1. Part 6: Informal Procurement
Known as Small Purchase Procedures
2 CFR (b)
Welcome to an introduction of informal procurement procedures for use by Oregon Child Nutrition Program Sponsors.

2. Federal Procurement Roadmap
All CNP Sponsors
Is the purchase or contract worth more than $150,000
Purchase/contract less than $150,000
Purchase/contract greater than $150,000
As mentioned in the introduction to procurement, this Roadmap outlines the Federal requirements for procurement in Child Nutrition Programs. The important number to remember is the $150,000 Federal Threshold. The $150,000 Federal Threshold is also called the Simplified Acquisition Threshold. The threshold is the level of spending to determine if an informal or formal procurement process is required.
This presentation will focus solely on the informal process using small purchase procedures. Micro-purchasing is discussed in a separate training.
Use Formal Process
Use Informal Process
Micro
Small
Competitive
Proposals
Sealed Bid

3. Definition Small purchase procedures:
Simple procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold.
Informal procurement is also known as small purchase procedures. These are relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the simplified acquisition threshold.

4. What is the Simplified Acquisition Threshold?
Under threshold
$150,000
Over Threshold
AKA small purchase threshold
Dollar limit threshold after which you must complete a formal procurement
Federal and Oregon set at $150,000
So then what is the simplified acquisition threshold? It’s also known as the small purchase threshold and is the dollar limit threshold after which you must complete a formal procurement, which must be an invitation for bid or request for proposal. As discussed in the introduction, the current Federal acquisition threshold is $150K, however sponsors may set a lower simplified acquisitions threshold. Sponsors must always use the most restrictive of Federal, State, or local.

5. What are small purchase procedures?
Price or rate quotations must be obtained from an adequate number of qualified sources
Adequate number of sources: Means more than 1 (one), preferably 3 (three) vendors
Competition
1 Quote
NOT ADEQUATE
2 Quotes
MEETS REQUIREMENT
3 Quotes
ADEQUATE COMPETITION
Small purchase procedures include the use of price or rate quotations. You must obtain an adequate number. Adequate means more than one, two is the minimum and three is recommended. If you do not have competition available in your area you must attempt to get more than one quote but if no other parties are interested then you can award to a single vendor. You must retain documentation that you attempted to get more than one quote. Remember that small purchase procedures are only allowed if the simplified acquisition threshold is $150K or less.

6. Advantages of using small purchase procedures
Public notice not required
Price or rate quotations can be opened at any time
Price or rate quotations can be verbal or written
Contract award is based on lowest price and meets specified requirements
There are many advantages to using small purchase procedures. Here are a few:
Public notice is not required. In formal procurements public notice is required.
Price or rate quotations can be opened at any time. Formal procurements have specific requirements for bid opening.
Price or rate quotations can be verbal or written. Formal procurements have specific written requirements.
Quotes can be awarded based on lowest price and the vendor that best meets any specified requirements. Formal procurements have more specific requirements. For example, IFB’s require awarding based solely on lowest price and RFP’s can include all different kinds of award criteria.

7. How do I get 3 competitive quotes?
Answer: Use an informal procurement log!
Example on next page.
How do I go about obtaining and documenting three competitive quotes? One way is to use a informal procurement log or similar tool. ODE CNP has a template and example on the next page.

8. Informal Procurement Log
Items that should be included on log:
Delivery details
Duration of quote
Product specifications
Estimated quantities
Information gathered from vendors
Signature and date of sponsor award
An informal procurement log is a clear and simple way to gather all of the documentation you need to meet informal procurement rules. Items that should be included on the log are:
Delivery details
Duration of quote
Product specifications
Estimated quantities
Information gathered from vendors
Signature and date of sponsor award

9. Types of award
Line Item
Bottom Line
Make Award
All contractors must receive same information, including specifications
You can award on-
Line-item basis (individual item)
Bottom-line basis (lowest overall price for all items)
You may have noticed on the procurement log that there are two types of award, you can award on a line-item basis, meaning an individual item or bottom-line basis, meaning the lowest overall price for all items that you are requesting quotes on. Before you make the award make sure that all prospective contractors received the same information including specifications for the goods or services you are seeking.

10. Records… What can happen if I don’t keep procurement records?
Just like all other procurement, records must be retained for 3 years plus current year. This information includes but is not limited to:
Copies of solicitation documents
Copies of letters, s, faxes relating to the procurement
Name and dates of vendors contacted by phone, and reports on the results of meetings when the contacts were made in person
Copies of price or rate quotations received
Notification of the successful vendor
Any other documents (invoices, cancelled checks, etc.) relating to the purchase
Just like all other child nutrition program paperwork, even small purchase records must be retained for three years plus current year. What types of records? Some example include:
Copies of solicitation documents
Copies of letters, s, faxes relating to the procurement
Name and dates of vendors contacted by phone, and reports on the results of meetings when the contacts were made in person
Copies of price or rate quotations received
Notification of the successful vendor
Any other documents (invoices, cancelled checks, etc.) relating to the purchase
Failure to keep procurement records could result in review findings, corrective action and even possibly fiscal action.
What can happen if I don’t keep procurement records?
Bid Protests from Vendors/Possible litigation
Withholding or reclaiming Federal Reimbursement
Public Scrutiny

11. Follow the 7 steps to a good informal procurement
Talk to prospective vendors
Seek out enough vendors
Build quality business relationships
Step 1- Before obtaining quotes
Step 1, before obtaining quotes:
Talk to prospective vendors to see what kinds of products are offered and who to contact for future quotes
Sponsors will want to seek out enough vendors to ensure they can get pricing from at least three vendors
Build quality business relationships with the vendors
By building these vendor relationships over the year, you will have a better understanding about what is available in the market and it will reduce the time it takes to conduct a competitive procurement

12. Draft solicitation document Write down product specifications
Write down any other requirement for the procurement
Step 2- Planning your Procurement
Step 2, planning your procurement:
Draft your solicitation document
Write down the product specifications in a purchase log
Write down any other requirement for the procurement such as delivery requirements or payment and invoicing method

13. Step 3-Starting the solicitation process
Contact vendors (by phone, , fax, in person, or mail) and
provide written specifications, or
If calling, read off the written specification
Provide the same language and specifications to each vendor
Sponsors should always use caution when verbally communicating
Written communication is preferred  
Step 3-Starting the solicitation process
Step 3, starting the solicitation 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
Provide the same language and specifications to each vendor, this will help avoid any quote protests and ensure fair competition
Sponsors should always use caution when verbally communicating specification and details of the solicitation.
Written communication is preferred but not required.  

14. Step 4-Document vendor responses
Write down in your purchase log the:
Vendor Name,
Contact Method,
Name of person providing the price quote,
The price quoted,
Date price quote was obtained and
Duration of price quote (note it is recommended for sponsors to dictate this to the vendor to ensure constancy in how long the price quote is valid) 
Step 4-Document vendor responses
Step 4, document vendor responses:
Write down in your purchase log the:
Vendor Name,
Contact Method,
Name of person providing the price quote,
The price quoted,
Date price quote was obtained and
Duration of price quote (note it is recommended for sponsors to dictate this to the vendor to ensure constancy in how long the price quote is valid) 

15. Step 5-Obtain price quotes from at least three (3) vendors
Competition means more than one (1), two (2) is the minimum and three (3) is recommended
Step 5-Obtain price quotes from at least three (3) vendors
Step 5, obtain price quotes:
Competition means more than one vendor
Two is the minimum and three is recommended
Aim to get more than three to maximize competition

16. What is a responsive and responsible vendor?
A “responsive vendor” is able to meet the requirements of the solicitation
A “responsible vendor” is willing and capable of furnishing the goods or services solicited.
Step 6-Award the contract/purchase to the most responsive and responsible vendor with the lowest price
Step 6, award the contract/purchase to the most responsive and responsible vendor with the lowest price:
What is a responsive and responsible vendor?
A “responsive vendor” is able to meet the requirements of the solicitation
A “responsible vendor” is willing and capable of furnishing the goods or services solicited.

17. Sign off on purchases only after inspection
Monitor invoices
Sign off on purchases only after inspection
Product not matching specifications
Audit invoices to verify that the prices charged match the prices quoted
Variances should be documented and corrected
Note returns, exchanges and variances
Step 7-Monitor invoices and products to ensure that bid prices, product quantity and quality are being honored
Step 7, monitor invoices and products to ensure that bid prices, product quantity and quality are being honored:
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.
Audit invoices to verify that the prices charged match the prices quoted
Variances should be documented and corrected
Note all returns, exchanges and variances for future evaluation

18. Fragmentation What is that?
Splitting purchases by purchase the same item over a period of time to avoid the small or formal procurement method. This is not an allowable practice.
Example- obtaining quotes each month for a product when the yearly aggregate cost exceeds formal threshold limit of $150,000 and does not meet micro-purchase procedures.
What is Fragmentation?
This is something you must always avoid when conducting competitive procurements. Fragmentation is when you
split purchases over a period of time to avoid the small or formal procurement method. This is not an allowable practice.
Example- Obtain quotes each month for a product when the yearly aggregate cost exceeds formal threshold limit of $150,000 and does not meet micro-purchase procedures. For more detailed information on micro-purchase procedures please see the training for micro-purchasing.

19. Scenarios using Small Purchase Procedures
Sally wants to purchase a new freezer for her kitchen. She anticipates the cost will be around $8,000. Sally wants to complete an informal procurement because it will save her time versus completing a formal procurement. She contacts a local equipment vendor and asks them for their best price. She verbally agrees to purchase it from the vendor. The purchase was completed.
Did Sally meet informal procurement requirements for this purchase?
We have a few scenarios for you…
Sally wants to purchase a new freezer for her kitchen. She anticipates the cost will be around $8,000. Sally wants to complete an informal procurement because it will save her time versus completing a formal procurement. She contacts a local equipment vendor and asks them for their best price. She verbally agrees to purchase it from the vendor. The purchase was completed.
Did Sally meet informal procurement requirements for this purchase?

20. ANSWER: NO
Quotes must be solicited from at least two vendors, preferably three or more!
Verbal quote information must be documented in writing to justify procurement and retained for audit purposes.
ANSWER: NO
Quotes must be solicited from at least two vendors, preferably three or more!
Verbal quote information must be documented in writing to justify procurement and retained for audit purposes.
Remember…if it isn’t documented, it didn’t happen.

21. Scenarios using Small Purchase Procedures
Fred purchases the majority of his groceries from a distributor and he spends over $150,000 per year. However, he has local produce companies that can offer better produce for a lower price than his distributor. Fred spends about $50,000 total on produce for the year. Fred calls three vendors and asks for quotes on a variety of produce products. He writes the information down and awards to the vendor with the lowest overall price that met the specifications.
Did Fred meet informal procurement requirements for this purchase?
Fred purchases the majority of his groceries from a distributor and he spends over $150,000 per year. However, he has local produce companies that can offer better produce for a lower price than his distributor. Fred spends about $50,000 total on produce for the year. Fred calls three vendors and asks for quotes on a variety of produce products. He writes the information down and awards to the vendor with the lowest overall price that meets the specifications.
Did Fred meet informal procurement requirements for this purchase?

22. ANSWER: YES
You can segment purchases by category if there are responsible vendors available to support segmenting, allowing sponsors to obtain the best product at the best price. This is not considered fragmentation.
Fred documented the quote information received and awarded to lowest price vendor that best met the specifications.
ANSWER: YES
You can segment purchases by category if there are responsible vendors available to support segmenting, allowing sponsors to obtain the best product at the best price. This is not considered fragmentation.
Fred documented the quote information received and awarded to lowest price vendor that best met the specifications.

23. Questions
If you have any questions regarding this session please contact your assigned specialist.

24. Resources ODE CNP Procurement webpage
2 CFR (b)
This slide provides links to regulations and memos cited in this presentation.

25. In accordance with Federal civil rights law and U. S
In accordance with Federal civil rights law and U.S. Department of Agriculture (USDA) civil rights regulations and policies, the USDA, its Agencies, offices, and employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, sex, disability, age, or reprisal or retaliation for prior civil rights activity in any program or activity conducted or funded by USDA. Persons with disabilities who require alternative means of communication for program information (e.g. Braille, large print, audiotape, American Sign Language, etc.), should contact the Agency (State or local) where they applied for benefits. Individuals who are deaf, hard of hearing or have speech disabilities may contact USDA through the Federal Relay Service at (800) Additionally, program information may be made available in languages other than English. To file a program complaint of discrimination, complete the USDA Program Discrimination Complaint Form, (AD-3027) found online at: and at any USDA office, or write a letter addressed to USDA and provide in the letter all of the information requested in the form. To request a copy of the complaint form, call (866) Submit your completed form or letter to USDA by: (1) mail: U.S. Department of Agriculture Office of the Assistant Secretary for Civil Rights Independence Avenue, SW Washington, D.C ; (2) fax: (202) ; or (3) This institution is an equal opportunity provider.”