under C.G.S. Sec. 10-303.

As of June 2002, the BESB contract covered 1,376 vending machines in 469 locations. Only half were in state locations. Fifty-three municipalities had at least one machine in a town or school building.

Table B-1 summarizes the scope of each RFP/RFQ document. Table B-2 lists the companies that submitted responses to each RFP/RFQ. A detailed list of key dates leading up to and throughout the bidding process is presented immediately after the tables.

KEY DATES AND ACTIVITIES

March 31, 1977 - letter from attorney general responding to Department of Transportation (DOT) as to whether C.G.S. Sec. 10-303 prohibits leasing food or vending services on specified highways and at Bradley Airport to parties other than those represented by BESB says:

... Section 10-303 does not prohibit the leasing of any building or property owned, operated or leased by the State or any municipality therein for the purpose of operating a food services facility, a vending machine or a vending stand to parties other than those represented by the Board of Education and Services for the Blind. However, the opportunity for operating such a facility must be given in the first instance to the Board of Education and Services for the Blind. Only after renouncement of this statutory right may such a facility be offered to other qualified vendors.

1985, 1988, 1990, and 1992 - series of agreements between DOT and BESB to transfer revenue from turnpike and parkway vending machine operations to BESB

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July 23, 1987 - effective date of state regulations governing vending facilities in public buildings -- Sec. 10-303-2 (a) includes the following definitions:

(33) "Vending Facility" means automatic vending machines, cafeterias, snack bars, cart service, shelters, counters ... which may be operated by blind licensees and which is necessary for the sale of newspapers, periodicals, confections, tobacco products, foods, beverages and other articles or services dispensed automatically or manually and prepared on or off the premises ... and including the vending or exchange of chances for any lottery authorized by state law and conducted by an agency of the state.

(35) "Vending Machine" means a coin or currency operated machine which dispenses articles or services, except those machines operated by the United States postal service for the sale of postage stamps or other postal products and services located on postal service property.

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December 30, 1996 - memorandum from assistant attorney general notes sample vending machine RFP and resultant contract have been reviewed and "Since these contracts do not involve the payment of money by BESB, they need not have formal Attorney General's Office approval." -- did made a few suggestions regarding contract language

January 3, 1997 - memorandum from assistant attorneys general responding to whether BESB can operate food service facility in state or municipal building using commercial subcontractor says C.G.S. Sec. 10-303 draws a distinction between food service facilities and vending machines, "explicitly contemplates vending machines operating for the benefit of BESB programs will not always be state owned," and notes:

Thus the Federal statutes allow for commercial entities to operate vending machines only under contract, with the income accruing to benefit the blind. They do not contemplate commercial entities operating food services facilities with the income inuring to the benefit of the blind. In that Connecticut's statutory scheme is modeled on the Federal Act and designed to `dovetail' with its provisions ... BESB is similarly not authorized to `contract out' anything other than vending machine sites to commercial entities.

Regarding "activity funds" created under C.G.S. Sec. 4-52, the memo says

... where Section 10-303 applies, it controls over Sections 4-52 et seq. In other words, if BESB chooses not to exercise its option of offering food services or vending machines at a particular state educational, welfare or medical institution, then the site may be used for a canteen or vending machines to benefit an activity fund set up under Section 4-52.

late 1996 through 1997 - BESB sends written reminders to municipalities about provisions of C.G.S. Sec. 10-303 (and says BESB staff will contact them to discuss their needs) and writes to all state agency heads asking for list of state owned, operated, or leased property they operate from -- receive responses from a number of towns and state agencies

August 6, 1997 - BESB seeks opinion from attorney general on "legal options ... [BESB] has to force the municipalities and state and federal agencies into compliance with 10-303" -- no written response received

Spring 1997 - January 1998 - BESB staff work on proposal for statewide vending machine contract -- develop draft language, attempt to compile comprehensive list of vending machine locations statewide, and seek input from vendors on feasibility of concept (including representatives of Coca-Cola and Pepsi)

January 15, 1998 - BESB issues press release announcing intent to restructure way it contracts for vending machine services by consolidating hundreds of individual locations into five regions or single statewide approach

January 20, 1998 - memorandum from assistant attorneys general indicating "proposed statewide vending RFP" submitted to them by BESB "looks good" -- a few language additions are suggested

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January 30, 1998 - BESB issues RFP 9798-27 soliciting proposals to install, operate, and maintain vending equipment in 169 towns divided into five regions (covering from 14 to 43 towns); vendors had option of bidding on one, multiple, or all regions for 10-year contract (with renewal for additional five years if agreed upon by both parties)

February 12, 1998 - notice announcing availability of RFP 9798-27 printed in the Hartford Courant

February 18, 1998 - Addendum No. 1 to RFP 9798-27 issued -- added requirement bidders submit one original and 10 copies of their proposal

February 18, 1998 - 42 individuals (representing approximately 30 different companies) sign attendance sheet at mandatory Pre-Proposal Conference for vendors wishing to respond to RFP 9798-27 -- written summary of meeting indicates BESB intends to exercise cancellation clause in all existing vending contracts as it phases in new five-year or 10-year contract that will result from the RFP

February 24, 1998 - memo from BESB purchasing manager to "All Prospective Proposers" provides copy of questions and answers from pre-proposal conference -- memo also indicates that in response to requests at pre-proposal conference and written inquiries for more time to prepare bid proposals, deadline for bid submissions postponed to April 3, 1998

February 25, 1998 - memo from BESB purchasing manager to "All prospective Proposers" clarifying deadline for bid submissions is April 3, 1998

March 6, 1998 - original deadline to submit proposals for RFP 9798-27

March 1998 - five-person evaluation team selected to assist BESB purchasing manager reviews responses to RFP 9798-27 -- two BESB employees and one person each from Office of the State Comptroller, Division of Special Revenue, and Department of Correction serve on team

April 3, 1998 - revised deadline to submit proposals for RFP 9798-27; 10 responses received -- see Table B-2 for names of the companies

April 9, 1998 - memo from BESB purchasing manager to executive director of BESB describing process for "evaluation of the regional/statewide vending services proposal," which is expected to take 30 to 60 days: establish weights for evaluation factors; team members independently review proposals; develop questions for clarification and obtain answers; team members independently score all proposal submissions; team meets to discuss evaluations and adjust scores as necessary; review final scores and make award recommendation

April 13 - 15, 1998 - at request of BESB purchasing manager, evaluation team members submit recommendations for weights to assign to individual evaluation criteria

April 16, 1998 - memo from BESB purchasing manager to "Members of the Evaluation Team for Vending Services" proposing value to be given to each evaluation factor specified in the RFP: completeness of proposal response [5 points], management capability [15 points], financial capability [20 points]; installation, operation, and development [25 points]; commissions [30 points]; and use of Connecticut small businesses [5 points]

April 20, 1998 - evaluation team members receive copies of all proposals to individually review and rate

April 29, 1998 - deadline for evaluation team members to submit their initial evaluations of proposals to BESB purchasing manager

May 12, 1998 - evaluation team meets with BESB purchasing manager to discuss RFP responses, including any additional information needed from proposers

May 13, 1998 - BESB obtains TRW Business Profile for each of three companies ranked highest by evaluation team (i.e., All Seasons Services, Inc., Classic Foods Dining & Automated Services, and Coca-Cola Bottling Company of New England)

May 13, 1998 - BESB sends letter to Classic Foods asking them to comment on letter from Coca-Cola Bottling Company of New England regarding product availability, provide information about investment and product sources, and submit copy of their most recent audited financial statement

May 27, 1998 - BESB sends letters to All Seasons and Coca-Cola Bottling Company of New England asking each to provide copy of their most recent audited financial statement

May 27, 1998 - memo from BESB purchasing manager to evaluation team providing tabulation of scores of top three companies and average of individual ratings, noting "... it is clear that Classic Foods has the best overall score" and indicating he will draft letter of recommendation from team to BESB executive director unless anyone objects before the end of the following day

June 1, 1998 - internal BESB memo indicating review of credit and financial reports for top three vendors "did not provide any significant detrimental information that warrants removing any of them from consideration"

June 3, 1998 - memo from BESB purchasing manager to evaluation team members informing them financial review did not provide any "significant detrimental information that would warrant changing or adjusting any of the Evaluation Team's previous scoring of these venders" and attaching draft letter recommending Classic Foods be given contract for all regions of the state -- team members are to call immediately if they do not concur with recommendation

June 5, 1998 - memo from BESB purchasing manager to BESB executive director conveying June 3rd letter of recommendation (and noting one team member not available until following week to sign letter, but he concurred with recommendation)

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May/June 1998 - several state agencies contact Office of Policy and Management (OPM) to express concerns about how BESB statewide contract will affect existing vending machine arrangements at individual agency locations

June 18, 1998 - memo from deputy secretary of OPM, to "Heads of State Agencies" seeking information about the type and location of vending machines, annual gross sales and net revenue, commission rates, and uses of income from the machines

June 19, 1998 - letter sent from executive director of BESB to each of the companies that submitted proposals in response to RFP 9798-27 indicating:

Unfortunately, circumstances have developed precluding me from awarding the contract at this time. The Office of Policy and Management has indicated that the award will have a budgetary impact on other State agencies. This impact requires an analysis, the result of which may change the scope of the vending sites to be serviced.

June 26, 1998 - deadline for state agencies to submit vending machine data to OPM

August 18, 1998 - OPM staff complete summary of statewide survey of vending operations and find 10 agencies "at least partially non-compliant" -- staff recommends BESB:

• not be allowed to continue with statewide vending contract unless they agree to provide agencies with revenue comparable to current arrangements;
• not be allowed to expand vending presence in public schools;
• recognize legitimate interests of agencies serving students/patients/clients in setting vending prices below market;
• delay pursuit of increased DOT revenue until current agreement ends in 2003;
• be encouraged to come to agreement with units of higher education to increase BESB's presence in vending operations without significantly altering current revenue arrangements; and
• go through upcoming governor's budget process, if multi-year, capital program needed to upgrade vending operations.

September 4, 1998 - letter from deputy secretary of OPM to executive director of BESB says results of survey of vending operations in state facilities "raise a number of questions that need to be addressed before the signing of any statewide contract," directs BESB to begin process with agencies out of compliance with C.G.S. Sec. 10-303 that will culminate in the signing of a memorandum of understanding between each agency and BESB, and asks BESB to "suspend the process for the awarding of a statewide vending contract" -- BESB can continue pursuing interim arrangements for existing machines currently under their control

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December 15, 1998 - letter from executive director of BESB to commissioner of administrative services indicating BESB is

now positioned to change the way we do business. Drawing from the experience gained from the previous RFP issued, and clarification from OPM concerning revenue sharing with other state agencies, we are ready to seek a business partner in this endeavor. We have drafted a Request for Qualifications (RFQ) that will help identify those entities that have the marketing, management, financial strength, and more importantly, the experience in the operations management of a large vending business, to partner with BESB. Our goal is to generate revenue which will ensure operating funds for the program while maintaining a high quality of product for our vending machine customers.

Once the RFQ process is complete, selected vendors meeting the requirements will be requested to submit a Request for Proposal (RFP) that establishes the framework for negotiation toward a partnership agreement with BESB.

Because of our extensive experience with this type of procurement, BEP staff will be overseeing the entire process to ensure continuity through the RFP process.

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January 7, 1999 - BESB issues RFQ 9899-22 to identify vendors to enter into business partnership with BESB "to develop and expand BESB's statewide full line vending machine business, in addition to acquiring all of BESB's current vending machine business throughout the State of Connecticut," which included approximately 650 machines in over 200 locations; vendors determined to meet qualifications would be asked to submit RFP -- copies of RFQ distributed to at least 70 vendors

January 8, 1999 - Addendum No. 1 to RFQ 9899-22 issued -- extends deadline for submissions of qualifications by one week

January 25, 1999 - Addendum No. 2 to RFQ 9899-22 issued -- revises information vendors required to submit regarding their existing vending machine business (e.g., the original RFQ asked for specific location and sales data, while the addendum only requires summary data)

February 26, 1999 - original RFQ deadline

March 5, 1999 - revised deadline to submit proposals for RFQ 9899-22; eight submissions received -- see Table B-2 for names of the companies

mid-March 1999 - the four members of the RFQ evaluation team (all of whom work for BESB) receive copies of all proposals to individually review and rate using evaluation criteria specified in RFQ: vendor qualifications (number, type, and size, quality, scope of vending machine locations), financial condition/strength, past experience with large scale accounts, and organizational structure and credentials of key personnel; meet to discuss proposals; and recommend four vendors deemed qualified to receive vending machine RFP

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March 23, 1999 - BESB issues RFP 9899-23 requesting proposals for "a partner to operate and maintain State authorized vending machine business within the State of Connecticut" and encourages vendors to partner with Connecticut small businesses experienced in vending for five-year contract (renewable for additional five-year periods); BESB will negotiate the terms and conditions of the Personal Service Agreement (PSA) that will formalize the contract with the selected partner

BESB sends copy of RFP 9899-23 to four pre-qualified vendors: All Seasons Services, Inc. (Southbridge, MA), Canteen Corporation (Middletown, CT), Classic Foods (Greenfield, MA), and Coca-Cola Bottling Company of New England (East Hartford, CT)

April 9, 1999 - deadline to submit proposals for RFP 9899-23; three bids received -- see Table B-2 for names of the companies

mid-April 1999 - same four BESB employees who evaluated RFQ responses serve as evaluation team for RFP -- each proposal reviewed (initially by single evaluator, then by all team members) using five criteria specified in the RFP (though not the weights): commission percentages (payable to BESB) [38 points]; other financial incentives [5 points]; installation, operation and development of new business (as well as continued operation of current locations) [40 points]; financial condition [15 points]; and vendor's intention to partner with Connecticut small businesses [2 points]

April 15, 1999 - letter sent to Coca-Cola requesting additional information

April 18, 1999 - Coca-Cola submits response to April 15 letter

April 22, 1999 - separate e-mails from members of evaluation team ranking the proposals are sent to chair of team

April 26, 1999 - memo from fiscal administrative manager to executive director of BESB indicating evaluation team found only two vendors submitted proposals that "exceed the minimum requirement for consideration as a vending partner for BESB's BEP [Business Enterprise Program]," and they recommend BESB "commence negotiations with Coca-Cola Bottling Company of New England for a partnership agreement"

April 27, 1999 - letter from executive director of BESB to Coca-Cola Bottling Company of New England, offering that firm "the opportunity to form a partnership with us [BESB] for statewide vending services to our customers"

late April - early May 1999 - representatives of BESB and Coca-Cola Bottling Company of New England negotiate details of contract -- in consideration of lump sum payments of $100,000 at startup plus $100,000 in year six and other training and marketing considerations, initial contract length to be set at 10 years (i.e., original five-year period plus first five-year renewal) at startup

May 13, 1999 - letter from executive director of BESB to Coca-Cola Bottling Company of New England accepting their proposal "to be our vending service partner" and noting the use of All Seasons as a subcontractor won them "the highest marks"

June 26, 1999 - BESB signs PSA 99-541 with Coca-Cola covering 10-year period from July 1, 1999 through June 30, 2009; no other governmental authorities sign document

September 20, 1999 - letter from Coca-Cola Bottling Company of New England to executive director of BESB indicating the company "as contractor for vending services" with BESB "will successfully administer the contract across all state territories for the duration of the agreement"-- also notes that although company does not control franchised beverage rights for all of Connecticut, its relationships with bottling operations in other areas will allow the company to administer the BESB contract statewide using authorized subcontractors

¹ If a location contains a vending stand operated by a blind person, the revenue from all vending machines in the building also accrues to that person rather than BESB.