1. Procurement: Procedures, Plan, and the Review Division of School and Community Nutrition Office of Administration and Support KENTUCKY DEPARTMENT OF EDUCATION

2. USDA Nondiscrimination Statement The U.S. Department of Agriculture (USDA) prohibits discrimination against its customers, employees, and applicants for employment on the bases of race, color, national origin, age, disability, sex, gender identity, religion, reprisal, and where applicable, political beliefs, marital status, familial or parental status, sexual orientation, or if all or part of an individual’s income is derived from any public assistance program, or protected genetic information in employment or in any program or activity conducted or funded by the Department. (Not all prohibited bases will apply to all programs and/or employment activities.) If you wish to file a Civil Rights program complaint of discrimination, complete the USDA Program Discrimination Complaint Form, found online at http://ww.ascr.usda.gov/compliant _filing_cust.html, or any USDA office, or call (866) 632-9992 to request the form. You may also write a letter containing all of the information requested in the form. Send your completed complaint form or letter to us by mail at U.S. Department of Agriculture, Director, Office of Adjudication, 1400 Independence Avenue, S.W., Washington, D.C. 20250-9410, by fax (202) 690-7442 or email at program.intake@usda.gov.program.intake@usda.gov Individuals who are deaf, hard of hearing or have speech disabilities may contact USDA through the Federal Relay Service at (800) 877-8339; or (800) 845- 6136 (in Spanish). USDA is an equal opportunity provider and employer.

3. Training Objectives  What is procurement?  What is the role of the School Food Authority (SFA) in procurement?  What is the role of a purchasing co-operative?  What is a third party purchasing agent and how does it fit into the picture?  What are the procurement methods?  What is a procurement plan?  What can an SFA expect during a procurement review?

4. What is Procurement?  What is it?  What is the law that governs it?

5. What is Procurement? Procurement is ….. A multi-step process for obtaining goods, products, and/or services at the best possible price.

6. What is Procurement? Applicable Federal Law Program Year 2015 - 2016 Uniform Administrative Requirements  7 CFR 3016 UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPERATIVE AGREEMENTS TO STATE AND LOCAL GOVERNMENTS  7 CFR 3019 UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, AND OTHER NON-PROFIT ORGANIZATIONS Program Regulations  7 CFR 210.21 NATIONAL SCHOOL LUNCH PROGRAM  7 CFR 220.16 SCHOOL BREAKFAST PROGRAM  7 CFR 225.17 SUMMER FOOD SERVICE PROGRAM  7 CFR 226.22 CHILD AND ADULT FOOD CARE PROGRAM

7. What is Procurement? Applicable Federal Law Beginning Program Year 2016 Uniform Administrative Requirements  2 CFR 200.317 – 200.326 PROCUREMENT STANDARDS  APPENDIX II TO PART 200 – CONTRACT PROVISIONS FOR NON- FEDERAL ENTITY CONTRACTS UNDER FEDERAL AWARDS Program Regulations (No change)  7 CFR 210.21 NATIONAL SCHOOL LUNCH PROGRAM  7 CFR 220.16 SCHOOL BREAKFAST PROGRAM  7 CFR 225.17 SUMMER FOOD SERVICE PROGRAM  7 CFR 226.22 CHILD AND ADULT FOOD CARE PROGRAM

8. What is Procurement? State/Local Law  State Law  Local Board Policies and Procedures

9. What is Procurement? Memos and Guidance  FNS Policy Memos and Guidance  SCN Policy Memos

10. The Role of the SFA An SFA is responsible for:  Making purchases  Managing contracts and vendors  Using good administrative practice and sound business judgment  Maintaining purchase records  Maintaining policies and/or procedures

11. The Role of the SFA An SFA is responsible for: Making purchases in accordance with law in a manner that provides full and open competition.

12. The Role of the SFA Making purchases in accordance with law in a manner that provides full and open competition:  Prepare and issue solicitations;  Evaluate solicitation;  Award contract;  Implement contract;  Measure work completed; and  Calculate payments

13. The Role of the SFA Making purchases in accordance with law in a manner that provides full and open competition:  Federal regulations, FNS Policy Memos, and FNS Guidance  State statutes, administrative regulations, and SCN Policy Memos  Local policies and procedures Applying most restrictive law

14. The Role of the SFA Making purchases in accordance with law in a manner that provides full and open competition :  Secures the best price of best quality product or service  Level playing field  Same opportunity to compete  Procurement procedures may never unjustifiably restrict or eliminate competition.

15. The Role of the SFA Managing contracts and overseeing vendors  Address problems,  Incorporate necessary changes or modifications in the contract,  Ensure both parties meet or exceed each other's expectations; and  Actively interact with the contractor to achieve the contract's objective(s).

16. The Role of the SFA  Handling all contractual and administrative issues arising out of procurements for the food service department in accordance with good administrative practice and sound business judgment.  Maintaining records relating to its purchases.

17. The Role of the SFA  Maintaining policies and/or procedures that govern the conduct of employees who are engaged in the selection, award, and administration of contracts for the SFA.  Maintaining policies and/or procurement procedures.

18. The Role of a Purchasing Co-operative  What is a purchasing co- operative?  What are some of the benefits of using a purchasing co-operative?  When can an SFA use a purchasing co-operative?

19. The Role of a Purchasing Co-operative What is a purchasing co-operative? A group of people or entities joining together to accomplish all or part of the steps in the purchasing process in an effort to increase buying power, reduce costs, and improve the quality of products and services available to members.

20. The Role of a Purchasing Co-operative What is the benefit of using a purchasing co-operative? A cooperative purchasing group uses the collective buying power and expertise of the group to obtain the highest quality products at the best price

21. The Role of a Purchasing Co-operative When can an SFA use a purchasing co-operative? A cooperative purchasing group uses the collective buying power and expertise of the group to obtain the highest quality products at the best price.

22. What is a third party purchasing agent and how does it fit in the picture?  What is a third party purchasing agent?  Can an SFA use a third party purchasing agent?  What is the difference between a co-operative and a third party purchasing agent?

23. What is a third party purchasing agent?  A third party purchasing agent is a person or entity that procures on behalf of an SFA or a cooperative.  Examples may include a group buying organization (GBO) or a purchasing consortium.

24. What is a GBO or a purchasing consortium? A Group Buying Organization (GBO) and purchasing consortiums are terms commonly used to refer to an organization that buys on behalf of other entities in larger quantities. A GBO can be for-profit or not-for- profit.

25. Can an SFA use a third party buying agent? An SFA may use the services of a third party buying agent as long as:  Third party buying agent’s services are competitively procured  Third party buying agent conducts procurement in a manner that provides for free and open competition.

26. What is the difference between a co-operative and a third party buying agent? A GBO differs from a cooperative purchasing group in that a GBO consists of entities other than just school food authorities.

27. SP 35-2012 Procuring Services of Purchasing Cooperatives, Group Purchasing Organizations, Group Buying organizations. Issued 6/12/2012 Competition is the Key SFA seeking the services of an entity:  purchasing cooperative,  group purchasing organization,  group buying organization, or  an entity offering to facilitate access to those types of entities,  must comply with 7 CFR 210.9, 210.21 and 3016.36(c).  This is true even when services are offered free of charge.

28. SP 35-2012 Procuring Services of Purchasing Cooperatives, Group Purchasing Organizations, Group Buying organizations. Issued 6/12/2012 Cooperatives and SFAs  An SFA may participate in a cooperative comprised solely of SFAs without conducting a competitive procurement if the local cooperative was created by SFAs banding together to form a cooperative in order to increase purchasing power.  A cooperative would follow Federal procurement regulations when procuring goods and services for its members.  A cooperative that is comprised of solely SFAs procuring as a collective group of SFAs must procure in the same manner as an individual SFA.

29. SP 35-2012 Procuring Services of Purchasing Cooperatives, Group Purchasing Organizations, Group Buying organizations. Issued 6/12/2012 Intergovernmental Cooperation and “Piggybacking”  SFA may only enter into an intergovernmental agreement with an SA or local governmental agency which allows the SFA to join or “piggyback” onto an existing agreement between that SA or local governmental entity and a goods or service provider when that agreement was procured consistent with applicable CNP regulations.

30. SP 35-2012 Procuring Services of Purchasing Cooperatives, Group Purchasing Organizations, Group Buying organizations. Issued 6/12/2012  SFA should carefully review the solicitation issued by the SA or local governmental agency and the resulting contract to ensure compliance with applicable CNP regulations and to ensure that the additional scope in services does not create a material change.  SFAs need to obtain documentation from the parties involved in the existing contract in order to ensure the return of discounts, rebates, and other applicable credits in addition to compliance with other Federal requirements is key.

31. SP 35-2012 Procuring Services of Purchasing Cooperatives, Group Purchasing Organizations, Group Buying organizations. Issued 6/12/2012  Finally, material changes to the existing contract may arise as a result of the “piggybacking” because the parties to the existing contract may not have anticipated the increased quantity of goods and services necessary to fulfill the needs of the SFA. Consequently, an SA or local governmental entity may have to rebid at the next juncture because of these material change issues.  SFAs should seek guidance from the SA prior to executing an intergovernmental agreement with an SA or local governmental entity which allows the SFA to “piggyback” onto an existing contract.

32. ADMINISTRATIVE FEE  It may be permissible for purchasing co-operatives and third party buying agents to charge a fee for procurement services.  Procurement fees, however, cannot be directly tied to the amount of discounts, rebates, and applicable credits to be returned to the SFA.  Procurement fees may be a separate fee or part of another contract fee as long as fee remains fixed.  Those fees charged by a purchasing cooperative made up of SFAs may only charge a fees that consists of allowable expenses to the non-profit food service account. See SP-15-2008, Allowability of Procurement Fees in School Food Authority Contract http://www.fns.usda.gov/sites/default/files/SP_15-2008-OS.pdf http://www.fns.usda.gov/sites/default/files/SP_15-2008-OS.pdf

33. Methods of Procurement THIS IS NOT NEW! Four (4) methods:  Simplified Acquisition – Small purchase procedures or simple/informal procurement  Sealed Bids/Formal Advertising  Competitive Proposals  Noncompetitive Proposals

34. Methods of Procurement THIS IS NEW!!! Micro-purchasing Introduced a Micro-Purchase method from the Federal Acquisition Regulations (FAR) Enables Program operators to make purchases without obtaining competitive quotations, provided:  Aggregate value does not exceed $3,500; and  Competition is achieved by distributing micro-purchases equitably among qualified suppliers.

35. Methods of Procurement Simplified Acquisition/Small Purchase Procedures or Simple/Informal Procurement 3016.36(d)(1)  Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the simplified acquisition threshold [SAT] fixed at 41 U.S.C. 403(11) [currently the Federal SAT is set at $150,000. Kentucky’s is $20,000, but a local SAT may be lower]. If small purchase procedures are used, price or rate quotations shall be obtained from an adequate number of qualified sources. (FNS recommends three or more qualified sources.)

36. Develop your specs in writing Identify sources eligible, able, and willing to provide products Contact at least three of those s ources Evaluate bidders’ response to your specs Determine most responsive and responsible bidder at lowest price Simplified Acquisition:

37. Methods of Procurement Sealed Bids /Formal Advertising/IFB 3016.36(d)(2)  Procurement by sealed bids (formal advertising)bids are publicly solicited and a firm- fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price.

38. Methods of Procurement In order for sealed bidding to be feasible, the following conditions should be present:  (A) A complete, adequate, and realistic specification or purchase description is available;  (B) Two or more responsible bidders are willing and able to compete effectively and for the business; and  (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. Sealed Bid/Formal Advertising/IFB Produce Bid

39. Methods of Procurement If sealed bids are used, the following requirements apply:  (A) The invitation for bids will be publicly advertised and bids shall be solicited from an adequate number of known suppliers, providing them sufficient time prior to the date set for opening the bids;  (B) The invitation for bids, which will include any specifications and pertinent attachments, shall define the items or services in order for the bidder to properly respond; Sealed Bid/Formal Advertising/IFB

40. Methods of Procurement  (C) All bids will be publicly opened at the time and place prescribed in the invitation for bids;  ( D) A firm fixed-price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs shall be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and  E) Any or all bids may be rejected if there is a sound documented reason. Sealed Bid/Formal Advertising/IFB

41. Develop solicitation Publicly announce the IFB/RFP Evaluate bidders using established criteria Determine most responsive and responsible bidder at lowest price. Award and Manage Contract Formal Procurement:

42. Methods of Procurement Competitive Proposals/Request for Proposals (RFP) 3016.36(d)(3)  The technique of competitive proposals is normally conducted with more than one source submitting an offer, and either a fixed-price or cost- reimbursement type contract is awarded. It is generally used when conditions are not appropriate for the use of sealed bids. If this method is used, the following requirements apply:

43. Methods of Procurement  (i) Requests for proposals will be publicized and identify all evaluation factors and their relative importance. Any response to publicized requests for proposals shall be honored to the maximum extent practical;  (iv) Awards will be made to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered; Competitive Proposals: RFP

44. 1. Develop solicitation: Product/service expectations, evaluation criteria, etc. 2. Publicly announce the RFP 3. Receive, Evaluate bidders using established criteria 4. Determine most responsive and responsible bidder at lowest price and/or highest scoring proposal 5. Award and Manage Contract Competitive Procurement:

45. Methods of Procurement Noncompetitive Proposals 3016.36 (d)(4) Procurement through solicitation of a proposal from only one source after solicitation of a number of sources, competition is determined inadequate.  (i) Procurement by noncompetitive proposals may be used only when the award of a contract is infeasible under small purchase procedures, sealed bids or competitive proposals and one of the following circumstances applies:  (A) The item is available only from a single source;  (B) The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation;

46. Methods of Procurement  (C) The state agency authorizes noncompetitive proposals; or  (D) After solicitation of a number of sources, competition is determined inadequate. Noncompetitive Proposals

47. What is a Procurement plan? A procurement plan is a detailed description of a school food authority’s procurement process that demonstrates that the school food authority procures in a manner that is consistent with federal, state, and local law and regulation.  Demonstrates that the procurement process allows for fair competition for all products  It is a condition of a school food authority’s participation in the USDA’s Child Nutrition Programs.

48. Who is responsible for Procurement Plan?  Child Nutrition Director is responsible for preparing the plan.  Child Nutrition Director should prepare the plan in consultation with the finance officer.  The procurement plan must be approved by the superintendent and the school board.

49. What can an SFA expect during a procurement review? Per SP 04-2016 A review of procurement activities of a School Food Authority.  Review of Procurement Plan  Review Procurement Methods used to award vendor contracts, i.e., sealed bids, competitive proposals, or non- competitive proposals, as applicable.  Assessment compliance by conducting a review of documentation of the procurement process: solicitations, bids/offers, evaluation and award procedures, and contract performance management procedures.

50. USDA guidance http://www.fns.usda.gov/farmtoschool/usda- procurement-regulations http://www.fns.usda.gov/farmtoschool/procurement

51. Contact Information Deanna Tackett, Director School and Community Nutrition Kentucky Department of Education Deanna.tackett@education.ky.gov Valerie Crouch, School Branch Manager School and Community Nutrition Kentucky Department of Education Valerie.crouch@education.ky.gov