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Buy Right with the NEW Regulations

Buy Right with the NEW Regulations. Definition. A bid is a contractual procurement agreement between a school foodservice and a vendor for:. Specified Time Specified Price Specified Quantity.

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Buy Right with the NEW Regulations

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  1. Buy Right with the NEW Regulations

  2. Definition A bid is a contractual procurement agreement between a school foodservice and a vendor for: • Specified Time • Specified Price • Specified Quantity

  3. Purchasing supports the primary goal of the Child Nutrition Programs, which is “to protect the health and well being of the nation's children,” As stated in the National School Lunch Act of 1946 Purchasing decisions must be based on the nutritional needs of children.

  4. Why is Purchasing Important? • Ensure quality meals that meet student preference for best possible price • Food and supply costs under control of school managers/directors • Shrinking resources

  5. Why Bid? • Preferred product • Legal Issues • Lowest Price • Keep Distributors Honest • District Requirements

  6. Procurement Regulations • NSLP – Title 7 of Code of Federal Regulations (CFR) Part 210.21 • Federal Procurement 7 CFR • Part 3016 • Part 3019 fns.dpi.wi.gov/fns_procurement

  7. Methods of Procurement 3 Most Common Types of Purchasing • Bid • Invitation for Bid (IFB) • Request for Proposal (RFP)

  8. Bid Selection (Contract Award) of Product or Service is Based On • Price Only

  9. Invitation for Bid Selection (Contract Award) of Product or Service is Based On • Price Only • Minimum Specification

  10. Request for Proposal Selection (Contract Award) of Product or Service is Based On • Price Only • Minimum Specification • Weighted Criteria

  11. Weighted Criteria • Assigned Points Reflect Significance of Item or Goal • Price Must be the Most Significant

  12. Weighted Criteria • Point spread between the best proposal and the second best should be mostly based on the importance of the item or goal • Matrix used to sum up points and award contract

  13. Informal Method of Procurement Definition: • Total Value of the Contract for Goods and Services is under $ 100,000 • Solicitation of Companies (minimum 3) Known to be Doing the Kind of Business Needed

  14. Formal Method of Procurement Definition • Must be Written • Total Value of the Contract for Goods and Services is over $ 100,000 • Mailed to all Companies (minimum 3) Know to be Doing the Kind of Business Needed • Intent to Purchase Must be Published a Minimum of 14 Days Prior to the Due Date in the Legal Notice Section of a General Circulation Newspaper • Opened Publicly

  15. Bid Protocol at Opening Absolutely NO feedback until evaluation is completed –then it goes to the bid department • Offers are taken under advisement • 2 – 3 people present • Only bidders may view other bids before public record • Public record after awarded and purchased

  16. Getting Started Identify: • Goods and/or Services • Quantities • Needs and/or Requirements • Separate “Got to Have” from “Nice to Have”

  17. Procurement • Good Administration • Ethics in Purchasing • Free and Open Competition • Clear and Accurate Description • Procedures

  18. Good Administration • Award bids or proposals to only responsible contractors • Ensure that pre-qualified lists of person, firms or products are current • Adequate number of qualified sources

  19. Good Administration Do you have written selection procedures for procurement transactions that ensure that all bids or solicitations: • Use “brand name or equal” or multiple brand names without “equal” when it is impractical to clearly describe technical requirements of the product? • Identify all requirements which the bidders must meet and all other factors that will be used in evaluation bids or proposals?

  20. Ethics in Purchasing • Questions related to ethics do not always have clear answers. A good general rule is: “If you question an action, then you should not proceed.”

  21. Purchasing professionals agree that unethical behavior is: • Providing one supplier’s cost information to another supplier before supplier selection. • Showing preference to suppliers because of pressure from administration or boards. • Accepting gifts or cash from a supplier.

  22. Additional ethical issues: • Allowing personality to enter into purchasing decisions • Obtaining proprietary information from one supplier and sharing it with their competitor • Accepting free trips and entertainment.

  23. Promotion of Free and Open Competition • Determine Companies Doing The Type Of Business Desired • Contact All Known Companies

  24. Situations Considered to be Restrictive of Competition,but are not limited to: • Placing unreasonable requirements on firms to qualify to do business • Requiring unnecessary experience and excessive bonding

  25. Situations Considered to be Restrictive of Competition,but are not limited to: • Non-competitive awards to consultants hired on retainer basis • Organizational conflicts of interest • Specifying only a “brand name” product instead of allowing “an equal” product to be offered and including the specifications • Any arbitrary action in the procurement process

  26. Promotion of Free and Open Competition • Geographic preference, or “local preference” NOT permitted See 7 CFR Part 3016.36 (c)(2) • Use domestic products to the maximum extent possible • Follow the most restrictive of local, state or Federal law, rules

  27. Clear andAccurate Descriptions • Product Specifications • Problems with specifications • Developing descriptions

  28. Reasons to have Specifications • Clarifies what the food production unit wants • Informs the distributor and manufacturer what the customer wants • Advises the receiving person what should be delivered

  29. Product Specification • Product name • Federal grade • Size information: container and product • Bid unit • Quality indicators • Packaging requirements • Test or inspection procedures • One source of specs http://www.ams.usda.gov

  30. Product Specification • Evaluate product quality before bid opening – brand pre-approval • 10- 30 % price difference = quality difference • Direct relationship between the length of time of prices held and the price paid

  31. Problems with Specifications • Brand prejudice – no “or equal” • Unreasonable requirements not related to quality but increase price: i.e. delivery • Competition limited due to too tight specs • Quality level specified difficult to obtain

  32. Problems with Specifications Cont’d • Not updating specs • Purchasing and receiving staff not trained to use specs • Vendor, after gets bid: “low balls” or trades up to more profitable item • Inequality among bidders if specs too loose • If error: stuck for the bid period

  33. Developing Descriptions • One Ingredient or • One Major Ingredient: Rely on Standards of Identity and Grade standards; state this in bid and don’t repeat info. Determine grade needed and state “to be packed to USDA grade __ standards

  34. Developing Descriptions Multiple Ingredient (Highly processed): A system for consistent results might include Regulations: research re: manufacturer of product Industry Standards: check with professional organizations, and product and bid specialists Quality Indicators: study andevaluate thosenot covered by regulations

  35. Developing Descriptions • Student Taste Test: to narrow down broad categories • Write Draft Description • Use draft to create product comparison work sheet with products currently available: Extra requirements not currently available increase cost • Modify Description as needed

  36. Developing Descriptions • Review by manufacturers’ technical and bid specialists • Revise as needed • Student taste test for approved brand acceptance

  37. Procedures Records to Keep • Documents issued to solicit price proposals • Responses from vendors • Signed award documents • Reason for vendor selection

  38. Must maintain written selection procedures that: • Give clear, accurate requirements for the product but do not unduly restrict competition • Identify all requirements contractor must fulfill or meet • Identify other issues used to evaluate bids proposals

  39. Documentation Schools and Districts must keep all records regarding selection of a bid to proposal to show: • Rationale for method of procurement • Selection of contract type • Vendor selection or rejection • Basis for contract price

  40. Time Line Considerations(working backward from delivery) • Bid award to first delivery: Allow 2 -3 wks between vendor notification and 1st delivery; inform receivers • Bid opening: take all bids “under advisement”, usually require board approval, • Bid issue to opening: at least 3 wks; consider off season; consider copies of significant pages to brokers and mfrs

  41. Time Line Considerations(working backward from delivery) • Final Conference to Prices: Depends on accuracy of earlier steps done; ~ 2 weeks • Screening to Final Draft: Depends on number of changes to the product list and brand approvals • Screening: 1st time could take a year for verifying, updating info; 3 mos. In later years

  42. Rule Changesfor Contracting with FSMC • Allowable costs must be net of discounts, rebates, credits. • Only allowable costs can be charged to nonprofit food service account.

  43. Rule Changesfor Contracting with FSMC DPI to review contract terms of invitations for bids and/or requests for proposals before their issuance.

  44. Rule Changesfor Contracting with FSMC The SFA is also required to obtain: DPI’s approval of any changes or amendments before any contract or amendment to an existing FSMC contract is executed.

  45. Rule Changesfor Contracting with FSMC Two Prototype FSMC Contracts: Fixed Cost Cost plus a Fixed Fee

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