National Food Service Management Institute Section 10: Prices and Awards 1 Section 10: Prices and...

Section 10: Prices and Awards 1 National Food Service Management Institute

Section 10: Section 10:

Prices and Awards Prices and Awards (Steps 6 and 7)(Steps 6 and 7)

Food Purchasing Food Purchasing for Child Care Centersfor Child Care Centers


explain the difference between a line-item award and a bottom-line award,

state which methods to use for obtaining prices from retail vendors and wholesale vendors,

Lesson ObjectivesLesson Objectives

The learner will be able to


state the six parts of an IFB/RFP, and

identify where to obtain advanced training on an IFB/RFP.

Lesson ObjectivesLesson Objectives

The learner will be able to


Steps 6 and 7Steps 6 and 7

Obtain price quotes

Award business

Board of directors

Owners

$$


Which One?Which One?

Line-Item Award

Or

Bottom-Line Award


Line-Item AwardLine-Item Award

You buy each item from the vendor

offering the lowest price quote that meets quality

standards.


Line-Item AwardLine-Item Award

Product Name

Vendor A Vendor B Vendor C

Peaches $20.36 low $22.94 $23.41

Pears $22.49 $23.95 $22.46 low

Sugar $19.06 $18.75 low $21.45


Bottom-Line AwardBottom-Line Award

You buy all food products in a group

from the same vendor.

“all or nothing”



Award business to vendor with lowest total(bottom line)

Use quantity estimates accurate to + 10%



Compare extended prices, not unit prices


Unit vs. Extended PricesUnit vs. Extended Prices

Unit prices

Prices of single cans or cases

Extended prices

Unit prices x quantities


ExampleExample

A case of peaches costs $20. The center will buy 12 cases of peaches.

Unit price = $20

Extended price = $20 x 12 = $240



Adding the unit prices of all items is not the bottom-

line method.


Bottom-Line, No QuantitiesBottom-Line, No Quantities

Vendor A Vendor B Vendor C

Product Name Unit Price Unit Price Unit Price

Peaches $20.19 $22.02 $21.50

Pears $20.94 $20.48 $21.50

Sugar $15.98 $16.63 $14.10

Total $57.11 $59.13 $57.10


Bottom-Line, QuantitiesBottom-Line, Quantities

Vendor A Vendor B Vendor CProduct Name

Quantity Unit Price

Extended

Price

Unit Price

Extended Price

Unit Price

Extended Price

Peaches 25 cases $20.19 $504.75 $22.02 $550.50 $21.50 $537.50

Pears 10 cases $20.94 $209.40 $20.48 $204.80 $21.50 $215.00

Sugar 15 bags $15.98 $239.70 $16.63 $249.45 $14.10 $211.50

Bottom-Line Total

$953.85

Low$1,004.75 $964.00


Obtaining PricesObtaining Prices

To maintain full and open competition, a center

must give every vendor an opportunity to

compete for the business of the center.


Quality wanted

Best price


$$



Different methods used to obtain

prices from retail and wholesale

vendors


Retail Vendor PricesRetail Vendor Prices

If you buy from retail vendors, the best

approach for determining where to buy your food

and supplies is the market basket.


Market BasketMarket Basket

A representative list of the foods a center uses in a typical week



Make a list of the foods and quantities that your center uses in a typical week

Obtain the prices of these foods from the retail vendors in your community and write them down

Compare the prices using the line-item or bottom-line method (whichever one your center decides to use)



Determine which vendor offers the lowest price

Make a recommendation to your board of directors/owners to purchase from that vendor



You may need to split the food into

several smaller market baskets.


The Decision . . . The Decision . . .

. . . where to purchase must be approved by the board of directors or owners for a certain time period.


How Often?How Often?

How often determined by board/owners

Recommended at least once a year with board/owner approval

May be repeated at any time



Sometimes a center may need to

purchase from a vendor not awarded the market basket.



Write down the reason

Keep it with the invoice

Keep documentation for audit or review

If purchasing from vendor not awarded the business


Date of Prices: XX/XX/XXXX*

Product QuantityMagilla

Supermarket Price

Mallard Grocery

Price

Crane’s Wholesale Club Price

Flour, all-purpose 5 lb $1.50 $0.99 $1.35

Vanilla Flavoring 1 pint $1.65 $1.75 $1.75Cheese, Cheddar, reduced-fat, shredded

3 lb $10.38 $11.38 $10.95

Eggs 3 dozen $2.01 $2.25 $2.50

Chicken Stock, 14 oz 10 $4.40 $4.60 $3.90

Applesauce, No. 10 can 1 $3.67 $4.05 $3.55

Grape Juice, 1 gal 2 $3.86 $3.99 $3.74Pineapple Cubes, in juice, No. 10 can

1 $3.98 $4.25 $4.15

Green Beans, No. 10 can 1 $2.58 $2.54 $2.69

Tuna, 12 oz can 6 $11.22 $12.00 $11.44

Vegetables, mixed, frozen 3 lb $2.26 $2.46 $2.13

Broccoli, frozen, chopped 2 lb $1.74 $1.85 $1.64

Beef, ground, ≤ 20% fat 7 lb $8.40 $9.25 $9.50

Catsup, 24 oz 1 $1.46 $0.99 $1.36

Graham Crackers, 14 oz 2 $4.00 $3.98 $4.50

Tomato Paste, 6 oz can 2 $0.80 $0.66 $0.67

Totals $63.91 $66.99 $65.82

Activity 13Activity 13


Date of Prices: XX/XX/XXXX

Product QuantityMagilla

Supermarket Price

Mallard Grocery

Price

Duck’s Fruit Stand Price

Bananas 12 lb $5.76 $6.72 $7.20Apples—125 count 5 lb $5.15 $4.85 $5.25Oranges—100 count 15 lb $7.50 $8.25 $6.75Carrots 7 lb $5.25 $5.74 $6.02Celery 1 stalk $1.17 $1.27 $1.15Tomatoes 5 lb $4.90 $5.00 $4.80Pepper, Bell 1 $.65 $.50 $.45Onions, yellow 1 lb $.87 $.88 $.86Baking Potatoes 10 lb $6.70 $6.80 $6.90Cabbage, green 5 lb $2.30 $2.20 $2.25Totals $40.25 $42.21 $41.63

Activity 14Activity 14


Different pricing structure than retail vendors

Long-range firm prices possible

Wholesale Vendor PricesWholesale Vendor Prices


Wholesale Vendor PricesWholesale Vendor Prices

To purchase from a wholesale vendor and assure better

pricing, it is necessary to have

a contract.


ContractContract

Guaranteed price from the vendor

Guaranteed quantity to be purchased


IFB/RFPIFB/RFP

Should be used in obtaining pricing from a wholesale

vendor


Private non-profit centers: Must use IFB/RFP for purchases of more than $100,000 or amount in their organization’s procedures, if less

Public centers: Must use IFB/RFP for purchases of more than $100,000 or amount in State law or local procedures, whichever is less

Federal PrinciplesFederal Principles


For-profit centers: Must use IFB/RFP for purchases of more than $10,000

Federal PrinciplesFederal Principles


IFB/RFPIFB/RFP

IFB—only variable is price

RFP—many variables including price


Wholesale Vendor PricingWholesale Vendor Pricing

Write an IFB/RFP document

Invite (advertise) vendors to respond to the IFB/RFP during a stated time period

Compare prices from the vendors’ responses using the line-item or bottom-line method (whichever one your center decides to use)


Wholesale Vendor PricingWholesale Vendor Pricing

Determine which vendor offers the best price

Make a recommendation to your board of directors/owners to purchase from that vendor


First Choice: A Purchasing

Systems Manual for

School Food Service

Evaluating an IFB/RFPEvaluating an IFB/RFP

Chapter 10


Parts of an IFB/RFPParts of an IFB/RFP

Signature page General instructions Special instructions Product list Delivery sites if more than one Potential vendor list


Signature PageSignature Page

Dates pricing is firm Shorter period, better

price One year normal

Date and time IFB/RFP due Contractual statement the

vendor signs


General InstructionsGeneral Instructions

Corrections of mistakes on the price list

A list of laws that must be followed Whether fax copies of price list

accepted Penalties for failure to perform Other general information



Systems Manual for

School Food Service

Standard Contract LanguageStandard Contract Language

appendix 16


Special InstructionsSpecial Instructions

Drained weight of canned fruits and vegetables

Delivery time and frequency Grade standards Private labels of potential vendors Other information related to

product list


Product ListProduct List

Name and quality standards for each product

Quantity center wants Product item number Product bid unit



Systems Manual for

School Food Service

Bid UnitsBid Units

chapter 6


Product ListProduct List

Item Number

Product and Quality Standard

Bid Unit

Quantity Unit Price

Extended Price

001 Peaches, canned: to be packed to U.S. Grade B standard; yellow Cling; sliced; packed in juice; 6/No. 10 cans per case

Case 50


Delivery Site ListDelivery Site List

Name, address, phone number, contact person of sponsoring organization and information on delivery site

Name, address, phone number, hours of operation, and the contact person of each delivery site

(only if more than one delivery site)


Potential Vendor ListPotential Vendor List

Used to contact vendors

Contains Names of distributors Names of newspapers or other sources

where IFB/RFP will be advertised


IFB/RFPIFB/RFP

Any organization that is large enough to purchase from wholesale vendors should get more training

on the IFB and RFP.


If board/owner approval needed Summarize reasons for

vendor award in written/oral presentation

Consider time needed for board/owner approval

Have board/owners decide before current purchasing authority expires

Awarding the BusinessAwarding the Business


Awarding the BusinessAwarding the Business

If board/owner approval not needed, promptly Sign contract with

wholesale vendors

Notify vendor when purchasing will begin

National Food Service Management Institute Section 10: Prices and Awards 1 Section 10: Prices and...

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