SUMMER 2014 TRAINING

PROCUREMENT

REGULATIONS

FOR SCHOOL FOODSERVICE

WHY IS COMPLYING WITH PROCUREMENT REGS SO

IMPORTANT?

Expenses resulting from non-regulation

procurement procedures are unallowable and must

be repaid with non-child

nutrition funds.

AND SAVINGSYou as a CN director have a lot of expenses over which you have no control: Indirect Costs, Fringe Benefits, etc.

Practicing good procurement is one way which you can truly affect your bottom line and reduce your costs.

ALLOWABLE EXPENDITURESFROM FOODSERVICE FUNDS

• Food and supplies

• Purchased/prepared meals from vendors

• Payments to FSMCs

• Labor and other admin. and operational costs related to food service

• Indirect costs.

• (Applies to all funds in foodservice account.)

REGULATORY AUTHORITY

•Mississippi Code

•Federal Regs: 7 CFR Part 3016 (public schools) and 3019 (private, non-profits)

•USDA Program Regs: 7 CFR Part 210, 215 and 220

WHICH REGULATIONS APPLY TO YOU?

WHATEVER IS MOST RESTRICTIVE.

IF THE PROCUREMENT LAWS OF MISSISSIPPI OR YOUR BOARD POLICY ARE MORE RESTRICTIVE THAN FEDERAL REGULATIONS, YOU MUST FOLLOW THEM. (E.G. BIDS FOR NON-FOOD ITEMS OVER $50,000).

HOWEVER IF THEY ARE LESS RESTRICTIVE THEN YOU MUST FOLLOW THE FEDERAL REGS. (E.G. QUOTES FOR ITEMS LESS THAN $5,000).

MISSISSIPPI CODEFood Purchases:•Supplies that are perishable or foods purchased for use in connection with the school lunch and homemaking programs shall be exempted from competitive bid requirements.

•However, each school board shall adopt and place in its minutes definite policies for guidance of agents of such boards in connection with purchases of perishable supplies or foods which are unstable or variable in price.

•Such policies shall have the effect of law and any violations shall be subject to the penalties as provided by law.

(§ 37-39-15. Purchase of supplies or equipment for schools)

Because these are less restrictive than federal regs, you must follow the federal regs, unless your school board adopts more

restrictive guidelines.

NON-FOOD PURCHASESState Thresholds for Quotes/Bids : Non-State Contract Purchases

 

•$0 to $5,000............ no quotes required (This does not affect Child Nut. Programs because Fed. Regs require quotes for all purchases)

 

•*$5,000 to $50,000.....Purchases over $5,000, but less than $50,000 require two written quotes

 

•*Over $50,000............Purchases over $50,000 shall be advertised once per week for two consecutive weeks: sealed bids (or RFPs) may be opened after seventh working day of last day advertised.

*Because the $50,000 threshold for bids is more restrictive than Federal Regs., you must comply with that.

FEDERAL PROCUREMENT REGULATIONS

FEDERAL THRESHOLDS(APPLY TO ALL PURCHASES: FOOD AND NON-FOOD)

•Small Purchase Threshold: (Cost less than $150,000.) Must solicit quotes from an “adequate” number of vendors. Traditionally, we have required at least two.

•Over $150,000: Must solicit competitive bids or proposals

Any purchase which is exempt from state purchasing requirements such as food or items valued under $5,000 still has to comply with these federal guidelines.

EXAMPLE OF WHEN TO USE FEDERAL REGS

You do not wish to participate in the optional state purchasing programs. If the aggregate produce annual purchases for like item (i.e. milk products or produce) for your district are greater than $150,000, you must enter into formal procurement under Federal regulations.

You wish to purchase a piece of equipment that is $500. State Law would exempt this amount from solicitation requirements. However, because of federal regulations require quotes for all items under $150,000, they are the most restrictive and you must still get the quotes.

FOUR PRINCIPLES OF GOOD PROCUREMENT

•Transparent

•Responsive and responsible contractors

•Fairness and integrity

•Free and Open Competition

PROHIBITED PRACTICES

•Excessive Bonding Requirements 

•Excessive Education or Experience Requirements 

•Geographic Preferences (except for locally grown, minimally processed produce.)

•Sole Source: unless can be justified due to an emergency or other exigent circumstances

MORE PROHIBITIONS

•Negotiating with a bidder prior to bid opening

•Awarding based on only one factor of the proposal (i.e. lowest price when company did not meet the other requirements of the solicitation)

•Allowing vendors that developed the specification to offer bids

•Using unusually restrictive specifications

•Split purchase orders (purchasing same products throughout the year from different purchase orders to avoid purchasing threshold requirements)

TYPES OF COMPETITIVE

SOLICITATIONS

COMPETITIVE QUOTES(Informal Bid Procedures For Purchases Under $150,000)

• Quotes must be solicited for a specific period of time.

• Quoted prices are firm and there can be no escalation

• Verbal quotes for some items are acceptable because Federal regulations do not prohibit them. However, state regulations require quotes to be written and signed. (State requires written quotes for items between $5,000 and $50,000. This is more restrictive.)

COMPETITIVE QUOTESThe solicitation information (whether you using a written quote or verbal one) must contain:

• a description of the goods or services needed, including quantity, required certification, licensing, etc.;

• the date by which the goods or services must be provided; and

• any other pertinent terms or conditions required by the SFA, such as delivery days, times, and locations.

(You will want documentation that you offered each vendor the same information)

INVITATION FOR BIDS (IFB)(FOR PURCHASES OVER $150,000)

•Suitable when price is the determining factor.

•Should have complete and detailed specification that bidders can meet.

•Factors other than price are addressed in the bid document

•SFA must only determine the low bidder is responsive and responsible

REQUESTS FOR PROPOSALS (RFP) (FOR PURCHASES OVER $100,000)

•Particularly effective when soliciting services, accountings systems, software, etc. when price alone is not the determining factor.

•Several potential factors are given “weight” (i.e. technical resources, background/ expertise, response times, etc.) which are the determining factor of the award.

•Allows more flexibility when awarding the contract, as the SFA may engage in discussion with offerors after evaluating their proposals

RESPONSIVE VS RESPONSIBLE BIDDERS

Awards from competitive solicitations should be made only to responsible, responsive bidders.

Bidders are considered:

• "responsive" if their product or services meet the SFA's specifications, and

• "responsible" if they can and will successfully fulfill the terms and conditions of the proposed procurement.

(If you are going to declare a bidder non-responsible, you must have adequate documentation for your claim. This is not the same as “lowest and best.”)

Non-Competitive

Solicitations

SOLE SOURCE PURCHASES•Sole source purchases occur when there is only one vendor for a specific product (i.e. parts for an older oven that may be available for only one source).

•Must only be used when an emergency or other exigent circumstances require them.

•SFA is responsible for determining a product is sole-source. Normally done by soliciting information from other vendors to determine they do not produce a similar product. A statement from a vendor declaring himself a “sole source” is not sufficient.

•State Agency may ask for pre-award review.

SINGLE BIDDER

Sole source purchases are not the same as a sole or single bidder.

If you have solicited bid after determining there was reasonable expectation that there were at least 2 qualified bidders, and only one bid was returned, you may accept that bid assuming the bidder is responsive and responsible.

You may, however, want to evaluate your bid solicitation, specifications, etc. and determine if you did something to overly restrict competition. You may reject the single bid and rebid with amended specifications or other terms. Make sure that the rebid is both warranted and justified.

EMERGENCY PURCHASES

•Only permissible in extreme cases (broken freezer and there is no time for procurement).

•Failure to plan is never a justification for a non-competitive procurement

•State Agency may ask for pre-award review.

•Permissible for only short-term purchases until a solicitation can be developed and awarded

•Purchases from an unapproved non-competitive award can be disallowed.

•According to state law, emergency purchases must be approved by the superintendent (LEA) and put on the minutes of the next school board meeting. It is still advisable to get quotes even in the case of an emergency.

STATE CONTRACT PURCHASES(FOR NON-FOOD ITEMS)

•Purchase from other than the awarded vendor provided they purchase an identical item at or below the contract price. [Not applicable for items over $150,000.]

•Ignore the contract and follow the procedures for an open market purchase (i.e. thresholds for quotes and competitive bids).

Schools may purchase from the contracts or may do one of the following:

COMPETITIVE CONTRACTS

NEGOTIATED CONTRACTS

DOCUMENTS REQUIRED BY FEDERAL AND/OR STATE REGULATIONS

1. Procurement Plan. (Federal and State Regulations [see perishable food regulations 37-39-15])

2. Bid Protest Policy

3. Code of Conduct

Bid Protest Policy

ADDITIONAL RESOURCESFOR PROCUREMENT

ASSISTANCE

WWW:NFSMI.ORG

Equipment

General Procurement

s t

PR O C U R EM EN T • 1 n th e

N atioD al Food Service MaDagemeDt Institu te The University of M iss iss ip p i

PROCUREMENT PLANS