Digest

Board of Education and Services for the Blind Vending Machine Operations

INTRODUCTION

• The intent of the study was to determine whether state policies and procedures related to Board of Education and Services for the Blind (BESB) vending machine operations provide adequate accountability and promote the most efficient and effective use of the revenues generated.

BACKGROUND

• Under C.G.S. Sec. 10-303, BESB has the right of first refusal to operate vending facilities and vending machines in all state and municipal buildings, if the agency in charge of the location decides such services are desired.
• On June 29, 1999, after a multi-step process, BESB signed a 10-year contract with the Coca-Cola Bottling Company of New England giving the company and its approved subcontractors exclusive rights to supply food and beverage vending machines in buildings where BESB operates.
• Revenue BESB receives from vending machines in non-federal buildings is deposited in a nonlapsing fund, called the 361 Account.
• Administratively, BESB is located within the Department of Social Services (DSS) for administrative purposes only.

INTENT OF THE PROGRAM

FINDING

The legislative intent of C.G.S. Sec. 10-303, adopted in 1945 to provide employment opportunities for blind individuals, is no longer the primary focus of the BESB vending program.

• Money is used for fringe benefits and training for blind facility operators, entrepreneurial and independent living training, and equipment for blind or visually impaired children and blind adults. BESB allows schools to retain all vending revenue from their locations for student activity funds.

RECOMMENDATIONS

BESB's share of revenue from its vending machine program shall be used for the direct support of vending facility operators and the development of jobs for blind individuals.

As part of the budget process, BESB shall be required to report annually to the Appropriations Committee on the number and type of new jobs it created for blind individuals during the preceding year.

STATEWIDE CONTRACT PROCESS

FINDING

BESB used a publicly advertised process to select the contractor for its statewide food and beverage vending machine contract. However, BESB did not follow all of the procedures normally used by a state agency entering into a personal service agreement (PSA) because BESB believed contracts involving revenue to, rather than an expenditure by, the state did not require oversight by outside parties.

RECOMMENDATION

All of BESB's future contracting efforts related to vending machines shall be executed through the Department of Administrative Services (DAS). BESB shall not ask DAS to seek bids or proposals for any new or renewal products or services dispensed through vending machines until BESB has obtained approval from the Office of Policy and Management (OPM) in accordance with that agency's process for personal service agreements over one year in length.

CONTRACT MANAGEMENT

FINDING

BESB has failed to take the steps needed to ensure the statewide vending machine contract for food and beverages is operated uniformly and managed in accordance with all provisions of the contract.

• Policy implementation and oversight of the statewide vending machine contract has been random and inconsistent.
• Concerns about BESB's management of the vending machine program mirror issues previously raised about BESB's capabilities in other program areas.

RECOMMENDATIONS

By March 1, 2003, BESB shall take the steps needed to:

• establish a comprehensive automated accounting system for all vending machine revenue (including from the Department of Transportation, PSA 99-541, other contracts, and federal buildings) capable of producing timely reports on sales and revenue by source that can be matched against the numbers contained in the comptroller's periodic revenue reports;
• create a formal mechanism to obtain feedback from a rotating sample of machine locations regarding vendor compliance with contract provisions (e.g., machines being well-stocked and clean, prices correct, etc.);
• conduct periodic, random, unannounced visits to locations with machines to verify vendor compliance with contract provisions (e.g., stickers re BESB program on machines);
• prepare written evaluations of the contractor's overall performance at least annually and document any specific performance issues that require action on the part of the vendor or any subcontractor;
• meet with the contractor on a regular basis to discuss performance;
• prepare guidelines for BESB staff describing the steps to follow when contacting state agencies or local governments not covered by a specific vending machine contract (e.g., who to contact, how, and when); and
• formalize record keeping regarding the locations covered by all vending machine contracts, and at a minimum:

_ obtain written permits (i.e., signed letters of understanding) from the head of any state or local agency where a BESB vending machine is located;

_ issue written waivers for any location BESB chooses not to place machines within, unless the state statutes specifically exempt the location;

_ maintain an up-to-date inventory of vending machines by location and type of governmental agency (i.e., federal, state, town, or local school); and

_ maintain an up-to-date list of towns and state agencies not yet visited regarding their inclusion under the statewide contract.

If BESB fails to provide the program review committee with documented evidence by March 1, 2003, that BESB has taken the steps needed to implement all of the actions specified above, then BESB's "administrative purposes only" status within DSS shall be converted to that of a subdivision under the active control of the commissioner.

CONTRACT PARTICIPATION AND REVENUE ALLOCATION

FINDING

The parties benefiting from the statewide BESB vending machine contract for food and beverages vary, depending on whether a vending facility exists on-site, BESB has made contact with the administrator for the locale, and/or BESB has voluntarily waived revenue.

RECOMMENDATIONS

Participation in the BESB vending machine program by town governments and local schools shall be voluntary, except to the extent that such voluntary participation is limited by the existing BESB vending contract.

Revenue from towns and schools that voluntarily participate in any BESB vending machine contract shall accrue to the BESB 361 Account.

In state and municipal buildings with a vending facility operated by a blind person, revenue from all vending machines shall continue to accrue to that person for as long as he/she operates the facility, and to any subsequent operator who is blind.

The Department of Transportation shall continue to make payments to BESB under the terms of its memorandum of understanding in order to compensate BESB for not operating on-site vending facilities at highway rest areas.

State higher education institutions and state regional vocational-technical schools shall be allowed to continue making independent vending machine arrangements for the benefit of their students.

In all other state locations, revenue from vending machines shall be deposited in BEBS's 361 Account for the support of vending facility operators and other employment-related programs for blind adults.

REVENUE CAP

FINDING

BESB has been unable to document a clear spending plan for the revenue it receives from vending machine operations.

RECOMMENDATION

BESB shall not be allowed to carry forward more than $750,000 at the end of any given fiscal year. Any amount in excess of that level shall be deposited in the state's General Fund to be disbursed within the normal appropriation process.

PROGRAM REGULATIONS

FINDING

Existing regulations used to guide operation of the statewide vending machine contract are out-of-date and not applicable to the existing situation.

RECOMMENDATION

BESB shall update its vending facilities regulations and adopt additional provisions specific to the operation and management of independent vending machine contracts.

PRODUCT SALES IN STATE BUILDINGS

FINDING

The state has no written guidelines regarding the types of products and services appropriate to offer for sale within state-owned or leased space.

RECOMMENDATION

The Department of Public Works should establish guidelines regarding the types of products and services that can be offered for sale within state-owned and leased space and who is authorized to make such sales.