(X) Policy Memo
April 2, 2010
TO: Sponsors of National School Lunch and School Breakfast Programs
RE: Procurement Requirements for Child Nutrition Programs
The Oregon Department of Education Child Nutrition Programs (ODE CNP) has become increasingly aware of procurement (purchasing) irregularities in the Child Nutrition Programs. Improper procurements made with nonprofit child nutrition funds could result in 100% of those funds being restored to the nonprofit child nutrition fund from a School Food Authority's (SFAs) general fund.
Some of the violations include buying directly from vendors with no competitive procurement or buying products from a vendor that is off bid and no provision was made in the initial procurement for the off bid purchases. This memo is intended to outline procurement procedures required for all sponsors of child nutrition programs.
Chapter 7 of the Code of Federal Regulations (CFR) 210.21 outlines the general procurement requirement governing the National School Lunch Program (NSLP). It then refers to 7 CFR 3016-Uniform Administrative Requirements for Grants and Cooperative Agreement to State and Local Governments, which outlines the detailed procurement requirements.
7 CFR 3016 states that SFAs will:
- Make awards only to those contractors possessing the ability to perform successfully in the proposed procurement and consideration should be given to integrity, compliance with public policy, records of past performance, and financial and technical resources.
- Maintain records sufficient to detail the history of the procurement.
- Conduct all procurement in a manner providing full and open competition.
- Not place unreasonable requirements on firms in order for them to qualify to do business.
- Not impose in-state or local geographical preferences, except those where applicable Federal statutes mandate or encourage geographic preference.
- The 2008 Farm Bill allows SFAs and other institutions receiving funds through the Child Nutrition Programs to apply a geographic preference when procuring unprocessed agricultural products. See Memo dated November 23, 2009.
- Maintain written selection procedures for procurement transactions that incorporate clear and accurate descriptions of the product or service to be procured and that do not restrict competition.
- Include enough qualified vendors to ensure maximum open and free competition.
- Follow the small purchase procedures for purchases under $100,000 (Federal), or $75,000 (Oregon State), or local if more restrictive. SFAs must always use the most restrictive procedure. Price or rate quotations from at least three qualified sources are necessary. All nonprofit child nutrition funds must use this method. If SFAs make a purchase using district general fund dollars and not funds from the nonprofit child nutrition fund, purchases below $5,000 are not required to obtain competitive quotes but it is recommended.
- Follow formal procurement procedures for all procurement above $100,000 (Federal), or $75,000 (Oregon State), or local if more restrictive. SFAs must always use the most restrictive procedure.
The two formal methods are:
- Invitation for Bid (IFB) aka sealed bid method - Bids are publicly solicited and the contract is awarded to the responsible bidder whose bid, conforming to all the material terms and conditions, is lowest in price. Bids must be publicly advertised and solicited from an adequate number of known suppliers.
- Request for Proposal (RFP) aka competitive proposals - Conducted with more than one source submitting an offer, and either a fixed-price or cost-reimbursement type contract is awarded. Request for proposals will be publicized and must identify all evaluation factors. Sponsors must have a method for conducting evaluations of the proposals received and for selecting awardees. Awards are made to the most responsible vendor whose proposal is most advantageous to the program, with price and other factors considered.
Procurement by noncompetitive proposals is solicitation of a proposal from only one source, or after solicitation of a number of sources, which is determined inadequate competition. 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:
- The item is available only from a single source
- The public emergency for the requirement will not permit a delay resulting from competitive solicitation
- The awarding agency (ODE CNP) authorized noncompetitive proposals
- After solicitation of a number of sources, competition is determined inadequate
Cost plus a percentage of cost type procurements are not permitted.
When an agreement is signed with ODE CNP to operate child nutrition programs, SFAs agreed to follow the applicable procurement regulations. A review of procurement activities is included in the Coordinated Review Effort (CRE) administrative review.
If you have questions regarding procurement, please contact your assigned child nutrition specialist.
Sincerely,
Heidi Dupuis
Manager, School Nutrition
Child Nutrition Programs
Office of the Superintendent