Nutrition Services Division Management Bulletin
|Purpose: Policy, Beneficial Information|
To: National School Lunch Program and School Breakfast Program Sponsors
Attention: Food Service Directors, Purchasing Agents, Business Managers, and Administrators
Date: July 2012
Subject: Procurement Questions and Answers to Assist in the Implementation of the Final Rule Titled Nutrition Standards in the National School Lunch and School Breakfast Programs
|Reference: U.S. Department of Agriculture Policy Memo SP 17-2012, February 23, 2012|
This Management Bulletin (MB) provides procurement questions and answers to assist in the implementation of the Final Rule entitled “Nutrition Standards in the National School Lunch and School Breakfast Programs.” Following the January 26, 2012, issuance of the Final Rule, school food authorities (SFAs) have raised several questions regarding its effect on current contracts between SFAs and food service management companies (FSMCs). The U.S. Department of Agriculture (USDA), Food and Nutrition Service, issued the following questions and answers (Q&As) to assist both state agencies and SFAs as they implement the provisions of the Final Rule and examine current FSMC contracts.
Q1: Does the issuance of the Final Rule create a “material change” in FSMC contracts?
A1: As the USDA has previously advised in the Policy Memorandum entitled July 2005 Procurement Questions, the creation of a material change to a contract between an SFA and an FSMC depends on the SFA’s initial solicitation document and the resulting contract during the procurement process. The USDA anticipates that some current contracts between SFAs and FSMCs will be consistent with the new nutrition standards of the Final Rule. Those contracts would require only nonmaterial changes to ensure consistency with the Final Rule. The USDA Policy Memorandum is available on the USDA FNS Policy Memo Web page at http://www.fns.usda.gov/procurement-qas-assist-implementation-final-rule-titled-nutrition-standards-nslp-and-sbp.
Each contract between an SFA and an FSMC will have unique initial solicitation documents and contract terms. Each SFA that contracts with an FSMC must review existing contracts to make a determination as to whether a material change has occurred.
Additionally, Title 7, Code of Federal Regulations, sections 210.16(a)(10), 210.19(a)(6), 210.21(c)(1), 220.7(d)(1)(ix), and 220.16(c)(1) require the California Department of Education to pre-approve all FSMC contracts and supporting documents prior to their use. This includes all contract extensions and amendments.
SFAs should ask the following questions to help determine if a change to the contract constitutes a material change:
- If there would be an increase or decrease to the cost of the contract, would the increase or decrease in cost have caused bidders to bid differently if the prospective change had existed at the time of bidding?
- Would the prospective change materially affect the scope of services, types of food products, volume of food products, etc., in both the solicitation document and resulting contract? For example, the Final Rule requires schools to serve whole-grain rich products and specific varieties of vegetables, which may already be included in current contracts.
Q2: If it appears that an SFA’s implementation of the Final Rule will create a material change to the contract with the FSMC, must the SFA rebid?
A2: Per federal regulations, contracts between SFAs and FSMCs must be no longer than one year in duration with four optional annual renewals. Every SFA should be annually reviewing its FSMC contract with no expectation by either party to renew the contract. As noted above, the SFA must review the current contract and determine if any prospective changes would result in a material change. If the parties determine that prospective changes would be material, the SFA must either:
- Conduct a separate procurement to obtain the desired deliverable that created the material change; or
- Conduct a new procurement and ensure that the new solicitation associated with the rebid contains the appropriate specifications and provision to ensure conformance to the final rule. For example, if the SFA’s initial solicitation and resulting contract did not address whole-grain rich foods, the SFA would ensure that rebid specifications would procure such foods.
As needed, an SFA may conduct procurement at the earliest feasible juncture. However, the SFAs must ensure that a new procurement is completed for the 2013–14 school year.
Q3: If the SFA determines that a material change would occur as a result of implementation of the Final Rule but concludes that a new procurement cannot be completed prior to the 2013–14 school year, may the SFA amend its current contract in order to ensure full implementation of the Final Rule?
A3: Yes. As noted above, annual renewals of a contract between an SFA and an FSMC occur at the discretion of the SFA. In this case, both the SFA and the FSMC would need to agree to the terms of any amendment to the current contract necessary to ensure full implementation of the Final Rule.
Should an FSMC be unwilling or unable to agree to such an amendment to the current contract, the SFA would need to take immediate action. For example, immediate action may include:
- Termination of the current contract between the SFA and the FSMC in accordance with the termination provisions and issuance of a new solicitation
- Issuance of a separate solicitation to procure the necessary foods in order to ensure compliance with the final rule, consistent with the current contract between the parties
Q4: If it appears that an SFA’s implementation of the Final Rule will create a material change to the contract with a contractor other than an FSMC (e.g., distributor, meal vendor), should the same principles and time frames outlined in this Management Bulletin (MB) apply?
A4: Yes, the principles and time frames outlined in this MB should apply to all contracts between an SFA and contractor.
If you have questions regarding this MB, please contact a contract specialist (assigned by county) as listed on the form Caseload, located in the Child Nutrition Information and Payment System, under Applications, Download Forms, or send an e-mail to SFSCONTRACTS@cde.ca.gov.