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Procurement in the CNPs Frequently Asked Questions

Questions and answers to common questions regarding procurement in child nutrition programs.

Questions and Answers (Q&A) to aid Child Nutrition Program (CNP) Operators with understanding the procurement standards in Title 2, Code of Federal Regulations (2 CFR), Part 200, and other federal and California state procurement laws, regulations, and policies.

The California Department of Education (CDE) does not intend these Q&As to be inclusive of all terms, Provisions, and program requirements applicable to procurements and contracts. Each CNP Operator is responsible for ensuring that their procurement documents comply with all applicable laws, program instructions, and guidance materials. Each CNP Operator should consult with legal counsel regarding any proposed procurement methods or contract language.

For additional information, please visit the U.S. Department of Agriculture Q&As on the Transition to and Implementation of 2 CFR, Part 200 External link opens in new window or tab. web page.

If you are unable to find the answer to your questions, please contact the following program support staff for assistance:

General Terms with Abbreviations, Acronyms, and Definitions

  • Administrative review (AR)
  • Agricultural Marketing Service (AMS)
  • Bidder/potential vendor/respondent is a commercial enterprise, public or nonprofit private organization, or individual that can enter into a contract with a CNP operator.
  • California Department of Education (CDE)
  • California Education Code (EC)
  • California Government Code (GC)
  • California Public Contract Code (PCC)
  • Child and Adult Care Food Program (CACFP)
  • Child Nutrition Information and Payment System (CNIPS)
  • Child Nutrition Program (CNP)
  • CNP Operator is an agency that operates a CNP including, but not limited to, the National School Lunch Program, School Breakfast Program, Child and Adult Care Food Program, and Summer Food Service Program.
  • Code of Federal Regulations (CFR)
  • Consumer Price Index (CPI)
  • Contractor/vendor is a commercial enterprise, public or nonprofit private organization, or individual that has entered into a contract with a CNP operator.
  • County Office of Education (COE)
  • Food and Nutrition Service (FNS)
  • Food service management company (FSMC)
  • Institute of Child Nutrition (ICN)
  • Invitation for Bid (IFB)
  • National School Lunch Act (NSLA)
  • National School Lunch Program (NSLP)
  • Nonprofit Food Service Account (cafeteria fund)
  • Nutrition Services Division (NSD)
  • Policy Memorandum (Policy Memo)
  • Question and Answer (Q&A)
  • Request for Information (RFI)
  • Request for Proposal (RFP)
  • School Breakfast Program (SBP)
  • School food authority/School Nutrition Program Operator (SFA)
  • School Nutrition Program (SNP)
  • Summer Food Service Program (SFSP)
  • Technical Assistance (TA)
  • Title 2, Code of Federal Regulations (2 CFR)
  • Title 7, Code of Federal Regulations (7 CFR)
  • United States Code (U.S.C.)
  • U.S. Department of Agriculture (USDA)

Frequently Asked Questions

Allowable Costs

  1. Is apparel (e.g., aprons, uniforms) an allowable cost?

    Yes, if a CNP Operator has a policy that requires food service employees to wear uniforms and the uniforms are used exclusively by food service staff, then purchasing uniforms with nonprofit food service funds is allowable. The CNP Operator must make sure the cost is necessary, reasonable, and prudent for the operation of the nonprofit food service program. Additionally, the CNP Operator must use funds from the CNP for which the uniforms are being purchased and the uniforms must be used exclusively for that same CNP. For example, uniforms purchased using CACFP funds must be allocated for CACFP use only.

    For more information on allowable costs, SNP Operators may contact the Resource Management Unit at SNPCafeFundQuestions@cde.ca.gov, and all other CNP Operators may contact their program analyst, listed in the Download Forms section of the CNIPS.
  2. Does the CDE need to approve equipment (including software) over $5,000?.

    Yes, if the agency is an SNP Operator that is purchasing equipment equal to or greater than $5,000 per unit (or the SNP Operator’s local capital expenditure threshold if less than $5,000), and the equipment is not on the USDA-approved CDE Capital Expenditure List, then the SNP Operator must receive prior approval from the CDE. For more information, visit the USDA Policy Memo SP 39-2016; SFSP 13-2016; CACFP 11-2016, State Agency Prior Approval Process for SFA Equipment Purchases External link opens in new window or tab. web page.

    Per USDA Policy Memo SP 31-2014, State Agency Prior Approval Process for SFA Equipment Purchases—equipment is defined as any item of nonexpendable personal property with a useful life of a year or longer and an acquisition cost that equals or exceeds the federal per unit capitalization threshold of $5,000 or a lower threshold set by state or local level regulations.

    CNP Operators other than SNP Operators should contact their program analyst listed in the Download Form section of the CNIPS to determine whether preapproval is required on equipment purchases over $5,000.

  3. Is paying for an auditor an allowable cost for a CNP Operator?

    Yes, if it is a requirement of an award. Per 2 CFR, Section 200.501, Audit requirements, an audit is required if an agency expends more than $750,000 in federal funds during the CNP Operator’s fiscal year.

  4. Can a CNP Operator require a vendor to pay for the costs of their travel to visit the vendor’s facility as part of a safety check if this requirement was part of the contract?

    Yes, as long as the costs are allowable under 2 CFR, Part 200, and the payment by the vendor for the trip does not violate the CNP Operator’s code of conduct.

Brand Name

  1. Can a CNP Operator include a specific brand or product in their written specification?

    Yes, a CNP Operator may include a brand name in the specification but they must also include the language “or equivalent” and describe what constitutes an equivalent product in the specification to ensure that they are not limiting competition.

    2 CFR, Section 200.319(a) states:

    All procurement transactions must be conducted in a manner providing full and open competition consistent with the standards of this section. In order to ensure objective contractor performance and eliminate unfair competitive advantage, contractors that develop or draft specifications, requirements, statements of work, or invitations for bids or requests for proposals must be excluded from competing for such procurements. Some of the situations considered to be restrictive of competition include but are not limited to:

    1. Placing unreasonable requirements on firms in order for them to qualify to do business

    2. Requiring unnecessary experience and excessive bonding

    3. Noncompetitive pricing practices between firms or between affiliated companies

    4. Noncompetitive contracts to consultants that are on retainer contracts

    5. Organizational conflicts of interest

    6. Specifying only a “brand name” product instead of allowing “an equal” product to be offered and describing the performance or other relevant requirements of the procurement [emphasis added]

    7. Any arbitrary action in the procurement process.
  2. If a CNP Operator conducts a taste test and the tasters like a specific brand of burrito, can the CNP Operator release a solicitation for that burrito only?

    No, a CNP Operator must include the brand name or equivalent language in the solicitation. The federal regulations in 2 CFR, Section 200.319(a)(6), do not allow brand name-only solicitations (refer to question 1 above).

  3. At what point in the procurement process does a CNP Operator determine the list of preapproved equivalents for brand name food?
    The federal regulations do not define at what point a CNP Operator determines a list of preapproved equivalents.
  4. How does a CNP Operator include a brand name or equivalent in the specification to ensure that they are not limiting competition.

    Examples of how a CNP Operator can include a brand name or equivalent in the specification for competitive procurements are listed below. Note: this does not apply to sole source procurements. For guidance on sole source procurements, see the Noncompetitive and Sole Source Procurement section.

    • A CNP Operator indicates their preferred brand name or equivalent language in the specification. The prospective bidder can access the district’s Web site to obtain specifications and bid on other brand names that the vendor feels are equivalent to the brand name specified.

    • A CNP Operator lists the preferred brand name and a list of several brand name equivalents. If a vendor specifies another brand that is not on the list at the same or lower price, then the food service has 30 days to determine if it is “equivalent” to the brands listed. The vendor will need to provide samples so the district staff and/or students can conduct taste testing to determine if the product is an acceptable equivalent.

Buy American Provision

  1. What is the Buy American Provision?

    The Buy American Provision requires SNP Operators to purchase, to the maximum extent practical, domestic commodities or products. Title 42, U.S.C. Section 1760(n), of the NSLA defines domestic commodity or product as an agricultural commodity (i.e., one of the five food components that comprise a reimbursable meal) that is produced in the United States and a food product that is processed in the United States using substantial agricultural commodities that are produced in the United States. Substantial means that over 51 percent of the final processed product consists of agricultural commodities that were grown domestically.

    For more information, refer to the USDA Policy Memo SP-38-2017, Compliance with and Enforcement of the Buy American Provision External link opens in new window or tab. web page or view the CDE Buy American Provision in the SNP External link opens in new window or tab. YouTube video ( 25:23).

  2. What CNP Operators must adhere to the Buy American Provision?

    Title 42, U.S.C. Section 1760(n), requires SNP Operators located in the contiguous United States that purchase domestic commodities or products for the NSLP and SBP to adhere to the Buy American Provision. The Buy American requirement in the NSLP (as provided in 7 CFR, sections 210.21[d] and 220.16[d]), also applies to purchases made with FFVP funds. For more information on the FFVP, access the USDA FFVP: A Handbook for Schools External link opens in new window or tab. (PDF).

    CNP Operators that do not operate the NSLP or SBP do not need to comply with the Buy American requirement. Federal law and regulations only require purchases made for the NSLP (including the FFVP) and the SBP to comply with the Buy American Provision.

    SNP Operators that operate other CNPs (e.g., CACFP, SFSP) may also need to comply with the Buy American requirement for food purchased for those programs. In order to determine if an SNP Operator must adhere to the Buy American requirement, the SNP Operator must ask the following questions: (1) For which program is the food being purchased? (2) Which funding source is being used to purchase the food?

  3. How can an SNP Operator ensure adherence to the Buy American Provision?

    Monitoring and enforcing the Buy American Provision by the SNP Operator is crucial. It is ultimately the responsibility of the SNP Operator to ensure that agricultural food components, defined as one of the food groups which comprise reimbursable meals (meat/meat alternate, grains, vegetables, fruit, and fluid milk) meet the Buy American Provision. Failure to comply with the Buy American Provision may result in the disallowance of the entire contract. In order to ensure compliance with the Buy American Provision, SNP Operators must:

    1. Ensure that solicitations and contracts include requirement for domestic agricultural commodities and products;
    2. Include the requirement in documented procurement procedures;
    3. Retain records documenting any exceptions;
    4. Monitor contractor performance to ensure their compliance with all contractual requirements.

    These four requirements are outlined in 2 CFR, Section 200.318(b) and USDA Policy Memo SP-38-2017. USDA Policy Memo 38-2017 includes additional ways that the SNP Operator can comply with the Buy American Provision. The SNP Operator can:

    1. Require suppliers to provide certification of domestic origin of food products delivered and invoices submitted and document this in the SNP Operator's documented procurement procedures

    2. Examine product packaging and delivery invoices or receipts to ensure the domestic food that was solicited and awarded is the food that is received

    3. Require suppliers to identify the percentage of United States content in food products (including processed end products)

    4. Conduct periodic review of storage facilities to ensure the products received are the ones solicited and awarded, and that they comply with the Buy American Provision

    5. Include domestic requirements in bid specifications; and

    6. Verify cost and availability of domestic and nondomestic foods using data in the USDA AMS Run a Custom Report External link opens in new window or tab. web page.
  4. Are there any exceptions to the Buy American Provision?

    There are limited exceptions to the Buy American Provision that allow for the purchase of products not meeting the domestic standard. These exceptions include:

    • The product is not produced or manufactured in the United States in sufficient and reasonably available quantities of a satisfactory quality.
    • Competitive bids reveal the cost of a United States product are significantly higher than the nondomestic product (it should be recognized that the FNS has given guidance in SP 38-2017 that it is the SFA’s responsibility to determine the threshold for “significantly higher”).

    Before using one of the above exceptions, the SNP Operator must document the reason(s) for using an exception and they should also consider and document the following questions:

    1. Are there other domestic sources for this product?
    2. Is there a domestic product that could easily be substituted for the nondomestic product on the menu (e.g. substitute domestic pears for nondomestic apples)?

    3. Am I soliciting bids for this product at the best time of year? If I contracted earlier or later in the season, would prices and/or availability change?

    4. Am I using third-party verification, such as through the USDA AMS web page to determine the cost and availability of domestic and nondomestic foods? To compare the cost and availability of domestic and nondomestic foods, access data in the USDA AMS Run a Custom Report External link opens in new window or tab. web page.

    If, during an AR, the food package of an agricultural food component selected for review does not identify the country of origin, or in the case of processed foods the packaging does not identify that the agricultural food component(s) of the processed product are over 51 percent domestic by weight or volume, the SNP Operator may be out of compliance if an exception for nondomestic agricultural commodity or product was not first approved and documented by the SNP Operator.

    For more information, refer to the USDA Policy Memo SP-38-2017, Compliance with and Enforcement of the Buy American Provision External link opens in new window or tab. web page or view the CDE Buy American Provision in SNPs External link opens in new window or tab. YouTube video (25.23).

  5. What documentation is required to verify that a food is compliant with the Buy American requirement?

    To verify that a food is compliant with the Buy American requirement, the SNP Operator can maintain the following documentation:

    Certification of the percentage of domestic components in processed products.

    SNP Operators can include in their solicitation and contract a requirement for the vendor to certify the percentage of domestic agricultural commodities (i.e., food components) in processed products. For example, SNP Operators can state the following in their solicitations and executed contracts: We require that vendors certify that all food products are processed in the United States and vendors must certify the percentage of United States content, by weight or volume, of the food components of processed food products supplied to us.  With this language, SNP Operators have the authority to require that the vendor provide the SNP Operator with the percentage of domestic food components for all processed products supplied to the SNP Operator to ensure compliance with the Buy American requirement.

    List of ingredients, including the weight or volume, and the country of origin of each ingredient.

    SNP Operators can obtain a list from the vendor of all ingredients in the product including the weight or volume and the country of origin of each ingredient. The calculation to determine if the product meets the requirement of over 51 percent domestic agricultural commodities must rely on the ingredients that are food components. Foods that are not one of the five components that comprise a reimbursable meal must be disregarded; using these ingredients could unintentionally distort the Buy American Provision ratio. For example, take the following ingredient list for reconstituted apple juice:

    • 50 percent water from the Sierras (domestic)
      .
    • 25 percent of 100 percent apple juice concentrate from Washington (domestic)
      .
    • 25 percent of 100 percent apple juice concentrate from Venezuela (nondomestic)

    If the SNP Operator included the water in the overall calculation, the calculation appears to be 75 percent domestic (50 percent water plus 25 percent juice from Washington). However, this is not how the percentage should be calculated. Q&A No. 1 from USDA Policy Memo SP38-2017 states in part:

    When considering juice for example, in order for the product to be considered “domestic” in accordance with the Buy American Provision, the juice must contain over 51% of the juice or juice concentrate, by volume, from fruits or vegetables grown in the United States.  FNS does not consider water – whether tap or bottled – to be a domestically grown agricultural commodity for purposes of this Provision . . . For products procured by SNP Operators to be served in the CNPs, the fruit/vegetable component of the product, by volume, is the agricultural commodity. For fruit/vegetable juices, in order to be considered responsive, the juice provided by a vendor must contain over 51% of the fruit/vegetable component of the juice, by volume, from U.S. origin.
    Because water cannot be included in the equation, the domestic and nondomestic fruit component are both 25 percent and therefore the ratio of domestic to nondomestic is a 1:1 ratio, or 50 percent, which does not meet the requirement of over 51 percent domestic agricultural commodities.

    Receipts, invoices, and product labels that clearly indicate that agricultural commodities were 100 percent grown or raised domestically and that agricultural products were 100 percent processed domestically and over 51 percent of their agricultural food components/commodities were grown or raised domestically.

    Sufficient exception documentation for a nondomestic agricultural commodity or product. For more information on what is considered sufficient exception documentation, access the Buy American Provision Exception Documentation Instructions (Form ID PRU-10a) and Worksheets (Form ID PRU-10 and PRU-10b), in the Download Forms section of the CNIPS.

  6. Can a CN Label be used to verify compliance with the Buy American Provision?
    No. The CN label only provides standardized food crediting information on a product’s label so the SNP Operator can determine the meat/meat alternate contribution toward the meal pattern requirement for main dish products. The CN label does not serve as verification of a product’s compliance with the Buy American requirements.

Code of Conduct

  1. Are employees who are designated to adhere to the written code of conduct allowed to accept contractor-sponsored meals?

    Per 2 CFR, Section 200.318(c)(1), nonfederal entities are required to maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of contracts. In California, the Political Reform Act (California GC, sections 87000 et. seq.), and California GC, sections 1090 et. seq., govern conflicts of interest. Additionally, local conflict of interest rules may also apply. Please consult with legal counsel to determine if your agency’s conflict of interest code allows employees to accept vendor/contractor-sponsored meals, and what limits apply to these meals.

  2. Can a CNP Operator ask vendors to donate to a fundraiser or other event?

    An CNP Operator cannot ask vendors to participate or donate to fundraisers and other events. Per 2 CFR, Section 200.318(c)(1) the officers, employees, and agents of the agency may not solicit gratuities, favors, or anything of monetary value from contractors or parties to subcontracts.

  3. Does the code of conduct need board approval?

    Per 2 CFR, Part 200.318, only requires nonfederal entities who participate in the selection, award, or administration of a contract supported by a federal award are required to maintain a written code of conduct. Any board with oversight or decision-making authority regarding federal funds must adhere to an agency’s written code of conduct. CNP Operators should consult with legal counsel to determine if the code of conduct must be approved by the governing board.

  4. Is an employee who is designated to adhere to the written code of conduct allowed to keep a raffle prize with a ticket that was purchased with public funds?

    CNP Operators should consult with their legal counsel to determine whether the agency’s code of conduct allows the employee to keep the raffle prize. State and local rules pertaining to gift limits may also apply.

  5. If an instance of unethical conduct occurs during a solicitation, does it void that solicitation and require restarting the solicitation process?

    Agencies should consult with their legal counsel when they think an instance of unethical conduct occurs during a solicitation.

    Section 200.318(k) of 2 CFR, states in part:

    The non-federal entity alone must be responsible in accordance with good administrative practice and sound business judgement for the settlement of all contractual and administrative issues arising out of procurements. [Procurements should always comply with 2 CFR, Section 200.319—Competition] … Violations of law will be referred to the local, State, or Federal authority having proper jurisdiction.

    Court decisions have found contracts made in violation of California GC, Section 1090 were void.

  6. Which employees must adhere to the code of conduct?

    Any employee, officer, or agent that is engaged in the solicitation, selection, award, or monitoring of contracts must adhere to the code of conduct per 2 CFR, Section 200.318(c)(1).

    The Political Reform Act, (California GC, sections 87100 et. seq.), and California GC, sections 1090 et. seq., provides information for public officers and employees on prohibitions applicable to specified officers and employees.

    Ultimately, it is the responsibility of the CNP Operator to determine who must adhere to the code of conduct. CNP Operators should consult with legal counsel to determine who must adhere to their code of conduct.

  7. The federal regulations allow CNP Operators to accept unsolicited gifts of nominal value. What is the dollar limit that defines nominal value and is this limit per gift, per vendor, or per year for all vendors?
    Per 2 CFR, Section 200.318(c)(1), nonfederal entities may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value. The federal regulations do not define nominal value for local entities; however the nominal value established for favors, gifts, and gratuities in the CNP Operator’s food service department code of conduct should be consistent with the agency’s general code of conduct policies. Each CNP Operator must determine their policies and nominal value threshold for accepting unsolicited gifts. CNP Operators should consult with their local counsel to determine what qualifies as a nonsubstantial financial interest or a gift of nominal value.
  8. Can a CNP Operator adopt the district or parent company’s code of conduct as their own?

    Yes. A CNP Operator may use the district or parent company’s code of conduct if it has all of the components required in 2 CFR, Section 200.318(c)(1).

  9. After a CNP Operator awards a contract to a pizza vendor, the food service director wants the staff and students to taste the new pizza before the contract starts so they can promote it. Can they ask the vendor to give them free pizza before their contract starts for staff and students?

    No. Soliciting gifts from vendors is prohibited per 2 CFR, Section 200.318(c)(1). Taste tests can be done during the solicitation process.

  10. What specific information should the code of conduct document contain?

    The code of conduct document must include several components:

    • Conflicts of Interest: Define a conflict of interest and ensure staff with a conflict of interest do not participate in contract-related activities

    • Disciplinary action: Include disciplinary action for code of conduct violations

    • Gratuities, favors, and gifts: Ensure applicable staff do not solicit gifts from contractors and address whether staff are allowed to accept gifts of nominal value or not. If gifts are allowed, the code of conduct must include the nominal value

    The code of conduct document may contain additional components, depending on the type and structure of the CNP Operator:

    • Organizational conflicts of interest: This ensures the ability of the CNP Operator to be impartial if conducting a procurement transaction involving a related organization

    Statement of Economic Interest: This ensures that public employees who make or influence governmental decisions submit a Statement of Economic Interest, Form 700, when required

    The CDE Procurement in CNPs web page has a checklist of components (some are required and others are optional) to consider for inclusion in a CNP Operator’s procurement procedures and code of conduct documents.

Cooperative Purchasing Groups

  1. What is cooperative purchasing?

    Cooperative purchasing occurs when entities join to accomplish all or part of the steps in the purchasing process. Cooperative purchasing is a system aimed at using group purchasing in an effort to increase buying power, reduce costs, and improve the quality of products and services available to members, and ultimately the children in the meal programs these agencies operate. The purpose of cooperative purchasing is to use the collective buying power and expertise to obtain the highest quality products at the best price.

    Cooperative purchasing groups may or may not be beneficial to a CNP Operator. The benefits may produce considerable savings and improve the quality of products purchased. On the other hand, the possibility of fewer deliveries or elimination of some specific products may not be beneficial and may actually cause hardship to a district.

    For more information on cooperative purchasing, see the Special Topics chapter, beginning on page 76 in the Procuring Local Foods for CNPs External link opens in new window or tab. guide located on the USDA Farm2School web page and USDA Policy Memo SP 05-2017, CACFP 03-2017, SFSP 02-2017, Q&A: Purchasing Goods and Services Using Cooperative Agreements, Agents, and Third-party Services External link opens in new window or tab..
  2. Does a cooperative need to follow the same rules when procuring goods and services as an agency acting on its own behalf?

    Yes, USDA Policy Memo SP 05-2017, CACFP 03-2017, SFSP 02-2017, Q&A: Purchasing Goods and Services Using Cooperative Agreements, Agents, and Third-party Services External link opens in new window or tab. states in part:

    A cooperative that is comprised solely of Program operators and/or the CNP State agency may procure as a group and must do so in compliance with the procurement standards that apply to the individual Program operator (7 CFR 210.21 and 2 CFR 200.318-.326). This includes complying with all State and local procurement standards, if more restrictive, and publishing solicitations and contracts with all terms, conditions, required contract provisions, as applicable, and clearly identifies all product descriptions, specifications, and estimated quantities required. For SFAs, the Buy American and cost-reimbursable provisions in 7 CFR 210.21(d) and (f) are required. Further, each program operator is responsible for monitoring vendor performance to ensure compliance with all contract provisions. Written agreements delineating roles and responsibilities are encouraged.

  3. If a cooperative purchasing group does not follow proper procurement procedures, who is responsible?

    Each individual agency operating a CNP involved in a cooperative purchasing group is responsible for ensuring that all procurements are conducted correctly and according to all applicable federal, state, and local regulations, laws, and rules. For example, if twenty agencies form a cooperative with one lead agency, and the lead agency does not follow all federal, state, and local procurement standards when conducting procurements, all twenty agencies may have a finding during their AR. The CDE will provide the lead agency with guidance and TA prior to issuance of the solicitation and award of the contract. For more information regarding this subject, contact the Procurement Resources Unit by email at NSDProcurement review@cde.ca.gov.

Discounts, Rebates, Points, and Other Incentives

  1. Can a CNP Operator use points earned from vendors to purchase goods, services, or redeem the points for travel to CNP-related conferences?

    Yes, as long as the goods, services, and travel support the operation and maintenance of the nonprofit school food service program. Per 2 CFR, Section 200.405, costs are allocable if the cost:

    • Is incurred specifically for the federal award

    • Benefits both the federal award and other work of the nonfederal entity and can be distributed in proportions that may be approximated using reasonable methods

    • Is necessary to the overall operation of the nonfederal entity and is assignable in part to the federal award in accordance with the principles in this subpart.

    Per 2 CFR, Section 200.406, applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the federal award as direct or indirect costs. Examples of such transactions are:

    • Purchase discounts, rebates or allowances
    • Recoveries or indemnities on losses
    • Insurance refunds or rebates
    • Adjustments of overpayments or erroneous charges

    To the extent that such credits accruing to or received by the nonfederal entity relate to allowable costs, they must be credited to the federal award either as a cost reduction or cash refund, as appropriate.

    For SNPs, 7 CFR, Section 210.14(a), states in part, “…Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service…”

    For CACFPs, FNS Instructions 796-2, Rev. 4, paragraph (VI)(C)(2), states in part, “The institution must maintain accounting records documenting proper cost allocation between the Program and non-Program components of its food service operation and the State agency must ensure through the review process that all CACFP reimbursements are used solely for conducting nonprofit food service operations.”

    For SFSPs, FNS Instruction 796-4, Rev. 4, paragraph (XI)(A) states in part, “…Sponsors shall allocate credits, as necessary, and apply the appropriate amounts to their program administrative and operating expenses to reduce program costs. Costs claimed for reimbursement must be reported net of applicable credits.”

    Allowability of the use of points is often determined on a case-by-case basis. To ensure the allowability when using points, SNP Operators should contact CDE staff by email at SNPCafeFundQuestions@cde.ca.gov and all other CNP Operators should contact their program analyst, listed in the Download Forms section of the CNIPS..
  2. Can a vendor issue a rebate check to a CNP Operator instead of providing a direct rebate on an invoice? For example, a CNP Operator receives a rebate check from a distributor rather than a rebate on the invoice.
    A check or a rebate is allowable as long as the cafeteria fund is the sole recipient of this credit. Per 2 CFR, Section 200.406, credits accruing to or received by an agency that relate to allowable costs must be credited as either a cost reduction or cash refund, as appropriate.
  3. In a cost-reimbursable contract, can a CNP Operator accept a food product from a vendor rather than a rebate on the invoice?

    No. Rebates are monetary returns used to offset expenses and acts as a purchasing incentive. When a CNP Operator receives legitimate discounts, rebates, or credits from a vendor, they need to be taken directly off the invoice (or provided in the form of a check as noted above) which can serve as the CNP Operator’s documentation.

Food Service Management Companies and Vended Meals

  1. How do SNP Operators extend, amend, or rebid an FSMC contract?

    FSMC contract extensions, amendments, and rebids are done on a yearly basis. Per 7 CFR, Section 210.16(d), the contract between a school and the FSMC shall be of a duration of no longer than one year; and options for the yearly renewal of a contract signed after February 16, 1988, may not exceed four additional years. SNP Operators need to obtain preapproval from the CDE in order to extend, amend, or rebid the term(s) of an FSMC contract. Visit the CDE Procurement in SNPs web page and choose the Approval tab for more information on timelines for the rebidding process.

  2. Is it allowable for a vended meal contractor to receive funds directly from students ordering school lunch and then the vended meal contractor disburses funds back to the school?

    Yes. However, the SNP Operator is responsible for all revenues and costs associated with running the CNP. Therefore, the SNP Operator must ensure that they have adequate documentation from the vendor to ensure proper accounting. California EC sections 38093 and 38094, state that all funds derived from the sales of food shall be deposited into the cafeteria fund, and that the board shall designate a district employee to have custody of those funds.

Formal Procurement Method

  1. What is the minimum information that must be included in an RFP?

    An RFP must, at a minimum, meet the following criteria:

    • State the purchasing CNP Operator's need (i.e. why the CNP Operator is issuing an RFP) using clear and thorough specifications that are not overly restrictive.

    • Specify the anticipated terms and conditions of the contract.

    • Provide information that the respondent must include in their proposal, including how they will provide the services requested.

    • Identify factor(s) that the CNP Operator will use to evaluate the proposals and award the contract.

    • Describe how the CNP Operator will evaluate the technical criteria (e.g. delivery days and times) to determine whether a vendor is responsive and responsible.

    Per 2 CFR, Section 200.320(d)(4), contracts must be awarded to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered.

  2. Can a CNP Operator choose a vendor or product based solely on a taste test?

    No. Per 2 CFR, Section 200.320 (d)(4), contracts must be awarded to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered.

  3. Does the evaluation criteria need to be in the public advertisement?

    No. CNP Operators do not need to publicly post the evaluation criteria in the advertisement, but they do need to direct prospective respondents to the location of the solicitation, which includes information on how bids or proposals will be evaluated.

  4. How does a CNP Operator award points for price in an RFP?

    Effective January 1, 2018, each CNP Operator determines how it will award points for price in an RFP. Federal regulations do not prescribe the maximum number of evaluation points; however, contracts must be awarded to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered. As a best practice, price should be weighted at least 50 percent of the overall evaluation. The components for evaluation might be weighted as shown below: 

    • Price: 50 Points
    • Product specifications: 20 Points
    • Service and deliveries: 10 Points
    • Discounts, rebates, and applicable credits: 10 Points
    • Overall qualifications: 10 Points

      For an example of how to award points for price in an RFP, see Appendix P on page 139 in the Procuring Local Foods for CNPs External link opens in new window or tab. guide located on the USDA Farm2School web page.

  5. How can a CNP Operator write in their solicitation the criteria they use to evaluate and award contracts?

    The criteria could be summarized on an evaluation criteria page, and the criteria could be further defined in the scope of work or minimum requirements. CNP Operators can find examples of evaluation criteria in the USDA Procuring Local Food for CNPs External link opens in new window or tab. Guide located on the USDA Community Food Systems Procuring Local Foods web page. To ensure compliance with federal, state, and local laws, agencies should consult with legal counsel.

  6. Can the same solicitation be used to procure goods and services for multiple CNPs such as the NSLP and the CACFP?

    Yes; however, doing so requires that the solicitation reflect the most restrictive provisions required by the funding source. For example, since the Buy American Provision only appears in regulations for the NSLP and SBP, a CNP Operator purchasing agricultural commodities and products for both the NSLP and SBP and any other CNP must include the Buy American Provision in the solicitation.

  7. If a potential vendor asks a question about a solicitation (e.g. terms, specifications), should the CNP Operator provide the answer to all bidders?

    Yes. Solicitations are required to include a clear and accurate description of the technical requirements for the material, product, or service to be procured. If a CNP Operator provides additional information to a potential vendor in order to meet that standard, the CNP Operator must provide the same additional information to all other potential vendors. As a best practice, the CNP Operator may hold a Q&A session for all potential vendors. Afterward, the CNP Operator could post the Q&As on a public portal, such as their web site.

  8. What is an adequate amount of time to allow a vendor to respond to a solicitation?

    Sections 200.319 (a)(1) and 200.320(c)(2)(i) of 2 CFR, do not define what an adequate or sufficient amount of time is for a vendor to respond to a solicitation. However, not providing an adequate amount of time (e.g. three to six weeks) for a vendor to respond to a solicitation may be considered limiting competition. In order to be fair to potential vendors, CNP Operators could consider conducting market research, such as an RFI, to determine an adequate amount of time to provide a vendor to respond.

  9. What responsibility does a CNP Operator have to solicit and advertise IFBs and RFPs?

    Except as provided under 2 CFR, Section 200.320(f), Procurement by Noncompetitive Proposals, all programs must solicit from an adequate number of qualified sources (2 CFR, sections 320[c] and [d]). CNP Operators may contact vendors to inform them of a solicitation and, likewise, vendors may contact CNP Operators to inquire about solicitations. In addition, 2 CFR, Section 200.321(a) states in part “. . .the nonfederal entity must take all necessary affirmative steps to assure that minority businesses, women’s business enterprises, and labor surplus area firms are used when possible.”

    All CNP Operators issuing an RFP must publicize the proposal per 2 CFR, Section 200.320(d)(1); however, only local governments, as defined in 2 CFR, Section 200.64 (e.g., school districts and COEs), and tribal governments must publicly advertise and open IFBs per 2 CFR, sections 200.320(c)(2)(i) and (iii).

    Further, California PCC Section 20112 requires school districts, COEs, and CNP Operators governed by a school board or COE to publicly advertise all bids (IFBs and RFPs) at least once a week for two weeks in some newspaper of general circulation published in the district, or if there is no such paper, then in some newspaper of general circulation, circulated in the county, and may post on the district’s Web site or through an electronic portal, a notice calling for bids.
  10. Can a CNP Operator use an RFP instead of an IFB for supplies (e.g., food), or is an RFP only allowable for services?

    Yes. It is allowable under both state and federal laws and regulations for CNP Operators to procure supplies using the RFP method. A CNP Operator should use the IFB method in situations when there is no substantial difference among the products or services that meet specifications and the key difference among responsive bids is price.

    Effective January 1, 2018, all agencies using the RFP method must comply with 2 CFR, Section 200.320(d), which states that contracts must be awarded to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered.

  11. Can a CNP Operator choose to only advertise on the CNP Operator’s website?

    The answer is no for school districts, COEs, and agencies governed by a school board or COE. These agencies must comply with California PCC Section 20112, which states that bids shall be advertised once a week for at least two weeks in a newspaper of general circulation. The district may also post the notice on their Web site or other electronic portal; however, school districts and COEs may not advertise only on their Web site because posting on the district’s Web site is not considered a newspaper of general circulation.

    The answer is yes for CNP Operators other than those listed above. CNP Operators other than school districts and COEs can choose to only advertise on  their Web site provided they are in compliance with 2 CFR, sections 200.320(c) and (d)(1). These regulations requires CNP Operators to publicly advertise the IFB or RFP and provide sufficient response time prior to the date set for opening bids. CNP Operators should also ensure that their public advertising complies with 2 CFR, Section 200.320(c)(2)(i), which requires bids be solicited from an adequate number of known suppliers.

  12. Can a CNP Operator use past performance as an evaluation criterion?
    Yes. Past performance can be used as long as the CNP Operator informs vendors that past performance is one of the evaluation criteria. An evaluation of a vendor ’s past performance can help a CNP Operator determine whether a bidder is responsible. For an example of how to use past performance as an evaluation criteria, see Appendix J on page 126 in the Procuring Local Foods for CNPs External link opens in new window or tab. guide located on the USDA Farm2School web page.
  13. If a CNP Operator terminates a contract for cause with a vendor who has not met the terms and conditions of a contract, can the CNP Operator enter into a temporary contract with the next lowest bidder in the original solicitation?

    Yes. To the knowledge of the CDE, federal and state rules do not expressly prohibit CNP Operators from awarding to the next lowest bidder if the solicitation and contract include language that allows the CNP Operator to do so; however, CNP Operators should check that local rules do not prohibit this practice. The CNP Operator must first ensure that the terms, conditions, and cost of the proposed contract with the second lowest bidder do not deviate significantly from the original bid. As a best practice, the CNP Operator should consider adding an early termination clause in the new contract in case competitive procurement can be completed prior to the contract end date.

    Even though the CNP Operator enters into a temporary contract with the second lowest bidder, the CNP Operator should conduct a new competitive procurement.

    Note: Performance bonding can protect a CNP Operator from the costs incurred due to a substandard vendor in these types of situations.
  14. Is CDE preapproval required before CNP Operators advertise and issue their solicitation (i.e., RFP, IFB) document?

    SNP Operators are not required to submit their solicitation documents to the CDE for preapproval before advertising and issuing the solicitation if the procurement is not for an FSMC contract; however, when SNP Operators are scheduled for an off-site procurement review, the CDE will review their IFB and RFP documents for compliance (including compliance with advertising requirements). For SNP procurement review questions, please contact the PRU at NSDProcurementReview@cde.ca.gov.

    CACFP Operators with FSMC or vended meal contracts will automatically trigger the CDE preapproval process after awarding a contract to the lowest bidder (which is after the solicitation is issued), when they disclose in the CNIPS that they are procuring a vended meal contractor. In these situations, the CDE program analyst will review the contract to assist CACFP Operators with program compliance.

    SFSP Operators with FSMC or vended meal contracts are not required to obtain CDE preapproval prior to advertising and issuing a solicitation; however, SFSP Operators will automatically trigger the need for CDE staff to be present (in person or through electronic communication) at bid openings when the SFSP Operator discloses in the CNIPS that they are procuring an FSMC or vended meals contract per USDA Policy Memo SFSP 13-2014, Procurement Threshold in the SFSP External link opens in new window or tab. (PDF). Bids totaling $100,000 or more must be submitted to the CDE for preapproval before the sponsor can accept a bid per 7 CFR, Section 225.6(h)(4)].

    Note: Any bids (regardless of dollar amount) that exceed the lowest bid must be submitted to the state agency for approval before acceptance with an explanation of why that particular bid was chosen (instead of the lowest bid) per 7 CFR, Section 225.6(m)(4)(xii).

    For information on advertising and bid opening requirements for all CNPs, see the Formal Procurement Method section above.

General Procurement

  1. What is the minimum requirement for determining which procurement method to use?

    It is up to each CNP Operator to identify the best and most economical procurement method for procuring goods and services in accordance with applicable state, federal, and local laws and regulations. Agencies must follow the most applicable small purchase threshold when determining which procurement method to use. Some questions to consider are listed below.

    1. What is the estimated contract cost?

    2. What applicable federal, state, and local rules define your agency’s purchase threshold (e.g. micropurchase or small purchase threshold)?

    3. Should the CNP Operator use the micropurchase, small purchase, or formal purchase method?
  2. Can a CNP Operator award a contract to multiple vendors if a single vendor cannot supply the volume needed?

    Yes. If the solicitation includes language allowing for multiple contracts when quantities are insufficient from a vendor, it is allowable. However, if the solicitation lacks this language and the vendor cannot meet the volume needed, a CNP Operator can resolicit, making sure to include language in the solicitation allowing for this contingency moving forward. Sample language to consider for inclusion in contracts is provided in the Procuring Local Foods for Child Nutrition Programs Guide: “(The CNP Operator) reserves the right to award to multiple vendors, using criteria as specified in the evaluation and award provision section.”

  3. Can assigning penalties to distributors for shortages or item substitutions be a term or condition of the contract?

    Yes. This is considered a contractual dispute. Per 2 CFR, Section 200.318(k), the nonfederal entity alone must be responsible for the settlement of all contractual and administrative issues arising out of procurements. If the distributor demonstrates they are not responsive or responsible, penalties can be a useful remedy when dealing with a vendor who is not providing satisfactory service, provided there is a provision in the contract that allows this. The CDE advises CNP operators to seek advice from legal counsel to address any penalties covered by the contract.

  4. Can a CNP Operator extend contracts instead of issuing a new solicitation each year?

    Yes, subject to any applicable statutory and/or regulatory limitations. For example, a CNP Operator can extend contracts instead of issuing a new solicitation each year as long as the CNP Operator included language in the solicitation that they have the right to extend the contract. However, the language cannot obligate either party to extend the contract.

    For school districts with regards to school facilities, per EC Section 17596—continuing contracts for work to be done, services to be performed, or for apparatus or equipment to be furnished, sold, built, installed, or repaired for the district, or for materials or supplies to be furnished or sold to the district may be made with an accepted vendor as follows: for work or services, or for apparatus or equipment, not to exceed five years; for materials or supplies, not to exceed three years.

    For information regarding extending contracts with FSMCs, please see the section titled FSMCs and Vended Meals.

    Note: In order to increase the price of the contract in an extension, as a best practice, the CNP Operator may compare it to an index. An example of an index is the CPI, which produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services. Access this information on the Bureau of Labor Statistics CPI Tables External link opens in new window or tab. web page.
  5. How does a small CNP Operator accommodate for fluctuating prices (e.g., produce) in the contract?

    Fixed-price contracts can have price adjustment provisions that are based on a verifiable price index. The price adjustments can take place at contract renewals and with agreement from both parties.

    A cost plus fixed-fee contract provides for the reimbursement of allowable costs of goods plus the payment of a fixed fee to the vendor. This is an appropriate type of contract to use when market conditions are such that potential vendors are unwilling to commit to a fixed price for an extended period. For an example of how to account for fluctuating prices in a contract, see Appendix O on page 137 in the Procuring Local Foods for CNPs External link opens in new window or tab. guide located on the USDA Farm2School web page.

    Per 2 CFR, Section 200.323(d), cost plus a percentage of cost and percentage of construction cost methods of contracting must not be used.

  6. Is it allowable for a vendor to offer a CNP Operator a volume discount?

    Yes, it is allowable; however, if volume discounts are not part of the solicitation and a respondent indicates that they give volume discounts, then the response may be considered overly responsive. Therefore, it is a best practice for the CNP Operator to include in their solicitation a request for volume discounts. Any volume discounts must be included in the contract and the contract must specify that the discounts must be returned to the nonprofit food service account.

  7. If a CNP Operator solicited and has a contract with Vendor A for a product and Vendor B, who the CNP Operator does not contract with, offers the CNP Operator the same product at a lower price, can a CNP Operator use Vendor B to obtain the lower price?

    No. The CNP Operator solicited and awarded a contract to Vendor A. Competitive bidding rules will only allow the CNP Operator to contract with Vendor A for the product without going out to rebid.

  8. How does a small CNP Operator efficiently handle bids?

    Small CNP Operators follow the same steps as larger CNP Operators when purchasing goods and services and using informal or formal procurement methods. Some small CNP Operators may decide to join a cooperative which may lead to benefits such as increased purchasing power, new menu items, labor reduction, direct to manufacturer purchasing, increased volume and volume discounts, and networking opportunities.

  9. If a CNP Operator's contract with a vendor expires and another contract is required to purchase the same goods or services, can they purchase from the exact same vendor as before?

    No, not without competitively procuring the goods or services. When a CNP Operator's contract expires, the CNP Operator must once again competitively procure goods or services using proper procurement procedures and methods unless the previous contract included language allowing a contract extension. For more information on contract extensions, see the Q&As to the following question in the General Procurement section: Can a CNP Operator extend contracts instead of issuing a new solicitation each year?

  10. Are there regulations requiring CNP Operators to keep and update vendor lists?

    Yes, for school districts, COEs, and agencies governed by a school board or COE,  California PCC Section 20116, states in part:

    For the purpose of securing informal bids, the board shall publish annually in a newspaper of general circulation published in the district . . . . a notice inviting contractors to register to be notified of future informal bidding projects. All contractors included on the informal bidding list shall be given notice of all informal bid projects in any manner as the district deems appropriate.

    For CNP Operators other than those listed above, there are no regulations requiring CNP Operators to keep and update vendor lists. It is a good practice to keep a list of qualified vendors and notify them of solicitations.
  11. If only two local companies can repair a CNP Operator’s refrigerator and one of the repair companies did not previously perform satisfactorily, can the CNP Operator only use the one repair company in the future?
    Yes. A CNP Operator may use the one company if the other company is not responsive or responsible. The CNP Operator should document the reasons behind their decision and maintain these records for three years.
  12. What is bid splitting?
    Bid splitting is intentionally dividing purchasing to avoid getting price quotes or going out to bid using a more formal procurement method. For example, if a CNP Operator knows that they need 10 refrigerators that cost $3,000 each and they purchase 1 refrigerator every month using the micropurchase method, the CNP Operator is bid splitting. CNP Operators should get price quotes for the total of 10 refrigerators with an estimated aggregate purchase of $30,000 using either the small purchase method or a formal procurement method. This will help to ensure that the CNP Operator is getting competitive quotes (and the lowest price) for the goods they are purchasing.
  13. Can school districts and COEs use the authority of California EC Section 38083 to noncompetitively procure perishable foodstuffs and seasonal commodities?
    No. All procurements using funds from the cafeteria fund must be in accordance with 2 CFR, sections 200.318 to 200.326. Federal regulations only allow for noncompetitive procurements under specific circumstances as outlined in 2 CFR, Section 200.320(f). State laws cannot be inconsistent with federal rules governing the award (refer to 7 CFR, Section 210.19[e]). Continued use of EC Section 38083 to noncompetitively procure foodstuffs or seasonal commodities may result in the contract being disallowed and an allowable nonfederal fund repaying the cafeteria fund for the full value of the contract(s).
  14. Is it allowable to include a clause in a contract that requires the vendor to provide free pizza at the beginning of the SY to reward classrooms that have a high application turn-in rate?

    No, it is not allowable for a CNP Operator to include a clause that requires the vendor to provide food for a party because the contract is supported by public funds. Using public funds to provide a gift of free pizza is not allowed under federal and state rules (2 CFR, Section 200.404(b); Cal. Const., art. XVI, § 6).

Geographic Preference

  1. Can a CNP Operator award contracts to multiple vendors based on separate regions?

    Yes. A CNP Operator may award contracts to multiple vendors based on separate geographic regions if the regions and that stipulation are specified in the solicitation.

  2. What is the 2008 Farm Bill?

    The 2008 Farm Bill encourages CNP operators to purchase “unprocessed agricultural products, both locally grown and locally raised, to the maximum extent practicable and appropriate,” and to “allow institutions to use a geographic preference for the procurement of unprocessed agricultural products, both locally grown and locally raised.”

    For more information on purchasing local foods, visit the USDA Community Food Systems Procuring Local Foods External link opens in new window or tab. web page.

Micropurchase Method

  1. What is a micropurchase?

    A micropurchase is a single purchase transaction equal to or less than the micropurchase threshold, currently set at $10,000. When using this method, CNP Operators are not required to obtain quotes for the lowest price. Use of the micropurchase method is allowable under the following conditions:

    • The transaction is at or below the micropurchase threshold of $10,000.

    • The CNP operator making the purchase considers that the price they are paying is reasonable.

    • To the extent practical, CNP Operators must spread their micropurchases equitably among qualified suppliers. The regulations require that CNP Operators shop at different stores. Rotating stores allows multiple vendors to benefit from federal dollars coming into their community.

    If the CNP Operator chooses to not equitably distribute their purchases among qualified vendors based on price, they must use the small purchase method, and document justification to support this decision.
  2. Are equipment repairs considered micropurchases if they are below the micropurchase threshold?

    Yes. If there are unforeseen repairs or maintenance of equipment that are outside of the warranty period and/or is not covered by the contract, then each of the repairs could be a micropurchase transaction if it meets the micropurchase threshold. However, if a CNP Operator can forecast that pieces of equipment will need a projected amount of repairs or maintenance during a year, the CN Operator should determine if a contract can be executed for a year's worth of repairs at a more economical price than a separate transaction for each repair.

  3. Does the micropurchase threshold limit include tax and shipping?

    Yes, the micropurchase threshold includes tax and shipping.

  4. If a CNP Operator obtains quotes equal to or below the micropurchase threshold from an adequate number of stores, can the CNP Operator consistently shop at the same store if the prices at that store are consistently lower or do they need to distribute their purchases equitably among qualified suppliers?

    No. If a CNP Operator is obtaining quotes and selecting the lowest price store (not equitably distributing), the CNP Operator is following the small purchase method, rather than the micropurchase method, even if the transaction is equal to or below $10,000.

  5. What should a CNP Operator do if there is only one store to purchase goods within a reasonable distance?

    Agencies must distribute micropurchases equitably among qualified suppliers to the extent practicable. If there are no other qualified suppliers within a reasonable area, then it may not be practicable to drive a long distance to procure goods. In this situation, the CNP Operator should have documentation justifying the purchase of goods at only one store.

  6. Can a CNP Operator use the micropurchase method when multiple printers break unexpectedly at different times throughout the year?
    Yes. An unexpected purchase for the printers can be accomplished at different times throughout the year using micropurchase procedures if the cost is equal to or less than the current micropurchase threshold.
  7. If a CNP Operator visits a local grocery store several times throughout the year, and the aggregate amount spent is over the micropurchase threshold, should the CNP Operator use the small purchase method instead of the micropurchase method?

    Not necessarily. The procurement method used by a CNP Operator is generally based on the cost of the individual procurement transactions. However, if the CNP Operator is using the micropurchase method to procure the same type of goods several times throughout a SY, and the aggregate amount of multiple micropurchases is significant (e.g., $50,000), the CNP Operator may be able to save money if they consider using the small purchase method or a formal procurement method instead of the micropurchase method.

    Note: It is equally important to understand that CNP Operators cannot split purchases in an effort to avoid the appropriate threshold. CNP Operators should always forecast how much and what type of goods and services are needed throughout the SY prior to making CNP purchases in order to determine the most economical procurement method to use.

Noncompetitive and Sole Source Procurement

  1. What is a noncompetitive procurement?

    Noncompetitive procurements occur when a CNP Operator deems that competition is inadequate or impossible. This procurement method is only used when the award of a contract is not feasible under small purchase procedures, IFBs, or RFPs and one of the following circumstances applies:

    1. The item is available only from a single source (“sole source procurement”);

    2. The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation;

    3. The Federal awarding agency (i.e., the state agency) authorizes noncompetitive proposals in response to a written request from the CNP Operator (e.g. the school district); or

    4. After solicitation of a number of sources, competition is determined inadequate.
  2. What is a sole source procurement?

    A sole source procurement is a type of noncompetitive procurement that occurs when the goods or services are only available from one manufacturer, distributor, or supplier. Sole source describes a condition of the procurement environment. Sole source procurements are more likely to occur when a CNP Operator is purchasing cutting-edge technology or highly technical scientific products. In a true sole source situation, conducting a traditional solicitation (small purchase, IFB, or RFP) is a meaningless act because the element of competition will not exist since the product or service is only available from a single source.

    The decision that a sole source situation exists must be made by the CNP Operator, not the supplier. While one supplier may offer goods and services that contain features not available from other suppliers, the CNP Operator must be able to document that those specific features are required, not just preferred. Since a sole source procurement takes place without the benefit of competition, a CNP Operator must maintain appropriate documentation that supports its decision.

    CNP Operators should be reminded that a sole source situation is a condition of the procurement environment, not a procurement method; the procurement method is noncompetitive. Again, while a supplier can claim its products are the only products available in the marketplace that meet the CNP Operator's needs, the advertisement alone does not make the claim true. Agencies that fail to validate such claims may subsequently enter into improperly procured contracts.
  3. If daily deliveries are needed and only one vendor can meet this specification, is a noncompetitive procurement allowable?

    If, after soliciting a number of sources using specifications that were not overly restrictive, only one vendor can meet the specifications, then it is allowable to contract with that vendor.

  4. Can a CNP Operator conduct a noncompetitive procurement in the event of an emergency?

    Yes. Emergency is defined as a “sudden, unexpected occurrence that poses a clear and imminent danger, requiring immediate action to prevent or mitigate the loss or impairment of life, health, property, or essential public services.” (California PCC Section 1102). Any contract resulting from the use of noncompetitive proposals in a public emergency must be of a limited duration, until such time as conditions permit the completion of an appropriate competitive procurement. There are few circumstances under which a contract resulting from noncompetitive proposals should be in effect for more than a few months. Furthermore, extending or renewing a contract resulting from noncompetitive proposals for more than a few months should occur only as a result of the most severe type of natural disasters or similarly rare circumstances.

    The CDE recommends that agencies consult with legal counsel on whether an emergency situation exists and whether conducting a noncompetitive procurement would be allowable.

Off-site Procurement Review for SNP Operators only (this section does not apply to CACFP or SFSP Operators)

  1. Why do SNP Operators have multiple reviews scheduled during the same SY?
    SNP Operators are subject to multiple reviews throughout each SY depending on their participation in the various CNPs. The CDE PRU conducts the off-site procurement review to help ensure operators are in compliance with state and federal regulations. The CDE Field Services Unit conducts on-site and off-site monitoring, also known as an AR. These reviews may or may not overlap with each other depending on the agency type and the CDE procurement review schedule.
  2. If an SNP Operator has an AR scheduled during the SY, will they also receive an off-site procurement review?

    Not necessarily. If an SNP Operator is scheduled to receive an AR during the SY, it does not automatically mean that they will also receive an off-site procurement review that same SY. Review the off-site procurement review schedule below, which is based on the SNP Operator type:

    • RCCIs, private schools, camps, and all public school districts, COEs, and charter schools that contract with an FSMC

    Off-site procurement review schedule: A minimum of once every three years

    Expectation: An off-site procurement review will typically occur during the same year that an SNP Operator is scheduled to receive an AR

    • Public school districts, charter schools, and COEs that operate without a FSMC

    Off-site procurement review schedule: A minimum of once every six years

    Expectation: An off-site procurement review will typically occur every other time that an SNP Operator is scheduled to receive an AR

    Please note that the off-site procurement review is based on the previous SY. For example, if an off-site procurement review is scheduled for SY 2018–19, the review will include all procurement methods for the previous SY (2017–18). A list of SNP Operators scheduled for an off-site procurement review during the current SY is accessible on the CDE SNP Schedule for Procurement Reviews 2018–19 web page.

  3. What are some examples of the timing of the off-site procurement review?

    Below are scenarios to better explain the timing of the off-site procurement review and how it aligns with the AR.

    • Scenario 1: Brown’s Private School for Aspiring Analysts is scheduled to have their AR in SY 2018–19. When should this private school expect to have their off-site procurement review?

      Answer: SY 2018–19. All private schools are on the three-year review cycle. Therefore, the off-site procurement review is scheduled in the same SY as the AR. The private school should expect to receive an e-mail from the CDE at the beginning of SY 2018–19 with instructions about their upcoming off-site procurement review.

    • Scenario 2: The Gardenour Charter School is scheduled to have their next two ARs in SYs 2019–20 and 2022–23. The Gardenour Charter School does not contract with an FSMC. When should this charter school expect to have their off-site procurement review?

      Answer: Either in SY 2019–20 or SY 2022–23. Charter schools not contracting with an FSMC are on the six-year cycle. Therefore, the off-site procurement review can be scheduled either in the first SNP AR cycle (SY 2019–20) or during the next SNP AR cycle (SY 2022–23). The charter school should expect to receive an e-mail from the CDE at the beginning of either SY 2019–20 or 2022–23 with instructions about their upcoming off-site procurement review.

    • Scenario 3: The Gardenour Charter School decided to contract with an FSMC in 2018–19. When will their off-site procurement review be scheduled?

      Answer: SY 2019–20. All SNP Operators contracting with an FSMC are required to receive an off-site procurement review once every three years. Therefore, the Gardenour Charter School will move from the 6-year cycle to the three-year cycle. This will require the charter school to receive an off-site procurement review during their next scheduled AR, which is in SY 2019–20. The charter school should expect to receive an e-mail from the CDE at the beginning of the SY 2019–20 with instructions about their upcoming off-site procurement review.
  4. When will SNP Operators be notified that they are scheduled for an off-site procurement review?
    The CDE will notify SNP Operators that they are scheduled for an off-site procurement review at the beginning of the SY.
  5. How long does the procurement review take?

    The CDE will assign each SNP Operator with a PRU Program Analyst who will assist the SNP Operator for approximately three months to:

    • Secure the needed procurement documents;
    • Evaluate the procurement documents; and,
    • Work with the SNP Operator to close the review.
  6. What is a Vendor Paid List?
    A Vendor Paid List is a spreadsheet provided to the CDE by the SNP Operator that identifies all vendors paid from the cafeteria fund and summarizes the total amount paid to each vendor for the period of review.
  7. Does the SNP Operator include labor expense payments for wages and fringe benefits in the SFA Procurement Table or the Vendor Paid List?
    No. The SNP Operator does not include labor expenses in the SFA Procurement Table or Vendor Paid List.
  8. Are small SNP Operators (e.g., RCCIs) that only use the micropurchase procurement method required to submit written procurement procedures and code of conduct documents to the CDE?

    Yes. All SNP Operators, no matter how large or small, must use an allowable procurement method as required in 2 CFR, Section 200.320, when purchasing goods and services; therefore, all SNP Operators must have documented procurement procedures which reflect applicable federal, state, local, and Tribal rules per 2 CFR, Section 200.318(a) .

    The regulations in 2 CFR, Section 200.318(c), also require all agencies receiving federal funds to maintain written standards of conduct (i.e., a code of conduct) covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of a contract.

  9. What specific information should the procurement procedure and code of conduct document contain?

    The procurement procedures document should describe how an SNP Operator will conduct procurement transactions; that is, how the SNP Operator obtains goods and services in accordance with federal, state, local, or Tribal laws and regulations. Procedures specify the step by step instructions of how an SNP Operator purchases goods and services using cafeteria funds.

    The code of conduct document must include several components:

    • Conflicts of Interest: Define a conflict of interest and ensure staff with a conflict of interest do not participate in contract-related activities

    • Disciplinary action: Include disciplinary action for code of conduct violations

    • Gratuities, favors, and gifts: Ensure applicable staff do not solicit gifts from contractors and address whether staff are allowed to accept gifts of nominal value or not. If gifts are allowed, the code of conduct must include the nominal value

    The code of conduct document may contain additional components, depending on the type and structure of the SNP Operator:

    • Organizational conflicts of interest: This ensures the ability of the SNP Operator to be impartial if conducting a procurement transaction involving a related organization

    • Statement of Economic Interest: This ensures that public employees who make or influence governmental decisions submit a Statement of Economic Interest, Form 700, when required

    The CDE Procurement in CNPs web page houses a checklist of components (some are required and others are optional) to consider for inclusion in an SNP Operator’s procurement procedures and code of conduct documents
  10. What documentation will the CDE request if an SNP Operator does not have a purchase order or a contract with a vendor?
    The CDE will ask how the cafeteria funds are being tracked. The CDE recognizes that some SNP Operators may not have signed contracts or agreements, such as those that use micropurchases and small purchases for their procurements; however, the SNP Operator must have a way of tracking expenditures related to procurement. The CDE recommends that SNP Operators work with their business office or accounting department to obtain documentation that reflects program costs.
  11. If an SNP Operator has an FSMC contract, is the FSMC responsible for completing the SFA Procurement Table and Vendor Paid List?
    No. The SNP Operator, not the FSMC, is responsible for completing and submitting the SFA Procurement Table and Vendor Paid List documents to the CDE. The expectation of the CDE is that SNP Operators will complete the required documents and submit these documents to the CDE prior to any established and communicated deadline.
  12. An SNP Operator has a contract with an FSMC. The FSMC purchases all food items on behalf of the SNP Operator. Does the SNP Operator need to list in the SFA Procurement Table all of the FSMC’s subcontractors?
    No. The SNP Operator does not need to list all of the subcontractors that the FSMC uses in the SFA Procurement Table. The SNP Operator is only required to include the FSMC in the table.
  13. If the SNP Operator is not a public school, how do they determine their LEA or SFA type?

    The CNIPS ID for SNP Operators ends in an alphabetical code that designates the type of LEA or SFA. Below are examples.

    • The CNIPS ID for a public school district ends with the alphabetical code of PSD (e.g., 01234-SN-43-PSD).

    • The CNIPS ID for an RCCI ends with the alphabetical code of R (e.g., 01234-SN-43-R).

    • The CNIPS ID for a charter school ends with the alphabetical code of CS (e.g., 01234-SN-43-CS).

      SNP Operators can contact their program analyst or the PRU at NSDprocurementreview@cde.ca.gov for assistance in determining their LEA or SFA type.
  14. If an SNP Operator is new to the NSLP and has not yet claimed reimbursement for any meals or purchased food under the NSLP for the SY being reviewed, does the SNP Operator still need to complete the SFA Procurement Table and have an off-site procurement review?
    No. If the SNP Operator has not conducted any procurement transactions in the prior SY, then there were no cafeteria funds used for the SY being reviewed; therefore, completing the SFA Procurement Table and having an off-site procurement review is not necessary.
  15. The analyst conducting the off-site procurement review issued CAD. What does that mean?
    CAD is issued by the analyst conducting the off-site procurement review if they find that an SNP Operator’s documents or procurement method(s) are not compliant with federal, state, and local regulations, laws, and policies. If this occurs, the analyst will issue a finding and provide TA. To address the issued finding, the SNP Operator will need to complete and submit the requested CAD. CAD is determined on a case-by-case basis and may include, but is not limited to, an SNP Operator submitting to the CDE updated procurement procedures or code of conduct, or the CDE requiring that the SNP Operator attends or conducts staff trainings on proper procurement.
  16. Why does the SFA Procurement Table not reflect that COEs and public school districts are adhering to the federal small purchase threshold of $150,000? This field is blank in the SFA Procurement Table and the SFA is required to enter an amount.
    California Senate Bill 544, effective January 1, 2018, amended California PCC Section 20111. The effect of this amendment is that public school districts and COEs are permitted to follow the federal small purchase threshold of $150,000, unless their local small purchase threshold is more restrictive. The amount listed in this field may be overwritten by the SNP Operator to reflect their applicable small purchase threshold.

Piggybacking

  1. Can a CNP Operator piggyback on a properly solicited and approved contract?

    Yes. Per USDA Policy Memo SP 05-2017, CACFP 03-2017, SFSP 02-2017, Q&A: Purchasing Goods and Services Using Cooperative Agreements, Agents, and Third-Party Services, when adding parties to either a fixed-price or cost-reimbursable contract, known as piggybacking, the contract must have been procured in compliance with 2 CFR, sections 200.318–200.326, and applicable program regulations.

    Contracted party(ies) considering additional parties should include a provision allowing piggybacking in their solicitation and contract language as well as specifying applicable limitations of the extension (e.g., dollar value or limit to the number of additional parties that may be added) to minimize the potential of creating a material change.

    If the piggybacking provision and the applicable limitations language are not included in the contract and a material change is determined, a new competitive procurement is required. In addition, CNP Operators should ensure that the solicitation in the following year includes any additional parties that piggybacked on the prior contract.

Procurement Procedures

  1. What are procurement procedures?

    Procurement procedures are a CNP Operator’s written step-by-step process of procuring goods and services in accordance with federal, state, local, or Tribal laws and regulations. Procedures specify the step by step instructions of how an SNP Operator purchases goods and services. These procedures should be tailored to the specific needs of the CNP Operator and outline the entire procurement process. A newly hired employee should be able to read, understand, and perform the necessary steps involved in procurement based on these procedures. The requirements that CNP Operators should include in their documented procurement procedures are outlined in 2 CFR, sections 200.318‒200.326.

    The CDE Procurement in CNPs web page has a checklist of components (some are required and others are optional) to consider for inclusion in a CNP Operator’s procurement procedures and code of conduct documents.

  2. What help is available if I am not following proper procurement practices?

    Visit the CDE Procurement in CNPs web page for policies, guidance, trainings, and resources. CNP Operators may also contact a procurement specialist by email at SFSContracts@cde.ca.gov or by phone at 916-319-0636.

Small Purchase Method

  1. When can a CNP Operator use the small purchase method?

    Each CNP Operator needs to determine whether they must adhere to the federal small purchase threshold of $250,000 or a more restrictive small purchase threshold set by their agency/district or local government. The small purchase threshold is per contract cost. A CNP Operator cannot deliberately split transactions into amounts below the small purchase threshold to circumvent using the formal procurement method.

    The small purchase threshold may fluctuate and it is the CNP Operator's responsibility to remain updated on all purchase threshold dollar values and whether they must adhere to the federal or their local small purchase threshold.
  2. How does a CNP Operator prove that they contacted an adequate number of vendors to obtain price quotes?

    CNP Operators can prove they contacted multiple vendors by creating and maintaining documentation for all price quotes requested and obtained and ensuring that the CNP Operator has an electronic file or a paper trail upon request by the CDE.

    Per 2 CFR, Section 200.318(i), the nonfederal entity must maintain records sufficient to detail the history of each procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, vendor selection or rejection, and the basis for the contract price. Agencies should maintain written documentation showing that an adequate number of vendors were contacted.

  3. If a CNP Operator exceeds their small purchase threshold in a procurement, do they continue to order as needed?

    If the small purchase threshold is exceeded, a CNP Operator should conduct a second procurement, which may involve a micropurchase or small purchase. If a CNP Operator finds their purchasing needs exceed the small purchase threshold from past experience, the CNP Operator should plan on using the formal purchase method for the next program year. Repeated failure to follow proper procurement procedures in an attempt to circumvent the formal procurement method may result in a finding during an AR or procurement review.

  4. Can a CNP Operator consider the list of prices posted on a vendor’s Web site as obtaining a quote from that vendor?

    CNP Operators must obtain price or rate quotations from an adequate number of qualified sources. The federal regulations do not specify that quotes may not be obtained using a vendor’s web site; however, per 2 CFR, Section 200.318 (d), agencies should make an appropriate analysis to determine the most economical approach.

Questions:   Procurement Resources Unit | NSDProcurementReview@cde.ca.gov | 916-324-7131
Last Reviewed: Wednesday, September 19, 2018
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