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Many states have passed strict healthy choice legislation regarding availability of vended carbonated beverages to students. These laws have had a positive effect to promote healthy choices for students. But the negative consequences have been dramatic to the revenue once generated for schools from vended beverage sales.

Our school district has seen a 60 percent decline in upfront sponsorship/incentive money offered by beverage companies since our last contract awarded in 2006. Our schools relied on this revenue for extracurricular activities and have had to adjust to the decrease in funds. In our case, money from the general fund was distributed to schools to help wean them off the beverage vending funds. In our recent RFP, we included strategies that may help to offset the revenue decline. While sipping on my favorite carbonated beverage, I thought I would share:

• Sales volume guarantees. During the heyday of beverage vending contracts with school districts, product sales volume guarantees (by the school district) were prevalent and resulted in some big-dollar revenue from the vendor. However, with all the healthy legislation already passed and more possibly to come, it's time to shift the risk back to the vendor. So, we recommend no sales volume guarantees in your RFP.

• Sponsorship or incentive revenue. Even though we recommend a shift away from guarantees above, it does not mean a school district should stop asking for annual lump-sum sponsorship or incentive revenues. There are most certainly local conditions that affect the dollar amount vendors can offer, but they still seem willing to put money on the table. The only drawback is that most vendors will want a long-term agreement to justify the investment.

• Uniform vend price. A uniform and constant (over the contract term) vend price will allow vendors to forecast sales and formulate competitive commission rates in their proposals. It also allows for the school district to better manage changeouts of machines and to do away with pricing inequities that may have existed in the past.

• Allow sales of carbonated beverages to adults. In general, the rules passed by states are for availability of beverage vending to students and not adults. An argument could be made that adults should be abiding by the same rules and setting an example for their students, but this would be hard to enforce in our opinion. The compromise we made is that 50 percent of the slots in machines available to adults (teacher's lounge and administrative areas) will be filled with healthy choices.

• Incorporate concession sales and ask for rebates. Concessions for after-hour school activities are usually for athletic events and are handled by volunteer groups from the school. Normally these groups would buy beverage products from the nearest grocer. We enlisted the help of our athletic director to persuade these groups to purchase their beverage supplies using the district-wide beverage vend contract. We also asked the vendor for rebates on these sales; once received, these funds could be given back to the schools and the athletic department. This gave us some control over what was being sold at concessions in order to meet the rules plus allowed for shared compensation back to the schools and athletic department.

• Have vending company pay for electrical and security upgrades. Any electrical or security improvements needed in order to place and safely operate the vend machines were the responsibility of the vendor.

As procurement professionals, we always need to adapt to changing rules and formulate new and creative ways to better serve our customers, in our case our students. So, while we are taking away their favorite soda pop on one hand, we hope to help our schools provide for them in other ways by maximizing the revenue potential from these types of contracts.

About the author

Darral Paradis, CPPB, C.P.M., is director of Procurement and Materials Management of the Little Rock School District, Ark.