The San Antonio event planner who won a $39 million federal contract for emergency food relief during the pandemic has delivered just a fraction of the 750,000 boxed meals that food banks and other nonprofits were supposed to receive, interviews and records show.
The company, CRE8AD8 (for “Create A Date”), is charged with distributing 750,000 boxes of protein, dairy and fresh produce in Texas, Arkansas, Arizona, Louisiana, New Mexico, Oklahoma and Utah by the end of June.
As of today, CRE8AD8 had delivered about 123,000 boxes to food banks, according to bills of lading and other records provided by food banks in the seven states.
The company has delivered more than 25,000 additional boxes to churches and faith-based groups in Arizona, New Mexico, Texas and Utah, according to records provided by nonprofits and one of CRE8AD8’s suppliers.
But with the June 30 deadline fast approaching, the company appears destined to fall far short of delivering the promised 750,000 food boxes -18.75 million pounds of food.
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Leaders of food banks in San Antonio and Houston, who have struggled to meet a huge increase in demand for free food during the pandemic, expressed profound disappointment.
“Promises not met,” Eric Cooper, president and CEO of the San Antonio Food Bank, said in summing up CRE8AD8’s performance.
“The whole tragedy of this contract being awarded was that it actually hurt our city,” Cooper said. “CRE8AD8 just couldn’t seem to deliver.”
Cooper said that under a delivery schedule he developed with CRE8AD8, two dozen food banks in the U.S. Department of Agriculture’s Southwestern Region were scheduled to receive a total of 469 truckloads of food.
The Houston Food Bank, the nation’s largest, headed the list with 87 scheduled deliveries. As of today, it had received just 15, a food bank official said.
The San Antonio Food Bank was scheduled to receive 57 truckloads. Cooper estimated that by the end of the month, CRE8AD8 will have delivered 22 — about what the food bank currently distributes in a single week.
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Food banks outside of Texas also are falling short of their expected amounts. As of Friday, the Community Food Bank of Southern Arizona had not received any of its 12 scheduled deliveries from CRE8AD8, according to Michael McDonald, CEO of the Tucson-based nonprofit.
The USDA soon will announce whether contract extensions have been granted to CRE8AD8 and other vendors participating in its food box program. The next distribution period runs through August.
Asked whether CRE8AD8 deserved an extension, Brian Greene, the Houston Food Bank’s president and CEO, let out an exaggerated laugh and said: “Let that be my response.”
He added: “There are a lot of good vendors who are taking this seriously and trying to do a good job. I just hope that’s what (the USDA) is basing (extensions) on – who is truly taking this seriously.”
The USDA also is expected to award contracts to a few companies whose proposals were rejected last month in the initial round of bidding on the food box program.
Among the San Antonio companies that didn’t receive contracts were GoodHeart Brand Specialty Foods, which supplies fully cooked beef, chicken and pork products, and wholesalers River City Produce and Big State Produce.
“It’s time that USDA allows a more competent contractor to nourish the hungry,” Cooper said. “CRE8AD8’s gamble on whether it could execute the entire contract kept food from needy families.”
On ExpressNews.com: Food banks in other cities, states disappointed by San Antonio’s CRE8AD8
Gregorio Palomino, owner of CRE8AD8, did not respond to a requested to be interviewed for this story.
‘Highly capable companies’ passed over
The Farmers to Families Food Box Program was designed to restore supply chains disrupted by the pandemic. As schools, restaurants, hotels, cruise lines and other businesses closed, farmers and food distributors lost a major market for their products. Some farmers and ranchers saw no alternative but to dispose of surplus food.
The food box program is designed to get that food to needy families. The USDA fast-tracked $1.2 billion in contracts. CRE8AD8 received the nation’s seventh largest.
The nearly 200 contractors are called on to buy surplus food, box it and then distribute it to food banks and nonprofits.
The program got off to a controversial start after the USDA selected several companies with little experience with farming, the food industry or food banks.
One of them was CRE8AD8, an event and wedding planner that had no background in food distribution and no warehouses or trucks. The company also lacked a USDA Perishable Agricultural Commodities Act license, which is required for produce distributors.
The USDA granted CRE8AD8 a license in a matter of days. Typically, the process takes weeks.
Greene, the Houston Food Bank CEO, said he was surprised to see experienced food vendors passed over in the bidding. “We were rather surprised by the vendors who bid and did not get contracts,” Greene said. “These were highly capable companies that do this kind of stuff. It was strange, and now we are seeing some of the impact.”
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Food industry mainstays that received contracts from the USDA began working to line up purveyors before submitting their bids.
‘Ignorance and arrogance’
“We had commitments for (delivery) dates and quantities before we submitted to the USDA,” said Jeff Rowe, president of New York-based ES Foods, which received a $2.4 million contract to deliver protein boxes in the Southwest Region. “We knew exactly what was going in the box and how many boxes we could produce. We didn’t leave anything to chance.”
CRE8AD8 didn’t make its first delivery until May 28. Suppliers approached by CRE8AD8 said they were reluctant to do business with a company with no history in the industry and no PACA license.
Another reason some purveyors shied away: CRE8AD8 asked for credit payment terms that ranged from 30 to 60 days, according to officials from two Texas companies that CRE8AD8 approached.
After eventually reaching agreements with several purveyors, including a handful outside Texas, CRE8AD8 started making deliveries in earnest in early June. But the company’s performance over the last three weeks has been marred by problems that go beyond the low volume of deliveries.
The San Antonio and Houston food banks have had problems with the pre-cooked chicken CRE8AD8 provided from two suppliers, Gourmet Foods of Rancho Dominguez, Calif., and Cuisine Solutions of Sterling, Va. Both serve institutional clients such as hotels and airlines.
An ideal protein box for distribution at a food bank giveaway contains a variety of items – for instance, chicken enchiladas, chicken noodles and chicken pot pie.
CRE8AD8 provided protein boxes that contained bulk, frozen chicken in individual bags.
“Basically, we were given HRI-use only chicken,” said Greene, using an abbreviation for “hotel-restaurant-institutional” food, which is not intended to be given directly to consumers.
For a time, Cooper refused to distribute the chicken from Gourmet Foods because the boxes lacked instructions on how to heat the chicken. After what he described as repeated requests for guidance from CRE8AD8, Gourmet Foods and the USDA, Cooper said he finally received reheating instructions from Gourmet Foods.
Food bank staffers handed those instructions to families waiting in line in cars at a distribution at the Alamodome on June 12.
Cooper said Palomino and CRE8AD8 employees displayed an attitude of “ignorance and arrogance” in arguing that the chicken was fine because the boxes had USDA inspection labels.
“I couldn’t in good conscience give away a case of institutional protein to a family without instructions on how to heat it,” Cooper said. “Ultimately, it is on CRE8AD8. They should have known enough to say, ‘Gourmet Foods, this is going to go to a family. What do they need to know about your product?’
“But they all chose to hide behind the USDA label, saying, ‘This is all approved.’ But it’s approved for different markets — for hotels, for restaurants — not food bank distributions.”
Celia Cole, CEO of Feeding Texas, an association of 21 food banks, said CRE8AD8 does not understand what is “appropriate for charitable food distribution.”
“They have failed to deliver on the product volume in this first six weeks, for sure,” she said. “And in some cases, the product they have delivered has been difficult for food banks to manage.”
Stuck with ‘last-mile expenses’
Food bank officials also questioned why CRE8AD8 and other USDA contractors have not followed the “truck to trunk” delivery model.
In an April webinar for potential bidders, a USDA official said the agency wanted contractors to deliver food boxes directly to families at parking lot distributions such as those the San Antonio Food Bank has held.
“Ideally, what we would like is a mutually agreeable, small quantity drop-off, where the boxes go basically out of the truck and into the trunk, if you will,” the USDA’s David Tuckwiller said.
But the boxes CRE8AD8 and other USDA contractors have provided to the San Antonio and Houston food banks have been delivered directly to their warehouses, not to the people who need the food.
The food banks are racking up tens of thousands of dollars in extra costs, known in the industry as “last-mile expenses,” to unload product at their warehouses, store it and then deliver it to the distribution site.
“What they have done is just sort of dumped the cost onto us,” Greene said. “If you are Houston or San Antonio, we will grimace and do it.”
The food banks are using funds from private donors to cover those expenses.
“The community has been very supportive, and the fundraising has been good, so we can do this,” Greene said. “But wait a minute — we are not supposed to be using donated dollars to subsidize somebody’s contract that they are getting paid for.”