National Food Service Management Institute Section 10: Prices and Awards 1 Section 10: Prices and Awards (Steps 6 and 7) Food Purchasing for Child Care Centers

National Food Service Management Institute Section 10: Prices and Awards 2 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 Objectives The learner will be able to

National Food Service Management Institute Section 10: Prices and Awards 3 state the six parts of an IFB/RFP, and identify where to obtain advanced training on an IFB/RFP. Lesson Objectives The learner will be able to

National Food Service Management Institute Section 10: Prices and Awards 4 Steps 6 and 7 Obtain price quotes Award business Board of directors Owners $

National Food Service Management Institute Section 10: Prices and Awards 5 Which One? Line-Item Award Or Bottom-Line Award

National Food Service Management Institute Section 10: Prices and Awards 6 Line-Item Award You buy each item from the vendor offering the lowest price quote that meets quality standards.

National Food Service Management Institute Section 10: Prices and Awards 7 Line-Item Award Product Name Vendor AVendor BVendor 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

National Food Service Management Institute Section 10: Prices and Awards 8 Bottom-Line Award You buy all food products in a group from the same vendor. “all or nothing”

National Food Service Management Institute Section 10: Prices and Awards 9 Bottom-Line Award Award business to vendor with lowest total (bottom line) Use quantity estimates accurate to + 10%

National Food Service Management Institute Section 10: Prices and Awards 10 Bottom-Line Award Compare extended prices, not unit prices

National Food Service Management Institute Section 10: Prices and Awards 11 Unit vs. Extended Prices Unit prices Prices of single cans or cases Extended prices Unit prices x quantities

National Food Service Management Institute Section 10: Prices and Awards 12 Example A case of peaches costs $20. The center will buy 12 cases of peaches. Unit price = $20 Extended price = $20 x 12 = $240

National Food Service Management Institute Section 10: Prices and Awards 13 Bottom-Line Award Adding the unit prices of all items is not the bottom- line method.

National Food Service Management Institute Section 10: Prices and Awards 14 Bottom-Line, No Quantities Vendor AVendor BVendor C Product NameUnit 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

National Food Service Management Institute Section 10: Prices and Awards 15 Bottom-Line, Quantities Vendor AVendor BVendor C Product Name QuantityUnit Price Extended Price Unit Price Extended Price Unit Price Extended Price Peaches25 cases$20.19$504.75$22.02$550.50$21.50$ Pears10 cases$20.94$209.40$20.48$204.80$21.50$ Sugar15 bags$15.98$239.70$16.63$249.45$14.10$ Bottom- Line Total $ Low $1,004.75$964.00

National Food Service Management Institute Section 10: Prices and Awards 16 Obtaining Prices To maintain full and open competition, a center must give every vendor an opportunity to compete for the business of the center.

National Food Service Management Institute Section 10: Prices and Awards 17 Quality wanted Best price Obtaining Prices $

National Food Service Management Institute Section 10: Prices and Awards 18 Obtaining Prices Different methods used to obtain prices from retail and wholesale vendors

National Food Service Management Institute Section 10: Prices and Awards 19 Retail Vendor Prices If you buy from retail vendors, the best approach for determining where to buy your food and supplies is the market basket.

National Food Service Management Institute Section 10: Prices and Awards 20 Market Basket A representative list of the foods a center uses in a typical week

National Food Service Management Institute Section 10: Prices and Awards 21 Retail Vendor Prices 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)

National Food Service Management Institute Section 10: Prices and Awards 22 Retail Vendor Prices Determine which vendor offers the lowest price Make a recommendation to your board of directors/owners to purchase from that vendor

National Food Service Management Institute Section 10: Prices and Awards 23 Retail Vendor Prices You may need to split the food into several smaller market baskets.

National Food Service Management Institute Section 10: Prices and Awards 24 The Decision where to purchase must be approved by the board of directors or owners for a certain time period.

National Food Service Management Institute Section 10: Prices and Awards 25 How Often? How often determined by board/owners Recommended at least once a year with board/owner approval May be repeated at any time

National Food Service Management Institute Section 10: Prices and Awards 26 Market Basket Sometimes a center may need to purchase from a vendor not awarded the market basket.

National Food Service Management Institute Section 10: Prices and Awards 27 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

National Food Service Management Institute Section 10: Prices and Awards 28 Date of Prices: XX/XX/XXXX* ProductQuantity Magilla 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 Cheese, 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$3.74 Pineapple 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 13

National Food Service Management Institute Section 10: Prices and Awards 29 Date of Prices: XX/XX/XXXX ProductQuantity Magilla Supermarket Price Mallard Grocery Price Duck’s Fruit Stand Price Bananas12 lb $5.76$6.72$7.20 Apples—125 count5 lb $5.15$4.85$5.25 Oranges—100 count15 lb $7.50$8.25$6.75 Carrots7 lb $5.25$5.74$6.02 Celery1 stalk $1.17$1.27$1.15 Tomatoes5 lb $4.90$5.00$4.80 Pepper, Bell1 $.65$.50$.45 Onions, yellow1 lb $.87$.88$.86 Baking Potatoes10 lb $6.70$6.80$6.90 Cabbage, green5 lb $2.30$2.20$2.25 Totals $40.25 $42.21 $41.63 Activity 14

National Food Service Management Institute Section 10: Prices and Awards 30 Different pricing structure than retail vendors Long-range firm prices possible Wholesale Vendor Prices

National Food Service Management Institute Section 10: Prices and Awards 31 Wholesale Vendor Prices To purchase from a wholesale vendor and assure better pricing, it is necessary to have a contract.

National Food Service Management Institute Section 10: Prices and Awards 32 Contract Guaranteed price from the vendor Guaranteed quantity to be purchased

National Food Service Management Institute Section 10: Prices and Awards 33 IFB/RFP Should be used in obtaining pricing from a wholesale vendor

National Food Service Management Institute Section 10: Prices and Awards 34 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 Principles

National Food Service Management Institute Section 10: Prices and Awards 35 For-profit centers: Must use IFB/RFP for purchases of more than $10,000 Federal Principles

National Food Service Management Institute Section 10: Prices and Awards 36 IFB/RFP IFB—only variable is price RFP—many variables including price

National Food Service Management Institute Section 10: Prices and Awards 37 Wholesale 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)

National Food Service Management Institute Section 10: Prices and Awards 38 Wholesale Vendor Pricing Determine which vendor offers the best price Make a recommendation to your board of directors/owners to purchase from that vendor

National Food Service Management Institute Section 10: Prices and Awards 39 First Choice: A Purchasing Systems Manual for School Food Service Evaluating an IFB/RFP Chapter 10

National Food Service Management Institute Section 10: Prices and Awards 40 Parts of an IFB/RFP Signature page General instructions Special instructions Product list Delivery sites if more than one Potential vendor list

National Food Service Management Institute Section 10: Prices and Awards 41 Signature Page Dates pricing is firm Shorter period, better price One year normal Date and time IFB/RFP due Contractual statement the vendor signs

National Food Service Management Institute Section 10: Prices and Awards 42 General 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

National Food Service Management Institute Section 10: Prices and Awards 43 First Choice: A Purchasing Systems Manual for School Food Service Standard Contract Language appendix 16

National Food Service Management Institute Section 10: Prices and Awards 44 Special 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

National Food Service Management Institute Section 10: Prices and Awards 45 Product List Name and quality standards for each product Quantity center wants Product item number Product bid unit

National Food Service Management Institute Section 10: Prices and Awards 46 First Choice: A Purchasing Systems Manual for School Food Service Bid Units chapter 6

National Food Service Management Institute Section 10: Prices and Awards 47 Product List Item Number Product and Quality Standard Bid Unit QuantityUnit Price Extended Price 001Peaches, canned: to be packed to U.S. Grade B standard; yellow Cling; sliced; packed in juice; 6/No. 10 cans per case Case50

National Food Service Management Institute Section 10: Prices and Awards 48 Delivery 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)

National Food Service Management Institute Section 10: Prices and Awards 49 Potential Vendor List Used to contact vendors Contains Names of distributors Names of newspapers or other sources where IFB/RFP will be advertised

National Food Service Management Institute Section 10: Prices and Awards 50 IFB/RFP Any organization that is large enough to purchase from wholesale vendors should get more training on the IFB and RFP.

National Food Service Management Institute Section 10: Prices and Awards 51 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 Business

National Food Service Management Institute Section 10: Prices and Awards 52 Awarding the Business If board/owner approval not needed, promptly Sign contract with wholesale vendors Notify vendor when purchasing will begin