VBCPS and Pepsi Sign Exclusive Agreement Virginia Beach City Public Schools (VBCPS) and the Pepsi Bottling Group have entered into an exclusive agreement that could net the school system more than $14 million in revenue over 10 years. The exclusive agreement is guaranteed to provide $9.86 million over a 10-year period. However, a review of historical data on point-of-purchase vending sales for the school system indicates potential earnings of more than $14 million. The actual length of the contract is five years in keeping with School Board policy. However, the contract also includes an option to renew for an additional five-year period. The guaranteed amount includes a signing bonus of $750,000 for the first five years as well as $1 million for the five- year renewal. An annual $350,000 payment will be provided for that first five years, increasing to $500,000 for years six through ten (inclusive). Also, Pepsi has guaranteed the school division $400,000 annually toward the projected commissions on sales. In addition, an annual $25,000 payment will be made to the Office of Food Services, and the division's 11 high schools will receive $1,000 each in scholarship money. Signed August 24, 2001, the five-year pact is an exclusive, point-of-sale agreement. This means that ONLY Pepsi beverage products (soft drinks, sport drinks, juice drinks, bottled water, etc.) can be sold on VBCPS property. In addition to school campuses, this agreement covers the administration building, school plant, bus garages, etc. Vending machines are not affected. The exclusivity on sale of products in this agreement extends to booster clubs, parent organizations, student and teacher organizations and activities, and external applicants using school facilities. The agreement originated from a Request for Proposals (RFP) seeking an exclusive contract on soft drinks, sport drinks, etc. In the past, individual schools have had their own agreements with soft drink and vending companies. School system finance officers studied the issue at length and concurred that a more systematic, centralized approach would be beneficial. According to Vicki Lewis, VBCPS's chief financial officer, the decision to proceed with an RFP was prompted by the belief that central management would result in an augmentation of vending revenue resources as well as more strategic management of those resources. "Historically, the total vending revenue from all schools and sites was in the range of $200,000 to $250,000 per year. The new contract will provide at least $7 million in extra funds over a 10-year period. This funding will certainly benefit the division's student population," she said, also noting that a portion of the funds will be used to purchase middle and high school scoreboards, replacing those obtained through past soft drink agreements brokered at the school level. Lewis further noted that the school administration was careful to enter an agreement that would ensure that each Virginia Beach school will receive no less vending revenue than they have in prior years. The division's Department of Budget & Finance will use a formula to distribute funds at the beginning of each fiscal year. In addition to guaranteeing higher revenues, Pepsi signed a full service agreement. This means that it will be the responsibility of the Pepsi staff to restock machines, service the machines, and provide proper control over the collection and counting of money from machines. Losses to schools and school-related organizations who purchased inventory prior to the effective date of the agreement have been minimized through a special buy-back program and a concession by Pepsi that allows PTA and Booster clubs to deplete their existing stocks of non-Pepsi products. ###