Summary

This report responds to questions about Service America Corporation's operation of the House Restaurant System from January 1987 through August 1991. GAO also discusses an issue involving payroll benefit costs that Service America asked GAO to help resolve. Specifically, GAO addresses (1) the additional contributions due the federal retirement and savings programs on behalf of Service America food service personnel who were covered by the federal programs, (2) the accuracy of fees paid the government covering vending services between January 1987 and August 1991, (3) whether reported dining service sales and fees paid the government during that period appeared accurate, and (4) whether checks that Service America received and retained from House restaurant customers represented collections due the government.

GAO found that: (1) the contractor owes the federal retirement and thrift savings programs an additional $170,686 in various employer and employee contributions; (2) the contractor disputes $17,507 of the $170,686 that it owes the government; (3) the vending fees due the government for the period January 3, 1987, through January 2, 1984, have been in dispute because the contracts are not clear; (4) the contractor would owe the government $142,970 according to the terms of the 1984 contract, and $3,090 under the terms of the 1986 contract; (5) the contractor owes an additional $1,819 for the period January 3, 1990, through August 3, 1991; (6) the contractor disputes owing the government any additional fees for vending services on the basis that its actions were in compliance with the government's expectations and that its financial reporting was accepted by the government during the period January 3, 1987, through August 3, 1991; (7) although reported dining service sales for the 1989 contract period did not disclose any inaccuracies in the amounts the contractor reported, the fees the contractor paid the government on these sales were slightly lower than they should have been because of discounts it received that had not been allocated; and (8) the effects of contractor discounts were not quantified because the contractor did not provide sufficient information and the discounts were not significant.