Evaluation of Cost Plus Fixed Fee Procurement Methods in Indiana Schools

Abstract

The purpose of this study was to evaluate the efficiency and effectiveness of the new Cost Plus Fixed Fee Procurement System (Cost Plus System) used in buying food and related products in school foodservice programs in Indiana. The evaluation compared the new system relative to the traditional bid system in selected school corporations (districts) in the central part of the state during August-December 1988. The Cost Plus System consists of year-long bids which separate product prices from a fee for providing the wholesaling function. The product prices may change during the period of the contract, but the service fee must remain fixed, on a percase basis. The Cost Plus System was new to Indiana in 1987 but has been used extensively in some other states, mainly in the southeast region. The Cost Plus System had not previously been quantitatively evaluated. Criteria for the evaluation included comparison between the test and control sites of (1) prices paid, (2) administrative effort expended, and (3) quality ofproducts and service provided. Findings were as follows: prices paid under the Cost Plus System averaged lower than under the Bid System, administrative effort was reduced, the level of service was judged somewhat better, and the quality ofproducts received was higher than in the controlgroup.