University of Virginia Library

ATTACHMENT B = UNIVERSITY
HOSPITAL CONTRACT WITH
ARA SERVICES
DESCRIPTION OF PROPOSED CONTRACT BETWEEN
THE RECTOR AND VISITORS OF THE UNIVERSITY OF VIRGINIA
AND
ARA SERVICES

BACKGROUND

For several years, the University of Virginia Hospital has had a dual food service operation in confined contiguous areas. The University Food Service operated the cafeteria with support from their food center on Ivy Road and less than adequate support and production space on-site. The Hospital operated the patient food production and distribution from the main kitchen. The Replacement Hospital is scheduled to come on line with a large modern cafeteria and new methods of patient food production and distribution. These anticipated changes brought on by the Replacement Hospital along with the inefficiencies of our current setup, as well as complaints with quality and service from our cafeteria, generated a management decision to unify food production, distribution, cafeteria and catering services into a contractually provided service.

A Request for Proposal was developed and targeted at nationally recognized companies with experience in serving major teaching hospitals preferably with resources and experience in opening and operating new facilities within our current planning and budget forecasts. The University Hospital was successful in attracting the interests of seven companies that met its requirements, of which three competitive proposals were received. Negotiations with these three vendors were accomplished, and ARA was selected.

CONVERSION TO CONTRACT SERVICE

The negotiated contract provides for the protection of the Hospital's current employees as long as they provide satisfactory service. Upon attrition and to meet current vacancies created by the withdrawal of University Food Service, ARA will staff with ARA employees.

The cafeteria will operate 24 hours/day, 7 days/week with a full service menu for our off-hour employees. ARA will buy through ARA or State of Virginia resources, whichever is in the best interests of the Hospital.

The Hospital will control the menu offerings, quality, prices charged in the cafeteria and the performance of ARA employees.

PRICE

ARA has accepted this for a management contract fee of $52,000 per year and costs. The costs (including the management fee) are constrained to the established budget for the year. As an incentive to improve efficiencies and performance, a bonus plan is included. Should ARA come in under the budget, the savings will be shared 10% for ARA and 90% for the Hospital. Should they be able to increase volume in the cafeteria, the increase would also be shared in like manner.

Because of technicalities of maximizing the benefits of ARA purchasing outside the State purchasing constraints and to not have ARA considered as "agents" of the Hospital, the total dollar volume of the contract may be as much as $3,000,000/year, related to patient volume. However, the specific value to ARA will be considerably less, more in the range of $150,000, related to the management fee and the bonuses from increased volumes and savings.

APPROVAL

The University requests Board of Visitors approval to contract with ARA subject to the review and approval of contract documents by the Legal Adviser's Office and University Management.