1. Procurement 101 Nuts and Bolts of School Nutrition Programs
August 5, 2015
John Stalker Institute at Framingham State University
Framingham, Massachusetts
Bridget Ziniti, M.Ed.
Educational Specialist
(781)

2. Overview Procurement principles and process Procurement methods
Key procurement concepts
Contracts
Resources and questions
Massachusetts Department of Elementary and Secondary Education
Massachusetts Department of Elementary and Secondary Education

3. Drafting Specifications Announce the Procurement
What is Procurement?
Procurement is the purchasing of goods and services. The procurement process involves:
Planning
Drafting Specifications
Announce the Procurement
Awarding a Contract
Managing the Contract
Massachusetts Department of Elementary and Secondary Education

4. Why are Procurement Rules Important?
Accountability to Taxpayers for the way in which program funds are spent
Transparency will ensure funds are:
received by eligible schools and children
used effectively and efficiently with no waste or abuse
Massachusetts Department of Elementary and Secondary Education

5. Procurement Methods Sealed Bids (IFBs) & Competitive Proposals (RFPs)
Small Purchase Threshold
Informal
Formal
Micro-Purchases
Not exceeding $3,000
Small Purchases
Less than $35,000
Sealed Bids (IFBs) & Competitive Proposals (RFPs)
* Requires public advertising
Requires price quotes from at least 3 bidders
Distribute
equitably among suppliers
Federal Threshold = $150,000
MA Threshold = $35,000
Municipalities = varies
M.G.L. ch. 30(b) Supplies and Services (MA threshold less than federal)
Public entities must apply the stringent of the federal/state regulation
Procurement by micro-purchase (defined by 2 CFR Part ) and found in 2 CFR Part (a), is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed $3,000 (or $2,000 in the case of acquisitions for construction subject to the Davis-Bacon Act). To the extent practicable, the non-Federal entity must distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive quotations if the non-Federal entity considers the price to be reasonable.
This method was approved as of December 26, 2014 when the new 2 CFR Part 200 regulations, more commonly known as the Super Circular, became effective. We see this new method as very beneficial to small Program operators in all Child Nutrition Programs such as RCCIs, family day-care homes, and SFSP sponsors.
Massachusetts Department of Elementary and Secondary Eduation
Massachusetts Department of Elementary and Secondary Education

6. HANDOUT – Point out the bottom (key) of the sheet starting with 2.
(2) Responsible bidder: “a person who has the capability to perform fully the contract requirements, and the integrity and reliability which assures good faith performance
(3) Responsive bidder: “a person who has submitted a bid or proposal which conforms in all respects to the invitation for bids or request for proposals”
(4) “All contracts in the amount of $10,000 or more shall be in writing, and the governmental body shall make no payment for a supply or service rendered prior to the execution of such contract”
(5) “Unless authorized by majority vote, a procurement officer shall not award a contract for a term exceeding three years, including any renewal, extension or option”
Massachusetts Department of Elementary and Secondary Education

7. Sound Business Practices M.G.L. c. 30B § 2
Sound Business Practices: “ensuring the receipt of favorable prices by periodically soliciting price lists or quotes”
This also applies to Micro Purchases
Spreading the Wealth
Massachusetts Department of Elementary and Secondary Education
Massachusetts Department of Elementary and Secondary Education

8. The Informal Procurement Process
Responsive means that the vendor submits a bid that conforms to all specifications and terms of the solicitation (If U.S. Extra Fancy fresh apples are requested but the vendor responds with Combination grade apples, then responsive is NOT satisfied)
Responsible means that the vendor is capable or performing successfully under the terms of the contract
1. Specifications (next slide)
2. Identify sources. Contact potential vendors in a variety of ways (visit farmer’s market)
3. Ensure responders are responsible and responsive (document bid even if it was offered in a face-to-face meeting)
4. Award the contract to the bidder that is most responsive and responsible with the lowest price
5. Ensure the school receives everything from the vendor that the contract stipulates
Make sure everything is documented
Document all procedures
Massachusetts Department of Elementary and Secondary Education
Massachusetts Department of Elementary and Secondary Education

9. Purchase Specifications*
Food: grade, weight, quality, packaging, nutrition standards, delivery requirement, Buy American, etc.
Supplies: size, quality, packaging, etc.
Equipment: utility and space requirements, quality and features required, installation requirements
Services: certifications, licenses, etc.
* Specifications may be written with qualitative characteristics that are likely to be met by local products, i.e., specifying fresh foods (harvested within a 24 to 48 hours of delivery)
HANDOUT - “Local” can be a preference but never a requirement; therefore it should never be used as a specification
Food specifications include grade standards based on the product’s taste, texture and appearance (grade A eggs, USDA Choice)
Nutrition standards (must provide a 2 ounce equivalent for the meat/meat alternate component in the NSLP)
Prohibited Ingredients (specifications must indicate what ingredients are prohibited in the product, i.e. trans fat)
Schools can also detail requirements that might target local suppliers, i.e., a school might require that farmers make themselves available for farm field trips …
Massachusetts Department of Elementary and Secondary Education
Massachusetts Department of Elementary and Secondary Education

10. What is meant by Responsive and Responsible?
Responsive means that the vendor submits a bid that conforms to all specifications and terms of the solicitation Responsible means that the vendor has the capability to perform fully the contract requirements, and the integrity and reliability which assures good faith performance **Document all procedures**
Responsible – Generally the best way to evaluate a bidder’s responsibility is to examine his or her track record. Requiring bidders to provide references that can verify their past performance under comparable contracts is an effective way to judge responsibility. Consider a request for similar contracts within a given time period to avoid the possibility of a selective list with only favorable references. (i.e. Bidders must submit a complete list of all current customers for which the bidder has installed and operated the proposed network for at least two years, with contact names and telephone numbers)
Massachusetts Department of Elementary and Secondary Education
Massachusetts Department of Elementary and Secondary Education

11. The Formal Procurement Process
Specifications are detailed requirements
Announce the solicitation in print or online as long as the information is made publicly available; the school may also contact known bidders (May post in Goods and Services Bulletin)
Evaluate bids using criteria in the solicitation. Objectively document the evaluation and score of every bid
Award to the most responsive and responsible vendor who offers the best value
Ensure the school receives everything the contract stipulates
Massachusetts Department of Elementary and Secondary Education
Massachusetts Department of Elementary and Secondary Education

12. Splitting Procurements www.freeimages.com
SFAs cannot arbitrarily divide purchases to fall below the small purchase threshold.
In some instances, however, *characteristics of a product or market justify the need to separate it from the overall food procurement.
____________
* Examples include fresh produce, Harvest Week or Farm to School promotions* The SFA should document its reason for separating the procurement
p. 13 of Procurement in the 21st Century
Fresh produce is typically purchased in small quantities frequently because availability and price fluctuates widely
Massachusetts Department of Elementary and Secondary Education
Massachusetts Department of Elementary and Secondary Education

13. Procurement Methods Note regulations Note: Buy American
Massachusetts Department of Elementary and Secondary Education
Massachusetts Department of Elementary and Secondary Education

14. Procurement Methods Continued
In an RFP, Qualitative Criteria also part of the award
Massachusetts Department of Elementary and Secondary Education
Massachusetts Department of Elementary and Secondary Education

15. Buy American 7 CFR 210.21(d) www.freeimages.com
Schools are required to purchase, to the
maximum extent practicable, domestic commodities and products
A domestic commodity or product means an agricultural commodity that is processed in the United States, and/or a food product that is processed in the United States *substantially using agricultural commodities that are produced in the U.S.
Include a Buy American clause in all product specifications, solicitations, purchase orders, and other procurement documents
*at least 51% domestic agricultural commodities *
Two situations may warrant a waiver to permit purchases of foreign food products:
1. The product is not produced or manufactured in the U.S. in sufficient and reasonably available quantities of a satisfactory quality; bananas or pineapples are good examples
2. Competitive bids reveal that a U.S. product costs significantly more than a foreign product
Massachusetts Department of Elementary and Secondary Education
Massachusetts Department of Elementary and Secondary Education

16. Written Codes of Conduct and Performance of Employees Engaged in Award and Administration of Contracts 2 CFR (c)(1)
Prohibits employees from soliciting gifts, travel packages, and other incentives from prospective contractors
Prohibits an employee from participating in the selection, award and administration of any contract to which an entity of certain persons connected to them, have financial interest
HANDOUT -- USDA’s Memo SP , CACFP , SFSP
Entities receiving Federal funds must develop and implement a written code of conduct designed to govern the performance of employees engaged in procurement
Assures public of open, competitive bid process without favoritism
Massachusetts Department of Elementary and Secondary Education
Massachusetts Department of Elementary and Secondary Education

17. Codes of Conduct continued
Provides for Child Nutrition Program operators to set standards when financial interest is not substantial or the gift is an unsolicited item of nominal value and may be acceptable
Provides for disciplinary actions to be applied in the event the standards are violated
State agency oversight and monitoring of procurement activities includes a review of the written code of conduct as well as an investigation of reported real or apparent conflicts of interest by employees involved in procurement
Codes of conduct through state/local trainings (PACE)
Certification Statement must be signed for FSMC contracts
Massachusetts Department of Elementary and Secondary Education
Massachusetts Department of Elementary and Secondary Education

18. ___________ ____________
Invitation for Bid (IFB) - Competitive Sealed Bidding 2 CFR (c)
A formal method of procurement in which sealed bids are publicly solicited resulting in the award of a fixed price contract to the responsible and responsive respondent.
___________ ____________
Publicly advertised and opened
IFB contains detailed specifications of the products and/or services being sought by the SFA staff
Awarded to the lowest responsive bidder
Negotiation is not used with competitive sealed bidding
Massachusetts Department of Elementary and Secondary Education

19. ___________ ____________
Request for Proposal (RFP) – Competitive Proposal 7 CFR (d)
A formal method of procurement in which sealed bids (a technical proposal and a cost proposal) are publicly solicited resulting in the award of either a fixed price contract or a cost reimbursable contract) to the responsible and responsive respondent.
___________ ____________
Competitive proposals are also known as competitive negotiations. RFP’s are appropriate when the scope of services cannot be clearly defined.
Price is the primary consideration but not the sole basis for award
The RFP identifies the goods, products, and/or services needed and all evaluation factors
The RFP is publicized and is used to solicit proposals from a number of sources
Two sealed bids
Quality Requirements are established and the comparative evaluation criteria to be applied to all proposals is defined
Does not end with the proposals – May be s, meetings, presentations that all become part of the final contract (make sure of adequate documentation)
Service contracts tend to be with an RFP (FSMC contracts, for example)
Massachusetts Department of Elementary and Secondary Education
Massachusetts Department of Elementary and Secondary Education

20. Two Elements of an RFP 1)Technical proposal:
The respondents explain how the
task will be accomplished; and
2) Cost proposal:
A respondent provides
the costs for accomplishing its
technical proposal
Technical proposal -- The RFP may include Nutrition and Meal Prices under the Evaluative Criteria (see HANDOUT)
Scoring of comparative criteria under M.G.L c. 30 B Highly Advantageous (HA), Advantageous (A), Not Advantageous (NA), and Unacceptable (U)
May not result in the selection of the responsive and responsible proposer offering the lowest price
The handout is missing: (U) Unacceptable
Other examples may include: participation factor, food safety, experience in a large school district (define large: Springfield for example has 67 schools with an enrollment of 28, 688), etc.
Massachusetts Department of Elementary and Secondary Education
Massachusetts Department of Elementary and Secondary Education

21. An RFP must …
State the purchasing agency’s need using clear and thorough specifications that are not overly restrictive;
Specify the anticipated terms and conditions of the contract;
Provide information that the respondent must include in their proposal as to how they will accomplish the services requested;
Identify each factor that the purchaser will use to evaluate the proposals and award the contract;
Describe how technical and cost factors will be considered in making the final determination
State that the award will be made, on the basis of price and other factors, to the responsive and responsible firm or individual whose response is most advantageous to the purchasing agency, after price and other factors have been considered
An example of overly restrictive: vendor must have at least 5 years of experience in Massachusetts
Evaluation of solicitation should be included in the RFP .. May assign points to each of the following:
Price (30 points)
Product Specifications (20 points)
Service and deliveries (15 points)
Geographic preference (15 points)
Discounts, rebates .. (15 points)
Overall qualifications (05 points)
Massachusetts Department of Elementary and Secondary Education
Massachusetts Department of Elementary and Secondary Education

22. RFP’s: Avoiding A Bid Protest make sure …
Responses are ranked using the criteria identified in the solicitation document (RFP)
The Review Team has sufficient skills and expertise to evaluate proposals and/or conduct negotiations;
The SFA is able to measure, justify and document why one company’s response to a particular criterion is better than another’s
The award is granted on lowest price after an evaluation of the technical and costs factors, and potential negotiation
Award is not always to the lowest bidder -- the evaluation criteria reflects standards or attributes for which you might be willing to spend more money
Scoring is typically by an assembled team
Documentation is essential – There is always the possibility of a bid protest
Ratings are Highly Advantageous, Advantageous, Not Advantageous, Unacceptable
Criteria for evaluation points should be prescribed in solicitation … i.e. price (30 points), product specifications (20 points), service and deliveries (15 points), geographic preference (15 points) …
Massachusetts Department of Elementary and Secondary Education
Massachusetts Department of Elementary and Secondary Education

23. Different Types of Contracts
Fixed Price Contract
Price is fixed for the duration of the contract
Procedures for price adjustments, authorization for price adjustments, and frequency of price adjustments must be included in the solicitation and contract
Price adjustments must be
tied to a standard index such
as the Consumer Price Index
(CPI) or Employment Cost
Index (ECI)
Imposes the least administrative burden on contracting parties
"US Consumer Price Index Graph" by Original image by User:donarreiskoffer, new SVG version made with Gnumeric (from original data; now covers 1913–2014) - Data source at [1], specifically in Table 24 in this PDF file (US Government – public domain); Original image at Image:Consumer Price Index US png. Licensed under CC BY-SA 3.0 via Wikimedia Commons -
"US Consumer Price Index Graph" by Original image by User:donarreiskoffer, new SVG version made with Gnumeric
Massachusetts Department of Elementary and Secondary Education
Massachusetts Department of Elementary and Secondary Education

24. Different Types of Contracts
Cost Reimbursable Contract*
A contract under which allowable and reasonable costs incurred by a contractor in the performance of a contract are reimbursed in accordance with the terms of the contract
In School Nutrition Programs, frequently provides for the reimbursement of allowable costs plus the payment of a fixed fee to the contractor
*additional provisions are found at 7CFR Part (f)
i.e., FSMC contract Allowable = Operational Costs like food, labor & supplies Fixed = Management and/or Administrative fees
Allowable costs will be paid from the nonprofit sfs to the contractor net of all discounts, rebates and other applicable credits …
The contractor must separately identify for each cost submitted for payment the amount that is allowable and the amount that is unallowable;
The contractor must exclude all unallowble costs from its bulling and certify that only allowble costs are submitted and records have been established that maintain visibility of unallowble costs
The contractor must identify the method by which it will report discounts, rebates and other applicable credits allocable to the contract that are not reported prior to the conclusion of the contract …
Massachusetts Department of Elementary and Secondary Education
Massachusetts Department of Elementary and Secondary Education

25. Allowable Costs 2 CFR Part 200.400 Cost Principles
All expenditures made from the nonprofit school food service account must be allowable
____________________
Allowable costs must be:
Necessary, reasonable and allocable for proper and efficient administration of the program
Applied uniformly/consistently throughout the organization
Adequately documented and net of all applicable credits
Cost Considerations:
What is the status of net cash resources (3 months or more?)
How does the product/service considered for acquisition directly benefit the operation and/or improvement of the school food service program (i.e., increase participation in the program, improve equipment ..)
What alternative options may address need (low/no cost item, volunteers)
Would the proposed cost divert funds from operations (i.e., staffing) and impair the delivery of the school meal service?
Massachusetts Department of Elementary and Secondary Education
Massachusetts Department of Elementary and Secondary Education

26. Contract PAGE Professional Association of Georgia Educators
A formal, legally enforceable agreement between a buyer and a seller that establishes a legally binding obligation for the seller to furnish goods and/or services and for the buyer to compensate the seller A contract must clearly and accurately describe the goods, products, and/or services to be delivered
Massachusetts Department of Elementary and Secondary Education

27. Contract requirements must mirror those of the solicitation:
Scope of Work
Cost provisions (fixed or
cost plus)
Contract duration and renewal
option* Chris Barrand
Termination clause
Applicable regulations
All contract requirements
__________________
M.G. L. chapter 30(b) §12(b) Unless authorized by majority vote, a procurement officer shall not award a contract for a term exceeding three years, including any renewal, extension or option
The contract requirements must REFLECT those found in the solicitation
Massachusetts Department of Elementary and Secondary Education
Massachusetts Department of Elementary and Secondary Education

28. Summary
Accountability, Open and Free Competition, Ethics, Level Playing Field
Informal/Formal Procurements
Dollar Thresholds
IFB’s and RFP’s
Contracts
Massachusetts Department of Elementary and Secondary Education

29. Resources
National Food Service Management Institute “Procurement in the 21st Century” NFSMI United States Department of Agriculture Food and Nutrition Service “Procuring Local Foods for Child Nutrition Programs” USDA March
Massachusetts Department of Elementary and Secondary Education

30. Resources
Massachusetts Office of the Inspector General “The Chapter 30B Manual: Procuring Supplies, Services and Real Property” August Compliance Review Program “Bidding Basics”
Compliance Review Program - The OIG’s Regulatory and Compliance Division recently began this program to help strengthen municipalities’ procurement practices. The Office’s Regulatory and Compliance Division will review procurement files and purchasing practices and then offer feedback and advice
Bidding Basics is a free online course which provides an overview of the legal requirements for procuring supplies, services and real property under Chapter 30B.
HANDOUT – Bidding Basics
Massachusetts Department of Elementary and Secondary Education
Massachusetts Department of Elementary and Secondary Education

31. Questions ?
Massachusetts Department of Elementary and Secondary Education