Procurement 101: A General Overview of Federal Requirements

1. Procurement 101:A General Overview of Federal Requirements

2. What Is Procurement? Definition -- multi-step process for obtaining the most responsive goods and services at the lowest possible price.

3. 5 Steps: 1. Planning 2. Writing Specs 3. Advertising 4. Awarding The Contract 5. Managing The Contract

4. “Passing Down” of Regulations CONGRESS OMB USDA/FNS KDE SFA

5. What regulations must SFAs follow? • Program Regulations for Procurement: • NSLP: 7 CFR 210.21 • SBP: 7 CFR 220.16 • Special Milk Program: 7 CFR Part 215 • Food Distribution: 7 CFR Part 250 • Uniform Administrative Requirements for Procurement: • State/local governments: 7 CFR 3016 • Non-profits: 7 CFR 3019

6. What regulations must SFAs follow? (continued) • Government Wide Federal Regulations • OMB Circulars A-102, A-110, A-87 • A-122 • State and Local Laws, Regulations, and Policies that are not in conflict with Federal Requirements.

7. What Do These Regulations Require? Public School Food Authorities (SFAs) may use their own procurement procedures which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal laws and standards identified in 7 CFR Part 3016.36 and Part 3016.60. SFAs must compare their state and local requirements against the federal requirements and follow the more restrictive! Non Profits are directed to use your normal procurement procedures if they are at least as stringent as the Federal requirements. If your own are not as stringent as Federal, you must follow the Federal requirements. Please refer to 7 CFR Part 3019 for more guidance on what is allowable.

9. Re-Cap *Federal Requirements – Define the minimum requirements. *State Requirements -- KRS 45A.100 *Local Requirements – KRS 45A.385 *Program Specific Requirements • National School Lunch Program – 7 CFR Part 210 – Includes Buy American Provision • Special Milk Program – 7 CFR Part 215 • School Breakfast Program – 7 CFR Part 220 • Food Distribution – 7 CFR Part 250

10. Non-Profit School Food Service Account(Federal Funds) 7 CFR Part 210 and 220 • ALL funds received by the non profit school food account must be used to obtain food and other goods and services for use in the Child Nutrition Program (CNP). --Purchase food, supplies, equipment required for meal prep and service; --Purchase prepared meals from vendors; --Pay FSMC to operate their food service; --Pay for labor and operational costs; --Pay indirect costs

11. Principles of Good Procurement

12. COMPETITION! The goal of ALL Federal procurements because it leads to higher quality goods at a lower cost!

13. Competition! Full and open competition means that all suppliers are on a level playing field and have the same opportunity to compete. Procurement procedures must not unduly restrict or eliminate competition.

14. Why is competition important? • Cost of products and services!

15. Why is competition important? • Quality of products and services!

16. Fairness & Integrity The procurement process cannot be both self serving AND effective!

17. Responsive & Responsible Vendor • SFAs must make awards only to those contractors: • who are "responsive" because their product or service meets the SFA's specifications, and • who are "responsible" because they can and will successfully fulfill the terms and conditions of the proposed procurement.

18. Transparency “Transparency" means that everything done by the SFA must be: Clear, Above-board, and Out in the open

19. Good Procurement Practices • Understand and communicate, • Seek as many respondents as you can, • Ensure purchases are necessary, • Use the procurement process, • Write clear evaluation criteria, • Develop a good solicitation, • Publicize the solicitation, • Allow time for vendors to respond, • Ensure transparency, and • Document the process.

20. Written Policies & Procedures Policies • Foster Competition • Require Rationale • Establish Written Selection Procedures • Award to Responsive and Responsible vendors • Fully document actions • Maintain Documentation • Contract Admin System • Bid Protest Procedures Procedures • Follow Program Regs & Requirements • Consistently Followed Procedures • Fairly Conducted Procurement • Procured Items Meet the Needs • Code of Conduct

21. Prohibited Practices • Unreasonable Requirements • Incorrect application of Geographic Preference • Limiting the response time of a solicitation • Split purchasing. • Awarding a contract without advertising • Awarding a contract on the basis of only one of the evaluation criteria • Getting a cost quote from only one vendor

22. Prohibited Practices (continued) • Not providing the same information to all vendors • Failing to comply with applicable state or local rules • Releasing the contents of a bid before the public opening • Using outdated pre-qualified vendor lists. • Using vendor listings that do not include all potential vendors • Allowing changes AFTER a bid is awarded that could have affected the outcome of the award had the other vendors had the opportunity to respond to the modified provision.

23. Prohibited Practices (continued) • Allowing a potential vendor to draft upcoming procurement specifications and bid on the solicitation. • Using the school food service account to pay for expenses that result from improper planning and procurement process.

24. Four Phases of Procurement Get Ready, Solicit, Award and Manage

25. Four Phases • Plan– know what’s needed and when. Know approximately how much it’s going to cost. • Solicit – Provide detailed specifications and use the appropriate procurement method. Clearly describe the vendor delivery expectations and be sure to incorporate a little flexibility. • Award– All awards must go to a vendor that is both responsive and responsible. • Manage – Contract Administration -- Right quantity, on time, to the right location, meets quality specs, meets substitution policy, etc.

26. Procurement Methods • Small Purchase • Competitive Sealed Bid • Competitive Negotiation • Non Competitive Negotiation

27. Informal Procurement: 1 5 2 3 4

28. Formal Procurement: 1 5 2 4 3

29. Informal Procurement Method • Federal regulations set forth that a procurement contract under $100,000 in value may be awarded using informal methods. • States or localities may set a lower small purchase threshold, thereby imposing more formal procedures. • Kentucky Small Purchase Threshold is $20,000 – Must be used at a minimum!

30. What does this mean? • Informal procurements must maximize full and open competition. • SFAs should prepare a solicitation document/Request for Quote that contains a complete description of what’s required, date to be provided, other pertinent conditions. • Recommend at least three sourcesbe contacted who are eligible, able, and willing to provide product orservice . • The solicitation document and award information must be documented whether written or verbal.

31. Keep in mind… • SFAs may not intentionally split purchases to fall below the small purchase threshold and avoid formal procurement methods!

32. Formal Procurement Methods • Used when the value of purchase exceeds applicable Federal, State, or local threshold for small purchases. • More rigorous and prescriptive. Methods Are: • Competitive Sealed Bidding • Competitive Negotiation • Non Competitive Negotiation

33. Competitive Sealed Bid • Develop a realistic purchase description. • Identify vendors willing and able to compete. • Results in a firm-fixed contract. The selection of the vendor must be based on the response to the specifications and price.

34. To proceed…. • 1. Develop bid specifications • MUST be advertised publically • 2. Bids MUST be solicited from adequate number of vendors • 3. Invitation for Bid MUST clearly define items or services required along with purchasing conditions. • 4. Bids MUST be opened publically as stated in IFB. • 5. Firm-Fixed contract award MUST be made by written notice to responsible bidder. • 6. Method and factors of award MUST be clearly described and documented, i.e., lowest bid.

35. Competitive Negotiation • Cannot provide a specific description up front. • Advertise to find vendors willing and able to compete. • Identify evaluation criteria and how it is weighted. • Evaluation Team • Contract awarded to highest scoring proposal. • Should have process approved by SA.

36. Non Competitive Negotiation Used ONLY after all other procurement methods are determined to be unsuccessful and approved by the SA. • Only 1 Vendor Capable of Providing Item or service. 2. Public Emergency Doesn’t Permit Timely Competition 3. Competition Lacking MUST BE JUSTIFIED IN WRITING!

37. Measuring Compliance • USDA/FNS Reviews KDE through Management Evaluations -- 7 CFR Part 210.29 • KDE reviews SFAs through CREs – 7 CFR 210.18 and 7 CFR 210.19

38. Thank you!Questions? Deanna.Tackett@education.ky.gov