US Foods Inc. has agreed to repay $330,000 to 67 public institutions — including the New York State Museum and state Senate — after the company failed to pass on cost savings it received from manufacturers.
State Attorney General Eric Schneiderman announced the settlement Wednesday, following an investigation into the Illinois-based distributor by his Taxpayer Protection Bureau. The probe found US Foods failed to disclose the cost-saving discounts it received when it meets certain sales goals.
Under the terms of its contract with the state Office of General Services, US Foods was required to disclose these discounts and then pass them onto the institutions making the purchases.
“Financial transparency and accountability are requirements when doing business with the state of New York and my office is here to ensure that contractors are playing by the rules,” Schneiderman said in a news release. “Rules that require the full disclosure of discounts are meant to pass savings on to local and state government agencies and institutions that benefit from these contracts.”
Of the total settlement, the institutions are slated to receive $200,000. The remaining $130,000 will cover the cost of the investigation, according to Schneiderman.
Proceeds from the settlement with US Foods will be distributed to the 67 institutions that purchased food products based on their level of purchases, and will reimburse them for the discounts they did not receive.
Locally, the Hamilton-Fulton-Montgomery BOCES and the Capital Region BOCES’ Albany campus are each set to receive $15,353. Three camps run by the state Department of Environmental Conservation, including DeBruce, Colby and Pack Forest, will receive about $3,000 each.
The state Senate will receive $1,228, the O.D. Heck Developmental Center in Niskayuna will get $3,071 and the State Museum will receive $205.
The US Foods settlement isn’t nearly as large as others in recent years. Last year, the state recovered $18 million from Compass USA, Inc and in 2010, it reached a $20 million settlement with Sodexo Inc.
US Foods is being acquired by the Houston-based Sysco Foods for $3.5 billion. Including stock and debt acquisition, the total value of the deal is valued at $8.2 billion.
The acquisition isn’t expected to close until the third quarter of 2014. It’s unclear how it will affect the local workforce, since Sysco already operates a massive distribution center in Halfmoon, only a short distance from the US Foods facility in Clifton Park.