In 2001, the U.S. Marine Corps signed a contract worth almost $1 billion with the international food service company, Sodexo (SDX), to operate mess halls at 55 U.S. bases. That contract is now up for renewal.
Sodexo's operations have been good enough to win awards from the Marines. Just this last week the central mess facility at Marine Corps Base Parris Island, SC won the 2010 W.P.T. Hill Memorial Award for best mess service. Sodexo provides the food at the facility.
On the same day, Congresswomen Loretta Sanchez (D-CA), demanded an investigation and audit of the contract. She has two concerns: First, that Sodexo did not provide better, cheaper service; and second, that a central facility in Tennessee that prepared and froze food for Sodexo suffered from contamination that led to contaminated chicken being sent from it to two Marine bases. Sodexo stopped using the facility to support the Marine contract.
So Sodexo is being given awards for service while also possibly being investigated by the General Accounting Office.
It is perhaps not coincidental that Sodexo is involved in a fight with the Service Employees International Union (SEIU) over representation of their workers. Part of this might be playing a role in the dispute with Sanchez; the SEIU distributed her press release announcing her call for investigation widely.
Sodexo's stock is already dropping on word of the investigation.
Many companies complain about the difficulties of government contracting. The rules are too complex, there are too many ways to get tripped up and it does not pay well. But government, whether federal, state or local, is also a huge market. At a time when the private-sector economy is fragile, government business looks all the more appealing.
Business has to be concerned that a fairly straightforward contract is now a matter of Congressional inquiry. And surely the Marines are capable of evaluating its suppliers -- and are best placed to know whether Sodexo's food is pleasing to the troops.
It's hard not to conclude that Sodexo's problem has nothing to do with performance, but is a nasty labor dispute that has caught some high-profile attention.
No wonder companies avoid government work.