Procurement

Purchasing for child nutrition programs involves several steps all based on the foundation of open and free competition with the goal of providing with the most nutritious, high-quality and safe meals possible while staying within a budget. Here you will find resources to assist in traveling down the procurement path.

All procurement transactions must be conducted in a manner that follows the principles of good procurement:

1. Provide for free and open competition. Free and open competition means that all vendors have a level playing field and the same opportunity to compete.
2. Conduct procurement in an environment that provides for fairness and maintain integrity throughout the process. This means employee or agent of the School Food Authority (SFA) or Local Education Agency (LEA) responsible for development, selection, award, and administration of contracts should avoid any conflicts of interests, real or apparent. The employee or agent of the SFA or LEA shall neither solicit nor accept gratuities, favors, or anything of monetary value from vendors or proposed vendors.
3. Award contracts to vendors who are eligible, responsive, able, and willing to meet the product specifications, and the terms and conditions provided in the solicitation document.
4. Maintain transparency throughout the process. This means records are maintained to establish accountability and cost effectiveness for the federally funded SNP.

2 CFR 200.317-326 Super Circular - Federal Procurement Regulations

School Nutrition Procurement

Procurement is a multi-step, systematic, and complex process for obtaining quality goods, products, and/or services at the best possible price. Proper planning before beginning to prepare the procurement document for solicitation is critical and necessary for the School Food Authority to obtain high quality products and services needed at the lowest possible cost.

The steps in procurement for School Nutrition Programs (SNP) are: 

1. Plan and determine cycle menus that meet meal pattern requirements for all grade groups
2. Determine the products necessary to produce menus
3. Forecast or estimate the necessary quantities of each product 
4. Develop product descriptions or specifications and quality standards
5. Determine product movement process that will help establish delivery schedules and inventory management and ultimately costs
6. Estimate the total cost of the product procurement. This would mean contacting potential vendor for information on product availability, price, delivery costs, and other related costs such as records and order placement
7. Select the proper procurement method and create solicitation documents
8. Contact potential vendors to obtain competitive offers
9. Evaluate vendor responses
10. Award the contract to the most responsive and responsible vendor, and
11. Manage the contract.

Methods and Documentation

Procurement Decision Tree – A flow chart to show components of a procurement plan. The procurement method to use is determined once the value of the procurement event is estimated. Below is a description of procurement methods, including steps to follow when using a method, and documentation to retain for each method.

All procurement transactions must be conducted in a manner that maximizes free and open competition. This means “all suppliers are on a level playing field” and have the same opportunity to compete. Procurement procedures must not unjustifiably restrict or eliminate competition.

Informal - Micro-purchases
Informal - Small Purchase
Formal - Sealed Bids and Competitive Proposals

Resources

Procuring Local Foods for Child Nutrition Programs - This USDA guide covers procurement basics, defining local, where to find local products, and the variety of ways schools can purchase locally in accordance with regulations. This guide incorporates information about micro-purchases, buying local foods for child care and summer meal programs, and real world examples. The guide also includes sample solicitation language, detailed geographic preference examples, and helpful resources.

2 CFR 200.317-326 Super Circular
7 CFR 210.21 NSLP Procurement
7 CFR 220.16 Breakfast Program 
7 CFR 225 Summer Food Service Program

Procurement in 21st Century Resource Manual (2015) From the Institute of Child Nutrition, University of Mississippi, the manual provides general concepts about procuring goods and services to help school nutrition directors identify key considerations during the decision making process based on the complexity of implementing a cost-effective procurement system in School Nutrition Program.

Equipment Purchasing and Facility Design for School Nutrition Programs - From the National Food Service Management Institute, University of Mississippi, the resource gives school nutrition directors a competitive advantage as they approach equipment purchases and facility design.

The resource is divided into two sections.

1. Introduction to Equipment and Design for School Nutrition Programs - This section has eight chapters with Chapter Seven - Getting Ready to Bid and Chapter Eight - Finishing the Equipment Purchasing Process dedicated to procurement of equipment from solicitation to start-up and training for preventive maintenance of equipment. It includes sample request for quotations/Invitation for Bid.
2. Making Specific Equipment Choices - In eight chapters, focusing on specific types of foodservice equipment purchased by school nutrition programs.

Templates and Prototypes

The following templates and prototypes can be found in Download Forms on IowaCNP. All documents start with the prefix: NSLPPROC followed by a number and title of the form. 

1. Procurement Decision Tree
2. Application Packet - Written Procurement Plan and Code of Conduct template
3. Written Procurement Plan and the Code of Conduct Handout 
4. Micro-Purchase log
5. Small Purchase (3 Bids and a Buy) procurement template
6. Request for Proposal (RFP) for Prime Vendor (Food) template
7. Attachment B - Official Pricing Spreadsheet - supplement to Request for Proposal template
8. Invitation for Bid (IFB) template
9. Public notification for RFP and IFB
10. No Bid Vendor Statement
11. Rebates, Discounts, and Credits Tracking Form
12. Milk - Extended Cost Estimate Spreadsheet
13. Buy American Exception Log template.

Food Service Management Company (FSMC) Procurement

A Food Service Management Company (FSMC) is an entity that performs one or more activities of the food service operation on behalf of a school nutrition program sponsor. These activities may include any or all of the following services: bookkeeping, menu development, preparation of reimbursement claims, organization and maintenance of program documents (such as daily meal counts, menus, and menu production records), meal preparation and service, consulting services, and purchasing services.

Federal regulations require that all purchases of goods and services using food service revenues follow federal procurement regulations. Specifically, sponsors must adhere to a competitive bidding process, and FSMC contracts must include federally required clauses. In addition, the sponsor, not the FSMC, is responsible for preparing all bid documents and the agreed upon contract.

When deciding whether contracting with a FSMC will provide the best possible food service operation, the SFA should consider all financial, administrative and operational issues. Contracting with a FSMC means that a for-profit business will operate the SFAs nonprofit Child Nutrition Program. The SFA must maintain legal authority and responsibility for the Child Nutrition Program at all times.

• What to Know Before Contracting with a Food Service Management Company - Recorded 9-13-16. Presents information to help organizations determine whether to contract for Food Service Management Company services or whether to remain self-operating. Covers the timeline for FSMC procurement, processing deadlines, evaluating current child nutrition programs, two contract type options, responsibilities of both the organization and the FSMC, and general information on the procurement process for management services.
• Management and Oversight of FSMC Contracts - Recorded February 2018. Covers the duties of the Authorized Representative, Monitoring Duties, Advisory Group Requirements, Reconciliation of USDA Foods, Verifying Charges on FSMC Invoices, Meal Pattern Compliance, Offer vs Serve, Food Production Records, Smart Snacks, Food Safety, and Procurement as it relates to FSMCs.
  • Management and Oversight of FSMC Contracts - Professional Standard

FSMC Procurement Process and Timeline

It is recommended that organizations begin by reading “Contracting with Food Service Management Companies: Guidance for School Food Authorities,” and plan the process of procuring FSMC services with the “Timetable for Procuring a Food Service Management Company.” Any school food authority, SFA, that has decided to procure FSMC services for the next school year must contact the Bureau of Nutrition & Health Services (BNHS) FSMC Consultant before February 1. Failure to contact BNHS by the deadline means that the SFA may not procure a FSMC contract for the next school year. The SFA must have the RFP advertised no later than March 1.

• Contracting with Food Service Management Companies: Guidance for School Food Authorities
• Timetable for Procuring a Food Service Management Company

Contract Types and Base Year RFP/Contract

When bidding for FSMC services, the state prototype must be used regardless of what type of contract is bid. To encourage competition and to obtain the best contract possible, SFAs are encouraged to submit their RFP to as many FSMCs as possible. Federal regulations require that SFAs annually submit all new contracts, corresponding bid documents, and/or annual contract extensions to the Iowa Department of Education (IADE), Bureau of Nutrition & Health Services (BNHS), for prior approval.

Fixed Price - In a fixed price contract, the FSMC sells a meal for a Fixed Price including their profit and overhead. All costs are known beforehand. Fixed Price contracts require no monitoring of National Volume Discounts and Rebates.

For current Fixed Price RFP, RFP Exhibits, and Base Year Checklist, contact Shea Cook at shea.cook@iowa.gov or 515-326-1682.

Cost Reimbursable - In a cost reimbursable contract, the FSMC passes along all costs (Food, Labor, etc.) and adds an administrative fixed fee and/or a management fixed fee.; Financial monitoring of this contract is more complex, and the SFA is responsible for ensuring that All National Volume Discounts and Rebates are being passed along.

For current Cost Reimbursable RFP, RFP Exhibits, and Base Year Checklist, contact Shea Cook at shea.cook@iowa.gov or 515-326-1682.

FSMC Post Award and Renewal

Material Change - No item may be added or replaced if it would constitute a material change to the contract. In general, a material change can be thought of as a change made to a contract after it has been awarded that alters the terms and conditions of that contract substantially enough, to the extent that had other bidders known of these changes in advance, they could have bid differently and more competitively. As such it is not expected that the total value of this RFP will increase or decrease significantly.

Advisory Board - After procuring FSMC services, the SFA, with participation from the FSMC, must establish an Advisory Board that meets at least twice a year and is composed of students, teachers, and parents who will assist in menu planning.

Self-Monitoring - SFAs must conduct self-monitoring visits and complete a monitoring form for each food service site twice a year, no later than December 1 and April 1.

FSMC contracts may be valid for up to one year from the date that they are signed by all parties and may be renewed for up to four additional one-year terms. Federal regulations require that SFAs annually submit all new contracts, corresponding bid documents, and/or annual contract extensions to the Iowa Department of Education (IADE), Bureau of Nutrition & Health Services (BNHS), for prior approval.

Fixed Price Addendum - The fixed price per meal/Meal Equivalent may be increased on an annual basis by the Yearly Percentage Change in the Consumer Price Index for All Urban Consumers, as published by the U.S. Department of Labor, Bureau of Labor Statistics, Food Eaten Away from Home (CPI). The CPI rate will be submitted to the SFA by BNHS annually. No other price increases are allowed for renewals.

For Fixed Fee Addendum Prototype documents contact Shea Cook at shea.cook@iowa.gov or 515-326-1682.

Cost Reimbursable Addendum - Management and General and Administrative Expense Fees may be increased on an annual basis by the Yearly Percentage Change in the Consumer Price Index for All Urban Consumers, as published by the U.S. Department of Labor, Bureau of Labor Statistics, Food Eaten Away from Home (CPI). The CPI rate will be submitted to the SFA by BNHS annually. No other price increases are allowed for renewals.

For Cost Reimbursable Addendum Prototype documents contact Shea Cook at shea.cook@iowa.gov or 515-326-1682.