University of Iowa Hospital's previous food contract ruled secret

New deal with Sysco signed in July to save money, regents say

University of Iowa Health Care complex, which houses University of Iowa Hospitals and Clinics, is seen in this photo taken on Friday, April 18, 2014, in Iowa City, Iowa. (Justin Wan/The Gazette)

IOWA CITY — The Iowa Court of Appeals reversed a Johnson County District Court decision that would have required the University of Iowa Hospitals and Clinics to make public a long-standing contract with food vendor Sysco.

Details of a new five-year deal were released to The Gazette this week. The Iowa Board of Regents has said the new contract saves the university money. That statement can’t be verified because the previous contract is under seal.

The 14-page Appeals Court ruling issued Wednesday said Sysco Iowa Inc., of Ankeny, had proved the contract to sell food to the Iowa City-based hospital from 2008 to 2015 included trade secrets, which are protected from public disclosure.

“The relevant portions of the contract would, if disclosed, effectively provide competitors with a blueprint of Sysco’s operating model not otherwise available to them,” the ruling states.

“Among other things, competitors would know precisely how Sysco defines cost for pricing purposes, precisely what margins it is both willing and able to operate on and what special discounts it provides.”

The Gazette had requested the Sysco contract in 2014. The university agreed to provide it, but Sysco filed for an injunction to stop the release.

After a hearing April 13, 2015, Sixth Judicial District Judge Chad Kepros ruled the contract did not qualify for trade secrets exemption from Iowa’s Open Records law. Sysco appealed, leading to this week’s decision.

Meanwhile, the Regents recently provided The Gazette a copy of UIHC’s new contract with Sysco, a five-year deal signed July 29.

The contract, which is 20 pages, requires the hospital to spend at least 70 percent of its food budget with Sysco in exchange for Sysco providing food distribution at a margin of 4 percent above cost.

The regents did not immediately respond to The Gazette’s question of whether all parts of the new contract had been provided.

Iowa’s public universities and the UIHC this summer signed new joint purchasing contracts for food distribution services following a recommendation from the Regents’ recent efficiency review.

The institutions previously held separate food vendor contracts, but a consultant hired in 2014 suggested they renegotiate joint agreements for office supplies, furniture and food “to leverage spending across all three institutions and improve pricing.”

The new contracts are expected to result in savings of more than $600,000 a year, board spokesman Josh Lehman said. This could not be verified because the previous contracts were kept secret.

An original timeline had the universities collaborating on a prime food vendor contract as soon as fall 2014. That was pushed to fall 2015.

As both those dates passed, the Board of Regents grew increasingly eager to start accruing savings, and Regents President Bruce Rastetter in February said he wouldn’t support any future meal-plan cost increases for students until the universities made progress on the collaborative dining services purchasing agreements.

The universities signed a new joint purchasing agreement with Martin Bros. Distributing Supplier on June 22. UIHC has a separate deal with Sysco, Lehman said, because “Sysco provided greater savings and met more of UIHC’s specific requirements.”