Procurement Review Process for School Nutrition Programs

New Jersey Department of Agriculture 1New Jersey Department of Agriculture 1

Procurement Review Processfor School Nutrition Programs

What New Jersey schools

need to know……

August 2018 WEBINAR


LEARNING OBJECTIVES Participants should be able to:

Understand federal, state and local requirements for procuring goods and services –Enterprise Fund (60) – Food Service account

Understand the federal requirement to have a written Code of Conduct for Procurement and a written Procurement Procedure

Understand the four allowable procurement methods

Understand the federal Procurement Review Process


Procurement in the School Nutrition Programs (SNP) was

brought to the forefront in December 2013 when the federal

government released Title 2, Code of Federal Regulations (2

CFR), Part 200, also known as the Uniform Grant Guidance or

the

“SUPER CIRCULAR”

Procurement: The HOT Topic


School Nutrition Program Fundamentals

Schools participating in School Nutrition Programs receive federal & state funds

Federal regulations

Government – wide - 2 CFR 200 (THE SUPER CIRCULAR)❖ COST PRINCIPLES ( allowable/unallowable costs)

❖ PROCUREMENT

▪ Program specific (7 CFR 210, 215, 220 & 250)❖ ELIGIBILITY

❖ MEAL REQUIREMENTS

❖ FOOD SERVICE ACCOUNT


School Nutrition ProgramsFundamentals – con’t

New Jersey School Code

Public School Contract Law - N.J.S.A. 18 A - 18 A -1

Local Public Contract Law - N.J.S.A. 40A:11-1 et seq

Applies to ALL public schools (including charter schools)

Sections apply to school meal programs:

REIMBURSEMENT

PROCUREMENT


What is PROCUREMENT?▪ Procurement is the act of obtaining goods or

services in exchange for money or value

▪ As recipients of federal dollars, all schools are expected to procure goods and services in the proper manner.

▪ ALL procurement, regardless of the dollar amount, must provide for full and open competition

▪ ALL procurement must adhere to federal requirements. In addition, when state and/or requirements are stricter, they must be followed too!

▪ Award to responsive and responsible vendors


The purchase of goods and services

What is Procurement ?

Awarding

a ContractManaging

a Contract

Advertising

Procurement

Drafting

SpecificationsPlanning


Procurement Methods

Informal Formal

Micro-

Purchases < $10,000 NEW

FEDERAL

THRESHOLD

Aggregate Single

Purchase

Small Purchases>$250,000 NEW FEDERAL

THRESHOLD

NJ State Threshold = $29,000

(With a QPA = $40,000)

Sealed Bids

(IFBs),

Competitive

Proposals (RFPs)

&

Non-competitive

Proposals

* Requires public

advertising

Requires price quotes

from at least 3 bidders

Distribute

equitably among

suppliers

Formal

FEDERAL FUNDS PROCUREMENT

METHOD SELECTION CHART

THERE ARE TWO (2) PROCUREMENT METHODS, FORMAL AND INFORMAL. THE METHOD THE SCHOOL FOOD AUTHORITIES (SFA) NEEDS TO USE DEPENDS ON TWO (2) FACTORS, THE AMOUNT OF THE CONTRACT AND WHETHER THE SFA IS A PUBLIC/CHARTER OR NON-PUBLIC SCHOOL.

NEW JERSEY PUBLIC/CHARTER SCHOOLS PURCHASING THRESHOLDS

AMOUNT ACTIVITY PROCUREMENT METHOD

INFORMAL PROCUREMENT

Below $4,350 without QPA N.J.S.A. 18A:18A-3 Sound Business Practice *

Below $6,000 with QPA APPLIES TO PURCHASES BELOW THE QUOTATION THRESHOLDS

SMALL PURCHASE QUOTATION PROCEDURES

$4,351 or $6,001 up to $29,000 or $40,000

N.J.S.A. 18A:18A - 37

Quotation using SFA Internal Procurement Procedures

ANY PURCHASE EXCEEDING QUOTATION THRESHOLDS REQUIRES A QUOTE UP TO THE APPLICABLE N.J.S.A. BID THRESHOLDS OF $29,000 (without a QPA*) OR

$40,000 (with a QPA*)

NOTE: ANNUAL AGGREGATE AMOUNTS

· FORMAL PROCUREMENT

$29,000 or $40,000 and above

N.J.S.A. 18A:18A - 37

Bid - Invitation for Bid (IFB) OR Request for Proposal (RFP)

· Bid Threshold without a QPA* - $29,000

· Bid Threshold with a QPA* - $40,000

* QUALIFIED PURCHASING AGENT

NEW JERSEY NON-PUBLIC SCHOOL PURCHASING THRESHOLDS

AMOUNT ACTIVITY PROCUREMENT METHOD

INFORMAL PROCUREMENT

Below $10,000 *Micro – purchases 2 CFR 200.320 (a)

Single Transaction aggregate cost less than $10,000Sound Business Practice *

* Or LESS than $10,000 if local SFA Procurement Policies are more restrictive

$10,001 - $249,999 Small purchase procedures 2 CFR 200.320(b)Quotation using SFA

Internal Procurement Procedures

FORMAL PROCUREMENT

$250,000 and aboveAs per federal requirements in 2 CFR Parts 200.317 – 200.36

Bid – Invitation for Bid (IFB) OR Request for

Proposal (RFP)


Procurement Procedures Must have documented procurement

procedures that conform to federal requirements and reflect applicable state and local standards

Must have written code of conduct for procurement

Bid protest procedures must be available

Documentation throughout the process is key for transparency. Build it into the procedure.


Identify/Forecast Needs

Conduct an independent cost analysis to determine what the anticipated cost may be (e.g. ask colleagues, check websites)

The anticipated cost will determine method of procurement (e.g., formal vs informal)

Gather information related to product or service (research, review market, discuss with colleagues, attend professional trainings, etc. in order to write a comprehensive solicitation


Identify/Forecast Needs continued…

Contractors that develop or draft specifications, requirements, statements of work, solicitation documents must be excluded from competing for the procurement.


Procurement 101 Informal Procurement Process


Procurement 101 Formal Procurement Process


Competitive quotes are not required

Purchaser writes product specification and any additional vendor requirements

Purchases must be equal to or below $3,500 (or current federal micro-purchase threshold)

Purchaser considers the price of the goods or services to be reasonable

Purchases must be distributed equitably among qualified “responsive” suppliers

SFA must keep all receipts, invoices, and purchase orders

Procurement 101Micro-purchase Method


Develop a specification

• Apples, US No. 1, five 185-count boxes per week for September through December

Solicit quotes

• Contact vendors (by phone, fax, e-mail or in person and provide them with specifications

Procurement 101Small Purchase Method

Informal Procurement: “Three Quotes and a Buy”


• Specifications/product description provide enough detail for vendor to respond adequately

• Telephone or written quotations from 3 qualified and responsible vendors (followed up by an email/fax)

▪ Date of quote

▪ Name of vendor and representative

▪ Description of item being quoted

▪ Quantity

▪ Price of item

▪ Date item needed

Procurement 101



If less than three (3) vendors exist to provide product or service, thoroughly document how this determination was made, such as research conducted to reach this conclusion, etc.

The lowest responsible bidder is awarded the contract (2 CFR 200.31(h)).

Retain all documentation for three (3) years plus the current school year.

Procurement 101



Procurement by competitive sealed bidding by issuing an IFB

Use when• A complete, adequate and realistic specification is

available

• The contract can be awarded solely on the basis of price

Procurement 101Formal Procurement: Invitation for Bid (IFB)


Procurement by competitive proposal by issuing an RFP

Use when

• Conditions are not appropriate for a sealed bid

• Price won’t be the sole basis for the award

• Typically used to procure a qualitative service

Procurement 101Formal Procurement: Request for Proposal (RFP)


Statement of work includes sufficient detail - General description of goods and services (specifications)

There is a balance of providing enough information to obtain the quality of product/service that is desired, but not overly prescriptive that limits free and open competition

Timeline and procedures

Technical requirements

Evaluation method, evaluation criteria and their importance are identified (e.g., point scale, scoring matrix.etc.)

Procurement 101Sections of a Solicitation (RFP)


Sections of a Solicitation (RFP) continued…

Cost is a major consideration of the award (primary factor), but not the sole factor

Experience, past performance, approach, financial and technical resources, etc. are considered in the award through scoring

Results in a fixed price or cost-reimbursable contract


NONCOMPETITIVE PROPOSALS

When an item is only available from a single source (sole source)

The public need is urgent or an emergency exists

After solicitation from a number of sources, competition is deemed inadequate

A member or representative of the local Board of Education/Governing Board will approve, in advance, all procurements that result from noncompetitive negotiations.


Procurement 101Sections of a Solicitation (RFP)

7 CFR 210.21 and 220.16 2 CFR 200.317-326

▪ Contractual Responsibilities

▪ Written Code of Conduct for Procurement

▪ Buy American Provision

▪ Geographic Preference

▪ Documented Procurement Procedures

▪ Written Code of Conduct for Procuremenmt

▪ Full and Open Competition


Reflect federal, state and local laws and regulations provided that the procurements conform to applicable federal law

Maintain all records to detail procurement history

Product specifications

Ensuring responsive and responsible vendors

Contract responsibilities, including evaluation, protests, disputes and claims

Documented Procurement Procedures


Governs performance of employees engaged in procurement for entities receiving federal funds

Written Code of Conduct for Procurement


Prohibits employees from soliciting gifts, travel packages and other incentives from prospective contractors



Prohibits employees from participating in the selection, award, and administration of any contract to which an entity or certain persons connected to them, have financial interest



School food authorities (SFAs) must set standards when financial interest is not substantial or the gift is an unsolicited item of nominal value and may be accepted



Must provide for disciplinary action to be applied in the event the standards are violated



SFAs must purchase, to the maximum extent practicable, domestic commodities or products

• An agricultural commodity produced in the United States

• A food product that is processed in the United States substantially using agricultural commodities that are produced in the United States

Buy American


Applies to SFAs and entities purchasing on their behalf

• Food service management companies (FSMC), cooperatives, intergovernmental and inter-entity agreements and GPOs

• Use a specification of 100% domestically grown and processed

• Requires advance notice/documentation if an exception is required to be substituted

Buy American


Limited exceptions

• A product is not produced or manufactured in the United States in sufficient and reasonable quantities of a satisfactory quality

• Competitive bid reveals the costs of United States product are significantly higher than the foreign product

• No dollar threshold to trigger exception

• Must document the exemption

Buy American


SFAs may apply a geographic preference when procuring unprocessed locally grown or locally raised agricultural products

• Unprocessed means agricultural products retain their inherent characteristics

• SFA has discretion to determine local area to which this option will be applied

Geographic Preference


• Solicitation must clearly outline how responses will be evaluated and scored, including geographic preference

• Application of preference option must leave an appropriate number of qualified firms, given the nature and size of the procurement

Geographic Preference


CONTRACTUAL CHANGES

Any changes to a contract or renewal must be within the scope of the original procurement.

Material changes require a new procurement.


PROCUREMENT 101 RESOURCES

Institute of Child Nutrition (ICN)

Procurement in the 21 st Century

Online Courses – USDA State Agency Guidance to Procurement (Topics 1, 2, and 3)

First Choice : A Purchasing Systems Manual for School Food Service

USDA

Procuring Local Foods for Child Nutrition Programs

Food Buying Guide for School Meals Programs


The Procurement Review


Ensure program integrity

Ensure SFA’s compliance with USDA regulations

Ensure SFAs are good stewards of federal dollars received

Purpose of Procurement Review


New Jersey Procurement Review Process

What to expect?


Procurement Review Notification

Procurement Reviews are on the same cycle as the Administrative Review.

Reviews are for the previous school year. Reviews taking place in SY 18-19 will cover procurements during SY 17-18.

The School Business Administrator will receive an e-mail notification of a review.


Procurement Review Notification

Selected SFA’s will be notified via email in the fall.

Procurement Reviews will be conducted by submitting documentation via e-mail to [email protected]

Phone exit conference calls will be conducted

mailto:[email protected]


Procurement Review Documentation

Initial documentation requested will be:

1. Vendor paid list (a detailed report of all expenditures by vendor for the non-profit food service account -fund 60) – Excel Format preferred.

2. SFA Procurement Table


Initial Documentation – Cont.

3. SFAs Code of Conduct for Procurement -2 CFR 200.318(c) and 7 CFR 210.21(c)

Form #327 - Sample Code of Conduct for procurement. The written code of conduct must define a conflict of interest and include disciplinary action for violations.

4. Procurement procedures/SFA Procurement Plan - 2 CFR 200.318(a) and 7 CFR 210.21(c)

Form #326 – Sample Procurement Procedures


Procurement Tool

The Procurement Tool was developed by the USDA. The Tool has multiple tabs to assist the State Agency in conducting the review.

Tool is still in Draft format. The tool will have changes in the upcoming year.

Districts will receive only the SFA Table from the full tool.


SFA Procurement Table

This worksheet from the Procurement Tool includes questions to be answered and a table for SFAs to input the following:

Dollar value of the SFA small purchase threshold

Memberships at retail and/or wholesale club warehouses

Use of group purchasing/buying organizations and/or cooperatives



Information regarding all purchases in Food Service Fund 60 such as: Vendors Total paid/vendor (Use drop-down box provided for

amount ranges.) Goods/services purchased, and Competitive procurement method to procure the

product (s) or service (s)

Once the information in the table is complete, the SFA will save the Excel file and return the file to the State agency via email.



We will now go over the sections of the SFA Procurement Table that must be filled out by the SFA. Pay close attention to the columns with red arrows as these are “drop down boxes” – select from one of the answers in the drop down box.

After reviewing the sections, we will see how the information is then populated into the tool.


The Next Step……..

Next you will see how the State agency selects vendors to be reviewed.

After the SFA Procurement Table information has been added to the full Procurement Tool, the SFA information is populated into the Procurement Selection Chart

The vendors to be reviewed are prescribed and defined in the Procurement Selection Cart.


Second Request for Information

SFA’s will receive a second request for documentation once vendors have been selected.

We will provide you with a PROCUREMENT REVIEW CHECKLIST. This document will indicate what vendors were selected and what documentation is required.

When returning documentation the SFA will indicate if item is attached, not applicable or not available. Please return the signed check list with documentation.


Documentation for Micro Purchases:

Purchase Orders

Vendor Invoices

Specifications (“if required by local purchasing policy”)

Any other important information related to the purchase.


Documentation for Small Purchases:

Specifications

List of Vendors requesting Specs

Quotations received

Scoring sheets and or evaluation of quotes

Purchase Orders, Vendor Invoices and Payment Vouchers

If multiple purchases – you will be asked for documents for 3 months.


Documentation for Formal Procurement (RFP/IFB):

Advertisement of Bid

Record of bid opening

Scoring Sheets/evaluation of bid

Documentation for rejecting the lowest bid (if applicable)

Purchase Orders, Vendor Invoices and Payment Vouchers

If multiple purchases – you will be asked for documents for 3 months.


Documentation for FSMC Contracts: All Information as requested in Formal

Procurement and……

Names of FSMC Advisory Board members and minutes of one advisory board meeting. (The FSMC Advisory Board is required in all FSMC contracts)

Copies of SFA on-site monitoring reports of the FSMC (State Agency Form # 330)

Operating Statements for each of the 3 months requested and the final end of the year operating statement for the FSMC.


FSMC Contracts continued

SFA review of FSMC Health Inspection Reports as required by the contract with the FSMC

Detailed record of Discounts, Rebates and Credits from commercial food and supply purchases.

Monthly and annual reconciliation of FSMC credited value of all USDA foods received. This should include all processed and “brown box” commodities.


Commodity Processing

Solicitation Documents

Specifications

Evaluation Criteria

All relevant documents for both Formal (RFP/IFB)and Informal Purchases (Micro and Small Purchases) for all Commodity Vendors.


Review of State Agency FormsThe following forms can be found in SNEARS under - Resources – Procurement Documents▪ #325 – Procurement Checklist

▪ #326 – Sample Procurement Procedures (REVISED 8/2018)

▪ #327 – Sample Code of Conduct

▪ #330 – SFA – FSMC Monitoring Form

▪ #331 – Procurement Log

▪ #358 – Federal Funds Procurement Method Selection Chart (REVISED 8/2018 )

▪ #383 -- NEW - Sample Completed Form 326 Page 2 –A . General Procurement Procedures (REVISED 8/2018)


Common Findings from SY 2017-2018 Micro-purchasing – not spreading purchases equitably

among qualified vendors

Private schools/RCCIs not conducting micro-purchasing and small purchase procedures correctly with no documentation

No SFA Procurement Procedures or Code of Conduct for Procurement

Price not the primary factor in evaluation criteria

Solicitations for food do not include “Buy American” provisions

No competitive procurement of USDA Foods processors ***

*** NEW RULE ON USDA FOODS PROCESSING Effective 7/2/18 –Procurement Requirements 7 CFR 250.31


New Rule on USDA Foods Processing USDA published the final rule, Revisions and Clarifications in

Requirements for the Processing of Donated Foods effective 7/2/2018

The rule has a new section on procurement of end products Section 250.31 – “Procurement requirements” that applies to SFAs

Now SFAs must comply with the procurement requirements in 2 CFR Part 200 when purchasing processed end products containing USDA Foods and related distribution and processing services from processors

Required to have certain information in procurement documents including price charged, method of end product sales, value of donated food contained in the end products, and delivery location


FSMC CONTRACT ISSUESin Cost Reimbursable Contracts

FSMCs not providing proper crediting of commercial rebates, discounts and credits

FSMC charging monthly costs for indirect FSMC services that should be part of the management/administrative fee ( ie. payroll /computer services)

FSMC charging the cost of delivery when utilizing their own commissary in a cost-plus a percentage of cost for food/supplies

Unallowable expenses being charged to the food service account (Fund 60

FSMC not fully utilizing the SFAs USDA Foods allocation


Procurement Review Webinar

This webinar can count toward 2 hours of professional standards training:

Key Area – Operations

Learning Topic – Purchasing/Procurement

Topic Code – 2400

New Jersey Department of Agriculture

School Nutrition Programs

(609) 984-0692

www.nj.gov/agriculture

USDA is an equal opportunity provider and employer

http://www.nj.gov/agriculture


THANK YOU FOR PARTICIPATING

Disclaimer: This presentation was provided as technical assistance to provide a general framework of the process of a procurement review. SFA’s are advised to review all reference materials and applicable federal, state and local purchasing laws to ensure compliance.


QUESTIONS