Procurement 101: A General Overview of Federal Requirements

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Procurement 101A General Overview of Federal
Requirements
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What Is Procurement?

• Definition -- multi-step process for obtaining
  the most responsive goods and services at the
  lowest possible price.

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5 Steps

• 1. Planning
• 2. Writing Specs
• 3. Advertising
• 4. Awarding The Contract
• 5. Managing The Contract

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Passing Down of Regulations
CONGRESS OMB USDA/FNS KDE SFA
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What regulations must SFAs follow?

• Program Regulations for Procurement
• NSLP 7 CFR 210.21
• SBP 7 CFR 220.16
• Special Milk Program 7 CFR Part 215
• Food Distribution 7 CFR Part 250
• Uniform Administrative Requirements for
  Procurement
• State/local governments 7 CFR 3016
• Non-profits 7 CFR 3019

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What regulations must SFAs follow? (continued)

• Government Wide Federal Regulations
• OMB Circulars A-102, A-110, A-87
• A-122
• State and Local Laws, Regulations, and Policies
  that are not in conflict with Federal
  Requirements.

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What Do These Regulations Require?

• Public School Food Authorities (SFAs) may use
  their own procurement procedures which reflect
  applicable state and local laws and regulations,
  provided that the procurements conform to
  applicable federal laws and standards identified
  in 7 CFR Part 3016.36 and Part 3016.60.
• SFAs must compare their state and local
  requirements against the federal requirements and
  follow the more restrictive!
• Non Profits are directed to use your normal
  procurement procedures if they are at least as
  stringent as the Federal requirements. If your
  own are not as stringent as Federal, you must
  follow the Federal requirements. Please refer to
  7 CFR Part 3019 for more guidance on what is
  allowable.

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Requirement 7 CFR Part 3016 (Public) 7 CFR Part 3019 (Non-Profit)
Competition in all procurements 3016.36(c) 3019.43
Award only to responsible responsive vendors 3016.36 (b) (8) 3019.44(d)
Written selection procedures 3016.36(c)(3) 3019.44(a)(3)
Code of Conduct 3016.36(b)(3) 3019.42
Recordkeeping 3016.36(b)(9) 3019.46
Contract Administration System 3016.36(b)(2) 3019.41
Prohibition on geographic preference, unless specifically permitted by Federal law (such as 2008 Farm Bill) 3016.60 and 3016.36(c)(2) Not addressed
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Re-Cap

• Federal Requirements Define the minimum
  requirements.
• State Requirements -- KRS 45A.100
• Local Requirements KRS 45A.385
• Program Specific Requirements
• National School Lunch Program 7 CFR Part 210
  Includes Buy American Provision
• Special Milk Program 7 CFR Part 215
• School Breakfast Program 7 CFR Part 220
• Food Distribution 7 CFR Part 250

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Non-Profit School Food Service Account(Federal
Funds)

• 7 CFR Part 210 and 220
• ALL funds received by the non profit school food
  account must be used to obtain food and other
  goods and services for use in the Child Nutrition
  Program (CNP).
• --Purchase food, supplies, equipment required for
  meal prep and service
• --Purchase prepared meals from vendors
• --Pay FSMC to operate their food service
• --Pay for labor and operational costs
• --Pay indirect costs

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Principles of Good Procurement
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COMPETITION!

• The goal of ALL Federal procurements because it
  leads to higher quality goods at a lower cost!

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Competition!

• Full and open competition means that all
  suppliers are on a level playing field and have
  the same opportunity to compete.
• Procurement procedures must not unduly restrict
  or eliminate competition.

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Why is competition important?

• Cost of products and services!

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Why is competition important?

• Quality of products and services!

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Fairness Integrity
The procurement process cannot be both self
serving AND effective!
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Responsive Responsible Vendor

• SFAs must make awards only to those
  contractors
• who are "responsive" because their product or
  service meets the SFA's specifications, and
• who are "responsible" because they can and will
  successfully fulfill the terms and conditions of
  the proposed procurement.

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Transparency
Transparency" means that everything done by the
SFA must be Clear, Above-board, and Out in
the open
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Good Procurement Practices

• Understand and communicate,
• Seek as many respondents as you can,
• Ensure purchases are necessary,
• Use the procurement process,
• Write clear evaluation criteria,
• Develop a good solicitation,
• Publicize the solicitation,
• Allow time for vendors to respond,
• Ensure transparency, and
• Document the process.

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Written Policies Procedures

• Policies
• Foster Competition
• Require Rationale
• Establish Written Selection Procedures
• Award to Responsive and Responsible vendors
• Fully document actions
• Maintain Documentation
• Contract Admin System
• Bid Protest Procedures

• Procedures
• Follow Program Regs Requirements
• Consistently Followed Procedures
• Fairly Conducted Procurement
• Procured Items Meet the Needs
• Code of Conduct

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Prohibited Practices

• Unreasonable Requirements
• Incorrect application of Geographic Preference
• Limiting the response time of a solicitation
• Split purchasing.
• Awarding a contract without advertising
• Awarding a contract on the basis of only one of
  the evaluation criteria
• Getting a cost quote from only one vendor

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Prohibited Practices (continued)

• Not providing the same information to all vendors
• Failing to comply with applicable state or local
  rules
• Releasing the contents of a bid before the public
  opening
• Using outdated pre-qualified vendor lists.
• Using vendor listings that do not include all
  potential vendors
• Allowing changes AFTER a bid is awarded that
  could have affected the outcome of the award had
  the other vendors had the opportunity to respond
  to the modified provision.

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Prohibited Practices (continued)

• Allowing a potential vendor to draft upcoming
  procurement specifications and bid on the
  solicitation.
• Using the school food service account to pay for
  expenses that result from improper planning and
  procurement process.

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Four Phases of Procurement

• Get Ready, Solicit, Award and Manage

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Four Phases

• Plan know whats needed and when. Know
  approximately how much its going to cost.
• Solicit Provide detailed specifications and use
  the appropriate procurement method. Clearly
  describe the vendor delivery expectations and be
  sure to incorporate a little flexibility.
• Award All awards must go to a vendor that is
  both responsive and responsible.
• Manage Contract Administration -- Right
  quantity, on time, to the right location, meets
  quality specs, meets substitution policy, etc.

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Procurement Methods

1. Small Purchase
2. Competitive Sealed Bid
3. Competitive Negotiation
4. Non Competitive Negotiation

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Informal Procurement
1
2
5
3
4
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Formal Procurement
1
2
5
4
3
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Informal Procurement Method

• Federal regulations set forth that a procurement
  contract under 100,000 in value may be awarded
  using informal methods.
• States or localities may set a lower small
  purchase threshold, thereby imposing more formal
  procedures.
• Kentucky Small Purchase Threshold is 20,000
  Must be used at a minimum!

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What does this mean?

• Informal procurements must maximize full and open
  competition.
• SFAs should prepare a solicitation
  document/Request for Quote that contains a
  complete description of whats required, date to
  be provided, other pertinent conditions.
• Recommend at least three sources be contacted
  who are eligible, able, and willing to provide
  product orservice .
• The solicitation document and award information
  must be documented whether written or verbal.

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Keep in mind

• SFAs may not intentionally split purchases to
  fall below the small purchase threshold and avoid
  formal procurement methods!

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Formal Procurement Methods

• Used when the value of purchase exceeds
  applicable Federal, State, or local threshold for
  small purchases.
• More rigorous and prescriptive. Methods Are
• Competitive Sealed Bidding
• Competitive Negotiation
• Non Competitive Negotiation

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Competitive Sealed Bid

• Develop a realistic purchase description.
• Identify vendors willing and able to compete.
• Results in a firm-fixed contract. The selection
  of the vendor must be based on the response to
  the specifications and price.

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To proceed.

• 1. Develop bid specifications
• MUST be advertised publically
• 2. Bids MUST be solicited from adequate number of
  vendors
• 3. Invitation for Bid MUST clearly define items
  or services required along with purchasing
  conditions.
• 4. Bids MUST be opened publically as stated in
  IFB.
• 5. Firm-Fixed contract award MUST be made by
  written notice to responsible bidder.
• 6. Method and factors of award MUST be clearly
  described and documented, i.e., lowest bid.

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Competitive Negotiation

• Cannot provide a specific description up front.
• Advertise to find vendors willing and able to
  compete.
• Identify evaluation criteria and how it is
  weighted.
• Evaluation Team
• Contract awarded to highest scoring proposal.
• Should have process approved by SA.

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Non Competitive Negotiation

• Used ONLY after all other procurement methods are
  determined to be unsuccessful and approved by the
  SA.
• Only 1 Vendor Capable of Providing Item
• or service.
• 2. Public Emergency Doesnt Permit Timely
  Competition
• 3. Competition Lacking
• MUST BE JUSTIFIED IN WRITING!

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Measuring Compliance

• USDA/FNS Reviews KDE through Management
  Evaluations -- 7 CFR Part 210.29
• KDE reviews SFAs through CREs 7 CFR 210.18 and
  7 CFR 210.19

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Thank you!Questions?
Deanna.Tackett_at_education.ky.gov