SNP Procurement

School nutrition procurement is governed by federal, state and local regulations and policies. Having a strong understanding of these regulations is key to being able to procure goods and services for covered programs with confidence that the SFAs are in compliance and are getting the best products for the best prices. Part 200 of Title 2 of the U.S. Code of Regulations titled, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, lays out the basic procurement requirements that SFAs and sponsors administering the National School Lunch Program, School Breakfast Program and Seamless Summer Program must follow when using federal funds. Program-specific rules can be found in the federal regulations governing each federal nutrition program. In accordance with regulations, schools must assess whether any expenditure being paid for from the non-profit school food service account is allowable, meaning is it necessary, reasonable and allocable. Following proper procurement practices ensures that the federal and state dollars are being spent in a free and open market and that all participants are treated fairly. The information in this section provides the base for structuring procurement practices and making procurement decisions that ensure all dollars spent from the non-profit school food service account are spent according to regulations and policies.  A procurement cheat sheet and link to the Institute of Child Nutrition are provided as references.  

When procuring goods and services for the Child Nutrition Programs, a school food authority must determine whether they must use an informal or formal procurement method. It is important to understand and then identify which method best meets the needs of your individual school food service operation. Review the tabs below to determine the best procurement methods for your district.

All procurement transactions must be conducted in a manner that provides full and open competition. Some situations considered to be restrictive include placing unreasonable requirements on firms in order for them to qualify to do business, requiring unnecessary experience and excessive bonding, organizational conflicts of interest, specifying only a “brand name” product instead of allowing “an equal” product, or awarding to contractors that developed or drafted specifications, requirements, statements of work, or solicitations. For more information, go to https://www.ecfr.gov/cgi-bin/text-idx?SID=3a82220e6238bf50616c1806c7789c03&mc=true&node=se2.1.200_1320&rgn=div8.

Six steps in the procurement process operators should continuously refer to in their procurement process:

1.        Planning. This includes a needs assessment, forecasting and budgeting. The school should be able to answer the following questions:

·          What goods or services do you need?

·          Are these goods or services available for purchase? And if so, are they available locally?

·          Will you need delivery, or will you pick them up?

·          When and where do you need them?

·          How much do you need?

2.        Drafting specifications. This documentation will include all the details such as descriptions, requirements, and specifications for those goods or services.

3.        Advertising a solicitation. Once drafted, provide this information to potential vendors (farmers, vendors, distributors, or other businesses) who might be able to fulfill your needs as described.

4.        Award to the offeror who is responsible, who returned a responsive bid according to the solicitation requirements and was the lowest cost (IFB or RFQ) or scored the highest (RFP)

5.        Manage the contract. Once awarded, continue to manage the contract to ensure that everything is provided according to your specifications and contract terms.

·          Evaluation of escalation/de-escalation clause

·          Evaluation of Contract Renewal/Amendment (roll-over clause)

·          Evaluation/documentation of contract re-negotiations/changes to original contract at the timelines and under the same conditions specified in the original solicitation document

·          Evaluation of return of discounts, credits, and rebates (as applicable) and detailed procedure indicating how/when the discounts, rebates, and credits would be assigned to the SFA by the contractor

·          Evaluation of whether procurement methods/activities are consistent with the SFAs approved written procurement plan where/how all documents pertaining to the solicitation and contract/contract amendments will be maintained

6.        Record Keeping. All IFBs/RFPs/RFQs with appropriate documentation and signatures of authorized purchases maintained on the original solicitations.

·          Comparison charts to document procurement decisions and contract awards

·          Record or public bid openings and/or proposal openings if proposals were publicly opened

·          Copies of contract award/non-award letters

·          Determination/document of correct procurement method used

·          Record retention and record access requirements (records maintained for three years from final payment of contract and/or renewal; all base solicitations must be maintained for three years after the final payment of the contract)

When the value of goods or services does not exceed the simplified acquisition threshold, you may use an informal procurement method to expedite the completion of its transactions and minimize the associated administrative burden and cost. There are two types of informal procurement methods: micro-purchase and small purchase. Regulations associated with informal procurements can be found at 2 CFR §200.320(a).

 

Micro-Purchase

A micro-purchase is the acquisition of goods or services that are reasonably priced and that do not exceed $10,000 per transaction. Some reasons to utilize this type of procurement may include unplanned purchases, delivery shortages, nominal purchases, or a seasonal purchase. To properly utilize this procurement type, the following requirements must be considered:

·  The most stringent threshold takes precedent. A district level threshold may be less than the $10,000 federal threshold.

·   One transaction may not be purposely separated into multiple transactions to fit within the threshold.

·  Purchases must be awarded without soliciting competitive price quotes as long as the price is “reasonable ”. Do not compare prices to determine reasonability as the purchase then becomes a small purchase. To determine if a price is “reasonable”:

o    compare previous purchases of similar item(s), but do not price shop since this is a micro-purchase and not a small purchase  

o    have personal knowledge of the item(s) being purchased

·         Purchases should be distributed equitably among qualified suppliers. It is discouraged to continuously use a single vendor because their price is under the micro purchase procedure.

·         Invoices/receipts must be maintained to confirm the goods or services purchased and respective price.

The federal threshold may be increased up to $50,000 on an annual basis with a self-certification. The self- certification must include a justification, clear indication of the threshold, and supporting documentation of any of the following:

1.         A qualification as a low-risk auditee, in accordance with the criteria in 2 CFR 200.520;

2.         An annual internal institutional risk assessment to identify, mitigate, and manage financial risks; or

3.         For public institutions, a higher threshold consistent with State law.

 

Small Purchase

A small purchase is the acquisition of goods or services by competitive quotes when the estimated value of an awarded contract or purchase is below the SFA’s simple acquisition threshold, also known as the small purchase threshold. If the estimated value of goods or services needed (during the period of time you wish to purchase them in) is greater than the micro-purchase threshold, and less than the small purchase threshold, the SFA may use the small purchase method. The simple acquisition threshold varies depending on district type.

The simple acquisition threshold for public systems without central procurement is $10,000. A public school system located in a county having a population of forty thousand (40,000) or more, according to the 2010 federal census or any subsequent federal census, may increase the simple acquisition threshold to $25,000.

The threshold for public school systems with central procurement is $25,000, and the threshold for non-public school systems is $250,000.

To properly utilize this procurement type, the following requirements must be considered:

·         The most stringent threshold takes precedent. A district level threshold may be less than the state or federal threshold. You must know your local thresholds!

·         Quotes must be obtained from at least two qualified sources, preferably three.

·         Quotes may be verbal or written, and they must be documented. You may utilize one of these forms to assist with documenting the transaction.

·         When obtaining a quote, the same clear and accurate specifications must be provided for the product or service to each qualified source.

·         Any responses that do not meet the specifications or requirements must be documented as non-responsive with the reason.

·         Invoices/receipts must be maintained to confirm the goods or services purchased and respective price.

When the value of goods or services exceed the simplified acquisition threshold, you must use a formal procurement method. There are three types of formal procurement methods – Invitation for Bid, Request for Proposal, and Noncompetitive. Regulations associated with formal procurements can be found at 2 CFR §200.320(b) and 2 CFR §200.320(c).

 

Invitation for Bid (IFB)

An IFB, also known as a sealed bid, is the acquisition of goods or services to the most responsive and responsible bidder based solely on price. This type of procurement is used when you know what you want and how you want it. To properly utilize this procurement type, the following requirements must be considered:

·         Firm fixed-price contract

·         Must be advertised to the public, opened publicly, and the award publicly announced

·         Items or services and bid conditions must be adequately defined

 

Request for Proposal (RFP)

An RFP, also known as a competitive proposal, is the acquisition of goods or services to the most responsive and responsible bidder based on other factors in addition to price. This type of procurement is used when you know what you want, but how it is accomplished is variable. To properly utilize this procurement type, the following requirements must be considered:

·         Firm fixed-price contract or cost-reimbursable contract

·         Must be advertised to the public but does not require a public opening

·         Must include detailed scoring criteria of how points will be awarded and a written method for how the technical evaluation will be conducted

·         Cost must be the primary factor

Noncompetitive

A noncompetitive procurement, also known as a sole source, means there is no competition for the award. This type of procurement is only awarded in specific circumstances, such as the item is only available from a single source, during a public emergency, or competition is deemed inadequate after a solicitation of a number of sources. Please consult with your regional consultant if considering this option. Regulations associated with noncompetitive procurements can be found at 2 CFR §200.320(c).

For assistance writing a formal solicitation, check out this guidance/checklist

All contracts must contain the applicable provisions described in Appendix II to Part 200. The following chart provides a summary of the provisions, applicability by part, and the respective citation. Pay close attention to the applicability, because not every provision applies to every contract. For more information, please visit this link.

Provision Applies When: Citation

Remedies for a Violation or Breach

Contract value exceeds the simplified acquisition threshold

2 CFR 200 Appendix II (A)

Termination for Cause and Convenience

Contract value exceeds $10,000

2 CFR 200 Appendix II (B)

Equal Employment Opportunity

Contracts meet the definition of “federally assisted construction contract.” Note: This provision applies to construction contracts ONLY.

2 CFR 200 Appendix II (C)

Davis-Bacon Act

Value of a prime construction contract exceeds $2,000. Note: This provision applies to construction contracts ONLY.

2 CFR 200 Appendix II (D)

Contract Work Hours and Safety Standards Act

Contract value exceeds $100,000 and involves the employment of mechanics or laborers. Note: This provision applies to construction contracts ONLY.

2 CFR 200 Appendix II (E)

Rights to Inventions Made Under a Contract or Agreement

All awarded contacts related to experimental, developmental, or research work type

2 CFR 200 Appendix II (F)

Clean Air Act and the Federal Water Pollution Control Act

Contract value exceeds $150,000

2 CFR 200 Appendix II (G)

Debarment and Suspension

All awarded contacts. More information regarding this requirement is provided below.

2 CFR 200 Appendix II (H)

Byrd Anti-Lobbying Amendment

Contractors that respond or bid for an award exceeding $100,000. More information regarding this requirement is provided below.

2 CFR 200 Appendix II (I)

Debarment and Suspension

A contract award (see 2 CFR 180.220) must not be made to parties listed on the governmentwide exclusions in the System for Award Management (SAM). SAM exclusions contains the names of parties debarred, suspended, or otherwise excluded by agencies, as well as parties declared ineligible under statutory or regulatory authority. To confirm compliance, you may use one of the three following methods:

(a) Checking the System for Award Management (SAM) or the Excluded Parties List System (EPLS); or

(b) Collecting a certification from the awardee; or

(c) Adding a clause or condition to the covered transaction with the awardee.

In meeting the certification requirements listed in (b) above, an authorized USDA Nonprocurement Debarment and Suspension Certification form for lower tiered covered transactions must be used, and can be found here.

If using the certification method, the above form cannot be deviated in any way. If the local agency requires additional certification information, they must do so using a separate certification.

 

Byrd Anti-Lobbying Amendment

Contractors that apply or bid for an award exceeding $100,000 must file the required certification. The contractor must certify that it will not and has not used Federal appropriated funds to pay any person or organization for influencing or attempting to influence an officer or employee of any agency, a member of Congress, officer or employee of Congress, or an employee of a member of Congress in connection with obtaining any Federal contract, grant or any other award covered by 31 U.S.C. 1352.

Unlike the debarment and suspension requirement, there is no authorized USDA certification form that must be used. Therefore, a district level form may satisfy this provision. You may also use the form found here.

 

Procurement Do’s and Don’ts

Procuring Local Foods for Child Nutrition Programs

Local Procurement State Agency Presentation

For all school food authorities (SFAs) to renew bids with price redeterminations, the contract must be tied to an appropriate cost index. Relating the price redeterminations in a contract to an index allows the SFA to ensure that the increases under the contract are not without basis. The indexes utilized are the Producer Price Index (PPI) and the Consumer Price Index (CPI).

The PPI program measures the average change over time in the selling prices received by domestic producers for their output. The prices included in the PPI are from the first commercial transaction for many products and some services.

The CPI program produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services. SFAs may use either index to measure price redeterminations. Price indexes are available for the U.S.; the four census regions; size of city; cross-classifications of regions and size-classes; and for 26 local areas. Indexes are available for major groups of consumer expenditures (food and beverages, housing, apparel, transportation, medical care, recreation, education and communications, and other goods and services), for items within each group, and for special categories, such as services.

Sample bid renewal language can be found here

SFAs must keep in mind that for all procurement transactions for food when funds are used from the nonprofit food service account—whether directly by an SFA or on its behalf—procurement transactions must comply with the Buy American provision. Implementation of the Buy American provision should be done by: including the provision in documented procurement procedures, state agency prototypes documents, and all procurement solicitations and contracts; including domestic requirements in bid specifications; contract monitoring; and verifying cost and availability of domestic and non-domestic foods using data in the USDA Agricultural Marketing Service's weekly market report.
Limited exceptions to the Buy American provision are allowed for the purchase of foods not meeting the domestic standard. These exceptions, as determined by the SFA, are:

  1. The product is not produced or manufactured in the U.S. in sufficient and reasonably available quantities of a satisfactory quality; or
  2. Competitive bids reveal that the costs of a U.S. product are significantly higher than the non-domestic product.

Before utilizing an exception, alternatives to purchasing non-domestic food products should be considered.

If the SFA is using one of the above exceptions, there is no requirement to request a waiver from the state agency or FNS in order to purchase a non-domestic product. SFAs must, however, keep documentation justifying the use of the exception(s).

The state agency has provided sample language that may be used in procurement solicitations and a sample waiver form with instructions for its use. Please note that this form is not mandatory, but all exceptions and the process the SFA follows to implement the Buy American provision must be documented.

The USDA's Schools/Child Nutrition USDA Foods Programs support domestic nutrition programs and American agricultural producers through purchases of domestic agricultural products for use in schools and institutions. Nutritious USDA-purchased food is provided to the National School Lunch Program. In Tennessee, USDA foods are distributed through the Department of Agriculture and administered by Terry Minton, USDA foods administrator. The USDA foods distribution office facilitates the administration of the program by providing entitlement and ordering survey worksheets in early January of each year so menu plans can be finalized for the following school year. Efficient utilization of USDA foods in the form of brown box, further processed foods and Department of Defense (DOD) fresh produce ensures that the entitlement dollars provided by USDA foods are maximized at the local school district level. When planning maximum fund utilization from USDA Foods entitlement, this USDA Foods Cost Analysis Tool is a great resource.

Brown Box USDA Foods – The SFA can request processed items that are delivered through state contracted distributors in quantities needed to satisfy their menu needs. These items are requested on the initial survey worksheets and are combined with requests from other SFAs across the state. Truckload quantities of these items are ordered and delivered to state contracted warehouses for distribution to local SFAs.

Further Processed USDA Foods – For raw, bulk USDA foods to be further processed into selected end products, the recipient agency (RA) competitively procures the services of commercial food processors to have the USDA foods converted to more ready-to-use products. After competitive procurements are finalized, the information regarding processor and number of pounds of the raw commodity being contracted must be sent to the commodity distribution administrator in order to ensure that the SFA's entitlement balance is maintained. A legally binding agreement with the Food and Nutrition Service (FNS) or the State distributing agency (SDA), as appropriate, allows the processor to receive USDA foods like bulk chicken as an ingredient in the production of finished products such as fajita strips.

Department of Defense (DoD Fresh) purchasing – State Distributing Agencies may permit SFAs to allocate some or all of their USDA foods entitlement to purchase produce through DoD Fresh. A maximum value or request for these funds to be allocated to DoD Fresh must be made by the SFA when submitting their survey worksheets to the State distributing agency. SFAs are reminded that they cannot continue to purchase from the DoD Fresh vendor after all entitlement funds are utilized unless that vendor has been secured with a proper procurement.

As a resource, a suggested timeline for procurement of USDA foods is included here.

Government-wide requirements found in the Office of Management and Budget (OMB) guidance cited at 2 CFR 200.439, require prior written approval of its awarding agency before incurring the cost of a capital expenditure.

2 CFR 200.13 defines capital expenditures as expenditures to acquire capital assets or expenditures to make additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations, or alterations to capital assets that materially increase their value or useful life.

Both the OMB guidance and Generally Accepted Accounting Principles (GAAP) identify equipment as a capital asset, which 2 CFR 200.12 defines as tangible or intangible assets used in operations having a useful life of more than one year which are capitalized in accordance with GAAP. Capital assets include:

(a) Land, buildings (facilities), equipment, and intellectual property (including software) whether acquired by purchase, construction, manufacture, lease-purchase, exchange, or through capital leases; and

(b) Additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations or alterations to capital assets that materially increase their value or useful life (not ordinary repairs and maintenance).

2 CFR 200.33 defines equipment as tangible personal property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-Federal entity for financial statement purposes, or $5,000.

Therefore, the School Food Authority (SFA) must seek prior approval for equipment purchases that equal or exceed $5,000 for items that are not on the state agency-approved equipment list, or for sole source purchases. Approval is not required for purchases less than $5,000. See SP39-2016 for more information.

The state has developed a list of capital assets (equipment) that are typically purchased. Any item on the approved equipment list will receive automatic state agency approval. The SFA may purchase those equipment items, following competitive federal, state, or local procurement procedures, as applicable, without submitting a request to the state agency for approval.

Please click here to find the complete list of pre-approved items, and the form to request approval for items that are not pre-approved.

When submitting a request for approval, be sure to fill out the entire form with appropriate signatures.

Submit the completed form to School.Nutrition@tn.gov.

 

A Food Service Management Company (FSMC) is a commercial enterprise or non-profit organization that provides meals and manages any or all aspects of school food service operations.

 

Resources

 

Renewal Timeline for Food Service Management Company (FSMC) Contracts

Please see the following guidance on executing a Food Service Management Company contract renewal. Following the timeline will ensure operation at the beginning of the school year. 

January
School Food Authorities (SFAs) must notify the Tennessee Department of Education (TDOE) of intent to renew 

- Email intent to renew contract each renewal year to School.Nutrition@tn.gov

- SFAs in year 5 of the contract, please see the Request for Proposal (RFP) timeline for the new bid process.

May-August
Submit renewal contract to TDOE

- SFAs must ensure that TDOE approves the FSMC contract PRIOR to execution and annually reviews the contract (including all supporting documentation). TDOE must review and approve all contract renewals.

- Copy of Consumer Price Index should be sent to TDOE with renewal if FSMC submits an increase.

- Copy of SFA-FSMC monitoring form should be sent to TDOE with renewal.

- June 1 is the last day to submit renewals.

Reconciliation Document - Reconciliation of Credits for USDA Foods form must be turned in by August 1.
Non-renewal 

- If the SFA elects not to renew the contract, the SFA must adhere to procedures and timelines outlined for new contracts.

- If the SFA elects to return to a self-operated program, notify TDOE.

Contact

If you have any questions regarding Food Service Management Company Contracts, please contact Josh Nunnally at Josh.Nunnally@tn.gov.

A vended meals agreement is established when a school contracts with a private company (also referred to as a vendor) for the purpose of providing meals. The vendor is not involved in any aspect of managing Child Nutrition Programs. This type of agreement must be competitively procured.

 

Resources

 

Contact

If you have any questions regarding vended meals contracts, please contact Josh Nunnally at Josh.Nunnally@tn.gov.