Vending-2012-RFP.pdf

Office of Chief Financial Officer Office of Contracting and Personal Property Management

April 17, 2012

Dear Prospective Offeror:

The Smithsonian Institution (“Smithsonian’) hereby invites you to submit a proposal for the attached solicitation (#R11SOL0040) for the management and operation of vending machines located in museums and specified employee workplaces. The Smithsonian is seeking a contractor to provide high quality, reasonably priced food products that are nutritiously balanced and include high quality, healthy alternatives as well as traditional snack foods, and non-alcoholic beverages in contractor owned vending machines.

Offerors are invited to acknowledge receipt of this solicitation via e-mail and advise of its intent to submit an offer. Failure to do so will not disqualify Offerors. Proposals must be received by 5:00P.M., Washington, DC local time on May, 17, 2012. They must be hand delivered or submitted via commercial carrier in the form of: (i) one original hard copy; (ii) 5 copies; and (iii) one copy in pdf format on CD-Rom or thumb drive to:

Attention: Contracting Officer Smithsonian Institution Attn: Chris Crane 2011 Crystal Drive, Suite 350 Arlington, VA 22202

Your proposal, as well as others, will be carefully reviewed by representatives of the Smithsonian.

NOTE: THIS IS NOT A SOLICITATION FOR A FEDERAL CONTRACT AND IS THEREFORE NOT

GOVERNED BY FEDERAL PROCUREMENT PROCEDURES.

If any additional information concerning this project is required, please contact Chris Crane at 202-633-7290.

Sincerely, Dorothy A. Leffler Contracting Officer

April 17, 2012

SMITHSONIAN INSTITUTION

Request for Proposal No. R11SOL0040

For the Operation of Selected Vending Services

1. ADMINISTRATIVE INFORMATION.

A. Introduction. The Smithsonian Institution (“Smithsonian”)’s Smithsonian Enterprises (“SE”) is seeking proposals (“Proposal(s)”) from qualified vending operators for the professional, high quality management and operation of vending machines located in museums and specified employee workplaces throughout the Smithsonian. A list of locations and current machines which describe the present operation, location and the respective vending products available can be found in Appendix A. Appendix B describes the locations and the approximate employee counts by location. Final selection of vending products shall be approved by the Smithsonian. The Proposed Vending Agreement is attached as Appendix C. Each of the above-referenced appendices is hereby made a part of this Request for Proposal (“RFP”).

Offerors are invited to review these appendices and may use the information they contain in preparing the proposals as further described in Section 3, Proposal Preparation Instructions contained herein.

The purpose of this Request for Proposal is to provide all interested Offerors with sufficient information to enable them to prepare and submit offers for consideration by the Smithsonian. All proposals should reflect the Offeror's willingness and capability to provide professional, high quality vending services to the Smithsonian at a reasonable price.

This request does not commit the Smithsonian to pay any proposal preparation costs, nor does it obligate the Smithsonian to procure or contract for any services or supplies, and it shall not be construed as authorization to proceed or to be reimbursed for any of the work specified herein.

Interested Offerors should note that THIS IS NOT A SOLICITATION FOR A FEDERAL CONTRACT and is therefore not governed by federal procurement procedures.

B. Inquiries. Inquiries concerning this RFP should be emailed to:

Attention: Chris Crane Smithsonian Institution

E-mail: cranec@si.edu

Significant questions pertaining to the solicitation must be submitted in writing and will be entertained through May 1, 2012. All questions having an impact on the solicitation will be answered and issued to all vendors in the form of an amendment to the RFP.

C. Type of Contract. The Smithsonian is seeking a vending concession agreement which provides for a concession fee payable to Smithsonian based upon gross revenues derived from vending operations at the specified Smithsonian locations. Rounded gross revenue for fiscal year 2010 was $512,000. Offerors should state in their offers the amount of the concession fee they propose to pay to Smithsonian, which shall be no less than thirty-one (31%) percent of gross receipts (i.e., all incoming receipts from all vending operations).

D. Contract Term. The initial contract term shall be for two (2) years from the date of award. There shall be two (2), two (2) year options to extend the term of the contract, each at Smithsonian’s sole discretion. The initial term is anticipated to begin on or about August, 2012.

The initial contract term plus options shall not exceed six (6) years.

E. Submission of Proposals. The Smithsonian is seeking a written proposal document (“Proposal”) which addresses all of the areas set forth herein. Proposals shall be limited to 30 pages, exclusive of attachments and appendices. Proposals must be received by the Smithsonian’s Office of Contracting by 5:00P.M., Washington, DC local time on May 17, 2012. Offerors must submit the RFP in the following format: one (1) original hard copy; (ii) 5 hard copies; and (iii) one .pdf format on CD-Rom or thumb drive. Said Proposal shall address the elements set forth in Section 3.

All Proposals must be addressed to Contracting Officer, and submitted to the following address:

Commercial Carrier/Hand Carry United States Postal Service Smithsonian Institution Smithsonian Institution Office of Contracting & PPM Office of Contracting & PPM Attn: Chris Crane Attn: Chris Crane 2011 Crystal Drive, Suite 350 P.O. Box 37012, MRC 1200 Arlington, VA 22202-3709 Washington, DC 20013-7012

The Smithsonian reserves the right to reject any and all Proposals received by this request, that arrive after the due date and time. Notice is also given that the Smithsonian retains the right to cancel this RFP at anytime for any reason. Offerors shall confine said Proposal to thirty (30) pages, exclusive of attachments and appendices. In addition, unnecessarily elaborate brochures or other presentations beyond those sufficient to present a complete and effective response to this solicitation are not desired and may be construed as an indication of the Offeror’s lack of cost consciousness. Elaborate art work, expensive paper and bindings, and/or expensive visual and other presentation aids are neither necessary nor desired.

F. Rejection of Proposals. The Smithsonian reserves the right to reject any and all proposals received in response to this request. In addition, non-compliance with the conditions of this RFP may result in disqualification of the nonconforming proposal.

G. Disposition of Proposals. All information, materials, and Proposals mailto:the� submitted in response to this RFP shall become the property of the Smithsonian and shall not be returned. Please clearly identify any and all information that falls under private business information category.

H. Presentations of Proposals. At the Smithsonian’s option, the Smithsonian may decide to have Offerors make in-person or over-the-phone presentations of their Proposal. Said presentations shall be held for either all Offerors submitting a Proposal, or only those Offerors which the evaluation committee has determined to be in the competitive range or on the “short list”. Similarly, the Smithsonian as part of the evaluation process reserves the right to visit Offeror’s commissary to view Offeror’s proposed operations. The Smithsonian shall notify Offerors if it decides to conduct such presentations and/or visits, and shall coordinate specific dates for such with the Offerors. Similarly, the Smithsonian reserves the right to make an award without presentations or discussions, so Offerors are requested to submit their Proposal on the most favorable terms it can submit.

I. Tour of Vending Locations: Offeror’s who are interested in touring select facilities prior to submitting a proposal are invited to e-mail Chris Crane at cranec@si.edu with requests for a tour no later than April 23, 2012. A tour is tentatively scheduled for April 26, 2012. The Smithsonian shall decide whether or not such a tour will be given and at which locations.

Participation in such a tour is not mandatory.

J. Change in Vending Locations. The Smithsonian reserves the right to change the location of vending machine operations, and to add to or reduce the number of locations as circumstances may warrant to meet market conditions and/or to improve vending service(s). To the extent possible, Smithsonian shall seek an orderly development of such changes to minimize disruption to contractor’s operations.

K. Nonexclusive Agreement. Offerors should understand that the obligations of the vending agreement are non-exclusive. The Smithsonian may contract with any other individual or entity to establish and/or manage vending machines or a food service facility of any kind at any of the Smithsonian museums or other locations.

2. VENDING SERVICES REQUIREMENTS. The successful Offeror will be required to manage and operate the vending service in accordance with the policies, standards, and procedures of Smithsonian.

A successful Offeror shall be required to provide the following:

A. High-quality, reliable vending service at an affordable price that offers customers high-quality, fresh food and products, with high brand recognition (whenever appropriate), B. value in pricing product and product variety responsive to customer tastes;

mailto:cranec@si.edu�

C. high-quality, “eco-friendly” energy-efficient (e.g. (low wattage, etc.), modern and attractive vending machines, and at no rental or purchase fee to the Smithsonian;

D. high-quality, fully accessible vending machines that are technically enabled to accept credit cards, provide monitoring of item level service data, forecast the need for additional products, and provide real-time feedback of the machine’s need for repair, maintenance, and/or service.

E. High-quality, fully accessible vending machines, all in a new or like-new condition with bill validators that recognize $1 coins as well as $1 and $5 bills entering with head-face up and facing both left and/or right, and including services and supplies furnished by Contractor such as:

(1) All vending items, including food, condiments and paper products;

(2) Cleaning supplies;

(3) Equipment, including change/coin machines and microwaves, as needed, maintenance and purchases; and

(4) Insurance.

F. commissary capability for production of high quality, freshly prepared products;

G. ongoing service, including maintenance, sanitation, etc. at Offeror’s expense for the following: vending machines, associated equipment, microwave ovens, and vending area condiment stations;

H. 24-hour repair service provided 364 days a year, with a minimum of four (4) hours response time, and a prompt refund policy convenient for customers;

I. a competitive concessions fee to Smithsonian (minimum of 31% to be considered by Smithsonian);

J. all price, portion and product changes throughout the term of the Agreement to be subject to Smithsonian’s prior written approval;

K. a consumer driven management philosophy including, periodic customer surveys;

L. a proven corporate history and success in vending accounts that are high volume (minimum of $300,000.00 per year);

M. PCI-compliance for use of credit card readers for vending machines;

N. capability to merchandise within the vending machines the Smithsonian’s own branded bottled water and other such Smithsonian branded items where appropriate, and at a negotiated rate between the Smithsonian and the successful Offeror; and

3. RFP PROPOSAL PREPARATION INSTRUCTIONS. Interested and qualified Offers should submit a Proposal demonstrating a clear understanding of the issues and requirements associated with the vending operation. Proposals shall be limited to 30 pages, exclusive of Appendices and attachments. The Proposal should specifically include the following:

A. Commission Statements, Pricing and Reports. In this section, Offeror is asked to describe the financial plan of the operation, to include:

(1) a pro forma that describes a two (2) year base term and 2 additional 2 year option, year outlook, including concessions fee statements and detailing costs, investments, projected sales and profits at each location;

(2) a description of the reporting system to monitor the financial plan, including at least monthly commission statements by location and machine. All reports should conform to the SE’s”4-4-5” accounting periods, which shall mean one of twelve intervals corresponding to the corresponding to the SE’s “4-4-5 week” accounting periods in which each quarter of the fiscal year is divided into three monthly periods as follows: four weeks in the first “month” of the quarter; four weeks in the second “month” of the quarter; and five weeks in the third “month” of the quarter (except for the last fiscal month, which always runs to the end of the fiscal year, regardless of the number of weeks).

(3) a statement of projected price changes throughout the term of the anticipated Agreement, with supportive economic forecasts and raw data; include a current market basket and average price increases for past 3-5 years on other comparable contracts; and

(4) a description of the process for Offeror’s monthly wire payment of the concession fee.

B. Product Quality, Variety and Freshness. This section should address the

Offeror’s capability and methodology for providing superior vending item(s)/products (“products”) for Smithsonian employees and/or other purchasers (collectively “customers”):

(1) Describe the fresh food distribution system from commissary to vending machine through purchase or discarding item(s), including frequency of service, ingredient specifications, shelf life, date coding policy and treatment of expired products.

(2) Describe the corporate standards for quality control and the frequency of inspection and replacements for products. Please include a corporate inspection schedule, if applicable.

(3) Describe what products, if any, used in vending machines are particularly identified with or considered a specialty of Offeror’s company. Please include national brand names where applicable, and address whether (and how) any third-parties (such as Coke) would be required to stock their products in the vending machines directly.

(4) Provide sample lists of the products that would be contained in each type of vending machine in each location, including in all cases the selling price and, whenever possible, the specific brand names that will be used. Include an appendix that contains a complete price and portion book to include portion size, brand name, food costs, and selling prices to be implemented at each facility.

(5) Describe in detail the methodology used to determine what food and beverage products will be available within the vending machines at the Smithsonian.

(6) Confirm willingness to stock Smithsonian-branded water and other Smithsonian-branded products within the vending machines.

(7) Confirm willingness to stock products in adherence with a Smithsonian exclusive sponsorship deal, (currently only Coke beverage products have an exclusive deal).

(8) Confirm willingness to provide Smithsonian with sample products for tasting upon request.

C. Equipment Quality & Capability. This section should address the proposed equipment to be used for the Smithsonian account that will also result superior vending experiences for Smithsonian customers including:

(1) Describe all features on the equipment to be utilized on the Smithsonian account (e.g. coin and bill readers, ADA compliance features, change dispensers, etc.)

(2) Describe the ability to utilize credit/debit cards for purchase transactions, and a description of how credit and/or debit card transactions would be processed.

(3) PCI or other comparable compliance for secured use of such credit and debit cards.

(4) Describe the “eco-friendly” energy efficiencies of the proposed equipment to be used on the Smithsonian account.

(5) Describe the technological capabilities in the proposed machines that will monitor and report item level service data (e.g. need for re-filling items, and forecast the need to additional products) and the need for repair/maintenance/service. Address how the Smithsonian may also be able to access this information.

(6) Describe any other technological features that would enable customers to provide interactive feedback regarding their vending experiences. Address how the Smithsonian may also be able to access this information.

(7) Describe Offeror’s maintenance and repair procedures and schedules for the vending machines. Please address the response time in conducting repairs, maintenance based on when feedback is received.

(8) Describe Offeror’s re-stocking procedures for the vending machines, and address the response time in re-stocking based on when feedback is received.

(9) Confirm compliance with NEC Code 422.51 Cord-and-Plug Connected

Vending Machines, (page 577 of 2011 Hanbook).

D. Operations Plans. In this section, Offeror should describe a comprehensive operations plan to include:

(1) detailed investment plans for duration of contract. Include plans and time frames for replacement and/or purchase of existing machines;

(2) service policy and plans for weekday, weekends, and holidays (no less than six (6) days per week), as well as for crisis situations, such as severe weather and government furloughs;

(3) detailed, step-by-step explanation of procedures to address an alleged, food-borne outbreak of illness or disease;

(4) detailed description of the maintenance, cleaning, and sanitation practices that will be applied to this account, including but not limited to the sanitation practices for surrounding floor area, internal and external areas of the vending machines, condiment stations, and microwave, as well as the integrated pest management system to be used on this account. Manuals may be included as appendices, however, a summary statement demonstrating a strong corporate commitment in addition to expected outcomes is required; and

(5) detailed explanation of customer refund policies and procedures;

(6) marketing plans, including methods for collecting and utilizing customer feedback and programs (promotions, additional machine locations and types of products offered) that your organization will implement, both during the initial set-up and throughout the term of the Agreement, to increase the sales of products through the vending machines;

(7) insurance, including product liability and personal injury;

(8) compliance with statutes involving accessibility for people with disabilities, including but not limited to the Americans with Disabilities Act (“ADA”), for customers and staff. Describe how your organization’s vending machines, microwaves, and condiment stations are fully accessible to people with disabilities by, among other things, reach range, controls, viewing range, and legibility of information;

(9) Recommendation(s) of ways to increase vending revenues to Smithsonian, including any other arrangements, contractual or otherwise whether or not mentioned in this RFP.

E. Corporate Information and Experience. In this section, Offeror shall include, in descriptive summary form the following information:

(1) List the location of corporate headquarters and all corporate regional office(s). Provide a brief history of the company;

(2) Describe the corporate structure and priority of the vending operation.

Include a description of all categories of business in which your organization is involved including vending and all other types of business, as well as the percentage of total corporate sales and profits for years 2007-2010 which are derived from the food service business(es) and from vending. List all vending accounts that exceed three hundred thousand dollars ($300,000.00) in sales per year;

(3) Identify all geographic areas where your company services vending.

(4) Describe the process of how your local vending management would work with Smithsonian representatives for all aspects of the business. Include an experience profile of local corporate liaison.

(5) List gross sales and profits during 2007-2010, as well as financial statements for the last three years. Include audited annual reports for 2008, 2009 and 2010.

(6) List of three (3) current comparable accounts in the Washington, D.C.

area, including the names of the local client management personnel at each account who can be contacted by the Smithsonian for recommendation concerning Offeror's capability and dependability for rendering excellent vending services to the Smithsonian.

(7) Describe your company’s commitment to energy efficiency and resource conservation and the conservation measures that will apply to this account. Include methods such as source reduction, reuse, recycling, and composting. Also address topics such as food waste, cardboard, mixed paper, plastics, and conservation of energy and water.

(8) Demonstrate commitment to assure that maximum practicable opportunity is provided to small, small disadvantaged, and women-owned small businesses (“SDBs”) to participate in the performance of this Agreement whether through an ongoing joint venture, joint teaming arrangement, a creative and innovative subcontracting plan or otherwise. Provide a list of all SDBs with which your company has subcontracted, or currently has business relationships related to vending concessions.

(9) Demonstrate policies that prohibit discrimination on the basis of race, color, sex (including sexual harassment), national origin, religion, age, and disability.

Also, describe any actions such as recruitment strategies, training programs, and affirmative action plans that your organization has initiated, proposed and/or will maintain in order to uphold its commitment to workforce diversity.

4. COMMENTS TO PROPOSED VENDING AGREEMENT. Offeror shall submit with its proposal to the Smithsonian all comments to the attached Proposed Vending Agreement, Appendix D. It is anticipated that no further negotiations will take place, except items described in the comments to this Agreement.

5. EVALUATION CRITERIA. An award of a vending concession agreement shall be made to the responsive, reasonable Offeror whose Proposal in the opionion of the Smithsonian is determined to be the most advantageous and in the best interests to the Smithsonian. The Smithsonian reserves the right in all cases to be the sole judge in determining whether an Offeror meets the evaluation criteria. The Smithsonian will determine the best value on the basis of the following evaluation criteria, which are listed in descending order of importance:

a. Commission Statements, Pricing and Reports

b. Equipment, Products, Quality, Variety, Freshness, and Quality Control Standards and Procedures

c. Operating Plans

d. Corporate Reputation, Experience, & References

e. Comments to Proposed Vending Agreement.

Appendices to follow.

APPENDIX A

EQUIPMENT BY LOCATION/FACILITY

Ripley Bldg - 1100 Jefferson Drive, SW - Washington, DC Bottled Beverage - 2

Postal Museum - 2 Mass Avenue NE - Washington, DC Snack Machine -1 Bottled Beverage -2

Hirshhorn Museum - 7th and Independence Ave SW - Washington, DC Bottled Beverage -3 Hot Beverage -1 Snack Machine -1 General Mdse -1

National Museum of the American Indian - 4th & Independence Ave SW - Washington, DC Snack Machine - 3 Bottled Beverage -3

Castle - 1000 Jefferson Drive SW - Washington, DC Bottled Beverage -4 Hot Beverage -1 Snack Machine -1 General Mdse -1

Freer Sackler Gallery - 1050 Independence Avenue SW - Washington, DC Bottled Beverage -2 Canned Beverage - 1 Snack Machine - 2

Capital Gallery - 6th Floor - 600 Maryland Avenue SW - Washington, DC Bottled Beverage -1

Hot Beverage -1 Snack Machine -1

National Zoo - 3000 Block of Connecticut Avenue NW - Washington, DC Bottled Beverage -8 Canned Beverage - 2 Snack Machine - 2 General Mdse - 1

Udvar-Hazy Center - 14390 Air and Space Museum Parkway - Chantilly, VA Snack Machine -1 Bottled Beverage - 2

400 Herndon Parkway - Herndon, VA Bottled Beverage -1 Snack Machine -1

406 Herndon Parkway - Herndon, VA Bottled Beverage -1 Snack Machine -1

Museum Support Center - 4210 Old Silver Hill Road - Suitland, MD Bottled Beverage -1 Snack Machine -1

Museum Support Service/Mail/Archive - 4210 Old Silver Hill Rd - Suitland, MD Bottled Beverage - 2 General Merchandise - 1 Snack Machine -1

Suitland Complex:

Cultural Resources Center - 4220 Silver Hill Rd - Suitland, MD Bottled Beverage -1 Snack Machine - 2 Garber Bldg # 24 - 3904 Old Silver Hill Rd - Suitland, MD Bottled Beverage -2

Garber Bldg # 10 - 3904 Old Silver Hill Rd - Suitland, MD

Bottled Beverage - 1

Anacostia Community Museum - 1901 Fort Place SE - Washington, DC Bottled Beverage -1

National Museum of Natural History - 10th and Constitution Ave NW, Washington, DC Bottled Beverage - 8 Hot Beverage -1 Snack Machine - 2 General Merchandise - 1

National Museum of American History - 12th and Constitution Ave, NW, Washinton, DC Bottled Beverage - 2 Hot Beverage -1 Snack Machine - 2 General Mdse -2

National Air and Space Museum - 601 Independence Avenue SW, Washington, DC Bottled Beverage - 6 Snack Machine - 3 General Mdse - 2 Hot Beverage -1

APPENDIX B

The approximate number of employees, volunteers, docents and contractors, who are issued identification badges and have access to vending areas for each museum are listed below.

Location/Facility

Approximate Employee

Count

Smithsonian Quad and Castle

Arts and Industries Bldg.

Hirshhorn Museum

National Air & Space Museum

Natural Museum of Natural History

Natural Museum of American History

National Portrait Gallery/American Art

Museum Support Center, Silver Hill

Museum Stores Distribution and Control Facility, Newington Warehouse

National Zoo

Sackler/Freer Gallery

Postal Museum, 2 Mass Avenue, N. E.

Catalogue Fulfilment Center, 3900 Stonecrest Blvd.

130-220

Ripley Center included with Castle

Renwick Gallery

APPENDIX C

SAMPLE VENDING AGREEMENT

THIS AGREEMENT is made and entered as of the ____ day of ______, 2012, ("Effective Date") by and between Smithsonian Institution (“Smithsonian”), an educational, non-profit organization established by the Congress of the United States in 1846 (20 U.S.C. 41 et seq.) and having its principal offices at 1000 Jefferson Drive, S.W., Washington, D.C. 20560, and _______________ ( "Licensee"), a Delaware corporation having its principal office at _____________________________________.

WHEREAS, Smithsonian is an establishment for the increase and diffusion of knowledge; and

WHEREAS, Smithsonian has established a world renowned complex of museums in the Washington, DC area and operates vending services at its museums and employee workplaces designated (the "Facilities") for its visitors, members and employees (collectively, "Patrons").

WHEREAS, Smithsonian wishes to provide quality vending services at particular locations at these Facilities, as specified in Apprendix B, (“Concession Locations”) for its Patrons; and

WHEREAS, to achieve this objective Smithsonian intends to substantially improve the vending services at the Facilities by providing its Patrons with high quality, innovative foods and beverages for reasonable prices in a manner which is efficient and courteous, and under the utmost sanitary and safe conditions;

WHEREAS, Licensee has the willingness and the capability to provide the said service under all the terms and conditions of this Agreement and in accordance with the rules and regulations now in effect or hereinafter promulgated by Smithsonian;

WHEREAS, Smithsonian has selected Licensee to operate, manage, and improve vending services at its Facilities for a term specified herein; and

NOW, THEREFORE, in consideration of the foregoing and of the mutual promises and covenants contained herein, the parties hereto agree as follows:

1. GRANT OF RIGHTS. Smithsonian hereby grants to Licensee the non-exclusive right, privilege and license (“License”) to operate a vending concession (“Concession”) at the Concession Locations during the Term, subject to the terms and conditions of this Agreement.

2. TERM.

A. The “Term” of this License shall mean a period of two (2) years commencing on _____________ and ending on ___________, unless sooner terminated or extended as provided herein.

B. Upon expiration of the Term specified above, Smithsonian shall have the right, but not the obligation, to exercise two, 3 year options to renew the Term of this License by giving Licensee written notice of its intention to renew no later than six (6) months prior to the end of the then current Term.

C. Notwithstanding anything to the contrary herein, Smithsonian reserves the right to contract with any other individual or entity to provide and/or manage vending services of any kind at any of Smithsonian’s museums and employee work places.

D. Upon the expiration of any Term not renewed hereunder, Licensee shall remove all of its employees and property from the Facilities in a smooth, orderly and cooperative manner and Licensee shall bring current all of its financial obligations to Smithsonian.

3. CONSIDERATION/ PERCENTAGE DISTRIBUTION / GROSS REVENUE. In consideration for the License granted herein, Licensee agrees to pay Smithsonian the following amounts during the Term:

A. _______ percent (__%) of Gross Receipts due and payable ten 10 business days after each Accounting Period by Licensee to Smithsonian for vending services rendered hereunder.

B. Gross Receipts shall mean all revenues received by Licensee from the sale of all products in the vending machines at the Facilities.

4. LICENSEE’S RESPONSIBILITIES .

A. Standards of Performance. Licensee shall perform all of its duties hereunder in accordance with the highest standard of the vending service profession.

This standard requires Licensee to provide Patrons with high quality vending machines and services at the Concession Locations, including but not limited to high quality foods and beverages for reasonable prices in vending machines, as well as microwaves, condiment stations and maintenance of surrounding vending service areas under the utmost sanitary and safe conditions (collectively, “Vending Services”). Licensee shall maintain the standard required of it hereunder, by adhering to the terms and conditions stated in the Sections hereunder and in the Appendices attached hereto, as well as the reasonable rules and regulations now in effect or later promulgated by Smithsonian.

Licensee understands and agrees that a violation of the standard set forth herein shall constitute a default under this Agreement in accordance with the provisions of Section 15 hereof.

B. Administrative Responsibilities. Prior to and/or contemporaneous with the completion of any and all construction, restoration, and/or repair of any Vending Service Location(s), or the commencement of operation hereunder, Licensee shall complete the following activities as required to assure the timely and efficient commencement of services at each Vending Service Location(s):

i. Licensee, with the cooperation of Smithsonian as necessary, shall apply for and receive all necessary licenses, permits, and certificates required for Licensee to maintain the vending machines and equipment listed in Appendix B hereto and made a part hereof. Licensee shall keep such licenses, permits, and certificates current and shall comply fully with all terms and conditions contained therein and shall be solely responsible for any violations thereof.

ii. Licensee shall recruit, train and employ its staff in a competent, effective manner to assure an efficient, quality operation at each Vending Service Location(s) as of the first day of operation.

iii. Licensee shall test the operation of all vending machines and equipment at the Facilities prior to the commencement of services hereunder.

iv. Licensee shall negotiate and enter into all supply and service agreements required for operation of vending-related supplies and services in the Facilities.

v. Existing Facilities may be temporarily interrupted to accommodate any and all construction, restoration and repair activities, or for any other reason deemed appropriate by Smithsonian. Smithsonian shall give Licensee reasonable advance notice, if possible, to arrange for any such closing or interruption. Smithsonian shall not be responsible or liable for any loss of revenues including but not limited to losses due to such a closing.

vi. Smithsonian hereby reserves the right to change, alter, or amend at any time the facility, location, or amount of the vending service operations subject to this Agreement, including but not limited to individual vending machines, microwaves, condiment stations, and the decor of vending areas.

C. Operations at the Facilities. Licensee shall be responsible for operating and managing the Vending Services in a competent, cost efficient, quality manner for the

Term specified in Section 2 and in accordance with the appendices attached hereto and all other terms and conditions of this Agreement. Licensee shall be responsible for and agrees to accept the following obligations:

i. Hours of Operation. Licensee shall operate the vending machines and equipment at the Facilities twenty-four (24) hours a day, seven (7) days per week. If it is necessary to close access to any Vending Service Location(s), Smithsonian shall give Licensee reasonable advance notice of such necessity, if possible, and Licensee shall cease operations in accordance with Smithsonian's instructions.

ii. Operating Standards. Licensee shall furnish all food and beverages on a fair, reasonable, and nondiscriminatory basis to all Patrons. Licensee shall maintain and operate the Vending Services in a first class manner, and shall keep the surrounding areas, including but not limited to the areas under and around the vending machines and equipment in a safe, clean, orderly, and inviting condition at all times.

ii. Staffing.

(1). Licensee shall at all times maintain sufficient staff for each Vending

Service Location(s) to achieve the highest standards of service and quality established under this Agreement. All personnel employed by Licensee to implement the Agreement shall at all times and for all purposes remain solely in the employment of Licensee and shall not be deemed to be or conduct themselves as servants, agents or employees of Smithsonian. Should Smithsonian at any time determine that inadequate staffing exists to service its Vending Service Location(s), it shall notify Licensee of the same and Licensee shall remedy any such staffing deficiency immediately to the reasonable satisfaction of Smithsonian. However, it is expressly agreed that Smithsonian does not thereby assume or share Licensee’s responsibility for the performance, actions or inactions of such individuals.

(2). The image of vending personnel to Smithsonian’s employees and visitors is important. Consequently, Licensee shall be reasonable with its employee policies, such as requiring reasonable dress and having employees that are reasonably conscientious, competent, courteous and efficient, as well as neat and clean in appearance. Licensee shall closely monitor the conduct of its personnel to ensure the maintenance of the highest standards of service set forth herein. In the unlikely event Smithsonian finds the conduct of any Licensee employee to be surly, careless, insubordinate, or otherwise objectionable or whose continued employment is deemed by Smithsonian to be contrary to the public interest, Smithsonian shall notify Licensee of the same and Licensee shall immediately take such measures as are necessary to resolve the matter to Smithsonian's reasonable satisfaction, including removal of said employee from Smithsonian account. In that event, Licensee shall take such measures without violating federal, state or local laws.

(3). Licensee agrees that it shall not discriminate in the terms and conditions of employment, promotion, transfer or termination because of race, religion, color, national origin, sex, age or handicap and at all times Licensee shall comply with all laws (including those of the District of Columbia) relating to equal opportunity, wage and hour, and tax laws covering employees.

(4). Licensee shall maintain attendants in those areas in which large volume sales occur, and route persons or attendant/route persons in these locations in which lower volume sales take place. The hours and schedules of all attendants, route persons, and attendant/route persons shall be developed and implemented to meet Smithsonian needs. Licensee shall keep Smithsonian informed of such hours and schedules and of any changes in the same. Licensee shall at all times maintain sufficient staff at each Facility to achieve the highest standards of service and quality established under this Agreement.

iii. Vending Machines. License shall maintain all vending machines in compliance with the building codes and regulations of each Facility, including NEC Code

422.51 Cord-and-Plug Connected Vending Machines, D. Food Provisions.

i. Procurement. Licensee shall purchase food, beverages, supplies, equipment and services from sources that are of an acceptable quality to Smithsonian.

ii. Product List, Prices, and Portions. The initial product list, prices, and portions of food and beverages provided by Licensee shall be subject to Smithsonian’s prior written approval

(1) Any increase in price, modification of portion, or change in the product list desired by Licensee requires the prior written approval of Smithsonian, which approval shall not be unreasonably withheld or delayed. Licensee shall request the necessary approval in a written format prescribed by Smithsonian, and shall include in any such request business data which substantiates the proposed change. The decision of Smithsonian concerning any request shall be final.

(2) If Licensee requests such a change, it shall provide Smithsonian with necessary information concerning the change at least thirty (30) calendar days prior to the date the change will be implemented. Within a reasonable time thereafter Smithsonian shall inform Licensee whether its request has been approved or denied.

(3) Licensee may request changes in the product list as it deems necessary. Within a reasonable time after receiving necessary information concerning such a request from Licensee, Smithsonian shall notify Licensee of its approval or disapproval of such request.

iii. Maintenance and Repair.

(1) Licensee shall maintain the vending machines, equipment, microwaves, and condiment stations in good order, repair, and safe condition. The cost of such maintenance shall be directly borne by Licensee.

(2) Licensee shall at all times maintain an available repair capability to make emergency repairs or replacements to machines and equipment within the same day of being notified that such repairs or replacements are required.

iv. Sanitation. Licensee recognizes and acknowledges that the sanitation of vending machines and areas is of great importance to Smithsonian.

Licensee therefore agrees to operate the vending machines, equipment, microwaves, and condiment stations in accordance with the highest sanitary standards and in compliance with all applicable federal and local laws and regulations. Licensee shall maintain the vending machines, equipment, microwaves, condiment stations and the area under and around the said machines and equipment in a clean, sanitary, and vermin-proof condition, and shall remove all boxes, wrappings, packaging, etc. related to the servicing of the vending machines. Smithsonian shall vacuum and clean the floors and/or carpets surrounding the machines and equipment.

(1) It is agreed that Licensee shall take those actions as are necessary to assure that all trash and garbage accumulated in the operation of its services is removed from the Facilities to designated trash and garbage receptacles on a daily basis. Piling of boxes, cartons, barrels or other similar items in an unsightly or unsafe manner on or about the Facilities is prohibited.

v. Utilities. Smithsonian shall provide electricity, heat, air-conditioning, ventilation, and water at the Facilities at no cost to Licensee.

5. ACOUNTING/BUDGET/AUDITS.

A. Accounting and Commission Payment. Within ten (10) business days following the end of each SE fiscal month during the Term, Licensee shall provide Smithsonian with an interim report showing all Gross Receipts, an itemized accounting by machine location, and the Vending Commission, along with payment to Smithsonian for all amounts owed to Smithsonian for said Accounting Period. Licensee shall make payment to Smithsonian by one of the following methods:

If via Electronic Funds Transfer, wire payments directly to:

Bank of America Washington, D.C.

ABA#

Credit: Smithsonian Enterprises Depository Account #

If via bank check, make check payable to the order of, and send to:

Smithsonian Enterprises Corporate P.O. Box 630178 Baltimore, MD 21263-0178

Statements shall be mailed separately and in duplicate form to SE’s Accounting Department, at the following addresses:

Smithsonian Enterprises Accounting Department 400 Herndon Parkway Herndon, VA 20170

Smithsonian Enterprises 600 Maryland Ave., SW Suite 6001 Washington, D.C. 20024 Attn: Will Bernard, Senior Financial Analyst

Receipt or acceptance by Smithsonian of any of the statements or reports furnished pursuant to this Agreement, or of any sums paid herein, shall not preclude Smithsonian from questioning the correctness thereof at any time, and in the event that any inconsistencies or mistakes are discovered in such statements, reports, or payments, they shall be rectified immediately and the appropriate corrections or payments made.

B. Annual Budget. By the first day of April during each Fiscal Year, as that term is defined in Section E below, Licensee shall submit for the Smithsonian’s approval a financial operating projection budget (“Annual Budget”) which sets forth in reasonable detail Licensee's estimate of Gross Receipts for the following Fiscal Year as well as Licensee's recommendations for alterations, additions and improvements at each Vending Service Location(s).

C. Fiscal Year. For the purpose of this Agreement, Fiscal Year refers to the accounting period of twelve months, beginning on the Sunday falling between September 26 and October 2 and ending on the Saturday falling between September 25 and October 1 of the following calendar year. Any partial year between the effective date and the end date of the Fiscal Year shall constitute the first Fiscal Year. In the event of termination during a Fiscal Year, the period between the beginning date of the Fiscal Year and termination shall constitute a separate Fiscal Year.

D. Certified Financial Statements. Calculations of all Vending Commissions due to Smithsonian during the year shall be accounted for cumulatively. Within forty-five

(45) calendar days following the close of each Fiscal Year, Licensee shall deliver to Smithsonian certified financial statements that are prepared by an independent, certified public accountant deemed acceptable to Smithsonian. Said financial statements shall address all financial data relevant to Smithsonian account including~but not limited to, Gross Receipts, Vending Commission, and Annual Budget for the following fiscal year.

E. Audits and Inspections. Smithsonian shall have the right to audit at its own cost any and all Commission Payment records of Licensee or any and all annual certified financial statements submitted hereunder. If any said audit establishes that additional amounts are owed to Smithsonian, Licensee shall pay such amounts to Smithsonian within fifteen (15) calendar days following the completion of the audit, together with interest computed thereon at the then current prime rate of interest offered by Chase Manhattan Bank and applied to the unpaid balance of such amounts from the date of first entitlement. If the said audit establishes that Licensee has overpaid Smithsonian, such overpayment shall be credited against fees currently payable to Smithsonian. If the audit reveals a discrepancy in excess of two percent (2%) of the total amount of fees payable to Smithsonian during any Fiscal Year, then the cost of the said audit shall be paid by Licensee.

F. Books, Records, and Accounting Equipment. Licensee shall use automatic accounting equipment or devices which properly and accurately record all Gross Receipts derived by Licensee in accordance with the terms of this Agreement. Licensee shall keep current and accurate books and records in accordance with the American Institute of Certified Public Accountants. All books, records, and accounting data shall be retained by Licensee for a period of three (3) years following the close of each Fiscal Year. Licensee agrees that Smithsonian or any of its duly authorized representatives shall, until the expiration of three (3) years after final payment under this Agreement or such lesser time specified, as appropriate, have access to and the right to examine any books, documents, papers, or records of Licensee involving transactions related to this Agreement, and to make copies and extracts thereof. Smithsonian agrees to give Licensee reasonable notice of any such examination. The periods of access and examination described above, for records which relate to litigation or the settlement of claims arising out of the performance of this Agreement, shall continue until such appeals, litigation, claims, or exceptions have been disposed of, or until the expiration of the three (3) year period stated above, whichever period is longer.

6. REFUNDS AND PATRON SATISFACTION.

A. Licensee shall provide full refunds to Patrons dissatisfied with Licensee's service or product provided. Upon approval of Smithsonian, Licensee shall develop and implement an effective "no-questions asked" refund policy within thirty (30) days of the effective date of this Agreement.

B. Any complaint received from a Patron alleging food poisoning, injury, poor service, or dissatisfaction with the items sold in the vending machines shall be referred to Licensee for disposition. Licensee shall keep Smithsonian closely advised of the status of each claim and shall provide Smithsonian with copies of all correspondence and documentation relative to the complaint. Licensee shall resolve all claims fairly and expeditiously.

C. Licensee shall conduct annual surveys, at a minimum, through the SE office to determine the food and beverage and other preferences of the Patrons. Licensee shall adjust the items offered in the vending machines and implement other changes in service as agreed to by Smithsonian.

7. WARRANTY. Licensee warrants that all merchandise dispensed hereunder shall, in all respects, be suitable for human consumption, and in particular it shall conform to whatever federal, state, and local laws, rules, or regulations relate to it. Furthermore, Licensee agrees to hold Smithsonian harmless from any damages that may result from its failure to abide by this warranty.

8. VENDING MACHINES AND EQUIPMENT.

A. Within ten (10) business days after the Effective Date of this Agreement, Licensee shall provide a schedule for improving, upgrading, and replacing all vending machines and equipment and vending area decorations. The schedule shall provide for each Vending Service Location(s) a list of recommended vending machines and equipment, color scheme and decor, floor plan, and proposed installation and completion dates. Such recommendations shall not be implemented unless approved in writing by

B. In no event shall the said schedule for improvements extend for more than six (6) months from the effective date of this Agreement. Smithsonian shall review and approve the schedule prior to its implementation by Licensee. This schedule shall be attached to the Agreement as Appendix D.

C. Within ten (10) business days after the effective date of this Agreement, Licensee shall service the equipment with a representative of Smithsonian and provide a written list of all vending machines and equipment including location, make, model and serial number.

D. All equipment installed or placed in the Vending Service Location(s) by Licensee shall be and remain exclusively the property of the Licensee.

9. HEALTH, SAFETY AND SECURITY OF PATRONS AND EMPLOYEES. The requirements this Section supplement the requirements of federal, state, and local authorities relative to the health and safety of employees and Patrons of the Facilities.

Smithsonian Institution reserves the right to perform health and safety inspections at any time, and if the conditions at any of the Facilities do not meet appropriate standards, Smithsonian may direct Licensee to take necessary action which may include ceasing operation at the Facilities and Licensee agrees to abide by all such directions.

A. Health. Licensee's employees shall receive medical examinations prior to commencing work at or servicing the Facilities, and at other times which Smithsonian may require. Licensee shall certify to Smithsonian that such examinations have been performed and that its employees are in full compliance with all applicable medical standards. Licensee agrees that it will immediately notify Smithsonian of all cases of communicable diseases, skin infections, or food poisoning contracted by its employees or by Patrons at the Facilities. Licensee shall promptly report to Smithsonian the details of any such case, the action it has taken to remedy the case, as well as the action it has taken to prevent recurrence.

B. Safety.

i. Licensee shall abide by all current health, fire, and safety regulations promulgated by Smithsonian. Licensee shall train its employees to respond to fire, civil defense, bomb threats, and other emergencies based on procedures established by

ii. Licensee shall notify Smithsonian as soon as possible of any fire, accident, or safety hazard involving…