Procurement is another word for purchasing. All sponsors using Federal non-profit food service funds must follow applicable procurement regulations. Conducting proper procurement helps to ensure that sponsors receive the best product possible for the best price. It also helps to ensure there is free and open competition and that taxpayer funds are being spent wisely.
Procurement Training:
- Sponsor Procurement Overview Roadmap
- NFSMI First Choice Training
Provides a general overview of purchasing requirements for School Food Authorities. Especially useful is chapter 10, "The Purchase System" and appendix 16, "Standard Contract Language". These two sections help with the development of actual documents for use in procurement.
- NFSMI Choice Plus Training
Provides a detailed overview of writing food specifications for use in purchasing.
Procurement Resources:
Procurement Regulations:
| Typical School Bid Cycle |
| October/November: New products are reviewed for pre-approval |
| December: Development of menus and bid specifications begins |
| January: Menus for the next school year planned |
| February: Specifications finalized;bid documents finalized |
| March: Bids publicized and vendors begin to prepare bids |
| April: Bids opened and evaluated |
| May: Bid awarded for the next school year |
| Types of Awards & Contracts |
| Bottom Line: The lowest-price, responsible bidder receives the contract based on the total price for all items combined at projected quantities. |
| Aggregate: Bidding and awarding bid items in line categories, such as canned and staples; frozen foods; milk and other dairy products; and bakery items. The sponsor will be served by several different vendors/specialty wholesalers. |
| Line Item: This bid considers the price of each product separately, and the bid is awarded item by item to the lowest bidder. Distributors are given no guarantees of the number of cases to be delivered, they may not bid or may place minimum invoice amounts on all deliveries. |
| Prime Vendor: When a foodservice operation acquires 80% or more of foods from one source, this vendor typically is considered a "prime vendor". Broadline distributors, which offer refrigerated, frozen and dry items, often are prime vendors. Advantages include higher volumes and lower costs without precluding competition during the bid process |
| Pricing Mechanisms |
| Fixed Price: Means the price quoted cannot be adjusted during the period of the contract. This method is used most frequently for canned and frozen foods. |
| Fixed Price with Escalator/De-escalator Clause (Market-based Pricing): Means the price is fixed for a specific amount of time but can be increased or decreased according to the market-based price. This method is most frequently used with produce, milk and eggs. Market-based prices may reflect the Consumer Price Index, the Agricultural Marketing Service market report or another reliable source of pricing information. |
| Cost Plus Fixed Fee: Means the bid price is for delivery of product, overhead costs and profit-plus the market-based price. This is often used for purchasing fresh products that see market prices vary substantially during the year. |
| Volume Discount: Is a reduced-pricing structure offered to a school district based on the volume of the purchase. |