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Soliciting Bids from Commercial Distributors


Nutrition Services Division Management Bulletin
Purpose: Beneficial Information

To: U.S. Department of Agriculture Foods Processors and Recipient Agencies

Number: USDA-FDP-01-2012

Attention: Food Service Directors, U.S. Department of Agriculture Foods Processors

Date: May 2012

Subject: Soliciting Bids from Commercial Distributors for U.S. Department of Agriculture Foods End Products

Reference: U.S. Department of Agriculture Policy Memo FD-119

This Management Bulletin (MB) provides information and guidance on soliciting bids from commercial distributors for U.S. Department of Agriculture (USDA) Foods end products.

In accordance with Title 7, Code of Federal Regulations (7 CFR), Part 3016 or 7 CFR Part 3019, as applicable, and 7 CFR Section 210.21, goods and services for the National School Lunch Program (NSLP) must be procured in a way that ensures free and open competition. School food authorities (SFA) must comply with these regulations for the procurement of commercial food products and USDA Foods end products. Generally, SFAs solicit bids for procurement of commercial food products from commercial distributors and USDA Foods end products from approved USDA Foods processors separately. This often occurs even when the distributor sells commercial food products that are identical to the USDA Foods end products.

USDA Policy Memo FD-119 clarifies that, in some cases, the SFAs may solicit bids for procurement of USDA Foods end products and commercial foods from distributors together. FD-119 also clarifies the requirements for combining the solicitation of these bids and the parties responsible for ensuring compliance with the requirements. Although FD-119 focuses on SFA procurement in the NSLP, it also applies to procurements conducted by SFAs in other child nutrition programs. To view the full Policy Memo, please visit the USDA Commodity Processing Policies Web page at http://www.fns.usda.gov/sites/default/files/pmfd119_NSLP_PROC-SolicitingBids.pdf.

Requirements for Solicitation

SFAs may solicit bids from a commercial distributor to procure commercial food products and USDA Foods end products if the distributor has already procured the services of a USDA Foods processor. The SFAs must follow federal procurement requirements. In addition, the solicitation and resulting contract must clearly address the specific requirements for USDA Foods end products.

The SFA’s solicitation must provide the following:

Coordination between the SFAs and the FDP

The SFAs must verify with the FDP that processors providing USDA Foods end products to a commercial distributor have an approved MPA or SPA with the FDP. The SFAs may only have USDA Foods diverted to approved processors. The SFAs must communicate with the FDP regarding the approved USDA Foods end products, the quantity of USDA Foods they are eligible to receive, and the value of the USDA Foods. The FDP must ensure the SFAs are aware of any restrictions in the MPA or SPA related to approved USDA Foods end products, methods of sales, or other provisions. These restrictions must be included in the SFA’s solicitation of a distributor for commercial foods and USDA Foods end products.

SFA Responsibilities

FDP Responsibilities

Coordination Between the Distributor and Processor

The distributor and processor should work together to ensure USDA Foods end products are only provided to eligible SFAs. The distributor must ensure only eligible SFAs receive USDA Foods end products produced using non-substitutable USDA Foods, such as beef or pork.

Often, the commercial products meet substitution requirements and grading requirements as outlined in 7 CFR sections 250.30(f) and 250.30(g) respectively and are considered identical to USDA Foods end products. In such cases, the commercial food products and USDA Foods end products may be commingled at the distributor’s facility and sold to any of their customers. When such food products are sold to eligible SFAs, each SFA must receive a credit for the value of the USDA Foods in the quantity of end products they are eligible to receive.

Distributor Responsibilities

Processor Responsibilities

USDA Policy Memo FD-007 provides additional guidance on the coordination between the processor and distributor in the distributor’s sale of USDA Foods end products to SFAs or other recipient agencies. To view the full Policy Memo, please visit the USDA Commodity Processing Policies Web page at http://www.fns.usda.gov/sites/default/files/pmfd-007_SP-Net_off_Invoice_rev.pdf. The FDP MB USDA-FDP-02-2012 provides further clarification on FD-007 and is available on the FDP Value Pass Through Systems MB Web page at http://www.cde.ca.gov/ls/nu/fd/mbusdafdp022012.asp.

If you have any questions regarding this MB, please contact Manpreet Kaur, Processing Consultant, by phone at 916-323-2591 or by e-mail at mkaur@cde.ca.gov or Jeanette Lund, Processing Consultant, by phone at 916-324-6150 or by e-mail at jlund@cde.ca.gov.

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