Procurement in School Nutrition Programs

1. Procurement in School Nutrition Programs May 2015

2. GOAL: To review USDA Procurement Regulations and expectations for School Food Authorities. OBJECTIVES: • Identify Applicable Regulations • Understand the Principles of Procurement • Review Critical Procurement Steps • Review Procurement Methods • Review Buy American Requirements

3. USDA Procurement Regulations Super Circular 2 CFR 200 Replaces previous regulations and combines all in one large circular: National School Lunch Program: 7 CFR §210.21 School Breakfast Program: 7 CFR §220.16 State/Local Governments: 7 CFR §3016 Non-Profits: 7 CFR §3019

4. State Agency Requirement Each State Agency shall annually review each contract (including all Supporting documentation) between any school food authority and food service management company to ensure compliance with all provisions and standards set forth in this part before execution of the contract by either party . . . . What does this mean Before SFAs sign any contract with a FSMC or FOOD VENDOR, a Complete procurement packet must be submitted to DDOE for review.

5. Procurement Packet to DDOE Cover letter to DDOE Copy of legal ad from news publication Copy of sign-in sheet for bidders attending pre-bid meeting (if applicable) Copy of the RFP (FSMC or Vended) given to respondents Vended Meals Contract (if applicable) Copy of full proposal with all documents submitted by the successful bidder Copy of Independent Price Determination Copy of Disclosure of Lobbying Activities Copy of DE Business License of successful bidder Copy of Suspension and Debarment Form

6. Procurement – Why is it necessary? • To ensure Federal funds, when used to purchase products and/or services, result in the best and most responsive product at the lowest possible price. 2. To ensure free and open competition • Most important principal of procurement • Provides all vendors an opportunity to compete • Levels the playing field • Results in best possible quality at lowest possible price

7. Principles of Good Procurement Free and Open Competition Fairness and Integrity Responsive and Responsible Contractors Transparency

8. Free and Open Competition Most Important Principal of Procurement • The procurement of goods and services must be conducted in a manner that ensures the highest quality of goods and services at the lowest possible price are procured. Procurement procedures must not • restrict or eliminate competition. Examples of restrictions may include: • Unreasonable requirements • Non-competitive practices (collusion) • Conflicts of interest • Less than arms-length: person responsible for making procurement has financial stake in transaction • Accepting gratuities, favors, gifts, etc.

9. Fairness and Integrity School Food Authorities must make sure that ethical safeguards exist and are maintained. The contractor must meet the SFA’s specifications and be able to fulfill the terms of the contract. SFA’s should check: • Contractor’s compliance with public policy • Contractor’s integrity and past performance • Financial and technical resources

10. Transparency • Is the procurement: • Clear • Above board • Out in the open

11. Goods & Services Needed Take a look at what specific goods and services are needed for your operation. • Food Service Operation • Self-Op/Central Kitchen/FSMC • Storage capacity • Processing abilities • Staffing • Food safety practices • Menus • Food inventory • Food Service Needs • Student participation • Student preferences • Menus • Transportation and delivery needs

12. Planning the Procurement Before procuring goods and services, the SFA should develop a procurement plan by following the steps below: Plan the procurement Prepare Effective Solicitation Make the award Monitor the award/contract

13. Step 1: Planning the Procurement • What is needed and when? • What is my budget? • What are the student enrollment projections for the school year? • What equipment do I have/will I need? • What’s the market and is it competitive?

14. Step 2 – Preparing Effective Solicitation Provide detailed specifications w/o restricting competition Use the appropriate procurement method (formal/informal) Describe expectations of contractor for the life of the contract Incorporate flexibility into the contract for unforeseen circumstances

15. Step 3: Making the Award • Contractor is responsive and responsible • Bids are evaluated and ranked fairly – DDOE RFP Vended Meals Prototype includes selection criteria • Award is made to lowest-priced responsive and responsible bidder

16. Step 4: Managing Contract Are delivered quantities correct? Are products delivered on time? Are products delivered to the right location? Are products meeting bid specifications? Are substituted products equal to contracted items?

17. Procurement Methods There are different procurement methods that can be used based on what is being procured: • Request for Proposal (RFP) • Invitation for Bid (IFB) • Written Quote

18. Formal Procurement Methods Formal procurement must be used when purchasing goods or services that exceed either the Federal threshold of $150,000 or the State threshold, whicheveris less. Formal procurement methods include: Invitation for Bid (IFB): used when specifications are available and/or can be developed and bids will differ only by price Request for Proposal: used when awarding a contract that is not solely dependent on the lowest cost. Example: technology

19. Delaware State Threshold VS USDA Threshold Formal Procurement USDA $3,000 or less- Micro Purchase  open market purchase $150,000 or less–Informal Procurement  3 written quotes Over $150,000 - Formal Bid Procurement  IFB  RFP DELAWARE Material & Non-Professional Services Less than $10,000–open market purchase $10,000 - $24,999 – written quotes (3) $25,000 and over – Formal Bid Professional Services Less than $50,000 – open market $50,000 and over – Formal RFP Process

20. Formal Procurement

21. Informal Procurement Informal procurement method, such as written quotes, may be used if the procurement is less than the $150,000 Federal threshold or the State (DE is <$25,000) or local threshold (whichever is less). Remember, the SFA must: • Maximize full and open competition • Solicit in writing before contacting any potential bidders including specifications • Contact at least three sources whenever possible

22. Informal Procurement

23. Advertising a Solicitation The content of the solicitation should identify: • Goods and services needed • The method of procurement that will be used; “RFP or IFB” • Contact information for obtaining information about the bid and bid packet • Due date for the sealed bid or proposal Note: Solicitations for Food Service Management Companies/Food Vendors in the School Nutrition Program must be announced at least 21 days prior to the due date of the bid or proposal.

24. Sample Solicitation NOTICE OF INVITATION TO BID PROVIDING MEALS FOR SCHOOL NUTRITION PROGRAMS KLG Academy is accepting bids for providing meals that meet all USDA requirements of the National School Lunch Program, School Breakfast Program, Afterschool Snack Program, At-Risk Afterschool Program and Summer Food Service Progam for 500 students in the 2015-2016 school year. Notice is hereby given that sealed bids will be accepted by KLG Academy at 111 Some Street, Anywhere US up until May 25, 2015. The request for proposal can be picked up at the pre-bid meeting scheduled for 10:00 a.m. on May 1, 2015 in KLG Academy’s school cafeteria. The RFP can also be accessed from our school website address; klgacademy.org. Bids received after 3:00 p.m. on May 25, 2015, will not be accepted. All bids must be mailed or hand delivered to KLG Academy, 111 Some Street, Anywhere, US. The envelope should be clearly marked “School Nutrition Bid.” Sealed bids will be publicly opened at 4:00 p.m. on May 25, 2015 in KLG Academy’s school cafeteria. The award will be made by May 30, 2015. All awards are pending Department of Education approval.

25. Buy American Provision Child Nutrition Reauthorization Act of 1998, Public Law 105-786 • Requires schools to purchase domestically grown and processed foods, to the maximum extent practicable. • Any entity that purchases food on behalf of the SFA (such as a purchasing cooperative or a FSMC must also follow the “Buy American” provisions.

26. Exceptions to Buy American Availability: when a product is not produced or manufactured in the US in sufficient and reasonable available quantities of a satisfactory quality. Cost: when a competitive bid reveals that the cost of the US product is significantly higher than the cost of a comparable foreign product.

27. How Can SFAs Comply with the "Buy American” Provision • Include the “Buy American” provision in procurement plan • Include “Buy American” clause in all product specifications, solicitations, purchase orders, and other procurement documents • Monitor contractor performance to ensure compliance with all contractual requirements, including “Buy American”

28. FSMC/Vendors cannot draft, write, or develop the specifications that the SFA uses for the solicitation. If they do, then that vendor is excluded from the bidding process.

29. If a FSMC/vendor solicits a contract from a School Food Authority and the School Food Authority enters into a contract with that FSMC/vendor, that is a sole source procurement and funds from the School Food Service Account may not be used to pay the FSMC/vendor.

30. Contract Rewards • SFAs will be allowed to renew an existing contract with a food vendor or FSMC for 2 years provided: • Original contract was approved by DOE • Request to renew contract was approved by DOE • There are no material changes • No significant increase/decrease in student enrollment • No meal programs have been added or deleted • No significant changes to the meal pattern since original contract