Procurement in the CNPs Frequently Asked QuestionsQuestions 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 agency is responsible for ensuring that their procurement documents comply with all applicable laws, program instructions, and guidance materials. Each agency should consult with legal counsel regarding any proposed procurement methods or contract language.
For additional information, please visit the U.S. Department of Agriculture (USDA) Q&As on the Transition to and Implementation of 2 CFR, Part 200 Web page.
If you are unable to find the answer to your questions, please contact the following program support staff for assistance:
- Child and Adult Care Food Program Unit
Nancy Charpentier, Office Technician (OT), by phone at 916-327-2991 or by e-mail at email@example.com.
- Procurement Resources Unit
Debbie Reeves, OT, by phone at 916-319-0636 or by e-mail at firstname.lastname@example.org.
- Summer Meals Unit
Larry Frakes, OT, by phone at 916-322-8323 or by e-mail at email@example.com.
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
Is apparel (e.g., aprons, uniforms) an allowable cost?
Yes, if an agency 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 cafeteria funds is allowable. An agency must make sure the cost is necessary, reasonable, and prudent for the operation of the nonprofit school food service. For more information on allowable costs, SNP operators may contact the Resource Management Unit at SNPCafeFundQuestions@cde.ca.gov, and all other agencies may contact their program analyst, listed in the Download Forms section of the CNIPS.
Does the CDE need to approve equipment (including software) over $5,000?.
Yes, if the SFA is purchasing equipment equal to or greater than $5,000 per unit (or the SFA’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 SFA must receive prior approval from the CDE. For more information, refer to USDA Policy Memo SP 39-2016; SFSP 13-2016; CACFP 11-2016, State Agency Prior Approval Process for SFA Equipment Purchases .
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.
Agencies other than SFAs should contact their program analyst in the Download Form section of the CNIPS to determine whether preapproval is required on equipment purchases over $5,000.
Can an agency include a specific brand or product in their written specification?
Yes, an agency 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 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.
If an agency conducts a taste test and the tasters like a specific brand of burrito, can the agency release a solicitation for that burrito only?
No, an agency 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).
At what point in the procurement process does an agency determine the list of preapproved equivalents for brand name food?
The federal regulations do not define at what point an agency determines a list of preapproved equivalents. For more information, the CDE suggests agencies refer to pages 49‒53 in the ICN Procurement in the 21st Century Resource Manual (PDF).
Buy American Provision
What agencies must adhere to the Buy American Provision?
Title 42, U.S.C Section 1760(n), requires SFAs that receive any federal reimbursement through the SNP (e.g. NSLP, SBP) to adhere to the Buy American Provision. This includes SFAs that operate the SNP with the CACFP and/or the SFSP.
What is the Buy American Provision?
SFAs must purchase, to the maximum extent practicable, domestic commodity or product. Title 42 USC, Section 1760(n), of the NSLA defines domestic commodity or product as an agricultural commodity 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 at USDA FNS School Meals Policy or view the Buy American Provision in SNP (Video; 25:23).
How can an SFA ensure adherence to the Buy American Provision?
Monitoring and enforcing the Buy American Provision by the SFA is crucial. It is ultimately the responsibility of the SFA 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, SFAs must:
- Ensure solicitations and contracts include requirement for domestic agricultural commodities and products;
- Include the requirement in documented procurement procedures;
- Retain records documenting any exceptions;
- 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 the SFA can comply with the Buy American Provision. The SFA can:
- Require suppliers to provide certification of domestic origin of food products delivered and invoices submitted and document this in the SFA's procurement procedures;
- Examine product packaging and delivery invoices or receipts to ensure the domestic food that was solicited and awarded is the food that is received;
- Require suppliers to identify the percentage of United States content in food products (including processed end products);
- 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;
- Include domestic requirements in bid specifications;
- Verify cost and availability of domestic and nondomestic foods using data in the USDA AMS Run a Custom Report .
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 SFA must document the reason(s) for using an exception and they should also consider and document the following questions:
- Are there other domestic sources for this product?
- Is there a domestic product that could easily be substituted for the nondomestic product on the menu (e.g. substitute domestic pears for
- 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?
- Am I using third-party verification, such as through the USDA Agricultural Marketing Service Web page to determine the cost and availability of domestic and nondomestic foods? For more information, please visit USDA Agricultural Marketing Service Weekly Market Report .
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 SFA may be out of compliance if an exception for nondomestic agricultural commodity or product was not first approved and documented by the SFA.
For more information, refer to the USDA Policy Memo SP-38-2017, Compliance with and Enforcement of the Buy American Provision at USDA FNS School Meals Policy or view Buy American Provision in SNP (Video; 25:23).
Code of Conduct
Are employees who are designated to adhere to the written code of conduct allowed to accept contractor-sponsored meals?
2 CFR, Section 200.318(c)(1), requires nonfederal entities 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.
Can an agency ask vendors to donate to a fundraiser or other event?
An agency 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.
Does the code of conduct need board approval?
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 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. Agencies should consult with legal counsel to determine if the code of conduct must be approved by the governing board.
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?
Agencies should consult with 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.
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 legal counsel when they think an instance of unethical conduct occurs during a solicitation.
2 CFR, Section 200.318(k), states in part that:
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.
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 agency to determine who must adhere to the code of conduct. Agencies should consult with legal counsel to determine who must adhere to their code of conduct.
Cooperative Purchasing Groups
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.
For more information on this subject, including a list of frequently asked questions, see pages 119‒149 in thethe ICN Procurement in the 21st Century Resource Manual (PDF) 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 .
Does a cooperative need to follow the same rules when procuring goods and services as an agency acting on its own behalf?
Yes, as addressed in 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 . This policy memo 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.
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 e-mail at NSDProcurement firstname.lastname@example.org.
Discounts, Rebates, Points, and Other Incentives
Can an agency use points earned from vendors to purchase goods, services, or redeem the points for travel to CNP-related conferences?
Vendor credits accrued from purchases made with federal monies must be reallocated to the cafeteria fund. An agency must use the credits or rebates to purchase items that are allowable uses of cafeteria funds.
These situations are often determined on a case-by-case basis. If an agency is unclear whether they are using their points on an allowable cost, they should contact CDE staff by e-mail at SNPCafeFundQuestions@cde.ca.gov.
Can a vendor issue a rebate check to an agency instead of providing a direct rebate on an invoice? For example, an agency 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.
Food Service Management Companies and Vended Meals
How do schools 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. Schools need to obtain preapproval from the CDE in order to extend, amend, or rebid the term(s) of an FSMC contract. Visit CDE Procurement in SNPs for more information on timelines for the rebidding process.
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 SFA is responsible for all revenues and costs associated with running the CNP. Therefore, the SFA would need to ensure they have adequate documentation from the vendor to ensure proper accounting. 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
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 agency’s need (i.e. why the agency 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 agency will use to evaluate the proposals and award the contract.
- Describe how the agency 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.
For more information, see page 22 in the ICN Procurement in the 21st Century Resource Manual (PDF).
- State the purchasing agency’s need (i.e. why the agency is issuing an RFP) using clear and thorough specifications that are not overly restrictive.
Can an agency 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.
Does the evaluation criteria need to be in the public advertisement?
No. An agency does 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.
How does an agency award points for price in an RFP?
Effective January 1, 2018, each agency 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
How can an agency 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. You can find examples of evaluation criteria in the USDA Procuring Local Food for CNPs 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.
Can the same solicitation be used to procure goods and services for multiple CNPs such as the NSLP and the CACFP?
Yes. But 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, a CNP operator purchasing agricultural commodities for both the NSLP and any other CNP must include the Buy American Provision in the solicitation.
If a potential vendor asks a question about a solicitation (e.g. terms, specifications), should the agency 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 an agency provides additional information to a potential vendor in order to meet that standard, the agency must provide the same additional information to all other potential vendors. As a best practice, the program operator may hold a Q&A session for all potential vendors. Afterward, the program operator could post the questions and responses on a public portal, such as their Web site.
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, agencies could consider conducting market research, such as an RFI, to determine an adequate amount of time to provide a vendor to respond.
What responsibility does an agency have to solicit vendors? Does an agency contact vendors or do vendors contact an agency?
Except as provided under 2 CFR, Section 200.320(f), all programs must solicit from an adequate number of qualified sources (2 CFR, sections 320[c] and [d]). Agencies may contact vendors to inform them of a solicitation and, likewise, vendors may contact an agency to inquire about solicitations. In addition, Section 200.321(a) of 2 CFR 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 agencies issuing an RFP must publicize the proposal per 2 CFR, Section 200.320(d)(1).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 agencies 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.
Can an agency use an RFP instead of an IFB for supplies (e.g., food), or is an RFP only allowable for services?
It is allowable under both state and federal laws and regulations for agencies to procure supplies using the RFP method. An agency 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.
Which agencies must publicly advertise?
Except as provided under 2 CFR, Section 200.320(f), all programs must solicit from an adequate number of qualified sources (2 CFR, sections 320[c] and [d]). All agencies issuing an RFP must publicize the proposal per 2 CFR, Section 200.320(d)(1).School districts, COEs, and tribal governments must publicly advertise IFBs per 2 CFR, Section 200.320(c)(2)(i). Further, California PCC Section 20112 requires school districts, COEs, and agencies 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..
Can an agency choose to only advertise on the agency's Website?
No. School districts, COEs, and agencies governed by a school board or COE 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.Yes. Agencies other than those listed above can choose to only advertise on the agency’s Web site if it complies with 2 CFR, sections 200.320(c) and (d)(1). This regulation requires agencies to publicly advertise the IFB or RFP and provide sufficient response time prior to the date set for opening bids. Agencies 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.
Can a school district or other agency use past performance as an evaluation criterion?
Yes. Past performance can be used as long as the agency informs vendors that past performance is one of the evaluation criteria. For more information, see page 75 in the ICN Procurement in the 21st Century Resource Manual. (PDF). An evaluation of a vendor’s past performance can help an agency determine whether a bidder is responsible.
What is the minimum requirement for determining which procurement method to use?
It is up to each agency 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.
- What is the estimated contract cost?
- What applicable federal, state, and local rules define your agency’s purchase threshold (e.g. micropurchase or small purchase threshold)?
- Should the agency use the micropurchase, small purchase, or formal purchase method?
- What is the estimated contract cost?
Can an agency 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, an agency 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 agency) reserves the right to award to multiple vendors, using criteria as specified in the evaluation and award provision section.”
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.
Can an agency extend contracts instead of issuing a new solicitation each year?
Yes, subject to any applicable statutory and/or regulatory limitations. For example, an agency can extend contracts instead of issuing a new solicitation each year as long as the agency 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 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 agency 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 .
How does an agency 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 more information on types of contracts, refer to pages 99‒103 in the ICN Procurement in the 21st Century Resource Manual (PDF).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.
Is it allowable for a vendor to offer an agency a volume discount?
Yes, it is allowable. 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 agency 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.
If an agency solicited and has a contract with Vendor A for a product and Vendor B, who the agency does not contract with, offers an agency the same product at a lower price, can an agency use Vendor B to obtain the lower price?
No. The agency solicited and awarded a contract to Vendor A. Competitive bidding rules will only allow the agency to contract with Vendor A for the product without going out to rebid.
How does a small agency efficiently handle bids?
Small agencies follow the same steps as larger agencies when purchasing goods and services and using informal or formal procurement methods. Some small agencies 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.
If an agency’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 an agency’s contract expires, an agency 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 question 4 in this section.
Are there regulations requiring agencies 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 agencies other than those listed above, there are no regulations requiring agencies to keep and update vendor lists. It is a good practice to keep a list of qualified vendors and notify them of solicitations.
Can an agency award contracts to multiple vendors based on separate regions?
Yes. An agency may award contracts to multiple vendors based on separate geographic regions if the regions and that stipulation are specified in the solicitation.
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 Procuring Local Foods for CNPs Guide .
What is a micropurchase?
A micropurchase is a single purchase transaction equal to or less than the micropurchase threshold, currently set at $3,500. When using this method, agencies 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 $3,500 in 2017.
- The CNP operator making the purchase considers that the price they are paying is reasonable.
- To the extent practicable, agencies must spread their micropurchases equitably among qualified suppliers. The regulations require that agencies shop at different stores. Rotating stores allows multiple vendors to benefit from federal dollars coming into their community.
- The transaction is at or below the micropurchase threshold of $3,500 in 2017.
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 an agency can forecast that pieces of equipment will need a projected amount of repairs or maintenance during a year, an agency 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.
Does the micropurchase threshold limit include tax and shipping?
Yes, the micropurchase threshold includes tax and shipping.
If an agency obtains quotes equal to or below the micropurchase threshold from an adequate number of stores, can the agency 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 an agency is obtaining quotes and selecting the lowest price store (not equitably distributing), the agency is following the small purchase method, rather than the micropurchase method, even if the transaction is equal to or below $3,500.
What should an agency 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, an agency should have documentation justifying the purchase of goods at only one store.
Can an agency use the micropurchase method when multiple printers break unexpectedly at different times throughout the year?
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.
Noncompetitive and Sole Source Procurement
What is a noncompetitive procurement?
Noncompetitive procurements occur when an agency 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:
- The item is available only from a single source (“sole source procurement”);
- The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation;
- The Federal awarding agency (e.g. the state agency) authorizes noncompetitive proposals in response to a written request from the agency (e.g. the school district); or
- After solicitation of a number of sources, competition is determined inadequate.
- The item is available only from a single source (“sole source procurement”);
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 an agency 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 agency, not the supplier. While one supplier may offer goods and services that contain features not available from other suppliers, the agency 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, an agency must maintain appropriate documentation that supports its decision.Agencies 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 agency’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.
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. For additional information on noncompetitive contracts, reference pages 27‒32 in the Procurement in the 21st Century Resource Manual (PDF).
Can an agency 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.
What are procurement procedures?
Procurement procedures are an agency’s written step-by-step process of procuring goods and services. These procedures should be tailored to the specific needs of an agency 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 agencies should include in their documented procurement procedures are outlined in 2 CFR, sections 200.318‒200.326.
What help is available if I am not following proper procurement practices?
Visit the CDE Procurement in CNPs and USDA Farm to School Community Food Systems Videos and Webinars for policies, guidance, trainings, and resources. Program operators may also contact their CDE Program Specialist for more information. A list of Specialists for each program may be accessed at CNIPS Download Forms Section Form ID Caseload .
Small Purchase Method
When can an agency use the small purchase method?
Each agency needs to determine whether they must adhere to the federal small purchase threshold of $150,000 or a more restrictive small purchase threshold set by their agency/district or local government. The small purchase threshold is per contract cost. An agency 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 agency’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.
How does an agency prove that they contacted an adequate number of vendors to obtain price quotes?
Agencies can prove they contacted multiple vendors by creating and maintaining documentation for all price quotes requested and obtained and ensuring an agency 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.
For additional information, refer to pages 15‒17 in the Procurement in the 21st Century Resource Manual (PDF).
If an agency exceeds their small purchase threshold in a procurement, do they continue to order as needed?
If the small purchase threshold is exceeded, an agency should conduct a second procurement, which may involve a micropurchase or small purchase. If an agency finds their purchasing needs exceed the small purchase threshold from past experience, an agency 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.
Can an agency consider the list of prices posted on a vendor’s Web site as obtaining a quote from that vendor?
Agencies 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.