Moving away from vendor loyalty and towards competition Presented by Randy Jones Department of Public Instruction 1

 DPI’s Procurement Webpage:  Informal Procurement Checklist - (Purchase Costing Less Than $150,000)  Informal Procurement Log and Evaluation Matrix (with instructions) - (Purchase Costing Less Than $150,000)  Informal Procurement Template - (Purchase Costing Less Than $150,000)  National Food Service Management Institute's (NFSMI's) First Choice: A Purchasing Manual for School Food Service 2

1. “What do you need?” 2. “Do I have the budget to pay for it?”  These questions bring about a set of actions that: take place prior to, during, and after your procurement event. 3

 Have you ever run a race?  Have you ever known someone in a cooking contest?  Have you ever watched in a football game? Racing, cooking contests, and football games are all forms of competition. 4

 "Competition" is the foundation for all properly conducted procurements, regardless of dollar value.  Competition is not a method of procurement, but a condition of the environment in which the procurement occurs. 5

 “Competitive Procurement”  "Free and open competition”  Procurement procedures must not:  unduly restrict competition, or  eliminate competition. 6

 Procurement is the process of purchasing of goods or services.  Best possible price that meets the needs of the School’s  Follows all Federal and State regulations 7

Schools must comply with:  7 CFR Part 3016 and Part 3019;  USDA Program regulations (7 CFR Part 210, Part 215, and Part 220), guidance, and instructions;  State law, regulations, and policies that are not in conflict with Federal requirements; and  Local law, regulations, and policies that are not in conflict with Federal requirements. 8

 The line that separates small purchases from big purchases is called the “small purchase threshold”.  Small purchase threshold = $150,000.  Purchases costing > small purchase threshold is called, “Informal Procurement”  Purchases costing ≤ small purchase threshold is called, “Formal Procurement” 9

 Small Purchase  Invitation for Bid (IFB)  Request for Proposal (RFP)  Sole Source  Emergency Procurement  Request for Information (RFI) 10

Informal ProcurementFormal Procurement 3 Bids and A BuyIFBRFP > $150,000≤ $150,000 Small PurchaseCompetitive Sealed BidCompetitive Proposal Responsive bids will differ only by price  Cost is not the sole determining factor for award.  Proposal includes evaluation criteria and weighting (points). School contacts Vendors for Pricing Public Notice Requirement fixed-price contracts:  a firm-fixed-price contract,  a fixed-price contract with economic price adjustment, or  a fixed-price contract with prospective price redetermination. Cost plus a fix fee contract: Not AllowedCost plus a fix fee contract: Allowed 11

 A situation in which there is only one known capable supplier of a good or service.  The key to determination of "sole source" is the documentation of the search for other sources for the required good or service.  Involves noncompetitive proposals  Milk Bids sometimes end up being Sole Source due in part to limited number of distributors 12

 A condition which creates an immediate and serious need for goods or services,  When its appropriate redress precludes the use of normal competitive procurement methods, and  When its existence seriously threatens the operations of an SFA.  SFA's failure to properly plan is never a reason for a emergency procurement.  Involves noncompetitive proposals 13

 RFI is a standard business process whose purpose is to collect written information about the capabilities of various suppliers.  RFI is used to gather information to help make a decision on what steps to take next.  Schools use RFIs in procurement of “End Products”. 14

 SFA and vendor will need to work together to ensure that the contract is adhered to properly by both parties.  The contract will need to be managed and regularly reviewed and audited to make sure it continues to meet the requirements originally established.  Good contract management is also about continually improving, developing and building good relationships, as well as day-to-day administration and monitoring. 15

 The Farm Bill amended the National School Lunch Act to allow schools to apply a geographic preference when procuring unprocessed locally grown or locally raised agricultural products.  Unprocessed products mean those agricultural products that retain their “Inherent Character”.  This is used for giving preference to but not excluding vendors  This is useful when procuring for the Farm to School Program. 16

 “Line Item” – a vendor is awarded the contract based on individual pricing for each item contained in the solicitation.  The solicitation may have contained several items but the award will be based on lowest individual price quoted for each item.  “Total Cost” – a vendor is awarded the contract based on overall pricing of all the items contained in the solicitation.  The solicitation may have contained several items but the award will be based the over all lowest price quoted for all the items.

A good specification should:  Identify minimum requirements.  Allow for a competitive bid. Specification Sources  Collect information from the end user i.e. students  Collect product information from the industry (brochures, catalogs, specs, etc.).  Look for specification information from other government entities.  Call on other “experts” in the purchasing community for help. 18

Types of purchasing associations:  Informal school associations  Cooperative Educational Service Agency (CESA)  Cooperatives (co-op)  Group Purchasing Organizations (GPO)  Other Purchasing Organizations Purchasing Agent 19

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21  Estimated value of the purchase is less than $150,000  Schools have a lot more flexibility in how they solicit bids from vendors.  No public notice requirement  No closed bid requirement  No public opening requirement  Informal bidding is always based on price!  Requires less time to prepare and complete the procurement process

“Three bids and a buy” 22

 Notify prospective vendors of your plan to purchase products  This allow vendors to know that you will be contacting them in the near future to get pricing  Schools will want to work with enough vendors to ensure that when they getting pricing, they can get pricing from at least three vendors.  Build quality business relationships with vendors 23

 Step 2 - Planning your bid: Write down the product specifications in a purchase log  Step 3 - Starting the bid process: Contact vendors (by phone, , fax, in person, or mail) and provide them with written product specifications or if calling, read off the written specification from your purchase log.  Step 4 - Document vendor responses: Name, Contact Method, Who provided the price quote, The price quoted, Date price quote was obtained and Duration of price quote 24

Step 5 - Obtain price quotes from at least three vendors (i.e. “Three bids and a buy”) Step 6 - Award the contract/purchase to the most responsive and responsible vendor with the lowest price. What is a responsive and responsible vendor? 25

 Monitor invoices, product quantity and quality on a consistent basis  Sign off on purchases only after they have been fully inspected  Product not matching specifications provided in bid should be returned or exchanged.  Note returns or exchanges for future vendor evaluation  Audit invoices and confirm that prices match what was quoted during the purchasing process.  Variances should be corrected  Note variances for future vendor evaluation 26

Three Bids and a Buy: Template 27

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 Three Bids and a Buy: Moving away from vendor loyalty and towards competition (Informal Purchasing Process)  This is a great tool for purchasing but the key to it’s success is for the purchaser to remain unbiased during the purchasing process.  Remember its all about competition!  Purchasing doesn’t have to be complicated but it does need to be documented and fair! 29

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31 Randy Jones School Nutrition Team Contract Specialist/Procurement Department of Public Instruction Phone: In accordance with Federal law and the United States Department of Agriculture policy, this institution is prohibited from discriminating on the basis of race, color, national origin, sex, age, or disability. To file a complaint of discrimination, write USDA, Director, Office of Adjudication, 1400 Independence Avenue, S.W., Washington D.C or call toll free (866) (Voice). Individuals who are hearing impaired or have speech disabilities may contact USDA through the Federal Relay Service at (800) ; or (800) (Spanish). USDA is an equal opportunity provider and employer.