San Antonio Express-News (Sunday)
Event planner lagging on food boxes
With deadline looming Tuesday, deliveries are falling far short
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 boxes of protein, dairy and fresh produce through the government’s Farmers to Families Food Box Program.
The intended recipients are food banks and other nonprofits in Texas, Arkansas, Arizona, Louisiana, New Mexico, Oklahoma and Utah. The deliveries are supposed to be completed by Tuesday.
As of Saturday, CRE8AD8 had delivered about 130,000 boxes to food banks, according to bills of lading and other records provided by food banks in the seven states.
The company has delivered at least 30,000 additional boxes to churches and faith-based groups in Texas, Arizona, New Mexico and Utah, according to interviews and records provided by nonprofits and one of CRE8AD8’s suppliers.
But with the deadline looming Tuesday, the company appears destined to fall far short of delivering the promised 750,000 food boxes — the equivalent of 18.75 million pounds of food.
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 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 plan 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 plan is detailed on a spreadsheet that breaks down the deliveries by quantities of protein, dairy and produce.
The Houston Food Bank, the nation’s largest, headed the list with 87 scheduled deliveries. As of Saturday, it had received just 16, a food bank official said.
The San Antonio Food Bank was supposed 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.
Other food banks in Texas and outside the state also have received less than their expected amounts — or nothing at all.
As of Saturday, the Community Food Bank of Southern Arizona had not gotten any of its 12 anticipated deliveries from CRE8AD8, said Michael McDonald, CEO of the Tucson-based nonprofit.
The USDA soon will announce whether it will grant contract extensions to CRE8AD8 and other vendors based on their performance since the food box program launched in May. 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.”
Said McDonald: “We want to work with contractors who have the wherewithal and the track record to do it, and not just the desire to do it — people who can deliver, who know the business.”
‘Delivered on our promises!’
CRE8AD8’s owner, Gregorio Palomino, took issue with complaints that he has fallen short on deliveries. He told the San Antonio Express-News via email that his company is “ahead of schedule” and “extremely successful.”
“We are one of the few awardees that have hit all 7 states in the SW Region and underserved areas within each state of this contract,” Palomino said. “We have delivered millions of pounds of food and hundreds of thousands of food boxes of protein, dairy and produce! We’re proud to prove that we’re successful and have delivered on our promises!”
Asked for evidence to support those assertions, Palomino said that “all financial information needed is public and available through the USDA website for anyone to access.”
The USDA’s
Agricultural
up
Marketing
Service website posts a daily total of food boxes delivered by all contractors in the program. But it does not list figures for individual contractors.
Palomino contends his USDA contract bars him from disclosing details of CRE8AD8’s deliveries. In a Facebook post, he said “it would actually be illegal for us to release anything.”
Other contractors involved in the federal program have shared detailed information on deliveries with the Express-News. For instance, C.C. Produce of Corpus Christi provided a list of deliveries it made from mid-May to early June, including the destination and number of boxes for each.
On Facebook, Palomino has responded to commenters who questioned his company’s performance by saying they “root for hunger,” are “toxic to the community” and are trying to “tear down the fabric that adds economic value.”
Companies passed over
The goal of the Farmers to Families Food Box Program is to restore supply chains disrupted by the pandemic. As schools, restaurants, hotels and other large-scale buyers closed, farmers and food distributors lost markets for their products. Some saw no alternative but to destroy 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 required to buy surplus food, box it and distribute it to food banks and other nonprofits that serve needy families.
The program got off to a controversial start after the USDA selected several companies with little experience in the food industry.
One of them was CRE8AD8, a company that plans weddings and other events, according to its website. Palomino has no background in food distribution, nor any warehouses or trucks.
The company also lacked a Perishable Agricultural Commodities Act (PACA) license, which is required for produce distributors.
The USDA granted CRE8AD8 a license in a matter of days. Typically, the process takes weeks.
Eyebrows were raised further when the Express-News published an investigation in May showing Palomino had made unsupported claims on his company’s website and his LinkedIn page, citing clients, credentials and business affiliations he did not actually possess.
For instance, CRE8AD8’s website listed USAA, Valero Energy and Fiesta San Antonio as clients. Officials at those organizations said they never had done business with Palomino or his firm. Their names disappeared from CRE8AD8’s website after the Express-News made inquiries.
Similarly, Palomino claimed to have served on the board of the San Antonio Hispanic Chamber of Commerce, a position the chamber says he never held.
Greene, the Houston Food Bank CEO, said he was surprised to see experienced food vendors passed over by the USDA in the bidding for the food box program.
“These were highly capable companies that do this kind of stuff,” Greene said. “It was strange, and now we are seeing some of the impact.”
‘Ignorance and arrogance’
Established food industry companies that did receive contracts from the USDA had begun lining up suppliers even before submitting their bids.
“We had commitments for (delivery) dates and quantities before we submitted to the USDA,” said Jeff Rowe, president of New Yorkbased 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 had to start from scratch. It didn’t make its first delivery until May 28. Suppliers approached by Palomino said they were reluctant to do business with a company that had no history in the industry and, initially, no PACA license.
Another reason some purveyors shied away: CRE8AD8 was not prepared to pay upfront and asked for credit terms ranging 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 has been marred by problems that go beyond the low volume of deliveries.
The San Antonio and Houston food banks have had difficulties with the precooked chicken CRE8AD8 procured 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 nuggets, chicken noodles and chicken pot pie.
CRE8AD8 provided protein boxes that contained bulk, frozen, precooked chicken in bags.
“Basically, we were given HRIuse-only chicken,” said Greene, using an abbreviation for “hotelrestaurant-institutional” food, which is not intended to be given directly to consumers.
For a time, Cooper refused to distribute the Gourmet Foods chicken because he said the boxes lacked instructions on how to heat the product.
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 June 12 at the Alamodome.
Eric Kopelow, chief operating officer of Gourmet Foods, said he was proud of the product the company supplied to the San Antonio Food Bank.
“We made it from scratch, specifically for this,” Kopelow said. “It’s a premium product.”
Cooper, however, 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 did 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.”
‘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 holds.
“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 CRE8AD8 and other USDA contractors have delivered food boxes to the warehouses of the San Antonio and Houston food banks — 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 the boxes at their warehouses, store them and then deliver them to distribution sites.
“What they have done is just sort of dumped the cost onto us,” Greene said.
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.”
‘Nourish the hungry’
With the start of the second phase of the program fast approaching, the USDA is reviewing proposals from some of the companies that bid initially to see if they should be granted contracts now.
The local companies passed over in the earlier round include GoodHeart Brand Specialty Foods, which supplies fully cooked beef, chicken and pork products, and food 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.”