- Report Published -
|Task Force Study on the Food Delivery System for the Prisons and Mental Health Hospitals in Virginia|
|Department of Mental Health; Mental Retardation and Substance Abuse Services; Department of Corrections; Department of General Services; Commonwealth Competition Council|
|HJR 709 (Regular Session, 1999)|
|This report represents the first legislative directed study of the food delivery system for prisons and mental health hospitals covering the entire process from food and food related procurement to delivery of products to the end user.|
A previous study was completed in 1998 by the COMPETE CENTER of the College of William and Mary under contract with the Department of Planning and Budget. The study recommended a more thorough analysis of the current food delivery system.
To accomplish its mission, the task force studied both internal and external sources that play a major role in the food delivery system for prisons and mental health hospitals.
In order to first determine the financial extent of the food delivery system, the task force examined the direct cost of the volume of food and food related products. As detailed in the body of this report, the Commonwealth had expenditures of $60.2 million in Fiscal Year 1999 in food and food related products. Of this amount, $38.8 million was the combined expenditure for prisons and mental health hospitals from all sources - The Virginia Distribution Center, Corrections agribusiness enterprises, and direct purchases from private vendors. These costs do not include the costs of any contracted privately-operated food operations or the food cost of the Department of Health's Nutrition Program for Women, Infants and Children (WIC).
In addition to the direct costs, there are significant indirect/overhead costs associated with the present food delivery system. These indirect/overhead costs occur in the form of multiple procurement systems, an excessive amount of procurement activity (372 food vendors), administrative/management overhead, food warehouse and storage space (approximately 387,000 square feet, including the new 128,000 square foot Virginia Distribution Center), staff associated with all warehouse operations (approximately 127 full-time equivalents), and food and food related inventory in the warehouses and facilities ($10,043,364 on June 30, 1999).
There is also opportunity costs associated with the present system by not maximizing volume food purchasing and by not taking advantage of "opportunity buys" offered by vendors. Due to the extent of all these related costs and factors, the task force did not attempt to determine their precise costs, but they do play a significant role in the total cost of the food delivery system.
An examination of all these components was necessary to fulfill the major requirements of House Joint Resolution No. 709 which mandated:
• A holistic study of the food delivery system for prisons and mental health hospitals:
• An examination of alternatives to increase efficiency: competition, and methods to lower the cost to the Commonwealth's taxpayers;
• Promotion of private sector involvement in setting up a competitive framework to determine the most efficient method of providing goods and services;
• Support for maximum inmate assignments within the Department of Corrections.
Related to these components, the chief patron of the Resolution charged the task force to seek methods to maximize the state's leveraged buying power to obtain volume food pricing, and to examine the facilities warehousing footprint to evaluate if private sector practices can reduce the cost of food deliveries.
In order to satisfy all these challenges, the task force conducted publicly advertised meetings across the Commonwealth in Harrisonburg, Portsmouth, Roanoke, and Richmond, At these meetings the task force invited officials from the federal Defense Logistics Agency, the Virginia Distribution Center, the Virginia Department of Agriculture and Consumer Services, and Virginia Polytechnic Institute and State University to discuss and present their respective food delivery systems. Private sector Prime Vendor food distributors were also invited to present their capability in serving the Commonwealth's food delivery system needs. The KPMG Consulting Group made a presentation on "best practices'' and supply chain management. The task force also heard presentations on "cook-chill" technology, and from the Department of Corrections staff and a Virginia Distribution Center supplier.
Information from presentations is discussed in the body of this report and summaries of the presentation briefs are included in the appendices.
The task force also collected significant and informative data on Virginia food and food related procurement and sources of supply. Surveys were sent to all the states requesting data on their respective food delivery systems for prisons. Surveys were also sent to the Commonwealth's prisons and mental health hospitals.
The task force toured the Virginia Distribution Center warehouse and the Richfood food distribution center, the largest center in the Richmond area.